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S. Hrg. 113–703 

NOMINATION OF HON. SHAUN L.S. DONOVAN 

HEARING 

BEFORE THE

COMMITTEE ON 

HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED THIRTEENTH CONGRESS 

SECOND SESSION 

NOMINATION OF HON. SHAUN L.S. DONOVAN TO BE DIRECTOR, OFFICE 

OF MANAGEMENT AND BUDGET 

JUNE 11, 2014 

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

Printed for the use of the 

Committee on Homeland Security and Governmental Affairs 

( 
(II) 

COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

THOMAS R. CARPER, Delaware Chairman 

CARL LEVIN, Michigan 

MARK L. PRYOR, Arkansas 

MARY L. LANDRIEU, Louisiana 

CLAIRE MCCASKILL, Missouri 

JON TESTER, Montana 

MARK BEGICH, Alaska 

TAMMY BALDWIN, Wisconsin 

HEIDI HEITKAMP, North Dakota 

TOM COBURN, Oklahoma 

JOHN MCCAIN, Arizona 

RON JOHNSON, Wisconsin 

ROB PORTMAN, Ohio 

RAND PAUL, Kentucky 

MICHAEL B. ENZI, Wyoming 

KELLY AYOTTE, New Hampshire 

GABRIELLE A. BATKIN, Staff Director 

JOHN P. KILVINGTON, Deputy Staff Director 

MARY BETH SCHULTZ, Chief Counsel 

TROY H. CRIBB, Chief Counsel for Governmental Affairs 

DEIRDRE G. ARMSTRONG, Professional Staff Member 

KEITH B. ASHDOWN, Minority Staff Director 

CHRISTOPHER J. BARKLEY, Minority Deputy Staff Director 

ANDREW C. DOCKHAM, Minority Chief Counsel 

LAURA W. KILBRIDE, Chief Clerk 

LAUREN M. CORCORAN, Hearing Clerk 
(III) 

C O N T E N T S 

Opening statements: Page 

Senator Carper ................................................................................................. 5 

Senator Coburn ................................................................................................. 7 

Senator Enzi ..................................................................................................... 16 

Senator Johnson ............................................................................................... 18 

Senator Begich .................................................................................................. 21 

Senator Tester .................................................................................................. 24 

Senator Baldwin ............................................................................................... 27 

Senator Portman .............................................................................................. 30 

Senator Levin .................................................................................................... 33 

Prepared statement: 

Senator Carper ................................................................................................. 39 

Senator Collins ................................................................................................. 41 

Senator Landrieu .............................................................................................. 44 

WITNESSES 

WEDNESDAY, JUNE 11, 2014 

Hon. Susan M. Collins, a United States Senator from the State of Maine ........ 1 

Hon. Mary L. Landrieu, a United States Senator from the State of Louisiana . 3 

Hon. Shaun L.S. Donovan, Nominated to be Director, U.S. Office of Management and Budget 

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

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

Biographical and financial information .......................................................... 49 

Letter from the Office of Government Ethics ................................................. 68 

Responses to pre-hearing questions ................................................................ 70 

Responses to post-hearing questions .............................................................. 116 

(1) 

1The prepared statement of Senator Collins appears in the Appendix on page 41. 

NOMINATION OF HON. SHAUN L.S. DONOVAN 

WEDNESDAY, JUNE 11, 2014 

U.S. SENATE,

COMMITTEE ON HOMELAND SECURITY

AND GOVERNMENTAL AFFAIRS, 

Washington, DC. 

The Committee met, pursuant to notice, at 10:12 a.m., in room 

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

Chairman of the Committee, presiding. 

Present: Senators Carper, Levin, Pryor, Landrieu, Tester, Begich, 

Baldwin, Coburn, McCain, Johnson, Portman, and Enzi. 

Chairman CARPER. Good morning. Senator Collins, have you 

been in this room before? [Laughter.] 

We actually thought of naming it after you at some point in time. 

Senator COLLINS. Only about 5,000 times. I think that is a rough 

count. 

Chairman CARPER. Something seems wrong with you sitting on 

that side of the table. 

Senator COLLINS. It does to me, too. 

Chairman CARPER. Do you want to come up here? [Laughter.] 

I am sure you would do well. 

Senator Landrieu is going to join us, I think, shortly, and if it 

is OK with Dr. Coburn, I think we will just go ahead and recognize 

you to make some introductory remarks, and then if she is here, 

we will let her take over, and if not, we will proceed. Thank you. 

It is nice to see you. 

And, Shaun, to you and your family, welcome. We are especially 

happy to see your bride and those two sons of yours. We are happy 

you are all here. 

Susan, please proceed. 

TESTIMONY OF THE HONORABLE SUSAN M. COLLINS,1 A 

UNITED STATES SENATOR FROM THE STATE OF MAINE 

Senator COLLINS. Thank you very much. Chairman Carper, 

Ranking Member Coburn, Members of the Committee whom I am 

sure will be joining us shortly, I come before you this morning to 

introduce Shaun Donovan, who has been nominated to be the Director of the Office of Management and Budget (OMB). 

In many ways, my appearance here today is, as the Chairman indicated, a homecoming, as I served for 16 years on this Committee. 

And introducing Secretary Donovan is, in many ways, bittersweet. 

I very much enjoyed the opportunity to work closely with him since 
2 

becoming the Ranking Member of the Appropriations Subcommittee on Transportation and the Department of Housing and 

Urban Development (HUD) in 2011. So, we have worked very closely together, and I will miss working with him. 

During his tenure as HUD Secretary, Secretary Donovan has 

been widely recognized as an effective and knowledgeable leader, 

and not just in terms of HUD’s own programs. As this Committee 

may well be aware, he has been centrally involved in shaping the 

future of the government’s role in housing finance and he also led 

the recovery efforts following Hurricane Sandy. 

Having served on this Committee for many years, I know that 

I frequently was frustrated by the OMB Directors ignoring the ‘‘M’’ 

in OMB. Effective management of Federal procurement policy, 

analysis of proposed Federal regulations, and the reduction of unnecessary government paperwork are core functions of OMB, and 

yet oftentimes the focus of the OMB Director has been solely on 

budget issues. Important as those are, it is also important that 

there be a concentrated focus on the management issues that are 

so important and in which OMB plays such a key role. 

So, I think it may be of considerable interest to this Committee 

to know about the data-driven approach that Secretary Donovan 

brings to improving the effectiveness and efficiency of Federal programs. At HUD, he instituted quarterly reviews, known as 

HUDStat, to improve the Department’s performance and to ensure 

that HUD programs are meeting their goals. Central to these reviews has been the use of data to develop plans to overcome challenges and strengthen the effectiveness of programs. 

I have no doubt that the Federal Government would benefit from 

the broader application of these efforts by having him lead the Office of Management and Budget. I know this is an issue that Senator Coburn has been interested in for many years, the need to 

have metrics so that we are actually measuring whether or not our 

programs are working and whether the taxpayers’ investment has 

been warranted, and that is exactly the kind of data-driven system 

that Secretary Donovan instituted at HUD that was not there prior 

to his becoming the leader of that Department. 

He has demonstrated the ability to achieve meaningful results by 

measuring programs, and perhaps nowhere is that more evident 

than the goal of reducing homelessness. It is one thing to have a 

broad goal to reduce homelessness and put some money behind it 

and create some new programs. The question is, does it work? 

Since 2010, due in large measure to data-driven solutions leading 

to more effective programs, chronic homelessness in this country 

has been reduced by 16 percent, and veterans’ homelessness has 

been reduced by 24 percent. 

Not only is Secretary Donovan knowledgeable and data-driven, 

but he has also demonstrated his responsiveness to Congress, and 

I cannot say that about every member of this cabinet or this Administration. I would like to briefly cite to you just one example. 

We had reports surface in my State of Maine of poor conditions 

at HUD subsidized housing. The problem was first brought to my 

attention by a local fire chief in western Maine who was really worried that some of this housing was so dangerous, it was at risk of 

serious fires. I turned to the Secretary, requested assistance from 
3 

1The prepared statement of Senator Landrieu appears in the Appendix on page 44. 

him, and he understood how important it was to resolve these 

issues as quickly as possible. He worked with HUD’s Inspector 

General (IG) to have HUD and the Office of Inspector General 

(OIG) staff come to Maine, inspect the properties, identify the underlying oversight deficiencies in the inspections that the State 

housing authority was doing, and formulate a correction plan. The 

board of the Maine State Housing Authority used these findings 

and recommendations to implement sweeping reforms, including 

much-needed leadership changes to prevent these unacceptable 

problems from happening again. 

I mention that example because it demonstrates the Secretary’s 

commitment to protecting not only the tenants who were living in 

squalor, in some cases, and really dangerous conditions, but also to 

protecting the taxpayers who were subsidizing this unacceptable 

housing. 

With the confirmation, if you choose to do so, of Secretary Shaun 

Donovan as Director of OMB, I can assure you that the American 

people will have a leader of integrity and intelligence in a critical 

job. I want to thank him personally for his service at HUD, and 

I would respectfully urge this Committee to give him your support. 

Thank you for the opportunity to introduce him to the Committee 

today. I, of course, would welcome any very hard questions that 

you would like to direct to the nominee. [Laughter.] 

Chairman CARPER. All right. Here is my first question. Where is 

Senator Landrieu? 

Senator LANDRIEU. Right here. 

Senator COLLINS. She has arrived right on time. 

Chairman CARPER. You called it. That was a wonderful statement. Thank you. 

Senator Landrieu, great to see you. Thank you. 

Senator LANDRIEU. Mr. Chairman, thank you. 

Chairman CARPER. Senator Collins just wrapped up. She had 

nothing good to say about him, but maybe you will. [Laughter.] 

TESTIMONY OF THE HONORABLE MARY L. LANDRIEU,1 A 

UNITED STATES SENATOR FROM THE STATE OF LOUISIANA 

Senator LANDRIEU. I do not believe that. 

Hello, family. 

Good morning to the Chairman and Ranking Member, and I 

apologize for being a few minutes late and I thank my colleague, 

Senator Collins, for going ahead, because we are both here so privileged and grateful for the opportunity to introduce someone who I 

believe, and I think shared by Senator Collins, is one of the brightest lights in President Obama’s cabinet and one of the best collaborative leaders I have ever known in my career. And, I have been 

now doing this quite a long time. In fact, Senator Collins and I 

have similar careers, having started much earlier and served at our 

State level and now have the privilege to serve here in Washington 

for almost the exact same time. 

So, I know that she has given some background of this nominee, 

but let me just remind the Committee of his extraordinary educational background at Harvard University, Master’s of Public Ad-
4 

ministration and a Master’s Degree in Architecture. And, I find 

that his work as a scholar in those fields really comes into play 

every day that he is here working in the jobs that this Administration and others have entrusted to him in really building a better 

Nation, and that is really what we are all here to do. I know, Mr. 

Chairman, you feel very strongly about that, as does your Ranking 

Member, building a greater democracy, more fair, more generous, 

and a government that is more effective and more efficient every 

day. 

During the President Clinton and President Bush Administrations, Secretary Donovan served as Deputy Assistant Secretary for 

Multifamily Housing at HUD, and Acting Commissioner of the Federal Housing Administration (FHA). In 2004, he became Commissioner of New York City Housing Preservation and Development, 

which is no easy job to take on. It is really just a monumental assignment, a $500 million budget, having to work with a variety of 

different stakeholder groups. I can only imagine. Every time I fly 

into the city of New York, I am always amazed that it can be run 

at all, it is so huge, and he did his part in doing it. 

But, on a more personal note—and, Mr. Chairman, I think you 

will get a chuckle out of this—as you know, I am the daughter of 

a HUD Secretary, and my father served proudly for President 

Carter. I have said in front of my father that I thought once he was 

the best Secretary of HUD that ever served, but I have met one 

even better. Now, Shaun gets very embarrassed, and my Dad does 

not like it, but it is true. 

So, I am thrilled to be here, and let me just say in conclusion, 

because I know we want to hear his testimony, that when Hurricanes Katrina and Rita struck, the two fiercest natural disasters 

to strike our country, and unfortunately struck within 3 weeks 

along the same coast about 9 years ago, it was this Secretary that 

really stepped up in his first trip as Secretary, came down to New 

Orleans and the Gulf Coast, went to Mississippi, as well. He has 

visited multiple times. He has really been the light and the 

strength that has helped us to rebuild, which starts with schools 

and hospitals and housing, primarily, in neighborhoods, so that cities and communities can come back. He also understands small 

business coming back as soon as possible. 

So, I just want to say, because of all my dealings with him in 

a variety of different fields, I have watched him on the ground with 

people. I have watched him, literally, as he has jogged through 

neighborhoods in New Orleans. I have seen him on the stump. 

And, I have been in many conferences with him, trying to work out 

very difficult problems. And, I find him to be very straightforward, 

very honest, and most importantly, hard working and caring. 

So, this is a big job he has been nominated for, a really big one, 

but I know that he can do it and I have every confidence and would 

give him my strong support and would ask the Members of this 

Committee to support him in every way they can. 

Thank you, and I will submit the rest of my testimony for the 

record. 

Chairman CARPER. Senator Landrieu, thank you so much. 

Senator Collins, before you arrived, was good enough to offer to 

answer any questions that we had, and I asked one, just as you 
5 

were coming in. I would ask one question of you before you leave, 

and that is, would you say that Secretary Donovan is one of the 

two best HUD Secretaries that our country has ever had. [Laughter.] 

Senator LANDRIEU. Yes. He would be among the top two. 

Chairman CARPER. OK. Fair enough. [Laughter.] 

I am glad we got that on the record. 

Senator LANDRIEU. Thank you. 

Chairman CARPER. Dr. Coburn, do you have anything? 

Senator COBURN. No. 

Chairman CARPER. Susan, Mary, great to see you both. It means 

a lot, I know, to our nominee and to us that you are here. Thank 

you. Welcome home. 

OPENING STATEMENT OF CHAIRMAN CARPER 

Chairman CARPER. All right, ladies and gentlemen. As we all 

know, our previous OMB Director, Sylvia Mathews Burwell got another job. You knew her when she was Sylvia Mathews, did you 

not? She has been confirmed as Secretary of Health and Human 

Services (HHS). In the past, this might have left us with a vacancy 

at the top of OMB for a long time. Fortunately, in this case, the 

President has moved promptly to nominate a replacement for Secretary Burwell, and we are glad that he has. 

Our Committee has, in turn, moved forward with a similar sense 

of urgency. I want to thank Dr. Coburn—I want to thank his staff, 

and mine, as well—for working with us on a bipartisan basis to 

move this nomination forward, but with due diligence. 

Our Nation’s fiscal crisis may have receded from the headlines 

in recent months, but, in fact, we are still dealing with the same 

challenges we faced for years now. As I have stated before, our 

country needs a comprehensive, long-term budget plan that really 

does three things. One of those is to raise some revenues, hopefully, to do tax reform that looks at corporate rates. We need to 

really overhaul some of our entitlement programs in ways that 

save money, save the programs for our future generations, and 

does not savage old people or poor people. And, we need to look at 

everything that we do and ask, how do we get a better result for 

less money? And you, your purview, your job, if confirmed, will 

really encompass all of those, so we are anxious to drill down on 

each of them. 

But, the Director of OMB is a critical player in making decisions 

and making progress in these areas, including helping to put our 

country forward on a fiscally sustainable path. We need a leader 

in this role who will be a strong voice for fiscal responsibility and 

for effective government management, as our two introducers have 

said. 

We have had the privilege of working with Sylvia Mathews 

Burwell, who played, as you know, an integral part in achieving 

the bipartisan budget deal reached late last year. I believe, colleagues, that we have the same kind of leader in Shaun Donovan, 

as well. 

And to those of us in Congress and so many other Americans, 

Secretary Donovan is a familiar face, having served as Secretary of 

HUD for the last 5 years now. From his work there, we know he 
6 

can take on and solve tough problems. We have heard that from 

our two introducers already. During his time at the Department, 

he has guided Federal housing programs through economic crisis 

and helped millions of Americans modify their mortgages and avoid 

foreclosures. 

He has also demonstrated an ability to cut through red tape and 

find ways for agencies to work together more effectively. He did 

this with President Obama asking him to be Chair of the Hurricane Sandy Rebuilding Task Force, and he has done so on a number of other issues, including transportation, energy efficiency, and 

veterans’ homelessness. 

Secretary Donovan’s tenure at the Department of Housing and 

Urban Development gives him a strong foundation when it comes 

to understanding how agencies tick. He also knows how the Federal budget process works. And, just as importantly, he has also 

worked in local government and in the private and nonprofit sector. 

He knows from those experiences how decisions at the Federal 

level can impact communities, businesses, and individual citizens. 

In each job that he has held, Secretary Donovan has earned a 

reputation as someone who uses data and evidence to get better results and to save money for taxpayers. He is someone who wants 

to find out what is working and do more of that, and to find out 

what is not working and do less of that. 

Secretary Donovan is also someone who values strong public-private partnerships. He has consistently championed ideas that further the public good while also spurring economic development. 

This Committee works in close partnership with the Office of 

Management and Budget in all areas, but especially as we try to 

identify areas where we could achieve results throughout the Federal Government while spending fewer taxpayer dollars. Based on 

his previous experience and our past conversations, I believe that 

Secretary Donovan is committed to continuing those efforts at 

OMB and governmentwide. 

Everything I know about Secretary Donovan’s accomplishments, 

commitment to public service, tell me he is going to be a strong and 

effective leader at the Office of Management and Budget and a 

good partner with this Committee if he is confirmed. 

His predecessor at OMB is an exceptional leader, and left big 

shoes to fill at the agency, a tough act to follow. Dr. Coburn and 

I thought and think the world of her and the team that she has 

put together. But, I think Secretary Donovan, colleagues, is ready 

to hit the ground running. I expect Secretary Donovan to work just 

as hard and to continue the same bipartisan approach and to be 

as accessible as Sylvia was. She was incredibly accessible, as were 

the senior members of her team. 

I look forward to your testimony today—we look forward to it— 

and we hope the full Senate will consider your nomination as soon 

as possible. 

And with that, I will turn it to Dr. Coburn for any comments he 

might like to make. Thank you. Dr. Coburn. 
7 

OPENING STATEMENT OF SENATOR COBURN 

Senator COBURN. Well, Mr. Secretary, thank you for spending 

the time with me yesterday. I enjoyed it and got to know you better. 

We talked a lot about management yesterday, and I am not 

going to talk about that today. I feel pretty comfortable in that 

area. 

But, I am going to raise some questions with you during the 

question and answer period about responsiveness. I sent several 

letters to HUD that, on the replies, multiple questions that were 

asked in the letter never were answered, which is in contrast to 

Sylvia Burwell. The No. 1 thing we think is we have an obligation 

to get answers to our questions. And so, for me, that is a troubling 

track record. Most of the time, Mr. Secretary, you do not write the 

answers to those. Somebody else writes them for you, and you are 

not necessarily fully informed. So, that, to me, is concerning and 

would relate to management in terms of really knowing. 

The second area of concern was your testimony before this Committee on Hurricane Sandy and the Task Force and the details of 

what was testified versus what the actual facts were. And, again, 

I think that is totally excusable, given your position, but again, it 

is important for us to have testimony that is accurate and clear. 

And, no malicious motive is implied in that. The fact is, the facts 

that we were given were not exactly the facts, as we later found 

out. 

So, I would welcome you to the Committee. I have no doubt that 

you are going to be approved. What I would like to do is establish 

with you the kind of rapport we had with Ms. Burwell, which 

means that we got answers to every question. Sometimes we did 

not like the answers, but we got answers. No. 2, she was timely 

and responsive, which I think is an important characteristic. 

And so I have a lot of questions for you on specific details of 

OMB’s obligations and some of your personal philosophy in terms 

of some of the things that have happened around here on the big 

problem in terms of solving our fiscal issues, and you are going to 

be the key for this Administration in directing that and leading 

that. 

I would also say, I thank you very much for being willing to 

serve, seeing your two young boys. I have some advice for you. This 

job will consume you, and what you have to do—I know you called 

me on a Saturday, I think, at home, and I was pretty short. But, 

the fact is, I have reserved weekends for my family, and what I do, 

and my recommendation to you, is get out of there at a decent time 

every day so you can spend time with your boys and your wife because they are far more important than that job. 

Chairman CARPER. I am Tom Carper and I approve this message. 

Let me just take a moment to again welcome our witness, his 

wife, Liza, and sons Milo and Lucas. Thank you for joining us. In 

a moment, you will have an opportunity when you speak to make 

some further introductions of them and others that you might wish 

to recognize in the audience. 

Our nominee, as you know, currently serves as the Secretary of 

HUD. While at that position, he also served as the Chair of the 

Hurricane Sandy Rebuilding Task Force. Secretary Donovan also 
8 

1The prepared statement of Mr. Donovan appears in the Appendix on page 46. 

previously has served in a variety of important roles, including 

Commissioner of the New York City Department of Housing Preservation and Development, and as Deputy Assistant Secretary for 

Multifamily Housing at the Department of Housing and Urban Development. Secretary Donovan also worked in the private sector on 

ways to finance affordable housing and as a consultant to the Millennial Housing Commission, which seeks ways to increase the 

number of multi-family housing options. 

Secretary Donovan, before you proceed with your Statement, our 

Committee rules require that all witnesses at nomination hearings 

give their testimony under oath, so I am going to ask you to stand, 

raise your right hand, if you will, and here we go. 

Mr. Donovan, do you swear that the testimony you will give before this Committee will be the truth, the whole truth, and nothing 

but the truth, so help you ,God? 

Secretary DONOVAN. I do. 

Chairman CARPER. Please be seated. OK. Secretary Donovan, 

feel free to proceed with your statement, and again, introduce family and friends as you would like. We are happy you are here. 

TESTIMONY OF THE HONORABLE SHAUN L.S. DONOVAN,1

NOMINATED TO BE DIRECTOR, U.S. OFFICE OF MANAGEMENT AND BUDGET 

Secretary DONOVAN. Thank you, Chairman Carper, Dr. Coburn, 

Members of the Committee, for welcoming me here today. It is a 

privilege to be considered by this Committee as the President’s 

nominee to be the Director of the Office of Management and Budget. 

I want to begin by thanking Senator Landrieu and Senator Collins for their kind words. I have had the great pleasure of working 

with these distinguished public servants on a broad range of issues 

over the years. As you heard, Senator Landrieu and I have collaborated to improve the way our Nation responds and rebuilds after 

a natural disaster strikes. Senator Collins and I have worked together to make HUD operate better and on many other issues, particularly her great leadership, along with Chairman Patty Murray, 

in making sure that we get our heroes off of our streets around this 

country. They have been great partners and I am deeply grateful 

for them being here today and for their leadership and friendship. 

I also want to thank my wife, Liza, and my two sons, Milo and 

Lucas. In public service, the biggest burdens and sacrifices often 

fall on our families. So, I deeply appreciate their continued support 

as I seek to take on this new challenge. 

I am also grateful to President Obama for nominating me. I continue to be honored and humbled by the confidence he has shown 

in me. 

Finally, I want to thank Members of the Committee and their 

staffs for meeting with me over the last few weeks and for sharing 

your insights. If I am confirmed, I very much look forward to continuing these conversations. 

I recognize that now-Secretary Burwell has set a high bar for 

OMB Directors going forward, both with her strong leadership and 
9 

her efforts to maintain solid relationships with Congress. If confirmed, I would look forward to picking up where Secretary Burwell 

left off by engaging with you and your colleagues to achieve common goals, to meet deadlines, and to work with Congress to restore 

regular order. 

During my time as the Secretary of the Department of Housing 

and Urban Development, I worked tirelessly to ensure that the 

Federal Government is doing its part to help the American people 

secure access to safe and affordable housing. Homes are the center 

of every person’s life. They play a key role in shaping safe neighborhoods, good schools, solid businesses, and, ultimately, a strong 

economy. 

For the past 51⁄2 years, HUD has been creative in helping families obtain this key part of the American dream, and during these 

tough fiscal times, have done so in a fiscally responsible fashion. 

Working with colleagues across the Administration, we have helped 

millions of families fight off foreclosure, reduced the number of veterans experiencing homelessness by 24 percent in 3 years, revitalized distressed neighborhoods, and helped communities hit by natural disaster rebuild stronger than before. 

Through all this work, I have seen firsthand how critical the 

Federal budget process is and how it makes an impact on the people we serve. The Federal budget is not just numbers on a page. 

It is a reflection of our values, and it is important to our future. 

I believe the President’s budget shows a responsible path forward 

for the Nation. It creates jobs and lays a foundation for growth by 

investing in infrastructure, research, and manufacturing. It expands opportunity by ensuring health care is affordable and reliable, expands access to housing, invests in job training and preschool, and provides pro-work tax cuts. And, it ensures our longterm fiscal strength by fixing our broken immigration system and 

addressing the primary drivers of long-term debt and deficits, 

health care cost growth, and inadequate revenues to meet the 

needs of our aging population. 

Over the last 5 years, the deficit has been cut in half as a share 

of the economy, the largest sustained period of deficit reduction 

since World War II. Our Nation can continue this progress while 

focusing on the critical goals of accelerating economic growth, creating jobs, and expanding opportunity for all Americans. 

I would like to briefly outline my priorities, if I am confirmed as 

Director. First, if confirmed, I look forward to working with Congress to continue the important progress made on the budget over 

the past year. The Bipartisan Budget Act and Consolidated Appropriations Act for Fiscal Year 2014 were good first steps in moving 

beyond the manufactured crises of the past few years and providing 

some measure of relief from the damaging cuts caused by sequestration. But, there is more that we must do to invest in our economy, create jobs, promote national security, while continuing to 

promote fiscal stability by addressing the key drivers of our longterm debt and deficits. 

Second, I want to acknowledge the critical management side of 

OMB’s responsibilities. I would work to advance the President’s 

Management Agenda, which is focused on making the Federal Government more efficient, effective, and supportive of economic 
10 

growth. Under the President’s leadership, the Administration is 

working to improve key citizen and business-facing transactions 

with Federal agencies. It is working to increase the quality and 

value in core government operations and enhance productivity to 

achieve cost savings to the American taxpayer. It is working to 

open Federal Government assets to the public, including data from 

Federally funded research, to create a platform for innovation and 

job creation. And, it is working to unlock the potential of the Federal workforce and build the workforce we need for tomorrow by investing in training and ensuring agencies can hire the best talent 

from all segments of society. 

Third, it is critical that OMB’s Office of Information and Regulatory Affairs (OIRA) continue the Administration’s regulatory 

focus on maintaining a balance between protecting the health, welfare, and safety of Americans, and promoting economic growth, job 

creation, competitiveness, and innovation. And, I would seek to 

continue the President’s successful regulatory retrospective review, 

or regulatory look-back, where the Administration is streamlining, 

modifying, or repealing regulations to reduce unnecessary costs and 

burdens. 

Finally, I want to note what a particular honor it would be for 

me to serve as the head of OMB. OMB plays a unique and critical 

role in the functioning of the Federal Government. As HUD Secretary, I work closely with OMB’s leadership, including Deputy Directors Brian Deese and Beth Cobert, and I have seen the outstanding contributions made by the talented men and women who 

work throughout this institution. 

To give just one example, in my role as the Chair of the Hurricane Sandy Rebuilding Task Force, I saw the tireless efforts made 

by OMB staff, many of them long-serving career employees, as they 

worked literally day and night for weeks and even months to ensure that disaster relief was delivered swiftly, fairly, and responsibly. It was OMB employees who had the expertise, knowledge, 

and governmentwide perspective to help coordinate the effort and 

make sure it was done right. 

Again, I want to thank the President for giving me this opportunity and the Committee for considering my nomination. I look 

forward to answering any questions you may have. 

Chairman CARPER. Thanks so much for that statement. 

I need to start our questioning today with three standard questions we ask of all nominees. 

Is there anything you are aware of in your background that 

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

which you have been nominated? 

Secretary DONOVAN. No, there is not. 

Chairman CARPER. All right. No. 2, do you know of anything, 

personal or otherwise, that would in any way prevent you from 

fully and honorably discharging the responsibilities of the office to 

which you have been nominated? 

Secretary DONOVAN. No, I do not. 

Chairman CARPER. No. 3, do you agree, without reservation, to 

respond to any reasonable summons to appear and testify before 

any duly constituted Committee of Congress if you are confirmed? 

Secretary DONOVAN. I agree. 
11 

Chairman CARPER. All right. I want to go back to that first question, about conflict of interest, and I want you to talk about any 

potential conflict of interest that might flow from your 12-year-old 

son, Lucas, performing in a rock-and-roll band with Jay Carney’s 

son and Michael Froman’s son. I think they are called Twenty20. 

Is there a conflict of interest there, any that you can think of? 

Secretary DONOVAN. I promise not to depend too much on my retirement being dependent on his success in his rock band. [Laughter.] 

Chairman CARPER. All right. Milo there will probably be managing the band, and we look forward to great things from all of 

you. 

I just want to say, Dr. Coburn and others have mentioned the 

sacrifice that families make on behalf of their moms or dads who 

serve in these positions. Your sacrifice begins today by giving up 

a part of a day in school, so thank you for your willingness to do 

that and to join us here. 

Let us talk about Sylvia Mathews Burwell. I understand you 

have known her for a while. Where did you all meet? 

Secretary DONOVAN. We met in our dorm, freshman year at college, actually. 

Chairman CARPER. No kidding. 

Secretary DONOVAN. We have been friends ever since. 

Chairman CARPER. OK. Why do you think she has been just 

enormously successful, highly regarded, highly respected here and 

really kind of taken the place by storm over the last year or so? 

Why do you think that has been the case? 

Secretary DONOVAN. Well, from the thank you note that I got 

from her freshman year when we actually went on a double-date 

together, through my long experience with her since, I would say, 

first and foremost, something that Dr. Coburn really focused on is 

her responsiveness and outreach. And, one of the key things that 

I would want to do, if confirmed, is to continue in what I think she 

has built as a very strong set of relationships with the Committee 

and more broadly with Congress. 

I also think when she came in, she was very focused on making 

sure, not just that the ‘‘M’’ side of OMB was not forgotten, but that, 

in fact, the ‘‘M’’ side and the ‘‘B’’ wide of OMB worked very closely 

together. I believe very deeply, as I think you have heard a little 

bit about today—I often say to my team, too often, we do not know 

what success looks like in Government, and by measuring, setting 

clear goals, measuring those goals, I believe we not only can 

achieve success in achieving the ends of Government, we can also 

save money for taxpayers, and that is really, for me, where we 

have to make sure the ‘‘M’’ and the ‘‘B’’ in OMB are connecting. 

And, finally, I would say that Sylvia is beloved within the institution of OMB, despite a short time there, because she has really 

focused on building the institution. To be frank, if I am confirmed, 

21⁄2 years is not a long time, and I do believe that it is absolutely 

critical to make sure that OMB is adding to the terrific team that 

is there with the best and the brightest and to making sure that 

the institution is strong, particularly among the career staff that 

is there. So, not just managing across government, but managing 
12 

OMB itself as an institution is something that she has focused on 

and I would want to continue. 

Chairman CARPER. Good. When you and I met, we talked a little 

bit about regulations. This Administration, every one of them, put 

out a lot of regulations and OMB plays a critical role in that process. We probably have a lot of regulations that are still in effect 

that maybe are not worth much and we ought to do something 

about them. Cass Sunstein in his earlier role as the head of OIRA 

within OMB sought to do that. Tell us a little about your approach 

to the regulatory side—— 

Secretary DONOVAN. Yes. 

Chairman CARPER [continuing]. Of OMB and how we—what kind 

of look-backs you would be interested in, updating regulations’ 

timeliness, that sort of thing. 

Secretary DONOVAN. I am glad you raised this, Mr. Chairman, 

because it really is one of the most important functions that OMB 

plays through OIRA. And, I think, we absolutely have to be focused 

on a common sense balance between protecting the air that we 

breathe, the water that we drink, the safety of the American people, with ensuring that our regulatory framework supports economic growth, more jobs, and building as strong an economy as we 

possibly can. 

I mentioned the regulatory look-back in my remarks. I think that 

is a very good example of how we can work together on a bipartisan basis to make our regulatory system work more effectively. 

And, I thought maybe I would just give you a couple examples of 

work we have been doing at HUD. Obviously, given the crisis—— 

Chairman CARPER. Just make them fairly brief—— 

Secretary DONOVAN. OK. 

Chairman CARPER [continuing]. Because I have one more question. 

Secretary DONOVAN. I am happy to do that. So, within the mortgage world, obviously, this has been a major area of focus, and as 

Senator Tester knows from his service on the Banking Committee, 

he and a number of other members have expressed an interest in 

making sure that we are not necessarily treating our community 

banks and small lenders in the same way we treat the largest 

banks, that we have to have a real focus on small business. And, 

so, one of the rules that we have issued recently streamlined the 

way that we oversee smaller institutions, the reporting requirements we have for them within the FHA program. I think that is 

a very good example. 

Another example I would give you is we have adopted e-signatures in FHA. We are one of the first agencies across the Federal 

Government to do that. And what I have heard consistently from 

citizens and small lenders is it has made their process not only less 

expensive and faster, but it has allowed consumers to sit at their 

kitchen table and read those stack of documents we usually get at 

mortgage closings to make those simpler, more accessible, but also 

give families time to really look at them rather than being rushed 

at the closing table. 

So, those are two examples at HUD of the kinds of things that 

I think we really need to do more of. 

Chairman CARPER. Good. Thanks. 
13 

Let us go back to the ‘‘M’’ in OMB and talk a little bit about 

management. In the Navy, when you are trying to do something 

really hard, what we used to say is like trying to turn an aircraft 

carrier, you need the whole crew in order to be able to do that, and 

you are going to need not just the crew at OMB to actually affect 

and implement the President’s management budget. But, talk to us 

about how you plan to network, to build a sense of team and coordinate working with us, with the Government Accountability Office (GAO), working with the Inspector Generals and others that 

can help implement a thoughtful management agenda. 

Secretary DONOVAN. I think this is a really important area in the 

sense that what I saw in local government, some of my frustrations, frankly, with the Federal Government is that, too often as 

a Federal Government, we operate in our silos of agencies and we 

do not necessarily connect with other agencies, with local government, and with Congress effectively or the private sector. 

And so I think one of the hallmarks of the work that I have tried 

to do at HUD, whether it is on the mortgage crisis, whether it is 

in our response to natural disasters, whether it is on homelessness, 

where health is a critical savings we actually get out of the work 

that we do on homelessness, with education, with the Department 

of Energy, I have built strong cross-governmental relationships 

where we have actually set shared goals and we have looked to 

achieve those in a coordinated way. 

And so one of the reasons I am excited about taking on OMB, 

if I am concerned, is it occupies a special position in working to coordinate and make sure that we are working as one government as 

effectively as possible. 

Chairman CARPER. All right. Thanks very much. Dr. Coburn. 

Senator COBURN. Thank you. 

One of the things that has not been able to be achieved yet is 

a consensus between the Administration and Congress on tackling 

the big elephant in the room, which is deficit reduction, in a way 

that will solve the problem into the years. We have a $17.5 trillion 

debt, predicted to go back to a trillion dollars a year deficit in the 

next few years. And OMB plays a critical role for the Administration, but also for the country. 

So, my first question is, I have worked very closely with the Government Accountability Office. I recommended that you spend time 

with GAO. When you see the last 4 years’ reports from GAO on duplication—and, by the way, the Administration has done a fairly 

good job at outlining some of those things in the annual budgets— 

what is your level of frustration when you see that, according to 

my staff’s calculation, we have about $250 billion a year in duplication with minimal metrics outlined by the GAO? What is the position within the Administration in terms of addressing that, in 

terms of the real leadership of asking Congress, fix this? 

Secretary DONOVAN. Well, Senator, you and I spoke a little bit 

about this and it is an area where I think we have made some real 

progress. Just to give you one example, the President’s budget for 

2015 outlines about 130 programs where we can achieve cuts, consolidations, other types of savings, for a total of about $17 billion. 

Certainly, my experience at HUD has been that there is a lot 

that we can do. One of the primary areas I focused on as soon as 
14 

I arrived, we have 13 different rental assistance programs at HUD, 

and some of that makes sense. We have a program for seniors, a 

program for people with disabilities that have logical differences. 

But, too often, those differences are just history and circumstance 

rather than being logical. 

So, I started an effort called the Rental Assistance Demonstration, which is already about two-thirds of the way consolidating 

older, frankly, obsolete programs into a single program, and we 

have been working with Congress, and, in fact, in our Senate budget—Senator Collins really should get some credit for this—we have 

been able to start to consolidate about one-fifth of all public housing into the Section 8 program. 

And, so, I think there is more work that we can do with executive authority. To be frank, Senator, I think, too often, what is hard 

is achieving bipartisan consensus about whether it is reducing the 

number of offices that we have around the country or reducing programs. And, so, I do think we need to find ways, and I would love 

to talk to you further about it, get suggestions, on ways that we 

could drive not just ideas about consolidation, but get to actual bipartisan consensus where we can achieve legislative reforms, both 

in the budget and otherwise, as well. 

Senator COBURN. My understanding is OMB has the power to require agencies to put metrics on programs. Do you agree with that? 

Secretary DONOVAN. Yes, I do, and, in fact, I would compliment 

the Committee. The Government Performance and Results Act 

(GPRA) Modernization has been a very important tool. I am a particularly big believer, referencing something I said earlier, in crossagency goals. 

Senator COBURN. Fine. 

Secretary DONOVAN. That is the reason we have been able to 

achieve such success on veterans’ homelessness, is because we built 

a data system that was shared between HUD and the Veterans Administration (VA) and we meet on a very regular basis with the 

most senior leadership to really look at the progress we are achieving, not just nationally, but place by place, to see what is working 

and what is not. 

Senator COBURN. But, the way to find out if things are working 

is to have metrics on the things, which you testified in your opening statement—— 

Secretary DONOVAN. Absolutely. 

Senator COBURN [continuing]. And we agree with that. So, I 

guess, my question for you is, are you committed to trying to implement that across the government through both the GPRA Modernization Act as well as your authority as OMB Director, because 

if you cannot measure these programs, you cannot manage them effectively and we will not know. And, that is one of GAO’s biggest 

recommendations, is there are no metrics on most of the programs. 

We do not know what we are doing. 

Secretary DONOVAN. I could not agree more. And, in fact, not just 

in the last 51⁄2 years, but my 5 years working under Mayor Michael 

Bloomberg in New York, as you know, the CompStat process was 

started at the Police Department in New York City. 

Senator COBURN. Yes. 
15 

Secretary DONOVAN. And, I created, both in my agency in New 

York and here at HUD, an Office of Strategic Planning and Management whose specific responsibility it was to create and track 

those metrics across the most critical programs and, frankly, to do 

process improvement work, as well, because it is one thing to identify the problem. You have then got to fix it, and having the capacity to actually have a team that can go in, almost like an internal 

consultant within the agency to do that, I think, is absolutely critical. 

And to be frank, many people—this is not an area that they 

think is one of the most interesting or sort of most noteworthy 

around—I am not only interested in doing this, I am actually passionate about it and I drive my team crazy at HUD in terms of my 

wanting to understand the numbers. 

Senator COBURN. Congress and this Committee recently passed 

the Digital Accountability and Transparency Act (DATA) and it has 

some deference to the Defense Department (DOD). It gives them 

some extra time. But, one of the things that is going to be required 

by that is the head of OMB to keep the commitment that we are 

going to meet the goals of that legislation. Will you state before 

this Committee that you will do everything in your power to keep 

the commitment that the DATA Act timelines are fulfilled? 

Secretary DONOVAN. Senator, I am committed to working with 

you very closely to make sure that we can achieve those goals of 

the DATA Act. I am getting up to speed on this. I know there was 

lots of bipartisan work on that bill. I know that OMB is currently 

trying to understand with agencies what system changes, what investments are going to be required. So, you have my commitment 

to come back very quickly, if I am confirmed, and work with you 

to meet those timelines. 

Senator COBURN. You just made a statement that shows what 

kind of trouble we are in. The agencies do not have that information now to comply with the DATA Act. And, the very fact that 

they have to get up to speed to comply tells you that they do not 

know what they doing in terms of management because they do not 

know where they are spending the money. This is pretty straightforward. Where did you spend your money? It is a pretty straightforward bill. And the very fact, across the government, agencies do 

not know where they are spending their money and do not aggregate those to look at it so that they could comply with the DATA 

Act is the very reason we wanted the DATA Act in the first place, 

is to force that consolidation of data so that they will actually know 

what they are doing and where they are spending the money. 

In your statement, you mentioned investing in our economy. How 

would you reconcile additional spending with the need for additional deficit reduction, given the fact that the Congressional Budget Office (CBO) has a point line mainly based on the entitlement 

programs, the mandatory programs. In your own mind, outside of 

what the Administration policy would be—how do you reconcile 

those two positions? 

Secretary DONOVAN. Senator, I think about this in terms of the 

work that I have done on housing, which is obviously one of the 

most significant drivers of our economy. What we have to do, and 

at times it can be a difficult balance, but it is absolutely critical, 
16 

there are critical functions that we need to invest in. We have not 

just a fiscal deficit, we have deficits in our infrastructure, we have 

deficits in our educational system, we have deficits in the investments we are making in research and development, which we know 

contribute in the long run to the economic competitiveness of our 

country and ultimately to economic growth. 

We have to find ways to invest in those critical things while at 

the same time dealing with what are really, as I mentioned in my 

statement, the two primary drivers of our long-term deficits. Our 

health care costs have grown more quickly than we have been able 

to control in our budget, and, at the same time, we have a wave— 

the Baby Boom generation—that will be adding to, given the commitments we have to seniors, to those long-term costs. And so, we 

have to find a bipartisan way to make those critical investments 

in the medium-term while at the same time dealing with those 

long-term drivers of the deficit. 

Senator COBURN. OK. I am past my time. 

Chairman CARPER. OK. I am just going to run through the list. 

This is in order of appearance. Senator Enzi, you are next, followed 

by Senator Johnson, Senator Begich, Senator Landrieu, Senator 

Tester, Senator Baldwin, Senator Pryor, Senator McCain, and then, 

after we have lunch, we will probably get around to Senator 

Portman, or maybe even before lunch. 

All right. Michael, you are up. Please proceed. 

OPENING STATEMENT OF SENATOR ENZI 

Senator ENZI. Thank you, Mr. Chairman, and thank you, Mr. 

Donovan, for being here and testifying. 

I am kind of curious as to why you would want to switch from 

an agency that you already have good control over and a lot of potential for solving some big problems that are the drivers for the 

economy in the United States to move over to OMB and start over 

again. 

Secretary DONOVAN. Other than the fact that I love data and 

management, it is a chance to work on the big challenges that face 

my kids that are sitting right behind me. And, as I often say, public service is tough work. I do not necessarily like it every day, but 

I love it every day and it is a challenge that I want to take on. 

Senator ENZI. Well, I appreciate your being willing to do that, 

and I am assuming that you are going to make it through the process fine and want to give you—— 

Secretary DONOVAN. I appreciate your confidence. 

Senator ENZI. I want to give you a small task to start with. 

[Laughter.] 

A huge priority for my State is something called Abandoned 

Mine Land Money. This was a program that was started when they 

started mining coal in the Powder River Basin. Of course, there 

has been coal mining going on all over the United States for years 

and years. Our State agreed, rather than taxing and keeping it all 

for ourselves, that we would allow a Federal tax and half of that 

would go into a trust fund for Wyoming and the other half would 

go for reclamation east of the Mississippi River, where they did not 

have nearly as much mining going on. 
17 

When I got to the Senate, no money had been given out of that 

trust fund yet and it had grown to a substantial number, and Senator Kennedy, in a bipartisan way, helped me to get that released. 

It took a super-majority to do it. We got the backlog released over 

a 7-year period. 

But, right now, the Office of Surface Mining (OSM) is reinterpreting that and determining that we do not get all of that back 

pay. So, it is something that I would like for you to look into and 

to help me work on, because I like numbers, too, and I am keeping 

track of this, and so I know that it was supposed to be given to 

us over a 7-year period. Five of the years passed, and the balance 

that is still owed us, without interest, is $165,401,519—— [Laughter.] 

Which might not sound like a lot in the Federal scheme of 

things, but for a small population State like Wyoming, it is a real 

big thing. So, I hope you can commit to me to work with OSM to 

get a correct interpretation on how the money is to be distributed 

so that this trust fund can truly be a trust fund. 

Secretary DONOVAN. Senator, should I be confirmed, this is an 

issue I look forward to getting up to speed on it and seeing what 

I can do to help resolve it. 

Senator ENZI. Thank you. Now, on the broader scale, and Senator Coburn started on this and I want to pursue it a little bit 

more, and that is the $17 trillion in debt that we have and how 

we are going to get some kind of control over the spending that we 

are doing, and you are in a prime position to do that. Do you have 

any kind of an idea of a plan where we can start to get toward a 

balanced budget and perhaps a mechanism for actually doing some 

prioritization? That is what Senator Coburn was talking about earlier, the GPRA process. Do you have any ideas for how to implement those? 

Secretary DONOVAN. Generally speaking, Senator, what I would 

say is I think we have begun to make some bipartisan progress on 

the deficit. Over the last few years, we have seen the deficit coming 

down faster than at any time since World War II. But, there is 

more that needs to be done, and I think, in particular, if you look 

at the President’s budget, over the budget window, it would bring 

down deficits as a share of the gross domestic product (GDP) from 

nearly 4 percent to about 1.6 percent. So, I think there are some 

important things to build on there. In particular, I think the $400 billion in savings that are contained in the budget in Medicare and Medicaid are critically important. I would also point to places where we can really look at 

wasteful spending that we have in our tax code through closing 

loopholes and other efforts. I think those are a very good beginning 

to a longer-term solution. 

Senator ENZI. Well, I appreciate those comments. I hope that you 

will look at the duplication that there is out there and maybe get 

some kind of a system for prioritization. 

Wyoming was faced with needing to make a 6-percent cut, partly 

because of the money that I just mentioned a little bit ago, but the 

Governor came up with a mechanism. If you just ask agencies, 

what is your top priority, or can you give me a priority, everything 

is a top priority. So, he asked them to prepare lists showing what 
18 

they would cut if they had to cut 2 percent, 4 percent, 6 percent, 

and 8 percent, and then he could look at the lists. And if it showed 

up on all four, it was one they were probably willing to cut. But, 

if it only showed up on the 8 percent list, it was probably pretty 

important. 

You are welcome to that idea from one of the laboratories of the 

States, which in this case happens to come from Wyoming, but I 

think they have a lot of ideas out there that will work. 

I know that you headed up the recovery effort following Hurricane Sandy. In that process, did you discover any waste or inefficiencies that we ought to be correcting? 

Secretary DONOVAN. And, I would share the frustrations of, I 

think, many of your colleagues in seeing places where we can speed 

up and improve the way government works, and I would actually 

just recognize Senator Landrieu, who was very focused on working 

after Hurricane Katrina to rationalize, simplify, streamline the approval processes, and I would say particularly around the environmental review process. 

So, for example, when we worked with Congress to pass the 

Sandy Supplemental Appropriations Bill, we included a provision 

that allowed any community that was using multiple sources of 

Federal dollars to rely on one single environmental review. Too 

often, we end up having to require multiple agencies to do environmental reviews for a single project, and that is obviously one example, but one very expensive example, of an inefficiency. 

And, I would say I am very encouraged by the bipartisan work 

that has been done in the Committee around infrastructure permitting more broadly. That is something, given how much investment 

is going into infrastructure after Hurricane Sandy, we created a regional working group with every critical Federal agency, with State 

and local government, to dramatically streamline how we are going 

to get those large infrastructure projects done. And, as I think you 

know, there has been great work that the Committee has done 

with OMB and the Department of Transportation to implement 

that around high-priority infrastructure projects. 

The best example of that is the Tappan Zee Bridge in my home 

State of New York, where we took a process that would have been 

probably 3 to 5 years to get the permitting done and dramatically 

cut that to under 2 years. 

Senator ENZI. Thank you, and my time has expired. 

Chairman CARPER. Thanks, Senator Enzi. 

Senator Johnson, and then Senator Begich. 

OPENING STATEMENT OF SENATOR JOHNSON 

Senator JOHNSON. Thank you, Mr. Chairman. 

Secretary Donovan, welcome. 

Secretary DONOVAN. Nice to see you, Senator. 

Senator JOHNSON. I appreciate you spending the time to meet in 

my office and I appreciate your willingness to serve. It is a big job, 

and I agree with you, OMB is right at the center of addressing so 

many challenges we face in this Nation. 

Let me start first by getting your take, and assessment of where 

we are economically. In terms of recoveries after big recessions, our 

post-World War II average after 19 quarters—and that is how far 
19 

we are into the recovery now, 19 quarters—economies have, on average, recovered by about 23 percent, in other words, grown by 23 

percent. After the 1980 recession, during the Ronald Reagan recovery, our economy had grown at 25.6 percent. Following the Great 

Recession here under President Obama, our economy is growing at 

10.8 percent. So, we have not even achieved half the average 

growth of post-World War II recoveries. Do you have any explanation of why do you think that is? 

Secretary DONOVAN. So, it is interesting you asked this, Senator. 

We actually spent some time with the economic team and the 

President just yesterday on this issue and a range of factors. The 

biggest factor, most economists agree, is actually the demographic 

changes that we are undergoing, and that accounts for about half 

of the difference between this recovery and other historical ones. 

Other factors that are very important, the debt overhang that we 

have from this crisis. Financial crises, in general, are slower to recover from. We see that across the world in the performance of 

world economies relative—the United States is actually relatively 

doing better, but that has made it a slow recovery overall. 

The dramatic cuts in government spending, local government and 

State government spending, is actually a significant contributor, as 

well. There are a few other factors, but—— 

Senator JOHNSON. Are you saying the Federal Government has 

cut spending? 

Secretary DONOVAN. There were reductions in State and local 

government that were very unusual. 

Senator JOHNSON. OK, but you are working for the Federal Government. We have not cut spending in the Federal Government, 

correct? We have not increased it as much as people wanted, but 

it has actually been flat for a couple years. We have not cut anything, right? 

Secretary DONOVAN. As a share of our economy, which is the traditional way that budget experts look at this, we have reduced discretionary spending significantly relative to the expectations 

we—— 

Senator JOHNSON. But, as a percent share of our economy, last 

year, we spent 20.8 percent, and for 50 years, the average is about 

20.2 percent, so as a percent share of our economy, we are spending a little bit more than average. And, that has actually come 

down from a high of close to 25 percent early in the Administration, correct? 

Secretary DONOVAN. In terms of overall outlays, you are talking 

about, Senator—— 

Senator JOHNSON. Yes, the Federal Government. 

Secretary DONOVAN. Again, our estimates are that we have reduced overall the deficit, and this is on a bipartisan basis, about 

$3 trillion. Most of that has come from reductions in spending relative to what our expectations were. 

Senator JOHNSON. You talked about investing in our economy. 

Can you give me your opinion, who is the better allocator of capital, 

the private sector or government? 

Secretary DONOVAN. I would answer, the private sector. 
20 

Senator JOHNSON. OK. All things being equal, is it good to have 

low-cost energy if you want to manufacture, if you want to get your 

economy going, or high-cost energy? 

Secretary DONOVAN. Low-cost energy, and, in fact, one of the 

bright spots in our recovery has been that we have significantly increased our production of energy domestically. I think, as you 

know, as we talked about the other day, we are now actually producing more here in this country than we are importing from overseas at this point. We have seen a doubling of our renewable generation, and particularly for manufacturers, an area you know very 

well, the production of natural gas has been a huge boost—— 

Senator JOHNSON. As a candidate, President Obama did say that 

because of his cap and trade proposal, electricity rates would necessarily skyrocket, and now we are trying to, through regulatory 

agencies, enact those cap and trade proposals or something similar 

to that. Do you think that is a good thing or a bad thing? 

Secretary DONOVAN. Senator, I am not an expert. I assume you 

are referring to the new rule—— 

Senator JOHNSON. Right. 

Secretary DONOVAN [continuing]. That has been issued. I am not 

an expert in talking great detail about that—— 

Senator JOHNSON. But, in general, if government regulations or 

policy drives up the cost of energy, that is not good for economic 

growth, is it? 

Secretary DONOVAN. Generally, low energy costs are good. As I 

said, the policies under this Administration have actually led to a 

significant expansion of domestic energy production, a doubling of 

renewables which is one of the strengths in the economy that I 

hear out there as I talk to the private sector. 

Senator JOHNSON. Let us talk about it. Let us talk about allocation of capital and government investing, because I hear this word 

‘‘investing’’ all the time, and generally, it means spending. But, 

President Obama in his acceptance speech said he would invest 

$150 billion over the next 10 years, the next decade, in affordable 

renewable sources of energy, wind power, solar power, and the next 

generation of biofuels, an investment that will lead to new industries and five million new jobs that pay well. 

There have been a number of reports, the most recent one from 

the Institute for Energy Research, that says that we have spent 

about $26 billion, and 17.5 percent of that $150 billion investment. 

They calculate we have produced about 2,300 jobs, about 0.046 percent of the five million jobs. 

You mentioned you have to measure your goals. Do you think 

that was an achievable goal? Do you think it was a wise goal? Do 

you think that was a wise investment? And, do you think it 

worked? 

Secretary DONOVAN. Senator, to be honest, I am not familiar 

with the report that you are quoting from. I would be happy to look 

at it and tell you my assessment. Should I be confirmed, I would 

love to spend more time talking to you about it, but I cannot give 

you an answer about the report—— 

Senator JOHNSON. The point I am making is we have spent about $26 billion on green energy jobs, created about 2,300 jobs at a cost 

of about $11.5 million per job. And, from my standpoint, if you real-
21 

ly want to take a look at what is happening in terms of this economy and why it is not growing as rapidly as it really should be is 

the onerous nature of the size of government, a regulatory environment that, according to the Competitive Enterprise Institute, cost 

$1.8 trillion per year to comply with, and OMB is right at the center of trying to rein in that regulatory burden. I wish you all the 

best luck in trying to do just that. Thank you. 

Secretary DONOVAN. Thank you. 

Chairman CARPER. Senator Johnson, thanks for those questions. 

Senator Begich, you are next, then Senator Landrieu and Senator Tester. 

OPENING STATEMENT OF SENATOR BEGICH 

Senator BEGICH. Thank you very much, and thank you for being 

here and appreciate you being here. 

I am going to actually have some questions, but I am going to 

wrap back around at the end, if I have time, on the energy 

issue—— 

Secretary DONOVAN. Yes. 

Senator BEGICH [continuing]. Because I come from a State that 

understands energy, not only from an oil and gas perspective, but 

we also will be 50 percent renewable energy for State consumption 

by 2025. No other State will meet us in that kind of percentage. 

We are a leader in this area. So, I am going to hold that for a second, but I want to be specific on some Alaska issues. 

As we talked about, one was the Transportation Security Administration (TSA) and the current recent proposal to eliminate the 

definition of round-trip in assessing Passenger Security Fees. This, 

in my view, exceeds the Congressional intention which was laid out 

in the Budget Control Act. And, what this means for Alaska, as you 

know, you have been there. You know it is not one flight and you 

land. It is multiple flights. And, because of that, it adds additional 

burden, especially in our rural areas, on the cost. 

And, I would hope and ask if you would be willing to take a look 

at this, because I think the intent of Congress is not what I think 

now the regulation is attempting to do, which is basically grab 

every dime they can from every time you stop. And, in Alaska, in 

a rural State, and, I can tell you, I am sure from Senator Tester’s 

State, Montana has the same situation, that I think this would be 

a concern, and would you be willing to kind of reexamine this and 

work with us to make sure this does not do damage to rural travel 

and the ability for people to afford to move from one place to the 

other. 

Secretary DONOVAN. Senator, as you mentioned, I have spent 

time with you, many others on the Committee, seeing the needs in 

rural communities, in Native American communities, and should I 

be confirmed, I would be happy to sit down with you, talk more 

about this, and see if there is a resolution we could reach. 

Senator BEGICH. Fantastic, and especially, 80 percent of our communities are not accessible by road, so the air is the road for us, 

so it is important. 

Secretary DONOVAN. Hooper Bay, good example. 

Senator BEGICH. Hooper Bay is a great example. Thank you for, 

again, coming up. 
22 

Another one which you talked about was the Department of Labor’s (DOL) recent proposed change to the Employment Retirement 

Security Act, or their view of what they have the role and responsibility there, which would have a direct impact to 401(k)’s and the 

Individual Retirement Accounts (IRAs) and how they are managed 

and how average, everyday Americans utilize their broker or their 

individual manager of those accounts. And, it seems they are chasing a problem that does not exist. This is now under the Securities 

and Exchange Commission (SEC) and they manage it well. I am 

not getting a lot of complaints about the people they are working 

with, but for some reason, the Department of Labor sees this as an 

opportunity, which I do not know what that means. It just seems 

to me another layer of bureaucracy that would impact smaller investors who invest in an IRA or 401(k). 

And, again, we talked about this, and again, I just want to put 

on the record, are you willing to take a look at that and see if there 

is an opportunity to understand and see if maybe there is an overreach by the Department of Labor here. 

Secretary DONOVAN. If I am confirmed, Senator, I would look forward to sitting down to talk to you more about it. 

Senator BEGICH. Fantastic. The other one, and we have been 

doing a lot of work in my Subcommittee on Emergency Management, Intergovernmental Relations, and the District of Columbia 

here on getting agencies to look at how monies can be utilized, and 

there was some discussion here about post-Sandy and some of the 

review we have done through my Subcommittee here on trying to 

make sure agencies have flexibility on using their funds, not just 

for response, but mitigation, which seems to be the better use longterm. I know there is a short-term always, disaster, we have to 

deal with it—— 

Secretary DONOVAN. Yes. 

Senator BEGICH [continuing]. But, really, the front end is the 

more important, mitigation. And, OMB has a huge role here by policy guidance in how agencies can be more flexible. 

Based on your experience on Hurricane Sandy and your work 

that you have now, is this an area that you will look at and try 

to help us understand what we can do to make a better use of our 

Federal resource here? 

Secretary DONOVAN. Senator, I think you put your finger on 

something that is enormously critical. And, just to sort of boil it all 

down, we now have very good evidence that for every dollar we 

spend on mitigation, on making communities safer, we save four 

dollars the next time a storm comes. So, this not only saves lives, 

it saves taxpayer dollars, and I think there are a range of things, 

not only that we can do, that we are doing, much of it coming out 

of the work that we did on the Sandy Recovery Task Force, starting with how do we get families and communities the best information about what risks are. 

I think the Federal Government is in a unique position to have 

the best science available for communities, and we have done that 

in transparent ways, creating websites that a family can go and 

click and figure out what the risk is on their street, to their home, 

50, 100 years into the future, but also, frankly, working to figure 

out where the government can get out of the way on this. At times, 
23 

we found that many of the Federal agencies had different standards about how we should rebuild, and so we created for Hurricane 

Sandy a single, consistent standard that cut across all the rebuilding programs, as much as we could under existing laws, and that 

just makes life a lot easier as a family is rebuilding, not have to 

understand what four different agencies require, but actually that 

there is a single, simple standard. 

Senator BEGICH. Very good. We will work with you in that arena, 

because I think it is an important opportunity. 

The other last thing that I will do—if I have seconds left, I will 

say something about the energy—but, I do want to have a conversation at some point with you in regards to revenue sharing on 

the Outer Continental Shelf. The Gulf States receive it. Alaska 

does not. We have legislation pending. OMB is always concerned, 

because they always want the money, but we also know the impact 

on Outer Continental Shelf development of oil and gas is felt by 

communities that are attached to it. And, so, we will work with you 

on that. I just more want to put it on your radar screen. I did not 

have time the last time when we talked. I forgot to kind of put that 

on the list. I think it is pretty important not only for Alaska, but 

other Coastal States that are dealing with Outer Continental Shelf 

oil and gas development. 

Let me, if I can—and I just will make a general comment. You 

do not necessarily need to respond. I understand my colleague’s 

concern about investment, but, when you think about the military 

who invested in the Internet, I am sure it was not a moneymaker 

back then. They probably were investing because they had to because of communication capacity and new technology. Well, today, 

it spawned enormous amounts of business. 

Renewable and alternative energy, as I said, for Alaska, we are 

an oil and gas State, but we also are going to be a 50 percent renewable energy by 2025. The State of Alaska has put, literally, 

hundreds of millions of dollars in this investment because we know 

it is the right thing, because the more you get off of energy from 

foreign countries that hate us means we get more money staying 

in our economy here, no matter what the mix of energy profile is. 

And, so, when I hear these arguments that it is almost, like, a 

waste of investment, it is not a waste of investment if we are turning around, not spending money with people who hate us, running 

two trillion-dollar wars trying to defend oil and gas issues overseas. 

It makes sense long-term. So, I would love to have—I am using you 

as a conduit here, but I would love to have that debate, because 

we spend a lot of money, a lot of lives, protecting oil and gas and 

energy sources around the world when the more we diversify our 

base here, the better off it is. And, it does produce jobs. It produces 

opportunity and new innovation. 

So, I thank you for your time. Thank you for allowing me to rant 

there for a minute. Thank you, Mr. Chairman. 

Secretary DONOVAN. Thank you, Senator. 

Chairman CARPER. Thank you for serving as a conduit for Senator Begich and others. 

All right. Senator Landrieu is next. She has stepped out. Senator 

Tester, and then Senator Baldwin. 
24 

OPENING STATEMENT OF SENATOR TESTER 

Senator TESTER. Thank you, Mr. Chairman. 

Chairman CARPER. Senator Tester. 

Senator TESTER. Thank you, Mr. Chairman, and I want to thank 

you for being here today, Shaun, and it is great to see your family. 

Secretary DONOVAN. Thank you. 

Senator TESTER. I just want to echo what some have said today, 

and that is I appreciate your service, but I really appreciate your 

family sharing you with us. You are one of the smart guys around 

here, and I do not mean that in the negative sense. I mean it in 

a positive sense. [Laughter.] 

And, I think you have vision and I think we are blessed to have 

you as a part of the Administration, so thank you very much. 

Secretary DONOVAN. Senator, thank you. I appreciate it. 

Senator TESTER. I want to talk about duplication for a second because I think it is one of those things that frustrates all of us, but 

sometimes we are the ones that create it. Now, let me give you an 

example, and these are all programs I love. 

You are the Secretary of HUD that deals with housing. We have 

a housing program in the U.S. Department of Agriculture (USDA). 

We have a housing program in VA. From my perspective, I am a 

rural guy, so USDA is a good thing, and I love veterans, and so 

the VA is a good thing. But, the truth is, if we want true accountability, it ought to be consolidated under one lid. 

How do we do that, and how do you encourage—or, you can pick 

another one, too. There are more egregious ones out there than 

housing. But, how do you, as OMB Director, how do you get us to 

a point where you can impact the duplication and impact Congress 

to reducing duplication? 

Secretary DONOVAN. Well, Senator, let me take an example that 

we have, and I mentioned earlier 13 different rental assistance programs at HUD. We have actually worked with our Appropriations 

Committee and have started to make real progress. 

Another example is on homelessness. We actually worked with 

GAO. They came to us with a report that looked at homelessness 

programs across the Federal Government, and we agreed. We have 

an Interagency Council on Homelessness, 19 different agencies represented. We have very clear metrics and goals for what we are 

trying to achieve, and because of that, this is where I think OMB 

can be very helpful in leading measuring success and being able to 

say not just there are too many programs, but which are the programs that are actually achieving success. 

What they found was that at HUD, the homelessness programs 

were actually more integrated, and working with Congress, we actually got some streamlining through the Homeless Emergency Assistance and Rapid Transition to Housing (HEARTH) Act of our 

homeless programs. But, there was a food program at the Federal 

Emergency Management Agency (FEMA), an emergency food program, that was basically going to shelters. It was not just being 

used for food, but that was the primary, and their recommendation 

was it is not as effective, in their view. Could we basically consolidate it with the Continuum of Care—that is what we call our programs at HUD. We liked what they said in their report. We 

thought it made sense. We have actually proposed in our budget 
25 

this year to take that program from FEMA and consolidate it into 

the work that we are doing at HUD. 

So, I think that is exactly the way it should work. You have to 

measure it, find out what is successful, and OMB can help drive 

that coordination because it has a unique perch to look across Federal agencies rather than being in a particular silo. 

To be frank, the challenge, we have talked about this—that you 

find is, every program has its supporters. 

Senator TESTER. That is correct. 

Secretary DONOVAN. Sometimes, there are different Committees—— 

Senator TESTER. Yes. 

Secretary DONOVAN [continuing]. As in this case, where you 

have—and, I think there is no substitute for the leadership of OMB 

and the agencies rolling up their sleeves, sitting down with Congress, and working those issues hard. But, I also think—and I 

would love to get your advice—we have to find ways to build more 

Democratic and Republican support, bipartisan support, for those 

kind of changes. And, I think what we can do on our side in the 

Administration is make sure that we are publicizing, making it 

very apparent what is working and what is not. 

Senator TESTER. Yes. 

Secretary DONOVAN. That is why I am a big believer in the transparency this Committee has worked on. But, the political obstacles 

are real and, your advice on how we overcome those would be helpful, too. 

Senator TESTER. Well, I wish that I had all the answers. I can 

tell you that I think that you can make a difference. I appreciate 

what you have just said. I think that recommendations from OMB 

on possible ways that we can make government more efficient, 

more effective—— 

Secretary DONOVAN. Yes. 

Senator TESTER [continuing]. And get more of the dollars we 

spend to the ground, I think, is critically important for us. 

In another area, yesterday, Senator Portman and I chaired a 

Committee meeting on information technology (IT) investments. 

We spend a lot of dough—Senator Baldwin was there, too—we 

spend a lot of money on IT, some of it with success, a lot of it without much success. The coordination is getting better, but it certainly is not where I believe it needs to be between agencies. Such 

things as the Dashboard at OMB—— 

Secretary DONOVAN. Yes. 

Senator TESTER [continuing]. The IT Council, all those things are 

good. I mean, how do you envision, as OMB Director, assuming you 

get confirmed, how do you envision your position between the agencies, empowering them to coordinate better? 

Secretary DONOVAN. So, this is an area—and I appreciate your 

work on it, Senator, your focus on it—our IT investments are some 

of the largest and most important investments that we make, and 

through my own experience, not just at HUD but in other leadership positions in the private sector, as well, they are also some of 

the places where it is easiest to go wrong. 

And, to give you the example I had, I came in. We were in the 

middle of a major reinvention of our financial systems at HUD. It 
26 

was behind schedule. It was over budget. We had spent about $100 

million, close to that, already, and, frankly, it did not look likely 

it was going to get us the results that we had wanted, and this had 

started almost 10 years before I had arrived. 

And, so, what was incredibly helpful is through the PortfolioStat 

process, OMB brought us ideas, and the shared services model in 

particular. We are now, to use the technical term, the poster child 

at HUD for shared services. We are in the process of migrating our 

entire financial systems over to Treasury. Starting by the first of 

the fiscal year, we will have the first piece of that system moved 

over. And, it is not a model—I would not have known that the Bureau of Fiscal Services at Treasury was really good at this, but 

they have credit reform programs. They do a lot of the things that 

we do at HUD, so it is a similar sort of financial system. And, we 

are going to get a better product, faster, at lower cost, than if we 

continued pursuing our own reinvention of our system. 

So, I am a big believer that OMB can play a very important role 

because I have lived it. I have seen it. And, we are now in the process of pursuing this shared services venture. 

Senator TESTER. I appreciate that work and appreciate the—I 

was going to ask another question about security clearances. My 

time is up, but we will get to that—— 

Chairman CARPER. Go ahead. Just make it brief, if you would. 

Go ahead. 

Senator TESTER. Really? OK. Well, I am somebody who thinks we 

have too many people with security clearances, and I am also somebody that thinks that the kind of due diligence that is necessary 

to give those security clearances is somewhat lacking. We contract 

a lot of the work out, not a lot of oversight, from my perspective. 

And, I could be wrong on that. Actually, I hope I am wrong, but 

I do not think the record bears that out. 

As OMB Director, what role do you see yourself playing in the 

security clearance platform, if that is what you want to call it, and 

what role do you see us—what role can you play—— 

Secretary DONOVAN. Yes. 

Senator TESTER [continuing]. Allowing us to make the necessary 

reforms? 

Secretary DONOVAN. Well, first of all, Senator, I think you are already playing a very constructive role. I know you have a number 

of pieces of legislation in this area that you put together, and I, 

should I be confirmed, I look forward to working with you specifically on those. 

Where I am encouraged by this is the 120-day review that the 

President ordered that was completed in March, I think, is a very 

good sort of analysis of the problem and starting point. I know that 

OMB is working with agencies to get detailed action plans as part 

of the priority goal setting process. And, in fact, the fact that this 

is one of our 15 priority goals across the whole government, I 

think, is an indication that it is really important to us. 

The thing that I think, of the many things that we are working 

on, the thing that seems most important in the work that I have 

done to sort of get up to speed on this over the last few weeks is 

that we have to have a process that does continuous evaluation, 

right. We have this big backlog in our security clearances, right. 
27 

But, even if we could catch up on that, the idea that you are only 

checking once every year, once every 5 years, given the technology 

that we have today, just does not make sense. 

And, so, how we move to a continuous evaluation process, where 

you have an automated way to check information, combined with 

working with State and local actors who may have—there may be 

a problem that an employee runs into with an arrest or something 

like that. If you do not have those access to those records—— 

Senator TESTER. That is correct. 

Secretary DONOVAN [continuing]. In real time, you are just not 

going to find stuff. So, that combination of automated data systems 

to do continuous evaluation with better data sharing, I think those, 

from what I have learned so far—you are more of an expert than 

I am on this—feel to me like critical things that we can do to move 

forward on this. 

Senator TESTER. Just really quickly—thank you, Mr. Chairman— 

I wish you the best in the confirmation. I wish you the best in this 

job. As you know, you have a standing invitation to come to Montana. You can bring your family, too. We would actually rather 

have them come than you. [Laughter.] 

But, because we will put your kids to work. [Laughter.] 

But, the truth is, you have a lot of work to do here in Washington, D.C., but I hope you have the opportunity to get around the 

country to be able to continue seeing the challenges that are out 

there, because I think it is important. So, thank you. Thank you 

very much. 

Secretary DONOVAN. Well, I appreciate it. I will just say with my 

sons here that it is an important way they will earn their allowance. [Laughter.] 

But, I have been waiting—now that Milo has turned 15 and he 

has passed me in height, I think he will be a much more productive 

worker on the ranch than he would have been a few years ago. 

[Laughter.] 

Senator TESTER. He can pick bales. That is good. [Laughter.] 

Chairman CARPER. All right. Senator Baldwin. 

OPENING STATEMENT OF SENATOR BALDWIN 

Senator BALDWIN. Thank you, Mr. Chairman. 

I want to thank you for also meeting with me, and I know you 

did with many Members of the Committee, prior to this hearing. 

Secretary DONOVAN. My pleasure. 

Senator BALDWIN. We had a chance to talk quite specifically 

about three issues that concern me a lot. But, I want to say that 

the thing that I took away from our meeting was a phrase that you 

shared with us in your opening statement today, that you do not 

necessarily like your job every day, but you love it every day. And, 

I tend to be a pretty hopeful and optimistic person myself, but 

when we ended up talking about the very specific things that I 

brought to your attention, those are the things that, that I do not 

like. 

And, so, I do want to actually talk through the same three topics, 

but perhaps in a sort of broader sense, because you have not been 

confirmed yet, so you are not necessarily getting around to the details of working on these issues, but I want to know what you can 
28 

do when you are confirmed, should you be confirmed, and what 

OMB can do and what sort of tools you can bring to these issues. 

And, the first one relates to a land transfer issue in the State 

of Wisconsin, one that has been pending for nearly 17 years. And, 

I had a chance to work on it during my 14 years in the House, and, 

of course, I am continuing to work on it now. But, it, unfortunately, 

has been slowed by a difference between the Department of Defense and the Department of the Interior relating to a land transfer 

to a third party, a Tribe in the State of Wisconsin. 

I have engaged extensively with both Departments and it just 

does not seem like any are willing to take their heels out of the— 

they have dug their heels in. What can OMB do, as Office of Management and Budget, to prod, push, bring to resolution—because 

this is not the only such issue that has been pending for many 

years beyond what is rationale and should be expected. 

Secretary DONOVAN. Senator, as you mentioned, we talked briefly 

about this, and should I be confirmed, I, as I said to you the other 

day, look forward to talking to you more and trying to figure out 

how this might be resolved. It is hard for me to comment specifically—— 

Senator BALDWIN. Yes—— 

Secretary DONOVAN. But more broadly, to go to your question, 

my experience, issues like this come up at HUD where different 

parts of HUD might be in disagreement, and my general experience has been—and I think if you talk to my team, they would tell 

you, I can be pretty impatient about this stuff—that what you have 

to do is get everybody in the same room and figure out that everybody is communicating. 

What I often find is that these problems come down to an issue 

of, the interpretation—it is like a game of telephone—is not necessarily the same. Get everybody in the same room and push to see 

if there are creative ways. I often find that if you are just in a view 

of, this is the way we have always done it, or, this is the way we 

have done it before, but looking for possible ways creatively to solve 

problems, you can often come up with a solution that—it may not 

be perfect, but it works. 

And the other thing, to be frank, is that what I often find sometimes is that agencies do not want to deliver disappointing news. 

If we really cannot do something, if there really is a statutory restriction against doing something, we owe it to you, to every Member of Congress, to come back and say, here is where the situation 

is, right. And, I have no idea on this issue—— 

Senator BALDWIN. Right we have not gotten into that level of detail—— 

Secretary DONOVAN [continuing]. But, that communication and 

cooperation and being able to get back quickly, whatever the news 

is, to communicate it, I feel like, is something that I would want 

to prioritize at OMB, if I am confirmed. 

Senator BALDWIN. Well, I appreciate your commitment to give attention to this. It is enormously frustrating, and it is one of those 

things that, I think, gives government, in general, a bad reputation. Seventeen years is unacceptable to all involved, and we really 

have not heard satisfactory answers, and I do not think it is a mat-
29 

ter of giving somebody hard news or bad news. It is intractability 

that, in this case, is just unacceptable. 

I wanted to talk about the U.S. Forest Service budget and the 

issue of fire borrowing. Right now, as we have seen a lengthening 

of the fire season in the United States, as we have seen more extreme fire events, we have seen the movement of the Forest Service 

budget from the things that they anticipate doing on an annual 

basis to respond to the emergencies that seem to come up with 

much greater regularity. And, it is, in fact, making it much more 

difficult to do the very things that the Forest Service might do to 

prevent forest fires in the future, to manage and maintain healthy 

forests. It is certainly something that we are seeing have significant events in Wisconsin. I know in the Western States, this is 

very significant. 

Well, I know that we many of us on this Committee, actually, 

have sponsored a bill that would allow for the most extreme fire 

events to be funded through disaster spending rather than the Forest Service account. The President’s budget for 2015 incorporates 

that proposal. So, I guess I would ask you, if confirmed, what can 

OMB do to see this through, and what impact does fire borrowing 

have, in your observation, on the Forest Service’s ability to do what 

it is supposed to do? 

Secretary DONOVAN. Yes. I am glad you raised this, Senator, because I think it is an important issue and it is one where I am 

hopeful that there can be bipartisan progress on it. I know that it 

is important to many other Members of the Committee, as well, 

and thank you for your leadership on it. 

The cap adjustment proposal that you referenced, I think, makes 

a lot of sense in a number of ways. First, it would expand the ability of the cap adjustment to cover the kinds of forest fire fighting, 

particularly the most extreme fires. One percent of the fires account, typically, for about 30 percent of the costs, and those are the 

kind of extreme examples that we really ought to be creating some 

flexibility around. But, it would do so by offsetting the cap for others. So, it does not increase overall the cap adjustment, and I think 

that is a fiscally responsible thing to do. 

But, as you well know—we talked about this, and we just talked 

about it with Senator Begich—often, we force ourselves into shortsighted decisions. In this case, we are reducing the kinds of smart 

things that would actually limit forest fires going forward, clearing 

out kind of low-lying vegetation in forests that can help spark these 

fires, a whole range of things. If we are not doing that kind of regular maintenance we create greater risk of forest fires going forward. And, so, by making this cap adjustment, we are actually 

going to ensure that we are doing the kind of smart things in the 

short term that are going to limit these costs going forward. It is 

exactly the kind of mitigation, smart mitigation measures that we 

talked about before with Senator Begich. 

So, I am very encouraged by your focus on this and I appreciate 

it. 

Senator BEGICH. Thank you. 

Chairman CARPER. Senator Baldwin, thanks very much for joining us today. 
30 

Senator Pryor is not here. Senator McCain had to leave. Senator 

Portman, you would be next. I do not know if you were here in the 

room when, in answer to a question about the DATA Act from Dr. 

Coburn—I know you and Senator Warner spent a lot of time on the 

DATA Act. You just need to know, the Secretary trashed it pretty 

badly—— [Laughter.] 

And, now it is your time to ask questions. Go ahead. 

OPENING STATEMENT OF SENATOR PORTMAN 

Senator PORTMAN. What a set-up. It just gives me another question, number 25 now, not just 24. [Laughter.] 

Well, first of all, thanks for coming before us and being willing 

to go through confirmation again. We had a nice opportunity to 

talk about this job that I once held and that is, as I told you, the 

worst job in government, but also the best job in government. It 

can be both, but it is a very important job, I think, some times 

over. 

In Administration, as we saw in the last and this Administration, people change back and forth, but the continuity is the management people there and the budget people there who are career 

professionals who do an amazing job, and I was honored to lead 

them, and a lot of them are still there. I know that will be the best 

part of your job. 

The worst part will be having to work with us, probably. But, 

there are lots of things that I would like to talk to you about today. 

I do not have time for all of them. I guess a big one is just understanding that you are now in a cabinet agency. Your job is going 

to be very different, and I know you acknowledge that and understand it. Let me give you an example. 

During your tenure at HUD, the paperwork burden has more 

than doubled on the American economy. In 2008, HUD regulations 

produced 27 million hours of paperwork. Today, that number is 58 

million hours of paperwork. At the end of 2013, HUD’s paperwork 

burden imposed a $1.7 billion cost on the economy. I think a lot 

of that is Dodd-Frank, probably about half of it. 

Now, at OMB, you are going to be the primary enforcer of the 

Paperwork Reduction Act, so I hope you are prepared to change 

your focus a little bit. It is always said that the OMB job is the 

‘‘Dr. No’’ job. That certainly was my experience. But, since I assume you have committed today to put the ‘‘M’’ back in OMB, 

which is what every new OMB Director says, I hope you also focus 

on this issue of Management: paperwork and regulations. 

In particular, there is a great opportunity with the DATA Act, 

since the Chairman mentioned it, to move quickly on making the 

data that is available to the public and to you, as a manager, more 

uniform. Standardize it. Ensure that you have the kind of transparency and visibility. What you do not know, you cannot manage. 

I know, earlier, there was a comment made that it is very difficult 

to manage something that you cannot measure. Well, the DATA 

Act is all about that. It is about measuring things accurately and 

uniformly across government. 

We do think it is a really important bill. Senator Warner and I 

worked on this for a few years and came up with what we thought 

was a very realistic and practical timeline for implementation. I 
31 

have to say, what I have heard from OMB since the DATA Act 

passed the Senate and the House about a month ago has not been 

encouraging. Instead of committing to meet the deadlines in the 

law, OMB has committed to, and I quote, ‘‘implementing its requirements based on current funding and timeframes that permits.’’ Not very encouraging. 

So, we left 3 years for implementation for parts of it. The uniform Federal financial data would not be made available to the 

public until May 2017. And, I tell you what, if you are not committed at OMB to that timeframe, it will never happen. You have 

to drive that. 

So, I am looking for a commitment from you today that you will 

drive it and America and you, as a manager will finally be able to 

see in detail how the government spends our hard-earned tax dollars. 

I did this when I was Director because I had to implement what 

was called the Federal Funding Accounting and Transparency Act 

(FFATA), a great acronym—— [Laughter.] 

Federal Funding Accountability and Transparency Act. It was actually Tom Coburn and Barack Obama who introduced that legislation, and it put all grants and contracts online over a certain 

threshold, and the DATA Act really is building on that to be able 

to track and report on Federal financial information more accurately. 

And, so I understand that it is a challenge, because I went 

through this, and the only way to have it work is if you drive it 

from the top. And, it has to be a huge priority of yours personally 

and of the agency. So, I guess I would—I know you are going to 

say to me, appropriated funds might not be there. They were not 

for me, either, but there are appropriated funds for Federal management, Federal financial management, in particular, and I just 

believe that a sustained leadership focus is going to be required. 

Will this be a priority of yours, implementing the DATA Act 

under your leadership, and do you think you can meet the DATA 

Act implementation day one priority that is critical to the timely 

implementation? 

Secretary DONOVAN. Senator, I commit to you, it will be a priority of mine. For me, the whole question of knowing what success 

looks like, measuring it, you cannot do that without good data. You 

talked about personal leadership—I, personally, attended every single HUDStat meeting that we have had over the last 51⁄2 years. We 

created HUDStat and I attended every one of those meetings because I believe strongly in what you said, that it is about personal 

leadership and you need to take that kind of personal role to demonstrate the importance and to create work across the agencies. 

I also will make sure that I am not giving you answers without 

knowing the facts, and this is a significant undertaking and I do 

want to make sure, if I am confirmed, that I dig into this quickly 

and be able to come back and talk to you about implementation, 

what it looks like and what we can do on that, because I take it— 

this will be one of my highest priorities, is not just the implementation of the Act itself, but also, more broadly speaking, how do we 

make government more evidence-based, more focused on data, and 

I want to do that. 
32 

I do want to take a moment, at some risk, to disagree with you 

on two things. One is that I am not going to promise to put the 

‘‘M’’ back in OMB because I think Secretary Burwell has done that, 

and—— 

Senator PORTMAN. Did you say that? [Laughter.] 

I think I said it. I am going to put the ‘‘M’’ back in OMB. So—— 

Secretary DONOVAN. I think it is going to be continuing the focus. 

Senator PORTMAN. Yes. 

Secretary DONOVAN. I think, not only Sylvia, but also Beth, has 

done a good job working with all of you. And, I am going to disagree that dealing with this Committee is going to be the toughest 

part of the job. I do not think that is true, and I particularly look 

forward to getting your advice and guidance, given your personal 

experience. 

Senator PORTMAN. Two other quick ones on the regulatory front. 

We do not have time to go into it in detail, but one is independent 

agencies. As you know, about 25 percent of the new rules are coming from independent agencies. There is legislation that is bipartisan here on the Hill that says, let us apply the cost-benefit analysis in an appropriate way to independent agencies. Senator Warner and I have been working on that for some time. Senator Pryor 

and I have worked on that—— 

Secretary DONOVAN. Yes. 

Senator PORTMAN [continuing]. In the larger Regulatory Accountability Act, really important. I just met with a bunch of manufacturers and they were talking about some of these agencies that 

have these acronyms like SEC and Federal Energy Regulatory 

Commission (FERC) and others. And, so, we want to work with you 

on that. 

And then on permitting, America just keeps falling behind in 

terms of permitting. Again, I just met with some folks that volunteered to me just moments ago, it is tougher to get investment here 

because investors are looking around the globe, and they look at 

America and they say, gosh, it is going to take 4 or 5 years to get 

this energy project up and going. It might be a wind farm, it might 

be oil and gas development, it might be just a commercial shopping 

center. And, so, they look elsewhere because of these permits and 

the problems with permitting. Sometimes, there are 34 Federal 

permits, sometimes seriatim. You have to get through one, then the 

other, on some of these energy projects, for instance. So, we hope 

you will work with us on that, too. That is a bill that Senator 

McCaskill and I have that is a common sense bill that would get 

at this permitting issue. 

And then, finally, thank you for your help with the City Gospel 

Mission. As you know, this is a great organization in Cincinnati. 

There is also one in Cleveland that has a similar issue. And, it is 

a distressing issue because this homeless shelter is not able to 

move forward right now with certainty because of a HUD deed restriction that has posed an obstacle to, really, an innovative and 

expanded way to deal with the homeless in our area of Cincinnati, 

Ohio. So, I know we are getting close to resolving this issue. I 

would ask for your sustained focus on that as we try to get across 

the finish line. 

Secretary DONOVAN. You will have it. 
33 

Senator PORTMAN. Thank you. Thank you, Mr. Chairman. 

Chairman CARPER. Thank you, Senator Portman. 

Last, but not least, Senator Levin. 

OPENING STATEMENT OF SENATOR LEVIN 

Senator LEVIN. Thank you. Let me have 10 seconds. 

[Pause.] 

First, let me welcome you and your family, and I think your two 

boys deserve some kind of a special award this weekend—— 

[Laughter.] 

For not only staying awake, but looking interested. [Laughter.] 

Secretary DONOVAN. They love data, too. [Laughter.] 

Senator LEVIN. I think they probably love baseball a heck of a 

lot more. [Laughter.] 

At any rate, thanks for your ongoing service to the country. 

I also, by the way, have an interest in the independent agencies 

and the cost-benefit analysis as it applies to them and whether 

they should be bound by the exact same cost-benefit analyses that 

all the other agencies are bound by and I would appreciate your 

thoughts about the independence of those agencies, whether or not 

they need a measure of independence from the President and, 

frankly, from political pressure. 

Secretary DONOVAN. Senator, this is an area where, obviously, 

given, in particular, the challenges we had in the housing market 

and its connection to the broader financial system, I have spent a 

lot of time with not just the Federal Housing Finance Agency 

(FHFA) that oversees Fannie and Freddie, the Federal Deposit Insurance Corporation (FDIC), SEC, a range of other independent 

agencies, now the Consumer Financial Protection Board (CFPB). 

So, I have gained a healthy respect for the importance of the independence of those agencies. 

I do think there are roles that OMB can play in creating best 

practices, in sharing information and technical assistance. But, I do 

have a healthy respect for the independence of those agencies and 

the importance of respecting that independence. 

Senator LEVIN. Well, I hope that you are confirmed and confirmed promptly, and shortly after you are confirmed, because 

there is a bill which I believe is pending on this subject, I think 

it would be important for us to have your views after you are confirmed on this. Can you commit to give us that quick review of that 

bill? You know the bill number, I think—do you? Or you can—— 

Secretary DONOVAN. I have it in my notes—— 

Senator LEVIN. You know the bill I am referring to? 

Secretary DONOVAN. I do—— 

Senator LEVIN. If you could give us that, to the Committee, after 

you are confirmed, after you have had a chance to look at that bill, 

but promptly, because I think it is on the calendar. Could you do 

that? 

Secretary DONOVAN. Should I be confirmed, I look forward to 

spending time with OMB staff quickly and getting up to speed on 

this, yes. 

Senator LEVIN. All right. And, then letting the Committee know 

what your views are? 

Secretary DONOVAN. Yes, sir. 
34 

Senator LEVIN. In terms of, by the way, the discretionary spending in this country, I was trying to get a quick bunch of numbers 

here, since we are all numbers people today. On this question of 

discretionary spending, you and Senator Johnson had a conversation about it, and the way it looks to me is that in terms of even 

nominal dollars, at least in the last 5 years, we are spending fewer 

nominal dollars than we did 5 years ago, and less than any years 

since then. And, in terms of percentage of GDP, which you were 

also talking about, it is a smaller percentage of GDP since 2007. 

Does that sound about right to you? 

Secretary DONOVAN. Yes. And, in fact, if you look out through the 

President’s budget proposal, we would end up in 2024 with the lowest discretionary spending as a percentage of our economy in more 

than 50 years. So, this is not just a recent trend, it is a historical 

trend, as well. 

Senator LEVIN. And it is something which, I think, is creating all 

kinds of problems in terms of economic growth, as you point out. 

But, that kind of leads me to the subject which you and I have 

spent some time talking about, which is the question of tax avoidance, tax loopholes, corporate revenue, particularly, going down as 

a result of the use of a number of tax avoidance gimmicks, mechanisms, schemes, loopholes, inversions, you name it. 

I think that this Committee has really led the way in a number 

of ways at looking at wasteful spending, and it should be high up 

on the radar and I am all for it, because when we can identify it, 

we ought to get rid of it. 

But, there are also tax loopholes, which are wasteful, as well, 

which do not serve any economic purpose except tax avoidance. We 

have mechanisms which the most profitable corporations in the 

world use to avoid paying taxes. Inversion is one of the mechanisms. We have a way in which companies can transfer their income to themselves in tax havens and avoid paying taxes. We have 

mechanisms by which profitable companies transfer their intellectual property to themselves in tax havens and avoid paying taxes. 

We have a tax loophole called carried interest where the folks that 

run hedge funds pay a lower tax rate than people who work for 

them. 

There is a lot of debate over deductions and credits which serve 

purposes, and I understand that. But, I think we ought to distinguish between those kind of tax credits and those kind of deductions and the loopholes which do not have any economic purpose 

except to avoid paying taxes. 

And, the question is, when it comes to trying to fill some of the 

gaps in our economy—we are going to run out of highway funds in 

a couple of months, I mean, we are going to stop highway projects 

right in the middle of the project unless we do something about it, 

so we have a great debate going on as to how do we fill that gap. 

We have a big problem with trying to do the right thing for our 

veterans. We have a need for some additional funds. At least, in 

the Senate bill, we sure do. The House bill does not have any additional funds. 

So, we have a need for additional revenues. I think it is clear, 

both in terms of the number on Gross Domestic Product, the discretionary spending as a percentage of our economy, and the reduction 
35 

in defense spending, as well, by the way, which is very troubling 

for me as Chairman of the Armed Services Committee, impact on 

our security. 

And, so, my question of you is whether or not you see the closing 

of at least some of the tax loopholes as a way of raising revenue, 

or should we look at closing even those kind of loopholes, the ones 

that serve no economic purpose except tax avoidance, as exclusively 

a way, if we do close them, of reducing rates? 

Secretary DONOVAN. So, Senator, the President is committed to 

comprehensive business tax reform. We think that is an important 

goal and that there should be a continued focus on a bipartisan 

basis on achieving that. At the same time, the President has proposed in his budget that we use one-time revenues from reform of 

our business tax code to invest in infrastructure, to go precisely to 

your point about making critical investments. 

And, should I be confirmed, I would certainly be open to working 

with you and others in the Senate on ways that we can eliminate 

wasteful spending in our tax code in shorter-term ways that would 

not necessarily be part of a comprehensive business tax reform. So, 

we would be open to those conversations. 

Senator LEVIN. Thank you. Good luck to you and we thank your 

family for their contribution that they make to your contribution. 

Secretary DONOVAN. And thank you for your service, Senator. 

Chairman CARPER. Secretary Donovan, I have just a couple of 

more questions to ask, and I am going to ask you just to respond 

to them very briefly. I am supposed to be somewhere else right 

now. You probably are, too. 

Secretary DONOVAN. I appreciate your staying. 

Chairman CARPER. The 800-pound gorilla in the room on deficit 

reduction, I believe, is entitlement programs. A big piece of that is 

health care, a big, major driver. And, I am going to submit some 

questions for the record, but I would just ask that you be especially 

mindful, that I am sure you are, the one piece of that is improper 

payments. 

And, if you look at the improper payments—for those who do not 

know what improper payments are, that is not necessarily fraud, 

but it is just mistaken payments, overpayments, mistakes, and so 

forth. And, I think we saw improper payments peak out at about 

$120 billion 4 years ago. They have dropped steadily to about $106, 

$108 billion today. But, we saw the number for Medicare actually 

rise over the last several years, and I am not sure—maybe my staff 

can tell me what it is, but it seems like it is around $45 billion. 

It has gone up, not down. 

I would just ask that you be especially mindful—and, we had an 

ongoing discussion, dialogue with Sylvia Mathews Burwell on this 

and Dr. Coburn and I have been all over this issue for the last decade, and he and I will continue it this year, but we really want to 

focus on that with you and your folks, assuming you are confirmed. 

After this hearing, you just never know, though, so we will see. 

[Laughter.] 

The other thing I want to mention, Dan Tangherlini and Beth 

Cobert sat right here with us 2 months ago. We had a wonderful 

hearing on the President’s management agenda. And, one of the 

items we talked a lot about was strategic sourcing and how—my 
36 

1The biographical and financial questionnaire for Mr. Donovan can be found in the Appendix 

on page 49. 

recollection is that some of the major companies in the world and 

in this country, private sector companies, I think they manage as 

much as 80, 90 percent of their contract spending through strategic 

sourcing and they save money. In the Federal Government, I am 

told that major Federal agencies examined by GAO only managed 

about 5 percent of their contract spending through strategic 

sourcing. That is dramatic. It may be unrealistic that we could get 

to 80 or 90, but we could sure do better than five, and we are going 

to be counting on you to do that and to work with Mr. Tangherlini 

and others, with Beth and your own shop, to get us there. 

There will be some other questions that my colleagues and I will 

have. 

[Pause.] 

My staff had given me a script here to use as the closing statement. [Laughter.] 

I just look to your sons back there. You guys, you have been here 

for the whole thing and you can give your Dad, like, one thumb up, 

or maybe two if you think he has really been exceptional. What do 

you think? 

I see two—OK, I see a couple. That is good. [Laughter.] 

OK. All right. 

Secretary DONOVAN. The check is in the mail, boys. [Laughter.] 

Chairman CARPER. Well, I want to thank you all for showing up. 

I think one of my favorite sayings in life, showing up is about 80 

percent of it. So, thank you for showing up and lending your support. 

You have a beautiful family, and I know you are very proud of 

them and I suspect they are fairly proud of you, as well. Dr. 

Coburn admonished you that there are priorities, as well, and I am 

sure that you are mindful of that. It is hard to find that balance. 

People ask me, what is the hardest thing in my life, in my work 

here and as Governor and so forth, and it is always finding the 

right balance between family and all the responsibilities there and 

trying to be a good public servant. 

I appreciate you going through this process. We are grateful to 

your family for their willingness to share you a bit longer with the 

people of our country. 

And, with that, I will say that the nominee, I am told, has filed 

responses to biographical and financial questionnaires, answered 

prehearing questions submitted by the Committee, and had his financial statements reviewed by the Office of Government Ethics. 

Without objection, this information will be made a part of the hearing record,1 with the exception of the financial data, which are on 

file and available for public inspection in the Committee offices. 

The hearing record will remain open, until noon tomorrow, for 

the submission of statements and questions for the record (QFRs). 

Dr. Coburn had mentioned to me his belief that before we vote 

here in the Committee, that the QFRs should be completed so, I 

just ask that you try to do that and we will look forward to, hopefully, having a business meeting soon and being able to work with 

you in this new capacity. 
37 

With that, I bid you all a good day and this Committee is adjourned. Thank you. 

Secretary DONOVAN. Thank you, Senator. 

[Whereupon, at 12:05 p.m., the Committee was adjourned.] 

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