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ADMINISTRATION EFFORTS ON LINE–BY–LINE 

BUDGET REVIEW 

HEARING 

BEFORE THE

SUBCOMMITTEE ON OVERSIGHT AND 

INVESTIGATIONS 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

OCTOBER 5, 2011 

Serial No. 112–92 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 

COMMITTEE ON ENERGY AND COMMERCE 

FRED UPTON, Michigan 

Chairman 

JOE BARTON, Texas 

Chairman Emeritus 

CLIFF STEARNS, Florida 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

JOSEPH R. PITTS, Pennsylvania 

MARY BONO MACK, California 

GREG WALDEN, Oregon 

LEE TERRY, Nebraska 

MIKE ROGERS, Michigan 

SUE WILKINS MYRICK, North Carolina 

Vice Chairman 

JOHN SULLIVAN, Oklahoma 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

BRIAN P. BILBRAY, California 

CHARLES F. BASS, New Hampshire 

PHIL GINGREY, Georgia 

STEVE SCALISE, Louisiana 

ROBERT E. LATTA, Ohio 

CATHY MCMORRIS RODGERS, Washington 

GREGG HARPER, Mississippi 

LEONARD LANCE, New Jersey 

BILL CASSIDY, Louisiana 

BRETT GUTHRIE, Kentucky 

PETE OLSON, Texas 

DAVID B. MCKINLEY, West Virginia 

CORY GARDNER, Colorado 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

H. MORGAN GRIFFITH, Virginia 

HENRY A. WAXMAN, California 

Ranking Member 

JOHN D. DINGELL, Michigan 

Chairman Emeritus 

EDWARD J. MARKEY, Massachusetts 

EDOLPHUS TOWNS, New York 

FRANK PALLONE, JR., New Jersey 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

JANICE D. SCHAKOWSKY, Illinois 

CHARLES A. GONZALEZ, Texas 

JAY INSLEE, Washington 

TAMMY BALDWIN, Wisconsin 

MIKE ROSS, Arkansas 

JIM MATHESON, Utah 

G.K. BUTTERFIELD, North Carolina 

JOHN BARROW, Georgia 

DORIS O. MATSUI, California 

DONNA M. CHRISTENSEN, Virgin Islands 

KATHY CASTOR, Florida 

SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

CLIFF STEARNS, Florida 

Chairman 

LEE TERRY, Nebraska 

SUE WILKINS MYRICK, North Carolina 

JOHN SULLIVAN, Oklahoma 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

BRIAN P. BILBRAY, California 

PHIL GINGREY, Georgia 

STEVE SCALISE, Louisiana 

CORY GARDNER, Colorado 

H. MORGAN GRIFFITH, Virginia 

JOE BARTON, Texas 

FRED UPTON, Michigan (ex officio) 

DIANA DEGETTE, Colorado 

Ranking Member 

JANICE D. SCHAKOWSKY, Illinois 

MIKE ROSS, Arkansas 

KATHY CASTOR, Florida 

EDWARD J. MARKEY, Massachusetts 

GENE GREEN, Texas 

DONNA M. CHRISTENSEN, Virgin Islands 

JOHN D. DINGELL, Michigan 

HENRY A. WAXMAN, California (ex officio) 

(II) 

(III) 

C O N T E N T S 

Page 

Hon. Cliff Stearns, a Representative in Congress from the State of Florida, 

opening statement ................................................................................................ 1 

Prepared statement .......................................................................................... 4 

Hon. Diana DeGette, a Representative in Congress from the State of Colorado, opening statement ...................................................................................... 7 

Hon. Joe Barton, a Representative in Congress from the State of Texas, 

opening statement ................................................................................................ 8 

Hon. Marsha Blackburn, a Representative in Congress from the State of 

Tennessee, opening statement ............................................................................ 9 

Hon. Lee Terry, a Representative in Congress from the State of Nebraska, 

opening statement ................................................................................................ 9 

Hon. H. Morgan Griffith, a Representative in Congress from the Commonwealth of Virginia, opening statement ............................................................... 10 

Hon. Henry A. Waxman, a Representative in Congress from the State of 

California, opening statement ............................................................................. 10 

Hon. Fred Upton, a Representative in Congress from the State of Michigan, 

prepared statement .............................................................................................. 214 

WITNESSES

Clinton T. Brass, Analyst in Government Organization and Management, 

Congressional Research Service .......................................................................... 25 

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

Answers to submitted question 1 .....................................................................

Answer to request from Mr. Griffith ............................................................... 89 

Thomas A. Schatz, President, Citizens Against Government Waste .................. 101 

Prepared statement .......................................................................................... 104 

Tad DeHaven, Budget Analyst, Cato Institute ..................................................... 125 

Prepared statement .......................................................................................... 127 

Patrick L. Knudsen, Grover M. Hermann Senior Fellow in Federal Budgetary 

Affairs, The Heritage Foundation ....................................................................... 135 

Prepared statement .......................................................................................... 137 

Veronique de Rugy, Senior Research Fellow, Mercatus Center, George Mason 

University ............................................................................................................. 147 

Prepared statement .......................................................................................... 149 

Andrew Moylan, Vice President, Government Affairs, National Taxpayers 

Union ..................................................................................................................... 152 

Prepared statement .......................................................................................... 154 

Gary Kalman, Director, Federal Legislative Office, U.S. Public Interest Research Group ........................................................................................................ 160 

Prepared statement .......................................................................................... 162 

Stanley E. Collender, Partner, Qorvis Communications ...................................... 185 

Prepared statement .......................................................................................... 187 

Scott Lilly, Senior Fellow, Center for American Progress .................................... 192 

Prepared statement .......................................................................................... 194 

SUBMITTED MATERIAL

Majority memorandum, dated October 3, 2011, submitted by Mr. Stearns ....... 13 

Letter, dated September 30, 2011, from Allie Neill, Acting Associate Director 

for Legislative Affairs, Office of Management and Budget, to Mr. Upton 

and Mr. Stearns, submitted by Mr. Stearns ...................................................... 22 

1Mr. Brass did not answer a submitted question for the record from Mr. 

Terry by the time of printing. 

(1) 

ADMINISTRATION EFFORTS ON LINE–BY–LINE 

BUDGET REVIEW 

WEDNESDAY, OCTOBER 5, 2011 

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS, COMMITTEE ON ENERGY AND COMMERCE, Washington, DC. 

The subcommittee met, pursuant to call, at 9:34 a.m., in room 

2123 of the Rayburn House Office Building, Hon. Cliff Stearns 

(chairman of the subcommittee) presiding. 

Members present: Representatives Stearns, Terry, Sullivan, Murphy, Blackburn, Bilbray, Scalise, Gardner, Griffith, Barton, 

DeGette, Schakowsky, Green, Christensen, and Waxman (ex officio). 

Staff present: Carl Anderson, Counsel, Oversight; Mike Gruber, 

Senior Policy Advisor; Todd Harrison, Chief Counsel, Oversight 

and Investigations; Katie Novaria, Legislative Clerk; Alan 

Slobodin, Deputy Chief Counsel, Oversight; Sam Spector, Counsel, 

Oversight; Peter Spencer, Professional Staff Member, Oversight; 

Kristin Amerling, Democratic Chief Counsel and Oversight Staff 

Director; Alvin Banks, Democratic Investigator; Brian Cohen, 

Democratic Investigations Staff Director and Senior Policy Advisor; 

and Anne Tindall, Democratic Counsel. 

OPENING STATEMENT OF HON. CLIFF STEARNS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF FLORIDA 

Mr. STEARNS. Good morning, everybody. 

We convene this hearing to find out what this administration has 

done to implement the President’s repeated promise to conduct a 

page-by-page, line-by-line review of the Federal budget and what 

more can be done. The aim of such a review is to eliminate unnecessary, duplicative, or wasteful government programs and to cut 

costs and create new efficiencies. 

The urgent need for such a review, of course, is obvious. Under 

the Obama administration, Federal spending has increased by 

more than 20 percent a year, or more than $600 billion per year. 

Under the Obama administration, the size of the cumulative Federal debt has increased about 40 percent, from $10.6 trillion to 

$14.8 trillion, and, frankly, it continues to climb. 

President Obama promised a fresh, in-depth, and exhaustive review of the Federal budget. What measurable actions have been 

taken, and of course, what are the results? 

Unfortunately, the Office of Management and Budget, the agency 

in charge of the line-by-line review, declined to provide a witness 

2 

today to testify to answer these questions. It is curious that OMB 

claims that it has no witness to testify on this issue when Jack 

Lew, the OMB Director, discussed line-by-line review in February 

2011 testimony before the House Budget Committee, and Jeffrey 

Zients, OMB’s Chief Performance Officer and Deputy Director for 

Management, is the official that President Obama linked to conducting the review. 

This line-by-line review has supposedly been a top priority for 

the Obama administration for the last 3 years. With that understanding, one would think there are things they would want to talk 

about and they would come today and testify. Unfortunately, they 

did not. 

This is not the first time during this Congress that OMB has refused to send a witness. Jeffrey Zients, the Deputy Director for 

Management, failed to appear at the June 24th hearing on 

Solyndra, and OMB is the only agency to require a subpoena from 

this committee because of its refusal to provide documents. One 

can’t help but wonder whether OMB’s refusal to provide a witness 

is because they don’t have anything to say or because they are 

upset that their stonewalling tactics in the Solyndra investigation 

have not worked. 

In a letter to the committee, OMB noted that a major accomplishment of its effort to comb through the budget line by line has 

been the identification of innumerable so-called ‘‘terminations, reductions, and savings.’’ However, as Clint Brass, a Congressional 

Research Service analyst, has confirmed,‘‘The Obama administration’s issuance of a volume like the Terminations, Reductions and 

Savings’’—or TRS is what it is called—‘‘document among a President’s budget proposals was not new.’’ ‘‘Generally speaking,’’ he 

continues, ‘‘these kinds of budget documents have been produced by 

Presidents dating back to President Ronald Reagan, if not before, 

in a variety of configurations.’’ 

The TRS document is, by nature, an inadequate tool for achieving the ambitious goal of line-by-line review. Aside from being nonexhaustive, there is no clear one-to-one correspondence between the 

line-by-line review and the proposals included in the TRS documents. In any event, the proposed $17 billion to be saved by the 

way of 121 cuts or restructurings to discretionary programs and 

mandatory spending in the fiscal year 2010 budget is not that impressive. In comparison, in fiscal year 2009, the Bush administration proposed double that amount, or $34 billion. Ultimately, the 

Obama administration’s proposed $17 billion in cuts, of which 

$11.5 billion was on the discretionary side of the budget, resulted 

in only $6.9 billion in cuts approved by Congress. 

Now, complicating things further, as Mr. Brass pointed out, 

‘‘Typically, these kinds of TRS documents have not been followed 

by subsequent publications that showed in detail the extent to 

which Congress adopted the President’s recommendations.’’ Thus, 

there is little proof of what the actual savings are. Also, it is not 

unusual for the budget authority behind these proposed terminations, reductions and savings to simply be transferred or consolidated elsewhere. More than offsetting any administration effort toward real progress in restoring fiscal discipline is the inconvenient 

fact that despite the cuts it has proposed thus far, Federal spendVerDate Aug 31 2005 14:15 Jul 16, 2013 Jkt 037690 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 F:\112-09~1\112-92~1 WAYNE
3 

ing is soaring and the budget deficit is exceeding over $1 trillion 

a year. As a share of gross domestic product, spending grew from 

18 percent in 2001 to 24 percent in 2011, while debt held by the 

public jumped from 33 percent to 67 percent. The Congressional 

Budget Office projects that without reforms, spending and debt will 

continue to rise for decades to come. No $17 billion or even $50 billion, for that matter, worth of proposed terminations, reductions 

and savings in any given year is enough to reverse this harmful 

trend. 

We need to find out the actual results from this review, build on 

ongoing initiatives, pursue new approaches to find more cuts and 

save more money. 

Today’s hearing can be a good start to help us deal more effectively with the enormous challenges of getting Federal spending 

under control. 

[The prepared statement of Mr. Stearns follows:] 

4 


81404.001

Opening Statement of the Honorable Cliff Stearns 

Chairman, Subcommittee on Oversight and Investigations 

Administration Efforts on Line-by-Line Budget Review 

October 5, 2011 

(As Prepared for Delivery) 

We convene this hearing to find out what this Administration has done to 

implement the President's repeated promise to conduct a "page by page, line by 

line" review of the federal budget and what more can be done. The aim of such a 

review is to eliminate unnecessary, duplicative, or wasteful government programs 

and to cut costs and create new efficiencies. 

The urgent need for such a review is obvious. Under the Obama 

Administration, federal spending has increased by more than 20 percent a year, or 

more than $600 billion per year. Under the Obama Administration, the size of the 

cumulative federal debt has increased about 40 percent, from $10.6 trillion to $14.8 

trillion, and it continues to climb. 

President Obama promised a fresh, in-depth, and exhaustive review of the 

federal budget. What measurable actions have been taken? What are the results? 

Unfortunately, the Office of Management and Budget, the agency in charge 

of the line-by-line review, declined to provide a witness to testifY here today to 

answer such questions. It is curious that OMB claims that it has no witness to 

testifY on this issue when Jack Lew, the OMB Director, discussed line-by-line 

review in February 2011 testimony before the House Budget Committee, and 

Jeffrey Zients, OMB's Chief Performance Officer and Deputy Director for 

Management, is the official that President Obama linked to conducting the review. 

This line-by-line review has supposedly been a top priority for the Obama 

Administration for the last three years. One would think there arc things they 

would want to talk about. 

However, this is not the first time during this Congress that OMB has 

refused to send a witness. Jeffrey Zients, the Deputy Director for Management, 

failed to appear at the June 24th hearing on Solyndra. And OMB is the only agency 

to require a subpoena from this Committee because of its refusal to provide 

documents. One can't help but wonder whether OMB's refusal to provide a 

witness is because they don't have anything to say or because they are upset that 

their stonewalling tactics in the Solyndra investigation haven't worked. 

Page 1 of3 
5 


81404.002

In a letter to the Committee, OMB noted that a major accomplishment of its 

effort to comb through the budget line-by-line has been the identification of 

innumerable so-called "terminations, reductions, and savings." However, as Clint 

Brass, a Congressional Research Service analyst has confirmed "[t]he Obama 

Administration's issuance of a volume like the [Terminations, Reductions, and 

Savings, or TRS] Document among a President's budget proposals was not new." 

"Generally speaking," Brass continues, "these kinds of budget documents have 

been produced by Presidents dating back to President Ronald Reagan, if not 

before, in a variety of configurations." 

The TRS Document is, by its nature, an inadequate tool for achieving the 

ambitious goal of line-by-line review. Aside from being non-exhaustive, there is 

no clear one-to-one correspondence between the line-by-line review and the 

proposals included in the TRS Documents. In any event, the proposed $17 billion 

to be saved by way of 121 cuts or restructurings to discretionary programs and 

mandatory spending in the fiscal year 20 I 0 budget is not that impressive. In 

comparison, in fiscal year 2009, the Bush Administration proposed double that 

amount, or $34 billion. Ultimately, the Obama Administration's proposed $17 

billion in cuts, of which $11.5 billion was on the discretionary side of the Budget, 

resulted in only $6.9 billion in cuts approved by Congress. 

Complicating things further, as Brass points out, "[t]ypically, these kinds of 

[TRS] documents ... have not been followed by subsequent publications that 

showed, in detail, the extent to which Congress adopted the President's 

recommendations." Thus, there is little proof of what the actual savings are. Also, 

it is not unusual for the budget authority behind these proposed terminations, 

reductions, and savings to simply be transferred or consolidated elsewhere. More 

than offsetting any Administration effort toward real progress in restoring fiscal 

discipline is the inconvcnient fact that despite the cuts it has proposed thus far, 

federal spending is soaring and the budget deficit is exceeding over $1 trillion per 

year. As a share of gross domestic product, spending grew from 18 percent in 

2001 to 24 percent in 2011, while debt held by the public jumped from 33 percent 

to 67 percent. The Congressional Budget Office projects that without reforms, 

spending and debt will continue to rise for decades to come. No $17 billion - or 

even $50 billion, for that matter - worth of proposed terminations, reductions, and 

savings in any given year is enough to reverse this harmful trend. 

We need to find out the actual results from this review, build on ongoing 

initiatives and pursue new approaches to find more cuts and save more money. 

Page 2 of3 
6 


81404.003

Today's hearing ean be a good start to help us deal more effectively with the 

enormous challenge of geuing fcdernl spending under cootroL 

Pagl.'3of3 
7 

Mr. STEARNS. I ask unanimous consent that the majority’s supplemental memo and attached letter from OMB be introduced into 

the record. 

Ms. DEGETTE. I will review and then I will let you know. 

Mr. STEARNS. All right. The gentlelady said they will review. 

With that, I recognize the distinguished lady from Colorado for 

her opening statement. 

OPENING STATEMENT OF HON. DIANA DEGETTE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF COLORADO 

Ms. DEGETTE. Thank you very much, Mr. Chairman. 

As we embark on this line-by-line budget review hearing series, 

I want to urge my colleagues to keep the important passages of the 

Constitution in mind, which I am sure they all remember since we 

read the Constitution at the beginning of this session of Congress. 

‘‘No money shall be drawn from the Treasury but in consequence 

of appropriations made by law,’’ and ‘‘The Congress shall have the 

power to lay and collect taxes and to borrow money on the credit 

of the United States.’’ These provisions of Article 1, clause 8, of our 

Constitution grant the power of the purse to Congress. That means 

that legislation to authorize the Nation’s fiscal path begins in Congress, and Congress is the steward of our Nation’s budget. 

I note these provisions because I believe if my colleagues on the 

other side of the aisle are going to use today’s hearing as a forum 

to express concern about whether the President and the administration have done a ‘‘line-by-line’’ review of the budget. They should 

have to answer whether they have done this review themselves. 

Right here next to me on the desk is the President’s fiscal year 

2012 budget proposal, the document that launches the Federal 

budget cycle and provides the President’s views on how Congress 

should develop budget legislation. It includes volumes on the budget, analytical perspectives, historical tables and an appendix of detailed budget estimates for each agency. I would like to ask my colleagues on the other side of the aisle, have you done a line-by-line 

review of these documents or of Congress’s budget? Have you done 

a line-by-line review of the proposal specifically regarding agencies 

under this committee’s jurisdiction? 

I am not asking these questions to suggest that oversight of the 

budget, particularly the agencies we oversee, is inappropriate. No 

one can dispute that Congress has a legitimate oversight role with 

respect to the administration’s budgeting process and decisions. 

Reigning in the deficit obviously should be a priority at both ends 

of Pennsylvania Avenue, and I also agree with the chairman that 

OMB should have sent a witness, and the minority told the administration as much. 

But the issue is not whether the President or even members of 

Congress have done a line-by-line review of the budget. Rather, 

Congress should be taking a close look at substantive questions relating to the budget. We should be asking, are we making appropriate expenditures to promote job creation, biomedical research 

and ensure important public health and safety protections for the 

American public. We should be asking whether we should be cutting the budget for unnecessary wars or duplicative programs. We 

8 

should be working to ensure that programs that serve the Nation’s 

neediest do not receive disproportionate cuts while subsidies to 

multibillion-dollar industries remain intact. 

I hope that today’s hearing will provide a constructive examination of the budget process under President Obama. To that end, let 

us review some basic facts. When President Obama took office, he 

inherited a deficit of over $1 trillion created in large part by two 

massive tax cuts, a new Medicare prescription drug program, not 

paid for, and wars in Afghanistan and Iraq, none of which was paid 

for on budget by the Bush administration. 

The Obama administration proposed a budget that would have 

cut this deficit in half by 2013. In his first two budgets, President 

Obama identified 120 terminations, reductions and savings totaling 

$20 billion in each year. His 2012 budget proposal proposed 211 

terminations, reductions and savings amounting to an estimated 

$33 billion in savings for 2012. These budgets were marked by a 

new level of transparency as well. For example, unlike his predecessor, who kept the war funding off the books, President Obama’s 

budget acknowledged the conflicts in Iraq and Afghanistan and 

that they had an impact on our Nation’s bottom line. 

Now, this approach stands in stark contrast to the approach of 

my friends on the other side of the aisle who would impose massive 

cuts on Medicare and Medicaid, balancing the budget on the backs 

of seniors, the poor and the middle class while cutting taxes for 

millionaires and billionaires. 

I look forward to hearing from our witnesses about how the 

budget process has been improved in the Obama administration 

and could be improved further, particularly with respect to budget 

issues affecting programs under the committee’s jurisdiction, and I 

hope that today’s discussion is fact-based and productive. I yield 

back. 

Mr. STEARNS. I thank the gentlelady, and I recognize the gentleman from Texas, Mr. Barton, for 2 minutes. 

Mr. BARTON. Thank you, Mr. Chairman. 

OPENING STATEMENT OF HON. JOE BARTON, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS 

As you know, there is a privacy hearing going on in another subcommittee, so I will have to, after I give an opening statement, go 

and attend to that. 

Mr. Chairman, nearly 3 years ago, then-President-elect Obama 

said, and this is a direct quote, ‘‘In these challenging times when 

we are facing both rising deficits and a sinking economy, budget reform is not an option; it is an imperative. We will go through our 

Federal budget page by page, line by line, eliminating programs we 

don’t need and insisting on those that we do operating a sensible, 

cost-effective way.’’ 

Mr. Chairman, here we are 3 years and $4 trillion of additional 

Federal debt later, and we still don’t have that line-by-line examination. However, House and Senate Democrats along with the 

President and his agency administrators appear to have rejected 

every effort to truly reform the budget, and as far as I can tell, are 

spending much more time increasing the financial and regulatory 

burden on the taxpayers of our Nation. 

9 

Today I hope that we can begin to uncover what, if anything, the 

President has done to truly reform our budget and get the Nation’s 

fiscal house in order. I want to echo your disappointment, Chairman Stearns, that the Office of Management and Budget could not 

supply a witness for today’s hearing. Perhaps they are too busy 

meeting with large political donors like those who encouraged the 

investment in the Solyndra loan guarantee to come before the Congress and tell the American people exactly where their tax dollars 

are going. 

With that, Mr. Chairman, I yield back. 

Mr. STEARNS. The gentlelady from Tennessee, Ms. Blackburn, is 

recognized for 2 minutes. 

OPENING STATEMENT OF HON. MARSHA BLACKBURN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TENNESSEE 

Mrs. BLACKBURN. Thank you, Mr. Chairman. I also am going to 

be back and forth with the privacy hearing, but unlike a lot of our 

colleagues who had great hope when President Obama stated that 

he would go through the budget line by line to eliminate wasteful 

and duplicative government, I was further encouraged when he 

stated in Executive Order 13571 that, and I’m quoting, ‘‘Government managers must learn from what is working in the private 

sector and apply these best practices to deliver services better, faster and at a lower cost.’’ 

Unfortunately, while this administration routinely repeats this 

line, they simultaneously force job creators, innovators and American taxpayers, hardworking American taxpayers to the very end 

of the line, only to pave the way for the golden era of government 

regulation. 

Furthermore, I have cause for concern that the President’s initiative since the man who oversaw it was Jeffery Zients, and we 

heard from him last week on the half-billion-dollar Solyndra loan. 

While Mr. Zients may not be present, it is my hope that we can 

assist him this morning in carrying out his stated goal on the June 

13, 2011, conference call when he said, and I am quoting, ‘‘to crack 

down on waste, step up oversight and hold bad actors accountable.’’ 

I yield back. 

Mr. STEARNS. The gentlelady yields back, and I recognize the 

gentleman from Nebraska. Mr. Terry is recognized for 2 minutes. 

OPENING STATEMENT OF HON. LEE TERRY, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEBRASKA 

Mr. TERRY. I appreciate that. 

Obviously, I think all of us are united in our effort to reduce the 

size of government to eliminate overlapping agency responsibilities, 

therefore, wasteful spending, abusive spending and simply just 

making sure that taxpayers have confidence that their money is 

being used wisely and efficiently, which they do not have that confidence today. So this effort could go a long ways in providing people confidence. 

I am disappointed that OMB does not have a representative here 

to show where we could work together, but also as the gentlelady 

from Colorado mentioned, if they are proud of their efforts, then I 

10 

want to hear what successes they have had and we could help 

them perhaps achieve them. There may be obstacles to implementing them within the Executive Branch that controls the agencies, and my fear is that that is why they aren’t here is because 

they would probably have to embarrass the Executive Branch for 

failing to follow through on the recommendations of those respective agencies. 

With that, I will yield back. 

Mr. STEARNS. The gentleman yields back, and the gentleman 

from Virginia, Mr. Griffith, has 35 seconds if he would like. 

OPENING STATEMENT OF HON. H. MORGAN GRIFFITH, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH 

OF VIRGINIA 

Mr. GRIFFITH. Thank you, Mr. Chairman. 

I would just say that I would like to see a line-by-line of the Executive Branch done by the Executive Branch but I also agree that 

it wouldn’t hurt for the Congressional offices to take a look line by 

line on their budgets as well. I think our country needs us working 

together to find every penny that we can find that would help with 

our national debt and deficit situation, and I yield back, Mr. Chairman. 

Mr. STEARNS. The gentleman yields back, and with that, I recognize the distinguished ranking member of the full committee, Mr. 

Waxman, for 5 minutes. 

OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

Mr. WAXMAN. Mr. Chairman, I am not sure what this hearing is 

all about. If it is about whether the Obama administration has 

scrutinized the Federal budget to eliminate wasteful spending, this 

is an important hearing and I support it. But if this hearing is a 

‘‘gotcha’’ hearing to examine whether the administration has actually done a line-by-line review of the Federal budget, I reject its 

premise. 

There is no question that the Obama administration has carefully examined the Federal budget to eliminate wasteful spending. 

The budget process each year involves close review by each agency 

of its spending needs. Through its terminations, reductions, and 

savings review, the Obama administration has recommended cuts 

in hundreds of programs totaling over $60 billion. 

But if the question is whether there has been a literal line-byline review of the Federal budget, which Republican members say 

the President promised, I am afraid my colleagues have misunderstood a figure of speech. The phrase ‘‘reading line by line’’ in American English is commonly understood to mean performing a careful 

review. Likewise, ‘‘meeting you halfway’’ in negotiations, which 

seems to be a forgotten art in this Congress, does not mean that 

you literally have to move your chairs closer together. And ‘‘bridging our differences’’, another devalued skill, does not involve major 

construction projects. 

And I know we are going to ‘‘get down to brass tacks’’ because 

our first witness is Mr. Brass, but ‘‘getting down to brass tacks’’ 

11 

doesn’t mean what some people might have thought it meant when 

the furniture industry developed the term ‘‘brass tacks.’’ It means 

getting down to the facts and reality. 

Well, these are all figures of speech, and I hope we have not arrived at the absolute bottom of political discourse in which the 

Oversight Subcommittee is checking to see if the President’s figures of speech are literally true. 

Unfortunately, I think the most important question we need to 

ask is why our budget system has become so dysfunctional. And 

the answer, I believe, will be found here in Congress, not in the 

White House. 

Let us take a brief look at how Republicans have handled the 

budget in this Congress. First there was the promise from the 

Speaker at the beginning of his term that there is not going to be 

any more omnibus appropriations bills. He told the American Enterprise Institute that he would do away with comprehensive bills. 

At another point he said that the House would do all separate appropriations bills and that 2,000-page bills are not in anyone’s interest. Yet today we are operating on the heels of a 4-day continuing resolution, which will be followed by a 6-week continuing 

resolution, which will be followed by an omnibus appropriation, if 

we are lucky. 

Then there was the debt ceiling standoff. Every Republican and 

Democratic economic and financial observer said that this ceiling 

had to be lifted to preserve the American credit rating and not to 

rattle the markets. Instead, the Republicans held the ceiling hostage until default was imminent, using it for negotiation leverage 

and headline value. 

And now there is the Super Committee. For members who say 

they want a line-by-line review of the budget and for a party that 

claims it doesn’t want omnibus bills because they are too big to review, it seems pretty strange that the Super Committee is the 

method that has been adopted. This process sweeps past all authorizing committees’ consideration and all amendments and input 

from members of Congress. If it is successful, the Super Committee 

will create a giant omnibus bill, bigger than any before, and give 

us perhaps 3 weeks to read it but not change it, not even to offer 

changes to it. If it fails, it will produce an across-the-board cut in 

programs that could be accomplished by a pocket calculator but 

that will reflect no public policy, no economic realities, and no 

sense of justice and fairness. 

Well, I hope the Super Committee process achieves positive results, but if we are really serious about ensuring sound fiscal policy 

for our Nation, Congress needs to take a long, hard look in the mirror. I believe that examining ways to meet halfway and bridge differences would take us a lot further than examining whether the 

President did a line-by-line budget review. 

I remember a conversation I had with my son when he was quite 

little, and we had to explain to him that ‘‘stopping on a dime’’ did 

not mean we literally stopped for a dime. There are figures of 

speech and expressions, and I am pleased now that the Oversight 

Subcommittee has become the arbiter of whether people are actually stopping on a dime, getting down to brass tacks, literally reading a budget line by line. This is a wonderful exercise and I only 

12 

wish the cameras were here so the American people could see what 

Congress has come to. 

And I think my time is now expired, so I will yield back. 

Mr. STEARNS. I thank the gentleman. 

I hope the gentleman will stay for the questions that I will have. 

I am going to actually show the video clip of the President mentioning—— 

Mr. WAXMAN. Nothing could make me more excited, Mr. Chairman. If I can do that, I will certainly try to get back. 

Mr. STEARNS. Yes, ‘‘line by line’’—— 

Mr. WAXMAN. But otherwise I am going to read the testimony 

line by line very carefully. 

Mr. STEARNS. Well, you wouldn’t want to miss the President 

mentioning ‘‘line by line,’’ and you will clearly understand his intent with this video clip. 

I ask unanimous consent again from the gentlelady that the majority’s supplemental memo and attached letter from OMB be introduced into the record. Without objection, the documents will be entered into the record. 

[The information follows:] 

13 


81404.004

THE COMMITTEE ON ENERGY AND COMMERCE 

MEMORANDUM 

October 3, 201 J 

TO: Members, Subcommittee on Oversight and Investigations 

FROM: Subcommittee on Oversight and Investigations Staff 

RE: Hearing on "Administration Efforts on Line-by-Line Budget Review" 

On Wednesday, October 5, 2011, at 9:30 a.m. in 2322 Rayburn House Office Building, 

the Subcommittee on Oversight and Investigations will hold a hearing entitled "Administration 

Efforts on Line-by-Line Budget Review." This hearing is the first in a series of hearings on lineby-line review of the federal budget. It will examine the Obama Administration's efforts, 

specifically as directed by the Office of Management and Budget (OMB), to implement the 

President's repeated commitment to conduct a "page by page, line by line"\ review of the federal 

budget to eliminate unnecessary, duplicative, or wasteful government programs and to cut costs 

and create new efficiencies in retained programs. 

I. WITNESSES 

Clinton T. Brass 

Analyst in Government Organization and Management 

Congressional Research Service 

Thomas A. Schatz 

President 

Citizens Against Government Waste 

1 President-elect Sarack Obama, OMS Announcement in Chicago, Illinois (Nov. 25, 2008) available at 

http://change.gov/newsroom/entry/president elect bar"ck obama announces office of management and budget 

dire!. 

2 The Committee extended a timely invitation to Jacob Lew, the Director of the Office of Management and Budget, 

to testifY at this hearing. OMB informed the Committee that Mr. Lew does not testifY before subcommittees and 

that given the OMB Deputy Director nominee had not been confirmed, OMB had no other official who could testify 

on this subject. 
14 


81404.005

Majority Memorandum for October 5, 2011, Oversight & Investigations Subcommittee Hearing 

Page 2 

Patrick L. Knudsen 

Grover M. Hermann Senior Fellow in Federal Budgetary Affairs 

The Heritage Foundation 

Veronique de Rugy 

Senior Research Fellow 

Mercatus Center, George Mason University 

Tad DeHaven 

Budget Analyst 

Cato Institute 

Andrew Moylan 

Vice President of Government Affairs 

National Taxpayers Union 

Gary Kalman 

Director, Federal Legislative Office 

U.S. PIRG 

Additional witnesses may be called at the discretion of the Majority. 

n. BACKGROUND 

The need for restoring fiscal responsibility to the federal government, especially in view 

of the current economic crisis, is obvious. Indeed, in translating the need for fiscal discipline 

into practice, President Obama has often touted his Administration's commitment to performing 

a "line by line" review of the federal budget to reduce unnecessary spending. In fact, from the 

transition to the Obama Administration in late-2008 until the present day, the imperative to 

perform a "line by line" budget review has been a guiding principle behind White House efforts 

to achieve fiscal responsibility and a crucial focus of OMB in particular. 3 

In announcing his selection of Peter Orszag to serve as Director of OMS on November 

25,2008, then President-elect Obama insisted that "we must be willing to shed the spending we 

don't [need]. ... That is why I will ask my team to think anew and act anew to meet our new 

challenges. We will go through our federal budget - page by page, line by line - eliminating 

those programs we don't need, and insisting that those we do operate in a sensible cost-effective 

way." 

Now, more than two years into the Administration, the President's stated commitment to 

conduct a fresh, exhaustive, and in-depth review of the federal budget has not flagged. In a 

3 http://www.whitehouse.gov/issues/fiscal. 

4 President-elect Barack Obama, OMB Announcement in Chicago, Illinois (Nov. 25, 2008) available at 

http://change.gov/newsroom!entry/president elect barack obama announces office of management and budget 

dire!. 
15 


81404.006

Majority Memorandum for October 5, 2011, Oversight & Investigations Subcommittee Hearing 

Page 3 

message accompanying the President's Budget for fiscal year 2012, the President reaffirmed his 

commitment to a thorough budget review process, noting that "we took many steps to reestablish fiscal responsibility ... [including] going line by line through the budget looking for 

outdated, ineffective or duplicative programs to cut or reform."s As recently as September 19, 

20 II, while delivering remarks on economic growth, the President reiterated the importance of 

crafting an approach to deficit reduction, enabling Washington "to live within its means," by way 

of combing through the budget, "line-by-line looking for waste." 

The Committee requested that the Congressional Research Service prepare a background 

memorandum evaluating the President's call for a "line by line" review of the federal budget and 

its relationship to the budget formulation process and the practices of past Administrations, as 

well as identifying policy options that Congress might consider to increase transparency and 

enhance credibility of presidential budget proposals. The resulting memorandum, entitled 

"Analysis of the Obama Administration's 'Line-by-Line' Budget Review," and authored by 

Clinton T. Brass, an Analyst in Government Organization and Management, is appended to this 

memorandum. 

III. ISSUES 

The following issues will be examined at the hearing: 

The extent to which the President and OMB honored the pledge of conducting a 

line-by-line budgetary review across the federal government. 

• The proposed cuts resulting from this review and how many were actually 

executed. 

• The potential for identifying further cuts from line-by-line budget review. 

Identification of characteristics of federal programs suggestive of waste, fraud, 

and abuse. 

IV. STAFF CONTACTS 

If you have any questions regarding this hearing, please contact Sam Spector or Carl 

Anderson with the Subcommittee on Oversight and Investigations staff at (202) 225-2927. 

Attachment 

5 President Barack Obama, The Budget Message of the President (Feb. 14,2011) available al 

http://www.whitehouse.gov/sites/defallltJliles/omb/assets!blldgetJ03 Presidents Message.pdf. 
16 


81404.007

l 

~ Congressional 

Z --k Research t ~ Service-------------------

MEMORANDUM September 28, 2011 

To: 

From: 

House Committee on Energy and Commerce 

Attention: Samuel J. Spector 

Subject: 

Clinton T. Brass, Analyst in Government Organization and Management, 7-4536 

Analysis of the Ohama Administration's "Line-hy-Line" Budget Review 

This memorandum responds to your request for an analysis of the Barack ObamaAdministration's "lineby-line" budget review and the relationship of the review to several topics. Specifically, you asked for 

analysis of what the line-by-line review appears to entail. You also requested analysis of how the review 

may relate to 

Administration proposals for "terminations, reductions, and savings"; 

the processes and institutions that are involved in formulating the President's annual 

budget request; and 

practices by past Administrations. 

Finally, you requested that the memorandum briefly identify policy options that Congress might consider 

to bring 

additional transparency to presidential budget proposals, including the outcomes of such 

proposals after Congress considers them; and 

enhanced credibility to representations that an Administration may make in these requests 

regarding how well an agency or program has performed-for example, assurance that 

the representation that an Administration makes portrays performance information fairly, 

in the context of an agency's or program's statutory mission. 

Line-by-Line Budget Review and its Relationship to Other Topics 

This section analyzes what the Obama Administration's line-by-line review appears to entail, and how the 

review may relate to other topics identified above. The analysis is based on statements that the 

Administration has used to characterize the line-by-line review, when the statements are viewed in 

context with institutions and processes that appear to have been involved, and also in context with longstanding budget practices in the executive branch. 

Several caveats arguably are necessary, however, when interpreting publicly available information that 

concerns this subject. It should be noted, for example, that formulation ofthe President's budget largely 

occurs outside of public view. As a consequence, it is frequently not possible to make definitive 

Congressional Uesearch Sen'ice 7-5700 www.crs.go() 
17 


81404.008

Congressional Research Service 

statements of how a process like this one is undertaken in any given year. In addition, the Office of 

Management and Budget (OMB) closely manages and monitors the budget formulation process on behalf 

of the President to, among other things, prevent so-called "pre-decisional" information from leaving the 

executive branch.l OMB also may attempt to influence agencies in how they characterize problems and 

priorities in public documents. 

Even with these qualifications, analysis suggests that the line-by-line review appears to relate closely to 

annual development of the President's budget proposals, and may be another name for the Obama 

Administration's perspective on how it formulates the President's budget.' 

The first mention of plans for a line-by-Iine review appeared during the 2008 presidential campaign and 

subsequent transition.' Tn a transition document, the incoming Administration characterized the upcoming 

review as "an exhaustive line-by-line review of the federal budget," in which the Administration would 

"work to eliminate government programs that are not performing, and demand that new initiatives be 

selected on the basis of their merits -- not through a political process that rewards lobbyists and campaign 

donors.,,4 This language suggested the review would focus not only on identifying budget cuts, but also 

more generally on how to allocate funds. During the transition, President-elect Obama announced that an 

OMB official, the deputy director for management, would have a role in the review.' 

It was not immediately clear what the incoming Administration considered a "line" to be. The federal 

appropriations process focuses on lump-sum appropriations that are enacted into law for specifically 

stated purposes. Multiple programs or organizations may be funded by a single lump-sum appropriation. 

Historically, public sector budgeting also has used a form of budgeting called "line item" budgeting, 

which shows allocations offunding for a program or agency that is broken out into categories ("line 

items") like salaries and rent. At the federal level, supporting information may be provided by an agency 

to the President and Congress that breaks down a budget account into so-called object classes, which are 

similar to these line item categories." It is possible that the "Iine-by-line" expression was intended to refer 

to object class information, but it also appears to be possible that the expression may have been 

metaphorical in nature, to communicate that an extensive review would oecur without omitting any 

program or agency from scrutiny. 

On February 26, 2009, OMB released an initial budget overview for FY201 0, acting on behalf of the 

President.7 A more detailed submission of proposals was expected later in the spring. 8 In the meantime, 

I u.s. Executive Office of the President, Office of Management and Budget (hereafter OMD), Circular No. A-Ii, Preparation, 

Submission, and E.xecution a/the Budget, Section 22, August 2011, at 

http://www. whitehouse,gov/omb/circulars_a 11_current.."year_all_toc, 

2 For discussion and analysis of how the line-by-line review has appeared to fit within the Obama Administration's agenda tor 

government performance, see CRS Congressional Distribution Memorandum, Obama Administration Agenda for Government 

Performance: Evolution and Related Issues/or Congress, January 19,2011, by Clinton T. Brass. 

] Ibid., pp. 4-5. 

4 Sec Obama-Biden Transition Team, "Agenda: Ethics," at http://change.gov/agendalethics_agendal. 

5 CRS Congressional Distribution Memorandum, Ohoma Administration Agenda for Government Per/<)rmance: Evolution and 

Related Issues/or Congress, January 19,2011, by Clinton T. Brass, p. 5. 

6 Object class infonnation for the President's most recent budget proposal may be found on OMB's website at 

http://www,whitehouse.gov/ombfbudget/Supplementa!, under the heading "Supporting DocUinents." 

7 OMB, A New Era a/Responsibility: Renewing America's Promise (Washington: GPO, February 26, 2009). 

8 The statutory deadline for ~mbmission of the President's annual budget proposal to Congress is no later than the first Monday in 

February each year. However, recent Presidents have delayed submitting their first full budget proposals until the spring 

following their inaugurJtions. For discussion, see CRS Report RS20752, Submission o/the President '.'I Budget in Transition 

Years, by Robert Keith. 
18 


81404.009

Congressional Research Service 

the overview described some of the new Administration's priorities and plans. The overview argued for 

"investing taxpayer dollars in efforts and programs with proven records of success and reallocating or 

cutting programs that do not work or whose benefits are not worth their cost.,,9 In support of that 

objective, the Administration said it had begun an "exhaustive line-by-line review of the Federal Budget." 

The Administration said it would release related proposals in the full FY20 I 0 Budget and in subsequent 

years. Meanwhile, the document identified several cuts and savings proposals that would be articulated in 

more detail in the Administration's full budget submission. 'o 

On May 7, 2009, the Administration issued a document that proposed program "terminations, reductions, 

and savings" (hereafter FY2010 TRS Document)." The Administration characterized the FY2010 TRS 

Document as "the first report" from the line-by-line effort, and also as identifying "programs that do not 

accomplish their intended objectives, are not efficient, or that replicate efforts being completed by another 

initiative and [as recommending] these programs for either termination or reduction."l2 By the 

Administration's count, the document proposed 121 cuts or restructurings totaling "approximately $17 

billion." Typically, each item corresponded to only a portion of the funding within a budget account. Each 

item in the volume included a brief justification, but in many cases did not provide detailed information 

about the relevant budget account or entity within an agency that was the subject of attention. OMB 

released a more detailed Budget Appendix the same day, with account-by-account budget proposals from 

the Administration, but generally without explicit reference to the FY201 0 TRS Document. Executive 

branch agencies also submitted to Congress their considerably more detailed budget justifications. 

Generally speaking, these justifications are reviewed and modified by OMB to be consistent with the 

President's policy preferences. 

In subsequent years, the Obama Administration released additional TRS Documents for the FY20 11 and 

FY20l2 budgets. In these and other Administration budget documents, references to the line-by-line 

review often referred to budget cutting proposals. However, it is not clear that there is necessarily a oneto-one correspondence between the line-by-line review and the proposals included in the TRS Documents. 

More generally, it is also not clear if there is a one-to-one correspondence between the line-by-line review 

and proposed cuts. As noted above, the Administration had made previous statements that the review also 

focused on allocation of funds, including allocations based on what it characterized as merit and 

evidence.13 In addition, proposals associated with the line-by-line review were sometimes couched as 

being driven not by performance, but by fiscally difficult times and a need for "shared sacrifices."" 

The Obama Administration's issuance of a volume like the TRS Document among a President's budget 

proposals was not new. For example, the George W. Bush Administration released similar documents for 

President Bush's FY2006, FY2007, FY2008, and FY2009 budget proposals. IS Generally speaking, these 

q OMB, A New Era of Responsibility: Renewing America's Promise, p. 34. 

10 Ibid .. pp. 34-36. 

II OMS, Terminations, Reductions, and Savings-Budget 0/ the US. Government, Fiscal Year 2010 (Washington: 2009). at 

http://wv¥w.gpoacccss.gov/usbudget/fyIO/browse.htrnl. 

!2 OMB Web page, "Terminations, Reductions and Savings," at http://W\Vw.whitehouse.gov/omb/budgetlTRS/. 

13 The Obama Administration has previously identified t\vo types of evidence: (1) evidence about "what works and what does 

not": and (2) evidence that "identifies the greatest needs and Challenges." See CRS Congressional Distribution Memorandum. 

Ohama Administration Agenda/or Government Performance: Evolution and Related Issues/or Congress, January 19,2011, by 

Clinton T. Brass, p. 25. 

140MB, Terminations, Reductions, and Savings-Budget a/the u.s. Government. Fiscal Year 2012 (Washington: 2011), p. 1, at 

http://www.whitchouse.gov/omblbudgetlTRS. 

15 Each was titled Major Savings and Reforms in the President's 200x Budget, with "'x" corresponding to the last digit of the 

relevant fiscal year. PDF versions of these volumes are located at http://www.gpoaeccss.gov/usbudget/browse.l1tml. 
19 


81404.010

Congressional Research SenJice 4 

kinds of budget documents have been produced by Presidents dating back to President Ronald Reagan, if 

not before, in a variety of configurations. 16 These documents have highlighted some, but not necessarily 

all, ofthe President's proposals to cut or modify federal programs and agencies, or to redirect priorities to 

align with the President's policy preferences." Typically, these kinds of documents also have not been 

followed by subsequent publications that showed, in detail, the extent to which Congress adopted the 

President's recommendations. Instead, most were silent on the topic of congressional actions, although a 

handful of them portrayed limited information about congressional actions from a previous year, without 

supporting detail. \8 One exception appears to have occurred in 2005, when the Bush Administration 

reportedly released to some media outlets a retrospective, 85-page volume indicating how Congress acted 

on the President's termination and reduction proposals for FY2006. 19 Apparently, this volume was not 

posted on a publicly accessible, government website. 

Representations that an Administration makes in these documents about the performance of an agency or 

program may provide infornJation that not all observers would perceive to be complete. Past experience in 

the federal budget process suggests that a Preside~t may make representations about performance from 

the perspective of one definition ofHsuccess," while omitting any mention of other perspectives.'· During 

the George W. Bush Administration, for example, federally supported vocational education could have 

been rated either effective or ineffective, depending on whether "success" was defined as increased 

earnings for education recipients, on one hand (effective), or increased incidence of seeking higher 

education, on the other (ineffective).'1 Consequently, when the President or his or her Administration 

make representations to Congress about performance for a particular policy or program, Congress may 

consider whether the definition of success that is being used, such as a goal, reflects congressional intent 

for the underlying program (e.g., as expressed in statute) and the major perspectives that the program's 

broader community of stakeholders may have, or reflects a less comprehensive perspective." 

16 for example, see U.S. President Ronald W. Reagan, America's New Beginning: A Program/or Economic Recovery, February 

18,1981 (Washington: GPO, 1981) [President Reagan's initial FYI982 budget revision, after his transition from the Jimmy 

Carter Administration]; (2) OMB, Fiscal Year 1982 Budget Revisions, Additional Details on Budget Savings (Washington: GPO, 

Apr. 1981) [a subsequent FYI982 budget revision J: (3) OMB, Budget 01 the United States Government, Fiscal Year 1983 

(Washington: GPO, 1982), pp. 5-42 and 5-106; and (4) OMB, Major Policy Initiatives, Fiscal Year 1987 (Washington: GPO, 

[1986]), pp. 91-110. 

17 Some proposals have appeared repeatedly in such compilations. 

18 The Obama Administration '5 FY20 J 2 TRS Document, for example, said "[w]hile recent administrations have seen between 15 

and 20 percent of their proposed discretionary cuts approved by the Congress, the Administration saw 60 percent of its proposed 

discretionary cuts become law for 20 to" (p. 1). The George W. Bush Administration's FY2007 Major Savings and Reforms 

document said with respect to FY2006 that "[tlhe Congress answered the call for restraint and accepted 89 of the President's 154 

proposals for a total savings of$6.5 billion" (p. 3). 

19 See blog entry for December 23,2005, titled '''WH Touts Budget Successes," at 

http://hotiineblog,nationaljoumal.com/archives/2005!12J. Related PDF mes, apparently released by the Bush Administration, are 

posted online at http://hotlinebJog.nationaljoumal.com./savel.pdf; and http://hotlineblog.nationaljoumaLcomlsave2.pdf '[he first 

document, ·'savel.pdf', was pO:'ited on the OMB website and is now archived at http://georgewbush~ 

whitehouse.archives.gov/omb/pubpress!2005!fact_sheet_restraining_spend_122205.pdf. 

20 See CRS Congressional Distribution Memorandum, Ohama Administration Agenda/or Government Performance: Evolution 

and Related Issues/or Congress, January 19, 2011, by Clinton T. Brass, p. 31. 

21 See discussion of contrasting definitions of success for tederally supported vocational education in CRS Report RL33301, 

Congress and Program Evaluation: An Overview of Randomized Controlled Trials (ReTs) and Related L<;sues, by Clinton T. 

Brass, Erin D. Williams, and Bias Nuiiez~Neto. 

22 Congress ha:'i indicated in statute that when agencies set goals and arguably thereby define success, the agencies are required to 

do so after consulting with Congress and stakeholders. Specifical1y, under the GPRA Modernization Act of2010 (P.L. 111-352), 

executive branch agencies are required to develop strategic plans that identifY goals and objectives. When developing these plans, 

the law states that an agency ><shall consult periodically with the Congress, including majority and minority views from the 

appropriate authorizing, appropriations, and oversight committees, and shall solicit and consider the views and suggestions of 

(continued .. ') 
20 


81404.011

Congressional Research Service 

Potential Issues for Congress 

Pursuant to your request, this section of the memorandum briefly identifies some policy options that 

Congress might consider to bring additional transparency to presidential budget proposals, including the 

outcomes of such proposals after Congress considers them, and enhanced credibility to representations 

that an Administration may make in such requests regarding how an agency or program has performed. 

CRS takes no position on whether these options are advisable, in comparison to the status quo. However, 

some potential advantages and disadvantages may be identified for each option that is considered. 

With enactment of the Budget and Accounting Act of 1921,23 now codified in part at 31 U.S.c. § 1105, 

Congress required the President to annually submit a consolidated budget proposal to Congress. This 

statute currently goes into some detail regarding the information that the President is required to sUbmit.2

' 

Separately, the GPRA Modernization Act of 201 0 (P.L. 111-352), which amended the Government 

Performance and Results Act of 1993 (P.L. 103-62), included a provision to require an agency to annually 

"identify low-priority program activities based on an analysis of their contribution to the mission and 

goals of the agency and include an evidence-basedjustification for designating a program activity as low 

priority" (codified at 31 U.S.c. § 1115(b)(1 0)). 

If Congress deemed it advisable to increase the transparency regarding presidential proposals to 

significantly increase, cut, or modify an existing program or activity and what happened afterward, 

Congress might consider options to bring additional structure to how the President, OMB, and agencies 

implement the statutes cited in the preceding paragraph. For example, Congress might require that an 

annual accounting of what Congress has done with prior year Administration proposals for major 

increases or decreases be included in future budget submissions, to help make congressional 

policymaking and oversight easier, when considering such proposals. 

To enhance the credibility of any such representations, Congress might also consider providing some 

structure regarding how agencies or OMB make determinations of "low-priority program activities." 

Among other options, the statute might be modified to require that an agency's analysis of a program's 

success be based on the agency's statutory mission and related congressional intent, to address the 

possibility that a presidential budget submission may include information about performance that 

primarily reflects the President's policy preferences and omits other information. The term "evidence" as 

used in the GPRA Modernization Act also might be further defined to produce information that may be 

helpful to Congress. 

Nevertheless, options such as these may be perceived as also bringing some disadvantages. For example, 

efforts to increase transparency or enhance the credibility of budget presentations may cause additional 

workload for agencies and OMB. In addition, the President may prefer to have his or her budget requests 

be as unencumbered as possible, with fewer statutory requirements from Congress. Consequently, options 

like these may entail difficult trade-offs. 

( ... continued) 

those entities potentially affected by or interested in such a plan" (124 Stat. 3867; 5 U.s.c. § 306(d». 

23 For more information about the act, see CRS Report RL30795, General Management Laws: A Compendium, by Clinton T. 

Brass et aI., pp. 98-102. 

24 The required components have increased in number over time. In a 1989 report, the General Accounting Office (now the 

Government Accountability Office) identified 53 such provisions. Sec U.S. General Accounting Office, Budget lssues: The 

President's Budget Submission. GAOl AFMD-90-35, October 1989, p. 5. 
21 


81404.012

Congressional Research Service 

These options are a sampling of a broader number of options that might be considered, if they were of 

further interest. In the meantime, I trust that this memorandum is responsive to your request. Please feel 

free to contact me if you have questions or would like to discuss any of these topics further. 
22 


81404.013

EXECUTIVE OFFICE OF THE PRESIDENT 

OFFICE OF MANAGEMENT AND BUDGET 

WASHINGTON, D.C. 20503 

The Honorable Fred Upton 

Chairman 

Committee on Energy and Commerce 

U.S. House of Representatives 

Washington, D.C. 20515 

The Honorable Cliff Steams 

Chairman 

September 30, 2011 

Subcommittee on Oversight and Investigations 

Committee on Energy and Commerce 

U.S. House of Representatives 

Washington, D.C. 20515 

Dear Chairman Upton and Chairman Steams: 

Thank you for your letter of September 15,2011 to Jacob Lew, the Director ofthe Oftice 

of Management and Budget (OMB), regarding the role ofOMB in preparing the Federal budget 

and the efforts of this Administration to restore fiscal discipline to the Federal Government. 

OMS's principal mission is to assist the President in overseeing the preparation of the 

Budget and to supervise its administration by executive branch agencies. In reviewing and 

preparing the Budget, OMB evaluates the effectiveness of agency programs, policies, and 

procedures, and sets funding priorities. Although this process has always included a careful 

review of budgetary proposals, OMB has also implemented several additional initiatives that are 

a key part of this Administration's line-by-line review of the Federal budget to fulfill the 

President's commitment to eliminate waste and reduce the deficit. These initiatives are 

described further below and in the enclosed materials. 

First and foremost, OMB's identification of outdated, ineffective, or duplicative 

programs has been a critical part of the Administration's effort to put the Nation on a sustainable 

fiscal path. Through our publication of the Terminations, Reductions, and Savings volume 

accompanying each Budget during this Administration, OMB has identified numerous programs 

that were not effective or efficient, or did a job already done by another program. This section 

also reflects tough, balanced cuts to worthy programs that had to be made in light of current 

fiscal challenges. As Director Lew explained in his testimony before the House Committee on 

the Budget in February of this year, in each of the first two budgets of this Administration, 120 

programs were identified for termination, reduction, and savings. Furthermore, after careful 

review in preparing the 2012 Budget, OMB identified 211 programs for termination, reduction, 

or savings. 
23 


81404.014

As you know, the President also called on his Cabinet members to identify $100 million 

in administrative savings within 90 days of his first Cabinet meeting in April 2009. Through this 

initiative, OMB worked with agencies to develop a set of proposals that would generate this 

additional amount of savings and that could be implemented in a short amount of time. Through 

this work, 77 proposals were identified, representing 15 separate agencies. These proposals 

amounted to $243 million in savings through 2010, and $265 million over 10 years. The 

enclosed materials provide additional information regarding the content of these proposals, 

including the agencies that proposed them and an itemization of the amount of savings by 

category. We have also enclosed a chapter from the 2011 Budget that articulates how agencies 

have continued to identify savings proposals. 

OMB has also implemented initiatives aimed at making the Federal Government operate 

more efficiently and effectively. In the last three budget submissions, a chapter in the Analytical 

Perspectives volume of the Budgetl has outlined the Administration's principles and strategies 

for improving performance and accountability, and delivering efficient and effective government 

services. Specifically, as part of the 2011 Budget guidance, OMB requested that agencies 

identify a limited number of high-priority performance goals. OMB asked agencies to choose 

ambitious goals that did not require additional resources or legislative action to achieve within an 

18- to 24-month period. In order to maintain accountability, OMB conducts quarterly reviews of 

agency progress on all priority goals. These reviews also provide an opportunity to identify 

areas for improvement and, where problems have arisen, to understand why and make sure 

agencies are addressing them. To illustrate how this initiative is implemented, enclosed within 

the materials we are providing is a list of agency priority goals covering 20 I 0 and 2011. Chapter 

7 of the Analytical Perspectives in the 2012 Budget also provides an updated description of 

agencies' priority goals. 

The Administration has also recognized the unique insights of frontline Federal 

employees and has enlisted their participation in helping to eliminate waste and inefficiency. To 

fulfill the President's commitment to involve government workers in the process of identifying 

efficiencies and savings as part of the annual budget process, OMB administers the President's 

SAVE (Securing Americans Value and Efficiency) Award. Under this initiative, Federal 

employees submit their ideas for creating a government that spends taxpayers' dollars efficiently 

and effectively; the best idea from all the submissions is then included in the Budget, along with 

other finalist ideas. For instance, in 2010 a Federal employee recommended an "opt-in" 

mechanism for receipt of hard copies of the Federal Register to replace the automatic delivery of 

approximately 8,000 hard copies. Because this idea had the potential to yield considerable 

savings associated with printing and posting, it is currently being implemented by this 

Administration. Enclosed is further information regarding the SAVE award and OMB's 

guidance on that subject. 

In addition to these initiatives, OMB's annual guidance to agencies on their proposed 

budget submissions under this Administration has further helped advance the President's 

commitment to more efficient and cost-effective governing. These guidance documents include 

specific funding targets, as well as direction on the agencies' creation and review of their budget 

and management plans. Most recently, OMB instructed agencies to provide options to support 

'In the 2010 Budget, Chapter 2 of the Analytical Perspective, entitled "Building a High Perfonning Government" 

provided this detail, and in the Budgets for 2011 and 2012, the description of this initiative was provided in Chapter 

7 entitled "Delivering High-Perfonnance Government." 
24 


81404.015

the President's commitment to cut waste and reorder priorities to achieve deficit reduction while 

investing in those areas critical to job creation and economic growth. In particular, agencies 

were instructed that their proposed budget submissions to OMB for 2013 should be at least 5 

percent below their agency's 2011 enacted discretionary appropriation. Furthermore, the 2013 

Budget guidance directed agencies to identify additional discretionary funding reductions that 

would bring the requests to a level that is at least 10 percent below their 20 II enacted 

discretionary appropriation. 

Finally, OMB's Circular No. A-II, entitled "Preparation, Submission, and Execution of 

the Budget," provides additional information responsive to your request. This circular is 

transmitted annually to the heads of executive departments and establishments and provides 

technical guidance on preparing the Budget and budget execution. Within this Circular are 

sections that include requirements for agency proposed budget submissions- including budget 

policy figures consistent with Administration priorities and the Government-wide budget 

formulation process-agency priority goals, performance indicators, and consideration of 

measures of efficiency and effectiveness. 

Your letter also asked for specific information regarding the efforts of the Department of 

Health and Human Services, the Department of Energy, the Department of Commerce, and the 

Environmental Protection Agency to eliminate waste and inefficiency. We are compiling this 

information and will be sending you an additional letter describing the efforts of these agencies 

next week. We also understand that you have written to these agencies directly, and this letter is 

not intended to be a response on their behalf. 

If any additional information on these issues would be helpful, we would be happy to 

schedule a follow up briefing with your staff. 

Enclosures 

cc: The Honorable Henry A. Waxman 

Ranking Member 

Committee on Energy and Commerce 

The Honorable Diana DeGette 

Ranking Member 

Sincerely, 

Allie Neill 

Acting Associate Director 

for Legislative Affairs 

Subcommittee on Oversight and Investigations 

Committee on Energy and Commerce 
25 

Mr. STEARNS. And with that, Mr. Brass, you are aware that the 

committee is holding an investigative hearing and when doing so 

has had the practice of taking testimony under oath. Do you have 

any objection to taking testimony under oath? 

Mr. BRASS. No, Mr. Chairman. 

Mr. STEARNS. The chair then advises you that under the rules of 

the House and the rules of the committee, you are entitled to be 

advised by counsel. Do you desire to be advised by counsel during 

your testimony today? 

Mr. BRASS. No, Mr. Chairman. 

Mr. STEARNS. In that case, if you would please rise and raise 

your right hand, I will swear you in. 

[Witness sworn.] 

Mr. STEARNS. Mr. Brass, you are now under oath and subject to 

the penalties set forth in Title XVIII, section 1001 of the United 

States Code. You may now give your 5-minute opening statement. 

Please proceed. 

STATEMENT OF CLINTON T. BRASS, ANALYST IN GOVERNMENT ORGANIZATION AND MANAGEMENT, CONGRESSIONAL 

RESEARCH SERVICE 

Mr. BRASS. Thank you. Chairman Stearns, Ranking Member 

DeGette, members of the subcommittee, thank you for the invitation to testify today. 

The subcommittee requested that CRS discuss the Obama administration’s line-by-line budget review and what it appears to entail. The subcommittee also requested that CRS identify some policy options that Congress might consider in this context. The CRS 

written statement goes into these subjects in detail, so I will provide some highlights. 

At the outset, several caveats arguably are necessary. It should 

be noted, for example, that formulation of the President’s budget 

largely occurs outside of public view. The Office of Management 

and Budget, OMB, closely manages this process to prevent socalled pre-decisional information from leaving the Executive 

Branch. As a consequence, it is frequently not possible to make definitive statements about a process like this one. Even with qualifications like these, analysis suggests that the line-by-line review 

appears to be closely related to the annual development of the 

President’s budget proposals. The line-by-line review may be another name for the Obama administration’s perspective on how it 

formulates the President’s budget. 

The first mention of this topic appeared during the 2008 Presidential campaign and subsequent transition. The incoming administration characterized the effort as an exhaustive line-by-line review of the budget in which the administration would focus not 

only on identifying cuts but also more generally on how to allocate 

funds. In February 2009, OMB released an initial budget overview 

for the upcoming fiscal year saying it had begun a line-by-line review and would release related proposals for that in subsequent fiscal years. In May 2009, the administration issued a document that 

included selected proposals for ‘‘terminations, reductions and savings.’’ The Obama administration’s issuance of a volume like this 

among a President’s budget proposals was not new. Presidents datVerDate Aug 31 2005 14:15 Jul 16, 2013 Jkt 037690 PO 00000 Frm 00029 Fmt 6633 Sfmt 6633 F:\112-09~1\112-92~1 WAYNE
26 

ing back to President Ronald Reagan, if not before, have occasionally produced similar documents. 

The Obama administration characterized the document as the 

first report from the line-by-line effort. On the same day, OMB released a more comprehensive budget appendix, account-by-account 

budget proposals. Agencies also submitted to Congress their much 

more detailed budget justifications. In subsequent years, the 

Obama administration released similar sets of documents. In these 

documents, representations that an administration makes about 

the performance of a program may provide information that not all 

observers would necessarily perceive to be complete or fair. Past 

experience suggests that a President may in some cases make representations about performance from the perspective of one definition of success while omitting any mention of other perspectives. 

Consequently, Congress may consider whether the definition of success that is being used reflects underlying authorizing statutes or 

Congressional intent. Congress has indicated in statute that when 

agencies set goals, and arguably, thereby define success, the agencies are first required to consult with Congress and stakeholders. 

Statutes like this may provide Congress with an opportunity to influence how agencies and OMB present information to Congress. 

The subcommittee also requested that CRS identify some policy 

options that Congress might consider to accomplish the following 

outcomes. These include bringing additional transparency to Presidential budget proposals including the outcomes of such proposals 

are Congress considers them, options to bring enhanced credibility 

to representations that an administration may make regarding an 

agency’s or program’s performance, and options to bring more effective engagement between Congress and agencies on topics like 

these. 

The CRS written statement mentions a few options, and CRS 

takes no position on whether changes from the status quo are advisable. However, some potential advantages and disadvantages 

might be explored if options were of further interest. In the meantime, I would be happy to answer any questions you may have. 

Thank you. 

[The prepared statement of Mr. Brass follows:] 

27 


81404.016

• 

r--Z==;~ ~ Congressional 

:;;;:::: -d Research , ~ Service--------------------

Statement of Clinton T. Brass 

Analyst in Government Organization and Management 

Congressional Research Service 

Before 

The Committee on Energy and Commerce 

Suhcommittee on Oversight and Investigations 

u.S. House of Representatives 

Octo her 5, 2011 

on 

"Administration Efforts on Line-by-Line Budget Review" 

Congressional Research Sen'ice 7-5700 wUJw.crs.gov 
28 


81404.017

Congressional Research Service 

One-Page Summary 

The Subcommittee requested that this testimony discuss the Barack ObamaAdministration's "line-byline" budget review and what it appears to entail. In addition, the Subcommittee expressed interest in 

discussion of how the line-by-line review may relate to additional topics. Finally, the Subcommittee 

requested that the testimony briefly identifY policy options that Congress might consider to bring 

additional transparency to presidential budget proposals; enhance the credibility ofthe representations 

about performance that an Administration may make in these requests; and engage with agencies more 

systematically and effectively on topics like these. 

2 

Several caveats arguably are necessary when interpreting publicly available information that concerns this 

subject. It should be noted, for example, that formulation ofthe President's budget largely occurs outside 

of public view. As a consequence, it is frequently not possible to make definitive statements of how a 

process like this one is undertaken in any given year. 

Even with these qualifications, analysis suggests that the line-by-line review appears to relate closely to 

annual development of the President's budget proposals, and may be another name for the Obama 

Administration's perspective on how it formulates the President's budget. The Administration has said the 

line-by-line review relates to specific budget cut proposals, but also has said the review relates more 

generally the Administration's views on how to allocate funds. The Obama Administration's issuance of a 

volume of proposed "terminations, reductions, and savings" among a President's budget proposals was 

not new. For example, the George W. Bush Administration released similar documents for President 

Bush's FY2006, FY2007, FY2008, and FY2009 budget proposals. 

The testimony identifies some policy options for Congress and potential advantages and disadvantages. 
29 


81404.018

Congressional Research Service 

Written Statement 

Chairman Stearns, Ranking Member DeGette, and Members of the Subcommittee: 

Thank you for inviting the Congressional Research Service to testify today at your Subcommittee's 

hearing. At CRS, I help cover several subjects, including the executive branch's role in the federal budget 

process, government performance issues, and congressional-executive relations. 

The Subcommittee requested that CRS's testimony discuss the Barack Obama Administration's "line-byline" budget review and what it appears to entail. In addition, the Subcommittee expressed interest in 

discussion of how the line-by-line review may relate to these topics: 

Administration proposals for "terminations, reductions, and savings" that are contained in 

a separate volume of the President's annual budget request; 

the processes and institutions that are involved in formulating the President's annual 

budget req uest; and 

practices by past Administrations. 

Finally, the Subcommittee requested that CRS briefly identifY policy options that Congress might 

consider to 

bring additional transparency to presidential budget proposals, including the outcomes of 

such proposals after Congress considers them; 

enhance the credibility of the representations about performance that an Administration 

may make in these requests-for example, assurance that the representation that an 

Administration makes about a program's performance does so fairly, in the context of an 

agency's or program's statutory mission; and 
30 


81404.019

Congressional Research SenJice 4 

promote more systematic and effective engagement between Congress and agencies on 

topics like these. 

This testimony draws substantially from a memorandum that the Committee requested earlier and 

adds some discussion regarding how Congress might consider engaging with agencies. 

Line-by-Line Budget Review and its Relationship to Other Topics 

First, the Subcommittee requested analysis of what the Obama Administration's line-by-line review 

appears to entail, and how the review may relate to other topics identified above. This analysis is based on 

statements that the Administration has used to characterize the line-by-line review, when the statements 

are viewed in context with institutions and processes that appear to have been involved, and also in 

context with long-standing budget practices in the executive branch. 

Several caveats arguably are necessary, however, when interpreting publicly available information that 

concerns this subject. It should be noted, for example, that formulation of the President's budget largely 

occurs outside of public view. As a consequence, it is frequently not possible to make definitive 

statements of how a process like this one is undertaken in any given year. In addition, the Office of 

Management and Budget (OMB) closely manages and monitors the budget formulation process on behalf 

orthe President to, among other things, prevent so-called "pre-decisional" information from leaving the 

executive branch.' OMB also may attempt to influence agencies in how they characterize problems and 

priorities in public documents. 

1 U.S. Executive Office of the President, Office of Management and Budget (hereafter OMB), Circular No, A-il. Preparation, 

Submission, and Execution of the Budget, Section 22, August 2011, at 

http://www.whitehouse.gov/omb/eireulars_al l_curren(year_a II_toe. OMB has characterized its mission primarily as onc of 

"[implementing] the commitments and priorities of the President" and "[implementing and enforcing] Presidential policy 

government-wide." See OMB, "The Mission and Structure of the Otlicc of Management and Budget," at 

http://\¥WW,whitehouse.gov/omb/organization_mission. 
31 


81404.020

Congressional Research SenJiee 

Even with these qualifications, analysis suggests that the line-by-line review appears to relate closely to 

annual development of the President's budget proposals, and may be another name for the Obama 

Administration's perspective on how it formulates the President's budget.' 

The first mention of plans for a line-by-Iine review appeared during the 2008 presidential campaign and 

subsequent transition.' Tn a transition document, the incoming Administration characterized the upcoming 

review as "an exhaustive line-by-Iine review of the federal budget," in which the Administration would 

"work to eliminate government programs that are not performing, and demand that new initiatives be 

selected on the basis of their merits -- not through a political process that rewards lobbyists and campaign 

donors.'" This language suggested the review would focus not only on identifying budget cuts, but also 

more generally on how to allocate funds. During the transition, President-elect Obama announced that an 

OMB official, the deputy director for management, would have a role in the review.' 

It was not immediately clear what the incoming Administration considered a "line" to be. The federal 

appropriations process focuses on lump-sum appropriations that are enacted into law for specifically 

stated purposes.' Multiple programs or organizations may be funded by a single lump-sum appropriation. 

Historically, public sector budgeting also has used a form of budgeting called "line item" budgeting, 

which shows allocations offunding for a program or agency that is broken out into categories ("line 

items") like salaries and rent. At the federal level, supporting information may be provided by an agency 

to the President and Congress that breaks down a budget account into so-called object classes, which are 

2 For discussion and analysis of how the line-by-line review has appeared to fit within the Obama Administration's agenda for 

government performance, see CRS Congressional Distribution Memorandum. Ohama Administration Agenda for Government 

Performance: Evolution and Relaled Issues for Congress, January 19,2011, by Clinton T, Drass (available upon request), 

) Ibid., pp. 4-5. 

4 See Obama-Bidcn Transition Team, "Agenda: Ethics," at http://change,gov/agendalethics_agendal. 

5 CRS Congressional Distribution Memorandum, Ohama Administration Agendafor Government Performance; Evolution and 

Related issues/or Congress, January 19,2011, by Clinton T. Brass, p. 5, 

6 In the annual appropriations process, these lump-sum appropriations typically take the form ofunnumbcrcd paragraphs of 

statutory text, including in each paragrapb an anlOunt of budget authority that is to be provided to an agency or program, along 

with any restrictions or directions Congress may have. A paragraph also may be called an "appropriation account." 
32 


81404.021

Congressional Research Service 

similar to these line item categories.' It is possible that the "line-by-line" expression was intended to refer 

to object class information, but it also appears to be possible that the expression may have been 

metaphorical in nature, to communicate that an extensive review would occur without omitting any 

program or agency from scrutiny. 

On February 26, 2009, OMB released an initial budget overview for FY20l 0, acting on behalf of the 

President." A more detailed submission of proposals was expected later in the spring: In the meantime, 

the overview described some ofthe new Administration's priorities and plans. The overview argued for 

"investing taxpayer dollars in efforts and programs with proven records of success and reallocating or 

cutting programs that do not work or whose benefits are not worth their COSt."1O In support of that 

objective, the Administration said it had begun an "exhaustive line-by-line review of the Federal Budget." 

The Administration said it would release related proposals in the full FY201 0 Budget and in subsequent 

years. Meanwhile, the document identified several cuts and savings proposals that would be articulated in 

more detail in the Administration's full budget submission." 

On May 7, 2009, the Administration issued a document that proposed program "terminations, reductions, 

and savings" (hereafter FY2010 TRS Document)." The Administration characterized the FY20JO TRS 

Document as "the first report" from the line-by-line effort, and also as identifying "programs that do not 

accomplish their intended objectives, are not efficient, or that replicate efforts being completed by another 

7 Objcct class infonnation for the President's most recent budget proposal may be found on OMB's website at 

http://v.ww.whitehouse.gov/omblbudgct/Supplcmcntal, under the heading "Supporting Documents." 

s OMB, A New Era o/Responsibility: Renewing America's Promise (Washington: GPO, February 26, 2009). 

9 The statutor~y deadline for submission of the President's annual budget proposal to Congress is no later than the first Monday in 

February each year. However, recent Presidents have delayed submitting their first full budget proposals until the spring 

following their inaugurations. For discussion, see CRS Report RS20752, Submission of the President's Budget in Transition 

Years, by Robert Keith. 

JO OMB, A New Era of Responsibility.' Renewing America's Promise. p. 34. 

II Ibid., pp. 34-36. 

!2 OMB, Terminations, Reductions, and Savings---Budget a/the U.S Government. Fiscal Year 2010 (Washington: 2009). at 

http://www.gpoaccess.gov/usbudget/fyIO/browse.htm\. 
33 


81404.022

Congressional Research Service 7 

initiative and [as recommending] these programs for either termination or reduction.,,13 By the 

Administration's count, the document proposed 121 cuts or restructurings totaling "approximately $17 

billion." Typically, each item corresponded to only a portion of the funding within a budget account. Each 

item in the volume included a brief justification, but in many cases did not provide detailed information 

about the relevant budget account or entity within an agency that was the subject of attention. OMB 

released a more detailed Budget Appendix the same day, with account-by-account budget proposals from 

the Administration, but generally without explicit reference to the FY2010 TRS Document. Executive 

branch agencies also submitted to Congress their considerably more detailed budget justifications. 

Generally speaking, these justifications are reviewed and modified by OMB to be consistent with the 

President's policy preferences. 

In subsequent years, the Obama Administration released additional TRS Documents for the FY20 II and 

FY20 12 budgets. In these and other Administration budget documents, references to the line-by-line 

review often referred to budget cutting proposals. However, it is not clear that there is necessarily a oneto-one correspondence between the line-by-Iine review and the proposals included in the TRS Documents. 

More generally, it is also not clear if there is a one-to-one correspondence between the line-by-Iine review 

and proposed cuts. As noted above, the Administration had made previous statements that the review also 

focused on allocation of funds, including allocations based on what it characterized as merit and 

evidence. l4 In addition, proposals associated with the line-by-line review were sometimes couched as 

being driven not by performance, but by fiscally difficult times and a need for "shared sacrifices.,,15 

D Ibid., p. 1, and OMB Web page, "Terminations, Reductions and Savings," at http://\vww.whitchousc.gov/omblbudgetlTRS/. 

14 The Obama Administration has previously identified wo types of evidence: (1) evidence about '"what works and what does 

not"; and (2) evidence that "identifies the greatest needs and challenges:' See CRS Congressional Distribution Memorandum, 

Obama Administration Agendafor Government Performance: Evolution and Related Issues for Congress, January 19,2011, by 

Clinton T. Brass, p. 25. 

150MB, Terminations, Reductions, and Savings-Budget of the u.s. Government, Fiscal Year 2012 (Wa'{hington: 2011), p. 1, at 

http://\.V\\i\v. whitehouse.gov/omblbudgetlTRS. 
34 


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Congressional Research Service 8 

The Obama Administration's issuance of a volume like the TRS Document among a President's budget 

proposals was not new. For example, the George W. Bush Administration released similar documents for 

President Bush's FY2006, FY2007, FY2008, and FY2009 budget proposals.16 Generally speaking, these 

kinds of budget documents have been produced by Presidents dating back to President Ronald Reagan, if 

not before, in a variety of configurations. l7 These documents have highlighted some, but not necessarily 

all, ofthe President's proposals to cut or modify federal programs and agencies, or to redirect priorities to 

align with the President's policy preferences.!8 Typically, these kinds of documents also have not been 

followed by subsequent pUblications that showed, in detail, the extent to which Congress adopted the 

President's recommendations. Instead, most were silent on the topic of congressional actions, although a 

handful of them portrayed limited information about congressional actions from a previous year, without 

supporting detail.!9 One exception appears to have occurred in 2005, when the Bush Administration 

reportedly released to some media outlets a retrospective, 85-page volume indicating how Congress acted 

on the President's termination and reduction proposals for FY2006. 20 Apparently, this volume was not 

posted on a publicly accessible, government website. 

16 Each wa.<; titled Major Savings and Reforms in the President's 200x Budget, with "'x" corresponding to the last digit of the 

relevant fiscal year. PDF versions of these volumes are located at http://www.gpoaccess.gov/usbudget/browse.html. 

17 For example, see U.S. President Ronald W. Reagan, America's New Beginning: A Program/or Economic Recovery, February 

18, 1981 (Washington: GPO, J 981) [President Reagan's initial FYI982 budget revision, after his transition from the Jimmy 

Caner Administration]; (2) OMB, Fiscal Year 1982 Budget Revisions, Additional Details on Budget Savings (Washington: GPO, 

Apr. 1981) [a subsequent FYl982 budget revision]; (3) OMB, Budget a/the United States Government, Fiscal Year 1983 

(Washington: GPO. 1982), pp. 5-42 and 5-106; and (4) OMB. Major Policy Initiatives, Fiscal Year 1987 (Washington: GPO, 

[1986)), pp. 91-110. 

18 Some proposals have appeared repeatedly in such compilations. 

19 The Obama Administration's FY2012 TRS Document, for example, said "fw]hile recent administrations have seen between 15 

and 20 percent of their proposed discretionary cuts approved by the Congress, the Administration saw 60 percent of its proposed 

discretionary cuts become law for 2010" (p. 1). The George W. Bush Administration's FY2007 Major Savings and Reforms 

document said with respect to FY2006 that '"[t]he Congress answered thc call for restraint and accepted 89 of the President's 154 

proposals for a total savings of$6.5 billion" (p. 3). 

20 See blog entry fi)r December 23, 2005, titled '''WH Touts Budget Successes," at 

http://hotlineblog.nationaljournal.comlarchives/2005/12/. Related PDP files, apparently released by the Bush Administralion, are 

posted online at http://hotiineblog.nationaljoumaLcomlsavel.pdf;andhttp:/lhotiinehlog.nationaljournal.com/save2.pdf. The first 

document, "savel.pdf', was posted on the OMB website and is now archived at http://georgewbush~ 

whitehouse.archi ves.gov/omb/pu bprcss/2005/faet_ sheet_ restraining_spend _122205. pdf 
35 


81404.024

Congressional Research Service 

Representations that an Administration makes in these documents about the performance of an agency or 

program may provide information that not all observers would necessarily perceive to be complete or fair. 

Past experience in the federal budget process suggests that a President may, in some cases, make 

representations about performance from the perspective of one definition of "success," while omitting any 

mention of other perspectives." During the Georgc W. Bush Administration, for example, federally 

supported vocational education could have been rated either effective or ineffective, depending on 

whether "success" was defined as increased earnings for education recipients, on one hand (effective), or 

increased incidence of seeking bigher education, on the other (ineffective)." Consequently, when the 

President or his or her Administration make representations to Congress about performance for a 

particular policy or program, Congress may consider whether the definition of success that is being used, 

such as a goal, reflects congressional intent for tbe underlying program (e.g., as expressed in statute) and 

the major perspectives that the program's broader community of stakeholders may have, or reflects a less 

comprehensive perspective. 

Congress has indicated in statute that when agencies set goals and arguably thereby define success, the 

agencies are required to do so after consulting with Congress and stakeholders. Specifically, under the 

GPRA Modernization Act of 201 0 (P.L. 111-352), cxecutive branch agencies are required to develop fouryear strategic plans that identify goals and objectives. When developing these plans, the law states that an 

agency "shall consult periodically with the Congress, including majority and minority views from the 

appropriate authorizing, appropriations, and oversight committees, and shall solicit and consider the 

views and suggestions of those entities potentially affected by or interested in such a plan.,,23 The statute 

2J See CRS Congressional Distribution Memorandum, ObamaAdministrationAgendafor Government Performance: Evolution 

and Related issuesfor Congress, January 19,2011, by Clinton T. Brass. p. 31. 

22 See discussion of contrasting definitions of success for federally supported vocational education in CRS Report RL33301, 

Congress and Program Evaluation: An Overview of Randomized Controlled Trials (RCT..r) and Related Issues, by Clinton T. 

Brass, Erin D. Williams, and Bias Nufiez-Neto. 

23 124 Stat. 3867; 5 U.S.C. g 306(d). 
36 


81404.025

Congres,'Jional Research Service 10 

additionally says that consultations are required to take place "with the appropriate committees of 

Congress' at least once every two years. 

Potential Issues for Congress 

The Committee also requested that this testimony briefly identify some policy options that Congress 

might consider to bring 

additional transparency to presidential budget proposals, including the outcomes of such 

proposals after Congress considers them; 

enhanced credibility to representations that an Administration may make in such requests 

regarding how an agency or program has perfonned; and 

more systematic and effective engagement between Congress and agencies on topics like 

these. 

CRS takes no position on whether these options are advisable, in comparison to the status quo. 

However, some potential advantages and disadvantages may be identified for each option that is 

considered. 

With enactment of the Budget and Accounting Act of 1921,24 now codified in part at 31 U.S.c. § 1l 05, 

Congress required the President to annually submit a consolidated budget proposal to Congress. This 

statute currently goes into some detail regarding the information that the President is required to submit." 

Notably, the statute does not require the President to submit a document like the Obama Administration's 

TRS Document or the Bush Administration's Major Savings and Reforms. Rather, Presidents have 

24 For more information about the act, see CRS Report RL30795, General i\1anagement Lcnvs: A Compendium, by Clinton T. 

Brass et aI., pp. 98-102. 

25 The required components have increased in number over time. [n a 1989 report, tbe General Accounting Office (now the 

Govemment Accountability Office) identified 53 such provisions. See U,S. General Accounling Otlice, Budget Issues: The 

President's Budget Submission, GAO/AFMD-90-35, Octobcr 1989, p. 5. 
37 


81404.026

Congressional Research Service 11 

produced such documents at their discretion. Separately, the GPRA Modernization Act of201 0 (P.L. I J J352), which amended the Government Perfonnance and Results Act of 1993 (P.L. 103-62), included a 

provision to require an agency to annually "identify low-priority program activities based on an analysis 

of their contribution to the mission and goals of the agency and include an evidence-based justification for 

designating a program activity as low priority" (codified at 31 U.S.C. § 1115(b )(10». 

If Congress deemed it advisable to increase the transparency regarding presidential proposals to 

significantly increase, cut, or modify an existing program or activity and what happened afterward, 

Congress might consider options to bring additional structure to how the President, OMB, and agencies 

implement the statutes cited in the preceding paragraph. For example, Congress might require that an 

annual accounting of what Congress has done with prior year Administration proposals for major 

increases or decreases be included in future budget submissions, along with more detailed infonnation 

about relevant budget accounts and organizational units, to help make congressional policymaking and 

oversight easier, when considering such proposals. 

To enhance the credibility of any such representations, Congress might also consider providing some 

structure regarding how agencies or OMB make determinations of "low-priority program activities." 

Among other options, the statute might be modified to require that an agency's analysis of a program's 

success be based On the agency's statutory mission and related congressional intent, to address the 

possibility that a presidential budget submission may include infonnation about perfonnance that 

primarily reflects the President's policy preferences and omits other infonnation. The term "evidence" as 

used in the GPRA Modernization Act also might be further defined to produce information that may be 

helpful to Congress. 
38 


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Congressional Research Service 12 

Finally, Congress might consider options that relate to how its committees engage with agencies on topics 

such as budgeting and perfonnance, For example, a committee might consider directing agencies under its 

jurisdiction to begin systematic and periodic consultations with the committee, For agencies that have 

multiple committees of jurisdiction, a committee might furthennore attempt to hold such consultations 

jointly with other committees, in order to foster collaboration within Congress and reduce an agency's 

workload, These consultations might concern any of several subjects, including the selection of agency 

goals, methods for assessing performance, improvements in performance, organizational learning, 

reprogramming of funds, and management of major risks, In the face of constrained staff resources within 

congressional committees, Congress might also consider involving key stakeholders and the public in 

agency processes such as agency goal-setting, to help the committees to focus their resources on key 

items of interest. For example, if an agency were required to publish draft goals and objectives in the 

Federal Register for public notice and comment, Congress might be able to more systematically enlist 

stakeholders' expertise in helping Congress to detect ifan agency orthe President implements policy in a 

way that is unintended or undesirable, or if a program could be designed or implemented in a better way. 

Assisted in this way, Congress then may use various tools to engage on the subject.'6 

Nevertheless, options such as these may be perceived as also bringing some disadvantages. For example, 

efforts to increase transparency or enhance the credibility ofhudget and performance presentations may 

cause additional workload for agencies and OMB. In addition, the President may prefer to have his or her 

budget requests be as unencumbered as possible, with fewer statutory requirements from Congress. 

Consequently, options like these may entail difficult trade-offs. 

26 See Mathew D. McCubbins and Thomas Schwartz. "Congressional Oversight Overlooked: Police Patrols versus Fire Alarms," 

American Journal a/Political Science, vol. 28, no. I (February 1984), pp. 165-179. One scholar has argued that laws like the 

Administrative Procedure Act (codified at 5 U.S.c. § 55 t et seq.) and Government Pcrfonnance and Results Act require agency 

processes to embrace values such as open infonnation, participation, and representation. According to this view) the laws impart 

legislative values into how agencies exercise delegated legislative authority. See David H. Rosenbloom! Building a LegislativeCentered Public Administration: Congress and the Administrative State, 1946-1999 (Tuscaloosa, AL: University of Alabama 

Press, 2000). 
39 


81404.028

Congressional Research Service 

These options are a sampling of a broader number of options that might be considered, if they were of 

further interest. In the meantime, Mr. Chairman, I would be happy to answer any questions that you, the 

Ranking Member, and Members of the Subcommittee might have. Thank you. 

13 
40 


81404.029

• 

~ Congress;onal 

:;;;: ~ ReseC!rch · ~ Servlce--------------------

MEMORANDUM January 19, 20 

Subject: Obama Administration Agenda for Government Performance: Evolution and Related Issues 

for Congress 

From: Clinton T. Brass 

Analyst in Government Organization and Management 

7-4536 

cbrass@crs.loc.gov 

This memorandum was prepared to enable distribution to more than one congressional office. 

This memorandum responds to congressional interest in the Barack Obama Administration's agenda for 

government performance, how the agenda has evolved, and related issues for Congress. Specifically, the 

memorandum discusses milestones in the agenda's development, including the Administration's 

statements of plans and commitments regarding how it would work with Congress and agencies. 

Two tools of policy analysis-program evaluation and performance measurement-often are used to 

inform assessments of government performance. That is, these tools generate information for multiple 

audiences, including Congress, agencies, the President, and the public, to help inform assessments of how 

agencies, programs, and policies are performing or might be improved. Consequently, program evaluation 

and performance measurement may inform related oversight, substantive lawmaking, and resource 

allocation by Congress. Congress also may intend for the tools to inform related policy making, 

budgeting, implementation, and management in agencies and the Executive Office of the President. 

However, perfunctory reliance on, and use of, such tools also can present challenges. For example, 

evaluations and measurements may be flawed or may be presented in a biased or selective fashion. 

Without careful use, they also may drive unintended behaviors by entities that are being evaluated. 

The Obama Administration's approach to government performance may be of ongoing relevance to 

Congress in at least two ways. First, the Administration's approach may be of interest when Members and 

committees of Congress assess the credibility and relevance of evaluations or measurements that are 

presented in attempts to influence and inform Congress's thinking, lawmaking, and oversight. Second, 

and more broadly, the Administration's approach may be of interest when Members and committees 

consider establishing or modifying federal performance-related policies and processes such as evaluation, 

planning, and bUdgeting. Processes like these often are intended to generate useful information for 

Congress, agencies, the President, and the public, and thereby to inform both policy making and the 

process of faithfully and effectively executing the laws. 

The memorandum concludes by analyzing several issues in each of these two areas. 

COllgressiolU/1 H.esearcn Service 7-5700 www.crs.gov 
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Contents 

Introduction ............................................................................................................................................ 3 

Congress and Government Performance .................................................................................................. 3 

Announcements from Presidential Transition ........................................................................................... 4 

New CPO Duties ............................................................................................................................... 5 

Already Established DDM Duties ...................................................................................................... 5 

Statements at Confirmation Hearings for OMB Officials ................................................................... 6 

Post-Inauguration Agenda and Activities ................................................................................................. 7 

Inauguration and Killefer Withdrawal ................................................................................................ 7 

Obama Administration Budget Overview for FY20 10 ........................................................................ 8 

Announcement of Zients Nomination ................................................................................................ 9 

Detailed Budget Proposals for FY2010 and Related Policies .............................................................. 9 

Proposals for Program Terminations and Reductions ................................................................... 9 

Themes for a "New Management and Performance Agenda" ..................................................... 10 

Announcement of a "Performance Improvement and Analysis Framework" ......................... 10 

Pursuit of Performance Improvement: Three Related Efforts ............................................... 14 

Zients Statements Abont Plans at Confirmation Hearing .................................................................. 15 

Planning for High-Priority Performance Goals and FY2011 Budge!... .............................................. 16 

Development of a "Management and Performance Framework" ................................................ 16 

High-Priority Performance Goals (HPPGs) ................................................................................ 16 

Planning for the President's FY2011 Budget Proposals .............................................................. 18 

Developing a New Performance Management System ..................................................................... 18 

Fall 2009 Congressional Hearings ............................................................................................. 18 

OMB Emphasis on Impact Evaluations ...................................................................................... 20 

Statements on Implementation Challenges and OMB's Role ...................................................... 22 

FY2011 President's Budget and Announcement of HPPGs .............................................................. 23 

High-Priority Performance Goals and "Performance Management Strategies" ........................... 23 

Impact Evaluations and Characterizations of "Evidence-Based Policy" ...................................... 24 

Line-by-Line Review and Proposals for Termination or Reduction ............................................ 26 

February 2010 Framework: Six "Performance Strategies" .......................................................... 26 

Looking Ahead to the President's FY2012 Budget Proposals and 11th Congress ............................. 27 

Potential Issues for Congress ................................................................................................................. 28 

Potential Issues When Evaluations and Performance Measures Are Presented to Congress ............... 29 

Scrutinizing Program Evaluations and Performance Measurements ........................................... 29 

Scrutinizing How Agencies or OMB Define "Success" for a Program ........................................ 31 

Identifying Possibilities of Perverse Incentives .......................................................................... 32 

Making a Connection Between Evidence and Policy Making ..................................................... 33 

Potential Issues When Congress Focuses on Performance-Related Policy ........................................ 36 

Opportunities for Congressional Oversight: Lessons Learned from Past Efforts? ....................... 36 

Oversight of the Administration's Performance Agenda: Coverage and Potential Gaps ............... 37 

Generic Framework for Assessing Influences on Government Performance ......................... 37 

Example of Using the Framework: Federal Housing Policies ............................................... 38 

Assessing Administration Initiatives for Coverage and Potential Gaps ................................. 40 

Examining GPRAand E.O. 13450 ............................................................................................. 41 
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Introduction 

On January 7, 2009, President-elect Barack Obama announced part of his agenda for improving the 

performance of the federal government. He said he would establish a new, non-statutory position in the 

White House with the title Chief Performance Officer (CPO). The CPO would report directly to the 

President and would seek to make the federal government more efficient, effective, transparent, and 

accountable. The President-elect also announced his intention to appoint Nancy Killefer, a consulting firm 

partner, to the CPO position, and to nominate her also to be Deputy Director for Management (DDM) at 

the Office of Management and Budget (OMB). The DDM position was established by law and is subject 

to Senate-confirmation.! OMB's DDM is responsible for establishing general management policies for 

executive agencies across a variety of mission-support functions. In occupying White House and OMB 

positions, Ms. Killefer would wear "dual hats." On February 3, 2009, however, Ms. Killefer withdrew 

from her expected appointment as CPO and nomination for DDM to avoid potential controversy related to 

a personal tax issue. Two months later, President Obama named Jeffrey Zients, the founder of a private 

equity firm, to be CPO and DDM. The Senate confirmed Mr. Zients as DDM on June 19,2009. A 

succession ofrelated developments followed in 2009 and 20 I O. 

This memorandum focuses on the Obama Administration's agenda related to "government performance," 

much of which has been led by the CPO-DDM (hereafter CPO). In particular, it focuses on issues related 

to program evaluation and performance measurement.' Program evaluation and performance 

measurement may help inform assessments of how agencies, programs, and policies are performing. 

Consequently, they may help inform related policy making, budgeting, oversight, implementation, and 

management. However, the nature of the CPO position and the Administration's agenda have emerged 

gradually and are still evolving. For example, after Ms. Killefer's withdrawal, the Administration no 

longer referred to the CPO as a White House position. In addition, although the CPO's portfolio was 

articulated in some detail during the 2008 presidential campaign, the Administration later modified 

aspects of these plans. Over time, the Administration has announced a series of "frameworks"-that is, 

strategies intended to guide actions-and commitments for how the Administration would proceed, both 

administratively with agencies and in working with Congress. Because the Administration's agenda 

continues to evolve, the memorandum discusses selected developments chronologically. 

Congress and Government Performance 

The Obama Administration's agenda for government performance arrives as the most recent in a line of 

presidential initiatives. To help frame this subject, however, the memorandum first presents a brief 

discussion of potential congressional roles and activities related to government performance. Many 

writings on the subject of government performance treat the subject from the perspective of agencies or 

the President. 3 Fewer seem to approach the subject from the perspective of Congress. To conclude on this 

basis that Congress's roles are secondary to those of agencies and the President, however, may be a 

I Chief Financial Officers Act of 1990 (CFO Act), P.L. 101-576; 104 Stat. 2839; codified at 31 U.S.C. § 502(c). 

1 Other statutorily established, presidentially appointed, and mostly Senate-confinned positions at OMB and the Office of 

Personnel Management (OPM) more directly supervise other mission~support or "management" functions. These functions, 

which generally are not the focus of this memorandum, include financial management, procurement policy, infonnation 

technology, information and regulatory policy, and human resources management. 

3 For example, see Chris Wye, Performance Management for Career Executives: A "Start Where You Are, Use What You Have" 

Guide (Washington: IBM Center for the Business ofGovcmmcnt, October 2004); and Barry White and Kathryn E. Newcomer, 

eds., Getting Results: A Guide/or Federal Leaders and Managers (Vienna, VA: Management Concepts, Inc., 2005). 
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misinterpretation. Current law grants significant discretion in this area to agencies and OMB. However, in 

possessing the Constitution's Article I legislative powers, among others, Congress's potential roles are 

pervasive and difficult to overstate. Congress routinely legislates on the subject and conducts related 

oversight, variously cooperating and competing with the President for control of agencies and policies. 

In particular, two tools of policy analysis-program evaluation and performance measurement-often are 

used to inform assessments of government performance.' They also may be used along with other policy 

analysis tools to inform policy making. In either case, Congress may assume at least two major roles. 5 

First, Congress may use specific evaluations and measurements to help inform its thinking, policy 

making, and oversight activities. In the course of Congress's legislative work, actors inside and outside of 

government frequently cite evaluations and measures to justify policy proposals and recommendations. In 

these situations, consumers of performance information, including Congress, can face challenges of 

assessing (I) quality and depth of evaluation information, which can be uneven, and (2) the relevance of 

the information to a policy problem, which can vary. Should Congress want to scrutinize these 

representations in its legislative work, insight into how to assess the quality, coverage, and relevance of 

evaluations and measurements may be helpful. 

Second, Congress often makes policy regarding how agencies are to conduct and use evaluations and 

measurements. Congress may, among other things, establish processes for the production and 

consideration of evaluation information, establish entities to evaluate programs and policies, set aside 

related funding, articulate questions to be researched, and specify methods to be used. When policy 

makers consider these options, many observers would likely view at least two perspectives as being 

important: the institutional arrangements under which agencies produce and use performance information, 

such as who does it, how they do it, and for which audiences' needs; and also the practical capabilities 

and limitations of various evaluation and measurement approaches. Both of these perspectives might be 

used when assessing the Administration's agenda, formulating congressional responses, or acting 

independently of the agenda in areas of congressional interest. 

Announcements from Presidential Transition 

During the 2008 presidential campaign, then-Senator Obama outlined detailed plans for a CPO and other 

related initiatives6 After the election, the website of the presidential transition referred to many of the 

plans, including establishing the CPO position, creating a special "SWAT" team in the White House, 

setting "performance targets" for which managers and programs would be held responsible, and 

4 As discussed later in this memorandum (see Box 3), program evaluations may usc onc or more methods to assess how, and the 

extent to which, programs achieve intended objectives or cause unintended consequences. By contrast, perfonnanec measurement 

is narrower in focus and typically refers to periodic monitoring of data that are related to government programs. 

5 See discussion in CRS Report RL3330 I, Congress and Program Evaluation: An Overview of Randomized Controlled Trials 

(RCTs) and Related Issues, by Clinton T. Brass, Erin D, Williams, and BIas Nunez-Neto. 

n See Obama '08, Blueprintfor Change: Obama and Eiden's Plan for America, no date (83 pp.), p. 20, at 

http://www.barackobama.comipdllObamaBlueprintForChangc.pdf; and Obama-Biden, The Change We Need in Washington: 

Stop Wasteful Spending and Curb Influence of Speciallntere.sts So Government Can Tackle Our Great Challenge.f, no date 

[September 22, 2008J, pp. 5-7, http://obarna.3cdn.netlOO80cc578614b42284_2aOmvyxpz.pdf. See also CQ Transcripts Wire, 

"Sen. Saraek Obama Speaks at Campaign Event in Green Bay, Wisconsin," September 22, 2008, at 

http://www. washingtonpost.eomiwp-dyn/contentlarticle/2008/09/22/ AR200809220 1500.htrni. 
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conducting a "line-by-line" review of the budget.' Additional details soon emerged about the 

Administration's performance agenda. 

New CPO Duties 

On January 7, 2009, President-elect Obama announced that he would appoint Nancy Killefer to serve as 

CPO'" According to the presidential transition website, the CPO would be a "new White House 

position.,,9 Consistent with campaign proposals, the website indicated that the CPO "will report directly to 

the president."lo The President-elect also announced that he would nominate Ms. Killefer to be DDM at 

OMB. Her previous writings on government performance suggested strategies that she might pursue. ll At 

the press conference, the President-elect tied the CPO appointment to his campaign plans to conduct a 

"line-by-line" review of the federal budget." He also described other CPO duties. For example, he said he 

would instruct members of the cabinet and key members of their staffs to meet with the CPO soon after 

taking office-and on a regular basis thereafter-to discuss how they can run their agencies with greater 

efficiency, transparency and accountability. The President-elect also announced that by February 2009, 

when a "rough budget outline" would be released for FY20 I 0, further details would be forthcoming about 

"how we're going to approach eliminating waste in government, one of Nancy's tasks."lJ 

Already Established DDM Duties 

The President-elect's announcement signaled a decision to combine the DDM and new CPO positions in 

one individual. By statute, the DDM reports to the Director of OMB. 14 The DDM position has statutory 

responsibility--subject to the direction and approval of the Director of OMB-to establish general 

management policies for executive agencies across a large number of "management functions," which 

also are known as "mission-support functions." These include financial management, "managerial 

systems" (including performance measurement), procurement policy, grant management, information and 

statistical policy, property management, human resources management, regulatory affairs, organizational 

studies, long-range planning, program evaluation, productivity improvement, and experimentation and 

demonstration programs. The DDM also chairs or plays roles in interagency councils of "chief officers.,,15 

In practice, the DDM may exert considerable influence over agencies through these councils. 

7 See Obama~Biden Transition Team, "Agenda: Ethics," at http://change.gov/agenda/ethics_agendai. 

8 At the time of the atlllouncemcnt, Ms. Killefer WaS a senior partner and director of the management consulting firm McKinsey 

and Company. From 1997 to 2000, she was Assistant Secretary for Management and Chief Financial Officer at the Department 

of the Treasury. See Office of the President-elect (Obama), "President-elect Names Nancy Killefer as Chief Performance 

Officer," press release, January 7,2009, at http://change.gov/newsroorn!entry/presidcntelect_ obama_ names _ nancy_ killefer _as _ chie(yerformance _officer. 

\) Office of the President-elect (Obama), "New and More Efficient Ways of Getting the Job Done," press release, January 7,2009, 

at http://change.gov/newsroomlentry/new _and_more _efficient_ways _ oCgetting_ the job_done. 

to Obama-Bidcn Transition Team, "Agenda: Ethics," at http://change.gov/agenda/ethics_agcndal, 

!! For example, see Tony Danker, Thomas Dohrmann, Nancy Killefer, and Lenny Mendonca, "How Can American Government 

Meet its Productivity Challenge?," McKinsey and Company, July 2006, p. 4, at 

http://www.mckjnsey.com!aboutus/mckinseynews/americangovt-.rrodchallenge.asp. 

12 Office of the Prcsident~elcct (Obama), "President~elect Names Nancy KiIlefcr as Chief Performance Officer," press release, 

January 7, 2009. 

!3 "Press Conference with President~elcet Barack Obama; Announcement of Nancy Killefer for Chief Performance Officer," 

transcript, Federal News Service, January 7,2009, at http://\vww.nexis.com (subscription required), 

!4 The position was established by P.L. 101-576 (1990). Many of the DDM's statutory functions arc codified at 31 U.S.c. § 503. 

15 For an analysis of some "chief officers" and related councils, see CRS Report RL32388, General Management Laws: Major 

(continued ... ) 
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The DDM also has statutory responsibility-subject to the direction and approval of the OMB Directorto "coordinate and supervise the general management functions of [OMB]."l6 This responsibility refers to 

supervision of statutorily established offices in OMB that focus on mission-support functions. These socalled "statutory offices" include the Office ofInformation and Regulatory Affairs (OIRA), the Office of 

Federal Procurement Policy (OFPP), the Office of Federal Financial Management (OFFM), and the 

Office of Electronic Government (E-Gov Office). 17 OMB has no statutory office that covers functions 

including program evaluation, performance measurement, or general management, leaving these 

functions to the DDM. 

Statements at Confirmation Hearings for OMB Officials 

Additional details about the Administration's performance agenda emerged at early Senate confrrmation 

hearings. On January 13 and 14, 2009, the Committees on the Budget and on Homeland Security and 

Governmental Affairs held hearings to consider the anticipated nominations of Peter Orszag to be OMB 

Director and Rob Nabors to be OMB Deputy Director. Director-designate Orszag's prepared testimony 

before the Budget Committee shared some of the incoming Obama Administration's "initial thinking 

about priorities" relating to government performance and transparency. IS He covered several missionsupport functions, including performance, information technology (IT), human capital, and regulation. 

With regard to performance, he said that under the CPO's leadership, the Administration 

will create a set of performance metries that are outcome-oriented and in line with public expectations, 

as well as a central repository of performance data that will be available to departments and agencies, 

Congress, and the general public .... We also plan to build a team of management experts within OMB 

who will work with individual agencies to improve the skills of their workforce. We will launch pilot 

programs with individual agencies to serve as demonstration projects through which we can test our 

approaches to improve program effectiveness and efficiency [and] share best practices .... J9 

In subsequent questioning, Senator Robert Menendez asked Deputy Director-designate Nabors how he 

foresaw OMB and CPO-designate Killefer evaluating programs and working with Congress on 

appropriations. Mr. Nabors responded by emphasizing transparency and a commitment to consulting with 

Congress and stakeholders about how to evaluate programs.'o 

( ... continued) 

Themes and Management Policy Optionsj by Clinton T. Brass. 

", 31 U.S.c. § 503(b)(I). 

17 The eFO Act's legislative history notes that the heads ofOMB's statutory offices, such as the administrators ofOfRA and 

OFPP, "are statutorily required to report to the Director [of OMB]," but that the legislation establishing the DDM position would 

provide flexibility in this regard. A key committee report said the legislation suggests that the reporting relationship of the heads 

of the statutory offices to the OMB Director "be through the new [DDM position)." Sec U.S, Congress, House Committee on 

Government Operations, Chief Financial Qificer Act 0/1990, report to accompany H.R. 5687, 101 st Cong., 2nd sess., October 6, 

1990, H.Rept. 10 I ,818 (Washington: GPO, 1990), p. 18. 

18 U.S. Congress, Senate Committee on the Budget, Nomination of Han. Dr. Peter Orszag, a/Massachusetts. to be Director of 

OMS and The Nomination of Robert Nabors. Q.( New Jersey, to be the Deputy Director of OMB, 1111h Cong., 1

st sess., January 

13,2009, S.Hrg. 111,1 (Washington: GPO, 20(9). 

!9Ibid., p. 23. 

20 Nabors' response suggested how the Administration might approach the issue. Specifically, he said that he saw the CPO as a 

partner with OMB officials and Congress in developing metrlcs of program effectiveness, and that there would be "more 

openness in tCffilS of sitting down with the affected parties and with other stakeholders to dctcnnine exactly how programs should 

be measured:' Nabors contrasted this approach with his perception of how previous administrations evaluated programs, where 

"there really has not been enough interaction with other stakeholders, including the Congrcss, as to exactly how pro.6lfams should 

(continued .. ,) 
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Messrs. Orszag and Nabors appeared the next day before the Senate Committee on Homeland Security 

and Governmental Affairs." Several topics in the hearing related to the Administration's performance 

agenda, including execution of economic stimulus legislation, assessments of program effectiveness, large 

IT projects, and Administration proposals to terminate programs. In response to a question about the 

incoming Administration's plans for gauging a program's effectiveness, Director-designate Orszag 

commented on the George W. Bush Administration's Program Assessment Rating Tool (PART). The Bush 

Administration previously had described the PART -a multi-attribute questionnaire that resulted in a 

score ranging from 0 to 100--as rating a program's "overall effectiveness."" Mr. Orszag responded to the 

hearing question by saying the PART was "not particularly effective," because most federal officials do 

not know about it and, of those who are knowledgeable about it, "most do not use il.,,23 The lack of use, 

he asserted, stemmed from the PART's development "without consultation with the Congress and with the 

agencies," and because the PART was "too focused on process rather than outcomes." Commenting on the 

PART, Deputy Director-designate Nabors said that as a former staff director of the House Appropriations 

Committee, he was "routinely asked what ... [hel thought about various PART scores.,,'4 He said that the 

PART was not helpful to appropriations or authorizing committees, because, among other things, 

congressional and other stakeholders were not involved in specifying the "appropriate measures by which 

a program's success or failure can be determined." In addition, he said a bad evaluation might be grounds 

for eliminating a program, but it also could be grounds for attempting to fix it. 

Post-Inauguration Agenda and Activities 

Inauguration and Killefer Withdrawal 

On January 20, 2009, President Obama gave his inaugural address. A section ofthe speech emphasized 

assessing whether a government activity "works," ending activities that do not "work," managing in an 

accountable way, correcting deficiencies, and increasing transparency.2l More detail about the CPO's 

roles and Administration's performance agenda was expected in President Obama's first set of budget 

proposals for FY201O. Ms. Killefer's withdrawal on February 3,2009, however, may have affected the 

Administration's plans. In a letter that the White House posted online, Ms. Killefer asked the President to 

"withdraw my name from consideration," citing a "personal tax issue" that might distract from her duties 

as CPO." The Obarna Administration would not announce another appointee for CPO and DDM until 

( ... continued) 

be evaluated," and that "too often those decisions have been made behind closed doors," Quotations are from ibid .• p, 52. 

2l U.S. Congress, Senate Committee on Homeland Security and Governmental Affairs, Nomination of Peter R. Orszag, tIlth 

Cong., I" sess., January 14, 2009, S.Hrg. I J 1-549 (Washington: GPO, 2010); and Nomination of Robert L. Nabors II, III 'h 

Cong., I" sess., January 14,2009, S.Hrg. 111-440 (Washington: GPO, 2010). 

22 See Box 2 for more on the PART. For infoffilation about the PART's initial design and implementation, see CRS Report 

RL32663, The Bush Administration's Program Assessment Rating Tool (PART), by Clinton T. Brass. 

23 U,S. Congress, Senate Committee on Homeland Security and Governmental Affairs, Nomination ~lPeter R. Or.~'zag. llith 

Cong., I" sess., January 14,2009, S.Hrg. I J 1-549 (Washington: GPO, 2010), p. 24. 

24 U.S. Congress, Senate Committee on Homeland Security and Governmental AtTairs, Nomination of Robert L. Nabors II, III th 

Cong., I" se55., January 14,2009, S.Hrg. 111-440 (Washington: GPO, 2010), p. 8. 

25 U.S. President (Obama), The White HOllse Blog, "President Burack Obama's Inaugural Address," [January 20, 2009J, posted 

January 21,2009, at http://www.whitehouse.goviblogiinaugural-addressi. 

26The White House, "Letter from Nancy Killefer to President Obama," February 3, 2009, at 

http://www.whitehouse.gov/the-press_ office/LcttcrfromNancyKi JlefertoPresidentObamai. 
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April 2009. Nevertheless, more details about the CPO's role and Administration's agenda emerged 

shortly, as the Administration pursued efforts that reportedly were intended to set the stage for the CPO. 

Obama Administration Budget Overview for FY2010 

On February 26,2009, the Administration released an initial budget overview for FY2010.27 A more 

detailed submission of proposals was expected later in the spring2 ' In the meantime, the overview 

described some of the new Administration's priorities and plans regarding management and performance, 

including topics related to the CPO's duties. Among other things, the Administration proposed to 

"eliminate, cut, or place under intensive review" programs in the U.S. Department of Education that "are 

not helping to improve educational outcomes for students."" The Administration said these programs 

"lack strong evidence to justify taxpayer support and ... in many cases, could be funded in competitive 

funding streams that require evidence of results." The Administration also said it is "critical to invest in 

learning which programs are effective and in growing the ones that are." Consequently, it proposed to 

"[increase] funding for rigorous evaluation ... for education research." These education proposals 

continued a focus on evaluation policy that inspired controversy during the previous Administration, 

regarding how to define and use evidence when making policy, and what the term rigorous should mean 

in that context. 30 

The overview also argued for "investing taxpayer dollars in efforts and proi,,'Tams with proven records of 

success and reallocating or cutting programs that do not work or whose benefits are not worth their 

cost."" In support of that objective, the Administration said it had begun an "exhaustive line-by-line 

review of the Federal Budget." The Administration would release related proposals in the full FY2010 

Budget and in subsequent years. Meanwhile, the document identified several cuts and savings proposals 

that would be articulated in more detail in the Administration's full budget submission. 

8 

Under the heading "Making Government More Effective," the Administration identified other strategies it 

would pursue.32 Some were consistent with, or identical to, more detailed statements from presidential 

transition and campaign documents. 33 The document said the President "will meet regularly with cabinet 

officers to review the progress their agencies are making toward meeting performance improvement 

targets." However, the document no longer said the CPO would report directly to the President. The 

heading also covered other management-related topics, including procurement and technology. 

27 u.s. Executive Office of the President, Office of Management and Budget (hereafter OMB), A Nm-v Era of Responsibility: 

Renewing America's Promise (Washington: GPO. February 26,2(09). 

211 Recent Presidents have delayed submitting their full budget proposals until some time after they assumed office. For 

discussion, sec CRS Rcport RS20752, Submission of the President's Budget in Transition Years, by Robert Keith. 

29 OMS, A New Era of Responsibility: Renewing America's Promise, p. 25. 

30 For discussion, see CRS Report RL33301, Congress and Program Evaluation: An Overview of Randomized Controlled Trials 

(ReD) and Related Issues, by Clinton T. Brass, Erin D. Williams, and mas Nunez-Neto; aud Stewart I. Donaldson, Christina A 

Christie, and Melvin M. Mark, eds" What Counts as Credible Evidence in Applied Research and Evaluation Practice? (Los 

Angeles: Sage Publications, 2009). 

31 0MB, A New Era of Responsibility: Renewing America's Promise, p, 34. 

32 Ibid .. pp. 38-41. 

33 Among these were plans to address redundancy in administrative functions; create a team in the White House to work with 

agency leaders and OMB; and establish a CPO position to work with agencies to set performance targets. With regard to the Bush 

Administration's PART, the Obama Administration said it would, among other things, "fundamentally reconfigure" the PART~ 

"open up the insular performance measurement process" to Congress and the public; and assess individual programs in the 

context of other programs that are "serving the same population or meeting the same goals." 
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Announcement of Zients Nomination 

On April 18, 2009, President Obama announced his intention to appoint and nominate individuals for 

CPO and another new position, Chief Technology Officer (CTO). For CPO, the President selected 

Jeffrey D. Zients, who also would be nominated to serve as DDM at OMB.J5 The announcement did not 

go into detail, but said Mr. Zients "will work to streamline processes, cut costs, and find best practices 

throughout our government.,,36 On the same day, OMB Director Orszag provided more information about 

the CPO's duties. Mr. Zients would "lead the President's efforts on contracting and procurement reform, 

improve government productivity by helping to root out error and waste, build a performance agenda 

across government, and enhance the transparency of the government's finances." In addition, Mr. Zients 

would work closely with the CTO, Mr. Aneesh Chopra, and the Federal ChiefInformation Officer [CIO], 

Vivek Kundra." The Administration's inclusion of contracting, procurement, and financial management 

within the CPO's portfolio was new. The inclusion likely reflected the DDM's statutory role to coordinate 

and supervise OMB's "general management functions," and, therefore, the activities ofOMB's 

management-related statutory offices. J8 

Detailed Budget Proposals for FY2010 and Related Policies 

On May 7 and 11, 2009, the Obama Administration submitted to Congress more detailed components of 

the President's budget request for FY201 O. The contents of some documents related closely to the 

previous announcements of the Administration's performance agenda and CPO's responsibilities. 

Proposals for Program Terminations and Reductions 

On May 7, 2009, the Administration issued a document that proposed program "terminations, reductions, 

and savings" (hereafter FY2010 TRS Document)J9 The Administration characterized the FY2010 TRS 

Document as identifying "programs that do not accomplish their intended objectives, are not efficient, or 

that replicate efforts being completed by another initiative and recommends these programs for either 

termination or reduction.,,40 By the Administration's count, the document proposed 121 cuts or 

34 The Whitc House, Office of the Press Secretary, "Weekly Address: President Obama Discusses Efforts to Reform Spending, 

Government Waste; Names ChiefPerfonnance Officer and Chief Technology Officer," press release, April IS, 2009, at 

httpj/v.'WW.whitehouse.gov/the---'press_ office!W eekly-Address-Presidcnt-Obama-Discusses-Efforts-to-Refonn-Spending!. For an 

overview of the eTO position, see CRS Report R40150, A Federal Chie/Technology Officer in the ObQmQ Administration' 

Options and Issues/or Consideration, by John F. Sargent Jr. 

35 At the time of the announcement, Mr. Zients was founder and managing partner of Portfolio Logic, a Washington, DC. private 

equity firm. Prevlously, he served in executive positions in two business research and executive education finns, the Advisory 

Board Company and the Corporate Executive Board, and as a management consultant 

3ti The White House, Office of the Press Secretary, "Weekly Address: President Obama Discusses Efforts to Reform Spending, 

Government Waste; Names ChiefPerfonnance Officer and Chief Technology Officer." 

37 0MB• OMB Director Peter R. Orszag, <'Move Over R2, CPO is Here," April 18,2009, at 

http://www. whitehouse.gov/omblblogl09104118/MoveOverR2CPOisHere/. The cro position refers to the Obem. 

Administration's non-statutory title for the Administrator ofOMB's E-Gov Office, a presidentially appointed position. 

38 31 U.S.c. § 503(b)(1). This report does not focus in detail on the core activities ofOMB's statutory offices, including 

regulatory review (orRA), information policy (orRA), financial management (OFFM), procurement policy (OFPP), and 

infonnation technology investmcnt (shared between OIRA and the E-Gov Office). 

39 0MB, Terminations, Reductions, and Savings-Budget o.fthe US. Government, Fiscal Year 2010 (Washington: 2009), at 

http://wv..W.gpoaecess.gov/usbudgeUtyIO/browse.htm!. 

40 0MB Web page, "Terminations, Reductions and Savings," at http://,",,,,,w.whitehouse.gov/omb/budgetlTRS/. The George W. 

Bush Administration released similar documents for President Bush's fY2006, FY2007, fY2008, and FY2009 budget proposals. 
49 


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Congressional Resmrch Service 10 

restructurings totaling "approximately $17 billion." Each item in the volume included a briefjustillcation. 

Notably, the document made no reference to the Bush Administration's PART. According to one media 

outlet, OMB Director Orszag was asked in connection to the FY2010 TRS Document whether the 

Administration used the Bush Administration's PART or something similar to identifY inefficient 

programs.4I He reportedly responded that OMB is "in the process of overhauling the performance metrics 

system" and, in addition, that "overhauling the way [OMB] evaluates program performance will be a top 

priority for Jeffrey Zients." Furthermore, he reportedly said that OMB employees already were working 

to ensure the process could move along quickly once Mr. Zients took office. Indications of what the 

process might involve became public only days later. 

Themes for a "New Management and Performance Agenda" 

On May I I, 2009, OMB released the Analytical 

Perspectives volume of the President's budget." 

The volume did not mention the CPO, but 

included more detail about the Administration's 

performance-related plans. In a section titled 

"Building a High-Performing Government," the 

document outlined the first in a succession of 

evolving frameworks that the Administration 

would release. In this case, the Administration put 

forward six "themes" for a "new management and 

performance agenda" (see Box \)43 At the time, it 

appeared that all six themes might fall under the 

r---~---------------------. 

Sox 1:"Themes" for a "New Management 

and Performance Agenda" 

I. Putting Performance First RepJacing PART with a New 

Performanc~ hpprov'ement, and Analysi~ Framework 

II, Ensuring Responsible Spending of Recovery Act Funds 

III. Transforming the Federal Workforce 

IV. Managing Across Sectors 

V. Reforming Federal Contracting and Acquisition 

V!. Transparency, Technology, and Participatory DemocraCy 

statutory responsibilities ofOMB's DDM, depending on how the OMB Director assigned duties to 

subordinates. At a later hearing, OMB Director Orszag said the CPO position's role would embrace the 

entire agenda." Prior announcements and the Analytical Penpectives volume suggested, nevertheless, 

that day-to-day leadership in pursuit of the last four or five themes would come from other officials. 

Announcement of a "Perfonnance Improvement and Analysis Framework" 

Of the six themes, the first, relating to a "new performance improvement and analysis framework," 

received the most extensive discussion." This theme focused primarily on issues related to program 

evaluation and performance measurement. In the context of past announcements, these emphases 

suggested the CPO would playa primary role in establishing and implementing the new framework. To 

set the stage for the framework, the Administration discussed prior developments during the William 

Clinton and George W. Bush Administrations and cited three in particular: enactment of the Government 

41 Elizabeth Newell, "Administration Short on Details About Program Review Process," GovE'((!c'com, May 7,2009, at 

http://\\'\yw.govcxcc.com/dajlyfcd!05091050709e 1. htm. 

42 OMll, AnaZ\'tical Perspectives, Budgel oIthe u.s. GOI'ernment. F}'.?OlO(Washington: GPO. 2009), 

.)1 Ibid., PI'. 9-12. 

44 U.S. House Committee on Appropriations, Subcommittee on Financial Services and General Government, Financial 

"'''U:''''''''oi Government Appropriations/or 2010, hearings, 111 th Cong., l~l scss,. part 8 rMay 20,2009] (Washington: 

GPO. 2009), p. 74 . 

.. ." OMS, Analytical Pcrspectil'i?.\', Budget q{the u.s. Government, FY20/D, pp. 9-10. The other five themes appeared to be more 

closely supervised by other presidential appointees who focus on IT. financial management, contracting, and human resources 

(i.e., the CTO, heads afOMB's statutory offices, and the Director ofOPM), and arc not discussed in this memorandum. 
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Performance and Results Act of 1993 (GPRA), implementation the Bush Administration's PART, and 

issuance of the Bush Administration's Executive Order (E.O.) 13450. (See Box 2 for highlights.) 

11 

Box 2.; Recent Developments Related to Government Performance. and Evaluation 

Enact:ment and implementation of GP~ (active from' 1993~ptesent).~6 GPRArequires executive agencies to 'develop 

fiv~~year:. strat~gk: plans, annual performan.~e plans. ~nd annual prOgr-ar:' performance reports; to consult with C:ongress and 

stakeholders when developing strategic plans, bu~ not when developing annual plans or indicators; and to specify- in th~se plans 

and reports, among other thin'gS, mission statements, genera! goals and ob,ectives, periorm<;\nce goals, performance indicators. 

and some descriptions of program' evaluations. As drafted ,arid implemented, GPRA has emphasized using performance, 

information during the budget formulatiortprocess, but not necessarily when managing agef'!cies or programs. The law has been 

tightly ~ound Wit~ the process of f?rmulating presiden~ial budget proposals. which occ~rs largety ou~ide of public view. Annual 

plans, goals, performance indicators~ and program evaluation priorities are formulated within discretion available to agencies 

and the President and are not required by GPRA to ,be revised to reflect congressio!,)al budget decisions. The law also has 

emphasized,performance measurement considerably more than program evaluation. Program evaluation and performance 

meas.urement are different but often ar~ used for complemeryr:ary purposes; see Box 3 '(po f 2) for, expl!loation of xhese' terms. 

Implementation of the Busl) Ad",inistration's non-statutory PARTinitiati"e (active 2003-2009). For 

approximately l,OOO Bush Admjnistration~defjneq "programs," the PART used a q\.lestionnaire to generate an index score, The 

score ranged from 0- 100 and resulted in a corresponding rating: "eff~tive" for a score betWeen 85~ 100; \'moderately effective"" 

70~84~ !\adequate", SOw69; and "ineffective''. O~49. When OMS and agenc:ies disagreed on h~w to ~ess program performance 

(e.g:, JlO~ ~o, define "su~cess") p\ when OMB'b~liev~d a program lacked performance data, OMS gave another, designation: 

"results no~ demonstrated," OMB'said th~ PART was intended ,to'''formalize'' the Administration's E!f"forts to achieve "budget 

and performance integration,'l,which the Administration said "stresses making budget decisions based on results."47 

Issuance of Bush Administration f.O. 13450 (active November 13, 2001,present}.48 ThiS E.Q. aaoptsand codifies 

some aspects'of the PAR.T. It alsO' centralizes decision making in OMS and the Whit~ House about' ma,ny ~spect') of agencies' 

GPRA":elated ~orts',The E..O. ~uires an agency head to designate a ,career or ~onca~eer mel1!h.ar of the Senior Executive 

Service (SES) as "'p~rformance 'improvement officer" (ptO). A PIO is to work under the direction of the agency head and the 

OMS DDM. The E.O. also establishes a Performance Improvement Council (PIC) within OMB, whith is to be directed by the 

DDM and tomposed of·OMB-selected PIOs. Referring to the PART and its process, a Bush Administration OMS official 

reportedly said the E.O. was issued as' "an effor,t to sustain what we think is valuable beyond this admin!Stration,"f9 

The Obama Administration briefly described its perceptions of these three developments, especially 

focusing on the PART. Congress and previous Administrations had made "some meaningful progress, but 

much more could be done." For example, the Obama Administration said the PART helped to establish 

performance measures, "[b lut it has been less successful in encouraging the actual use of performance 

measurement as a performance improvement tooL,,5() In support of this statement, the Administration cited 

a 2007 Government Accountability Office (GAO) survey. The survey results, which were published in 

2008, indicated that among federal managers familiar with the PART, only "a minority-26 percentindicated that PART results are used in decision making, and 14 percent viewed PART as improving 

performance. ,," The survey finding may not be surprising, however. OMB guidance explicitly told 

agencies that a program's PART questionnaire should include performance goals that "provide 

.4(' P.L. 103-62, 107 Stat. 285 (1993), and later amended. Substantially amended in the 111 tll Congress, the new version of the law 

has not yet been implemented. Sec this memorandum's final section for discussion. 

47 Quotations are from OMB, Budget a/the United States Government, Fiscal Year 2004, Performance and Management 

Assessments (Washington: GPO, 2003), p. 9. Some of the Bush Administration's rhetorical emphasis behind the PART changed 

in July 2007, when the name of the umbrella initiative was changed from "budget and performance integration" to "performance 

improvement." See The White House, Results.gov (archived website), "The President's Management Agenda," link entitled 

"What's in a name?" (July 30, 2007), at http://georgewbush-whitehouse.archives.gov/resultslagendalbudgetperformance.html. 

E.O. 13450, "Improving Government Program Performance," 72 Federal Register 64519, November 13, 2007. 

49 Attributed to Robert Shea in Robert Brodsky, "Commanding Performance," National Journal, April 19,2008, p. 65. 

50 OM8, Analytical Penpectiv('s, Budget qlthc u.s. Government, FY2010, p. 9. 

51 U.S. Government Accountability Office (hereafter GAO), Government Pel/ormance: Lessons Learnedfor the Next 

Administration on Using Pel/ormance Infimnation to Improve Results, GAO-08-J 026T. July 24, 2008, p. 9. 
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information that helps make budget decisions," but need not include "performance goals to improve the 

management of the program. ,,52 

Box 3: Program Evaluation, Per:formance Measurement, and logic Models 

Like o~her subjects of federal policy, performance~re'la'ted potiey often involves special terms, Many ~erms that are used in 

lawmaking, policy implementation, and ov~rsight may sound si~ilar but' often have d:istin~fmeanings. 

12 

Program evaluation is oroader in scope than perforroa~ce measurement. See Figur:eJ {po 13)',which illustrates ,that performance 

meas~r:-en:en~ activities may b~ a',subset of some kinds' of program ev~lu~tion. ,Program evalu~:ion uS,es one p.( mo~ s~~t~m~tic, 

analytiC methods to answer -q,~estjons a~out how y.rell p.~ograms ar~ working, whether t~ey a~e achle~ing th~ir objectives, ,01" , 

causing unintend~d conse~uences, '~hy they are per{orming as they are, ,an~ ho~ ~hey can be improved}] Evafuatio? may 

encompass One?f more studies, or mOlY be pursue? as a.~ ongoing activity. Pr~gt'4m evaluations also may ~e conducted50 

assess nonfederal activlttes, 'such as when an indu~try s,elf~regufates. Program 'evaluation "types'" ,mar be cat~gorized i'1l}"1any 

ways.s'!: tn areas <?f ~omptexity, there is incr:easjng (:onsensus that d, single study o~ any ~pe or method is rarely sufficient to 

reliably supp9rt decision making.~~ Rather, progra~ evaluation often is,viewed ,as a cumulative 'process ~f using multiple ,studies, 

methods\ an~ analyses to bette~ inform learning and dedsion,making,S'b Systematic revle":,s, whlch'somft:times are c,aIledevaluation 

syn:theses, draw tonttl!sions about the curreqt state of ~oY"ledge from many evaluatio~s. 

P~rf0r:mQnr:;~ tneasurement is much narro~er i~ focu~'and :ypicaUr r~fers,'to periodi~ fuorl'itor!ng anp rep~rting of ~ata't,hat are 

related, to govemme\lt poticies and programs. In isolatio,n, pei:f0rman~e m~a,surem,ent ,d~ta' often are viewed as managerraUy, 

useful. l:!owever, p~rfor~an(;e mea~ores. which s:ome~imes are cane? in?icato!s, db n~t neces~arily reflect how we~l, a, 

go~ernm~t program or polkY'ls, V{<;>rking, beca~se they may be si~ificandy dr~ven by "external fa~ors" ot~er ~han ~he 

prograpi Or policy. Types of performanc¢. measures have ~~~n5ategC?riz€:d in ':Jany ways. They may <;orrespory~ to,a program's 

a{:tiv~fes, such as action~ ta~en In th~ pro,c~s of compte~ing a g()8d or'se0'i~e; ~tJtPU;S, suth as complet~'!d goods or services; 

intermediate outco:tf!e~, ,such as modified behavip\S, or ~ew knowledge; and end outcomes, ~uch as an Improved condition or 

altered status, for an inherently valued topiC I!ke poverty or economic well-bei,ng.57 

A logi~ nyodef may l,Je' use~ t~ Integrate program evaluation ~nd performanc:e'measurement: A logic model show~s how ~~Itipte 

in~JUts, a~tMties, and outputs a~e expet~ed to influenc~ ~utcomes in, a causal chain.' See fig~re ,2 (p. t;1) for the" diagram of a 

simple logic mod,el. In ~ job trainihg program, for example! an age~cy may offer da~ses to clie'1ts. The ~Iasse~ might,be 

~qnsldered to be an activity. The dasse:s, culminate yvith cliems,ymo ,complete a course. Thes,e course completions might be 

called, an output. If the c;I~ents, learn new ski,lts-aQ interlr!ediate outcome-they may ,h~ve a better ,chance of finding employment 

o~ jnc:easing'earnings~, Which might be: viewed as'~nd outcomes. Lo~C'models may ;lssist with understanding the relationships 

among: activities and polio/,out<::~~es and thereby b~fp det:ermine how well programs work. These relationships sometimes are 

calI~~ prbgram t~eb~that is, ~he :heory ~ehind hoW' a prQgram is intended or ~nde-rstood to ,achi~ye policy goals., ~jke,other 

kinds :>f poli~y,'analysls, program evaluations, performance ?"easurement, ~nd I~gic models m~y rai~e more r~ined guestions 

abo~~ how :,el~ a program is, working or about ~h~ c?~ditions that may b~ necC$sary for achleving succesS in certain 

circums:ances. Therefore, ~va!uatfons, measurement, and logic model$ often complement ea~h other when t~~y infor:.n: po[i-<;y 

making, oversight, or study. " 

52 0MB, "Performance Measurement Challenges and Strategies," June 18,2003, p. 4, at 

http://w\vw.whitehouse.gov/sitesldefault/files!omb/partlchallenges_strategies.pdf. 

53 In this context, the term program may be a policy, prc1cct initiative, law, tax provision, re,gulation, or mix thereof 

54 For two different presentations of types, see "Evaluation Dialogue Between OMS Staff and Federal Evaluators: Digging a Bit 

Deeper into Evaluation Science," July 2006, Table 1 (slide 14 of PDf), 

http://www.whitehouse.gov/ombfassets! omb/performance!supp _materials/fed _ eval_ 2006 _slides. pdf; and GAO, Performance 

Aleasllrement and Evaluation: Dejinitions and Relationships. GAO~05~739SP, May 2005. 

~5 For discussion of analogous developments in medicine, see Committee on Reviewing Evidence to Identity Highly Effective 

Clinic[lj Services, Institute of Medicine, Jill Eden, et a!., cds" Knmring What Works in Healthcare: A Roadmapfor the Nation 

(Washington: National Academies Press, 2008), p. 83. 

56 CRS Report RL3330 I, Congress and Program Evaluation: An Overview (~l Randomized Controlled Trials (RCTs) and Related 

Issues, by Clinton T. Brass, Erin D. Williams, and Bias Nufiez~Neto. 

For discussion, see Harry P. Hatry, Performance Measurement: Getting Results, 2

nd cd. (Washington: Urban Institute Press, 

2006), pp. 26-27; and Lawrence B. Mohr, impact Analysisjhr Program Evaluation, 2

nd ed. (Thousand Oaks, CA: Sage 

Publications, 1995), pp. 15-18. 
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After setting the stage with discussion ofthese three 

developments, the Administration outlined how it 

would develop a new framework and related plans. 

Working along with the Performance Improvement 

Council (PIC; established by E.O. 13450), the 

Administration said it eventually would 

"fundamentally reconfigure how the Federal 

Government assesses program performance." The 

PART would be replaced with a "performance 

improvement and analysis framework," which would 

Figure I. Program Evaluation vs. 

Performance Measurement 

Source: CRS. 

switch the focus from grading programs as 

successful or unsuccessful to requiring agency 

leaders to set priority goals, demonstrate progress in 

achieving goals, and explain performance trends. In 

order to break down silos, cross-program and crossagency goals would receive as much or more focus 

as program-specific ones. In developing this new 

approach, the Administration will engage the publie, 

Congress, and outside experts to develop a better and mOTC open performance measurement 5/\ process .. 

Figure 2. Basic Framework for A Logic Model: Evaluating How a Policy MayWork 

--= causal relationship 

INPUTS ~I ACTIVITIES H OUTPUTS 

Examples 

Resources 

• Dollars 

-Time 

Capital assets 

- Human 

- Physical (e.g 

facilities) 

• Information 

Technology 

• Case 

processing 

- Auditing 

• Outreach 

• Analysis 

• Coordination 

• Training 

Examples 

'Audits 

• Reviews 

• Regulations 

issued 

• Background 

investigations 

-New 

knowledge 

• Modified 

behavior 

Examples 

-Improved 

condition 

- Altered status 

Terminology can be confusing, because people often refer to activities, outputs. intermediate 

outcomes, and end outcomes with a term like "performance measure" or "indicator" 

13 

Source; CRS, adapted and modified from Hatry, p. 26 (2006) and United Way of America, Measuring Program Outcomes: A 

Practical Approach (1996), at http://amerlca!ivesunited.com/Outcomes/Resources/MPO/model.dm. 

5X OMS, Ana~)'tical Perspectiv(!s, BudKet (!/the u.s. Government, FY2010, p. 9. 
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Pursuit of Perfonnance Improvement: Three Related Efforts 

The Administration announced three efforts that would begin soon in pursuit of the performance 

improvemcnt and analysis framework.'9 First, the Administration planned to identify "high priority 

goals." As a first step in that process, the Administration said OMB would ask each major agency to 

"identify a limited set of high priority goals, supported by meaningful measures and quantitative targets, 

that will serve as the basis for the President's meetings with cabinet officers to review their progress 

toward meeting performance improvement targets." The Administration also said it would "identify ongoing opportunities to engage the public, stakeholders, and Congress in this effort." 

14 

Second, the Administration said the framework also would "emphasize program evaluation." The 

Administration said it would "conduct quality research evaluating the effectiveness of government 

spending," making an analogy to what has been called "comparative effectiveness research" in health 

care.60 The Analytical Perspectives document did not elaborate further. However, subsequent statements 

from OMB about "evidence-based policy" and "rigorous evidence" suggested a possible emphasis on 

using particular evaluation methodologies, potentially including randomized controlled trials (RCTs)," to 

ascertain the impact of government policy interventions on policy outcomes!' RCTs were the subject of 

some controversy during the George W. Bush Administration. 6J Later, OMB Director Orszag 

characterized this effort as "evidence-based policy" and related it to the President's budget proposals for 

program terminations and reductions, saying the targeted programs "have been determined to be 

ineffective, duplicative, or obsolete.,,64 

59 Unless otherwise noted, quotations are taken from ibid., pp. 9~ 1 O. 

60 For background on this topic in health care, see eRS Report RL34208, Comparative Clinical Effectiveness and CostEffectiveness Research: Background, History, and Overview, by Gretchen A. Jacobson. 

lil OMB, OMB Director Pcter R. Orszag, "Building Rigorous Evidence to Drive Policy," June 8, 2009, at 

http://www.whitehollsc.gov/omb/blog/09/06!08/BuildingRigorousEvidencetoDrivePolicy/. Director Orszag's blog entry linked to 

an advocacy group, the Coalition for Evidence~Based Policy, that primarily has emphasized its views on the merits of RCTs and 

disadvantages of other evaluation methods. See Coalition for Evidence~Based Policy, "Mission & Activities," at 

http://coalition4cvidcncc.orglwordpressl?page_id=6. 

62 An RCT is a form of "impact evaluation" that quantitatively estimates the extent to which a policy causes a change in an 

outcome of interest, compared to what would have happened without the policy. For a discussion of impact evaluations, see 

Figure 3 and related discussion latcr in this memorandum. An "outcome of interest" is a policy goal that onc or more 

stakeholders care about (e.g., unemployment rate). There can be many outcomes of interest related to a program, but there may 

not be consensus on which are most important. 

63 Topics that were subjects of debate included how to define "success" for a program or policy; how the tenn "effectiveness" is 

used ami defined; what kinds of information and analysis constitute "evidence"; what constitutes "rigorous" evaluation; what 

methodology or methodologies are capable ofprodueing "evidence"; how evidence should be presented and used; and what kinds 

of information and analysis should inform learning, management, and polley making. For discussion, see CRS Report RL3330!, 

Congress and Program Evaluation: An Overview oj Randomized Controlled Trials (RCTs) and Related Issues, by Clinton T. 

Brass, Erin D. Williams, and BIas Nufi.ez~Neto. 

M Written testimony DfOMB Director Orszag, in U.S. Congress, House Committee on Appropriations, Subcommittee on 

Financial Services and General Government, Financial Services and General Government Appropriations for 2010, hearings, 

I111h Cong., 1'1 sess" part 8 [May 20,20091 (Washington: GPO, 2009), p. 111. He also mentioned cost-benefit analysis at the 

hearing as a methodology capable of"demonstrat[ingJ results." Under cost-benefit analysis, a person seeks to estimate the costs 

and benefits of a policy option for different actors, denominating both costs and benefits in dollar terms, although some costs and 

benefits may not be possible to quantify. Cost~benefit analy'Sis then shows the distribution of benefits and costs among these 

actors and provides a perspective on whether the total beneflts for society justify the total costs. As an input to that assessment, 

the analysis may produce a computation of "net benefits" or "net costs." Many economists are uncomfortable with cost~beneflt 

analysis, ifit computes overall net benefits or costs for an option but does not take into account distributional concerns among 

winners and losers, or if the analysis is used to justify decisions without making side payments to compensate any losers. See 

Edward M. Gmmlich, A Guide to Benefit-Cost AnalysiS, 2"d ed. (Englewood Cliffs, NJ: Prentice Hall, 1990), pp. 30-33. 
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Third, the Administration would develop further options for the framework. In the coming months, the 

Administration said it would work with agencies and the PIC to develop options for five evaluationrelated topics. The Analytical Perspectives volume did not indicate whether Congress and stakeholders 

would be involved. The topics included (l) establishing a "comprehensive program and performance 

measurement system that shows how Federal programs link to agency and Government-wide goals"; (2) 

changing "program assessment and performance measurement processes to emphasize the reporting of 

performance trends, explanations for the trends, mitigation of implementation risks, and plans for 

improvement with accountable leads"; (3) "streamlining" GPRA- and PART-related reporting to reduce 

workload on agencies and OMB; (4) changing how evaluation-related information is presented to 

Con,,'fess, the public, and stakeholders, both in agency reports and on OMB's ExpectMore.gov website;" 

and (5) beginning a "comprehensive research program to study the comparative effectiveness of different 

program strategies to ensure that programs achieve their ultimate desired outcomes." 

Zients Statements About Plans at Confirmation Hearing 

On June 10, 2009, the Senate Committee on Homeland Security and Governmental Affairs held Mr. 

Zients' confirmation hearing for the DDM position66 Mr. Zients said that, if confirmed, he would "focus 

on the five areas the President has emphasized," including (I) creating an outcome-oriented measurement 

system; (2) helping to transform the Federal workforce; (3) improving acquisition practices and having 

the right mix of public and private labor; (4) ensuring that funding from the American Recovery and 

Reinvestment Act (ARRA; P.L. 111-5) would be spent quickly and wisely; and (5) achieving 

"unprecedented transparency and accountability" throughout government operations. 67 On the subject of 

IT investments, Mr. Zients alluded to an effort to "create a dashboard which will allow us to see where 

projects are, spot problems early and get them ... back on track. ,,68 With regard to program evaluation and 

performance measurement, Mr. Zients said the Administration would transition away from PART to a 

collaborative approach, working with the stakeholders at the senior-most level to understand what 

matters, what are the overall goals, how are they being translated to ... operating plans? And then, 

what are the best handful of outcomes-based metrics to track progress across time? And that you have 

the flexibility in the system ... to look at problems ... not just by program, but across agency. So, I'm 

wary of anything that's one size fits all. At the same time, I think the ultimate test is ... is the system 

being used by senior managers, senior leaders, senior stakeholders to make decisions?69 

This approach appeared to view "senior-most" stakeholders as the primary audiences for collaborating on 

definition.s of "success," and as the primary audiences for encouraging use of the resulting information. It 

65 The website was established the Bush Administration in early 2006 to house PART~related infonnation and is available at 

http://WVIW.whitehouse.gov/omb/expectmore/index.html. 

66 U.S. Congress, Senate Committee on Homeland Security and Governmental Affairs, Nominations, II r h Cong., pi sess., June 

10,2009 (hereafter, Zients Nomination Hearing), at 

http://hsgac.senate.gov/pubHclindex.cfm?FuseAction=Hearings.Hearing&Hearin~ [0= 194 7 6eae~ 7fDc-403e-a I fe-fD6160b2f7 e7; 

transcript at http;!lwww.cq.com (subscription required). 

67 Thc fourth and fifth themes that appeared in the President's FY2010 budget appeared to be combined here. Written testimony 

of JctTrcy Zients, in Zients Nomination Hearing, at http://hsgac,senate.gov/public/_files/061009Zients.pdf. 

68 Testimony in Zients Nomination Hearing. This referred to creation of a website that would show infonnation about projects' 

status with regard to cost, schedule, and performance using "earned value management" (EVM). The website was established as 

"IT Dashboard" on June 30, 2009, at http;/lit.usaspending.gov!, For more on EVM, sec CRS Report RL34257, Earned Value 

Management (£V.lt.1) as an Oversight Toolfor Major Capital Investments, by Clinton T. Brass. 

69 Oral testimony in Zients Nomination Hearing. Me. Zients added that "[s}ome programs probably aren't conducive to metricbased tracking across time, ... and ... therefore, require longer term studies around effectiveness and efficiency." 
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was unclear, however, how the Administration might approach the subject of more numerous operational 

metrics and analyses that often are used at lower levels of an agency to assist with management, learning, 

and research. In addition, Mr. Zients' testimony did not elaborate on how the Administration and agencies 

would provide for public transparency and participation in the process of developing goals and metrics. 

Planning for High-Priority Performance Goals and FY2011 Budget 

On June 19,2009, the Senate confirmed Mr. Zients to be DDM by unanimous consent.'o His confirmation 

set the stage for executive branch-wide implementation of an OMB memorandum that was issued shortly 

after his confirmation hearing. On June 11, 2009, OMB Director Orszag issued a memorandum to heads 

of agencies that provided more details about how the Administration would establish the framework that 

it previously announced in the FY2010 President's budget." The memorandum also assigned several 

"deliverables" to agencies, including that they identify near-term "high-priority performance goals" and 

include certain performance information and termination proposals in FY20 11 budget sUbmissions.J2 

Development of a "Management and Performance Framework" 

The June 2009 memorandum described a forthcoming process to establish a "management and 

performance framework." The memorandum suggested the framework might encompass many of the 

presidential priorities that Mr. Zients outlined at his confirmation hearing. 

Over the next several months, OMB also will work with Congress, interagency management councils, 

experts in Federal management policy, Federal employees, and other key stakeholders to craft a broad 

management and performance framework that will achieve near-term priorities and overcome long 

standing management challenges. This effort will include addressing the high-priority performance 

goals ... and will help inform budget decisions. The framework also will further promote reforms to 

Federal procurement and financial management processes, improvc the openness and transparency of 

government, and maintain a focus on implementation of [ARRA].71 

Publication in August 2009 of OMB's updated version of Circular No. A-ll, which guides agencies 

annually on how to develop budget submissions and comply with GPRA, shed little additional light on 

the Administration's framework other than removing references to the Bush Administration's PART. 74 

High-Priority Performance Goals (HPPGs) 

The June OMB memorandum provided detailed instructions to agencies on how to identify "high-priority 

performance goals" (HPPGs) that could be achieved in 12-24 months. Agencies would have six weeks, 

70 "Executive Calendar," Congressional Record, daily edition, vol. ISS, part 93 (June 19, 2009), pp. S6840-S684J. On July \, 

2009, the White House released a list of White House Office employees. The list did not include Mr. Zients, which indicated that 

the CPO is not a White House position, but instead is a non-statutory, additional title for OMS's DDM position. The White 

House, "Annual Report to Congress on White House Staff," July 1, 2009; at http://www.whitchouse.govlblogiAnnual-Rcport-toCongress-on-White-House-Staff-2009/. 

71 OMS, "Planning for the President's Fiscal Year 2011 Budget and Perfonnance Plans," memorandum. M-09-20, June 11, 2009 

(hereaner OMB June 2009 Memo), at http://www.whitehouse.govlomblmemomnda_2009!. 

i2 Other deliverables focused on the federal hiring process, employee survey findings, and employee wellness. 

71 OMB June 2009 Memo, pp. 1-2. 

740MB, Circular No. A-II, Preparation, Submission, and Execution of the Budget, August 2009, Part 6, at 

http://www . whitehousc.gov/sitesldcfimh/fi les/omb/assets/a 11_ current3ear/a _11_2009. pdf. 
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until July 31, 2009, to submit candidate goals to OMB. When developing the goals, agencies would be 

required to "engage with and consider input" from OMB, policy councils in the Executive Office of the 

President (EOP), congressional authorizers and appropriators, and "agency program and management 

leadership, front-line employees, external partners, the public, and other stakeholders." The memorandum 

did not explain how input would be solicited or whether it would be made publicly available. 

OMB outlined nUmerous guidelines for the 

HPPGs (see Box 4). In combination, the 

guidelines appeared to be difficult to satisfy or 

reconcile. For example, OMB required that the 

HPPGs be "highly valued by the public," which 

suggested that many HPPGs might be end 

outcomes (see Figure 2, p. 13). However, factors 

that are separate from a government program, 

which sometimes are called "external factors," 

such as overall economic conditions, also may 

influence whether end outcomes are achieved. 75 

Therefore, simple performance measurement of 

these end outcomes might leave unclear whether 

the program is contributing toward achievement of 

the goal, or if achievement or non-achievement 

instead is due to external factors that are separate 

from the program. 76 In addition, goals that are 

achievable and measurable in the short-term often 

tend to be more operational in character-for 

example, activities, outputs, or intermediate 

outcomes in a logic model, toward the left side of 

Figure 2-which might make it more difficult to 

select goals that are of high value to the public. 

Box 4. OMB Guidance for HPPGs 

OMB said the goals should be "near-term" (achievable in 12-

24 months); highly valued by the public or reflecting 

achievement of "key agency missions"; authorized by law; and 

sufficiently funded by Congress in order to be achieved. OMS 

also said, however, that the goals should not be focused on 

internal agency management issues. The goals also would need 

to be quantifiable, "measureable in a timely fashion," and 

chosen such that "outcomes ... can be dearfy evaluated." 

Acceptable goals would need to be difficuk to achieve unless 

multiple challenges were overcome. ~hallenges could include 

resolution of "coordination, operational, or other 

implementation challenges including across multiple agencies," 

or the need for a "concerted focus of agency resources." 

For each goal, the memorandum said an agency should define 

the problem being addressed and the goal to be accomplished. 

A goal would comprise one or more performance measures 

with "targets and timeframes." In addition. the memotandum 

said an agency should identify programs inside and outside of 

the agency that contribute to achieving a goal; identify persons 

within and outside the agency who are responsible for policy 

direction, program management, and implementation; identify 

"who will be held accountable for whether the goal ~ 

achieved"; and outline the agency's strategy to achieve the 

goal. 

After the July 31 deadline, OMB reportedly was "working closely with agencies to tweak performance 

goals" that had been sent to OMB. 77 Later, Mr. Zients reportedly said the goals would be posted online 

"after they are finalized as part of the fiscal 2011 budget process."" It is not clear how agencies solicited 

stakeholder input when developing the goals, including from Congress. 

Aspects of this initiative appeared to be similar in some respects to previous presidential initiatives. For 

example, the Richard M. Nixon and Gerald R. Ford Administrations pursued "Management by 

Objectives" (MBO), under which agencies were instructed in 1973 to "select objectives which are of 

Presidential significance" and that are "capable of accomplishment in the coming year.,,79 In addition, the 

75 See Figure 2 for an illustration of end outcomes and Box 3 for more on external factors. 

76 See Box 3 for discussion of how program evaluation is broader in scope and often more appropriate for addressing such 

questions than performance measurement. 

77 Elizabeth Newell, "Agencies Submit 'Fresh, Innovative' Performance Goals to OMS," GovExec.com, August 4, 2009, at 

http://www.govcxcc.com/dailyfcdJOS09/0S0409el.htm. 

Jason Miller, "OMB Wants to Change the Tone of Management," FederalneH'sradio.com, October 21,2009, at 

http://wv..W.fedemlnewsradio.com!?nid= 3 5&sid= 1791266, 

79 Chester A. Newland, "Policy/Program Objectives and Federal Management: The Search for Government Effectiveness," 

Public Administration Revie~ ... , vol. 36 (January/February 1976), p. 21. 
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Clinton Administration's National Performance Review recommended in 1993 that the "President should 

develop written performance agreements with department and agency heads.,,8() The HPPG effort also 

resembles an initiative in the United Kingdom under fonner Prime Minister Tony Blair. In this initiative, 

which was led by the Prime Minister's Delivery Unit (PMDU), departments were assigned targets for 

certain performance measures and received high level attention from the Prime Minister. 81 

Planning for the President's FY2011 Budget Proposals 

The June 2009 OMB memorandum also began the process of developing the President's FY2011 budget 

proposals. According to previous Administration statements, several of the memorandum's topics were 

supposed to have been influenced by Mr. Zients. Among other things, the memorandum directed each 

agency to identify at least five potential "significant" terminations or reductions in its budget submission 

to OMB. Each potential termination or reduction was to include "analysis and evidence showing why the 

reductions are warranted. ,,82 OMB also directed agencies to submit three alternative budget requests, 

reflecting different funding scenarios, with corresponding estimates of the "performance" associated with 

each request. For these requests, OMB directed agencies to highlight "methodologies used to allocate 

base funding" and specifically cited the use of cost-benefit analysis. Furthermore, the memorandum said 

agency requests for funding for a speciflc project or location "should provide a clear merit basis for 

inclusion in the budget" but did not explain what would constitute "merit."Bl 

Developing a New Performance Management System 

Fall 2009 Congressional Hearings 

From September 2009 through the calendar year's end, several developments suggested how the Obama 

Administration's framework might operate. For example, Mr. Zients testified at several congressional 

hearings about the Administration's plans for developing a new "performance management" framework. 

At a hearing on September 24, 2009, for example, he announced the appointment of Shelley H. 

Metzenbaum as his deputy with responsibility for performance-related topics. 84 After the 2008 

presidential election, Ms. Metzenbaum wrote a 66-page report that recommended what the Obama 

Administration should do regarding "performance management" (see Box 5 for highlights)85 

80 Office of the Vice President (Gore), From Red Tape to Results: Creating a Government That Works Better & Costs Less, 

Report a/the National Pelformance Review (Washington: GPO, 1993), pp. 75-77, and From Red Tape to Results: Creating a 

Government That Works Better & Costs Less, Mission-Driven, Results-Oriented Budgeting, Accompanying Report <?fthe 

National Performance Review (Washington: GPO, 1993), pp. 9-14. 

&1 The PMDU effort received mixed reviews. See Michael Barber, In .. stroction to Deliver: Tony Blair, Public Services, and the 

Challenge of Achieving Targets (London: Politico's, 2007); and Christopher Hood, "Gaming in Targctworld: The Targets 

Approach to Managing British Public Services," Public Administration Review, vol. 66 (July/August 2006), pp. 515~521. 

l!2 OMB June 2009 Memo, p. 4. 

in Some observers have called presidential budget requests that specify funds for a specific project or location a form of executive 

branch earmarking. For discussion, see CRS Report RL34648, Bush Administration Policy Regarding Congressionally 

Originated Earmarks: An Overview, by Clinton T. Brass, Garrett Hatch, and R Eric Petersen. 

)';4 U.S. Congress, Senate Committee on Homeland Security and Governmental Affairs, Subcommittee on Federal Financial 

Management, Government Information, Federal Senrices, and International Security, Getting to Betler Government: Focusing on 

Performance, 1111h Cong., lS[ sess., September 24, 2009, at 

http;l/hsgac.senatc.gov/public/index,cfm?FuseAction=Hearings. Hcaring&Hearin~ ID=4a27 d8ec-2e50-4e6e-aaba-72b62ca9aOee. 

85 In Box 5, page citations refer to Shelley H. Metzenbaum, Performance .Management Recommendations for the New 

Administration (Washington: IBM Center for the Business of Government, [January] 2009), at 

(continued ... ) 
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Box 5: Highlights of Recommendations from Metzenbaum Report 

'Ms: Meraenbau,m's report ~ecommended retaining ,a ,jre.vised" PART'to be condu,cted by OMS, because 'it "introduced a Ilsefu,! 

program management discipline" (p. 52). ATevised PART would emphasize using'analysis to imprqve: 'rather than atta~ning 

,argets'or scoring w,ell on overall program ratings {pp. 43, 52,54).1, also would decrease emphasis on holding agencies 

3etountable'for using effective periormane:e management practices, such as planning and management (p. 54). Separately, there 

would be four levels o.f performance measures or "targets": 

presidential. 

cross-agef!cy jagency, and 

program (pp, 38; 41). 

White House "policy councils" and 0,M8 would identify cross-agenCY measures and targets (pp. 43, 53). AgenCies would 

'iidentify a broader set,of agency priority targets in'their ,,!-reas of responsibility!> (p. 38). Echoing the Obama campaign's plans 

for a White House p'eriormance team, the report recom!Uended ,that the Cp<? use practices someWhat analogou,s to, the 

PMDU of the United Kingdom. A group of "highly regarded public and private sector managers" would provide feedback to 

members of the Cabinet about how to. meet the President's targets and priorities (p. 42). The report focused primarily on 

periormance measurement and anaiy>is of these measures (pp. 41-42), but did not explicitly include the subject of program 

evaluation in its scope o~ how program evaluati()ns could address the recommended analyses. 

The, report identified some ways In which agencies might interact with Congress and the public, but was largely sUent about 

how the President and OMS should work or consuli With Congress. For example, the report r'ecom~ended, that OMS 

"strongly encourage agencies to invite ou~side expertise and multiple perspectives to !nform the selection of targets. 

periorman'Cc measures, and strategies to improve pe,nQrmance" and particu~arly emphasized ~ngagement with "outside 

experts" (I'. 45). Whether Congress and the public would be invited by agencies to participate in specifying overall goals, 

h?wever, seemed unClear\ The report did not address the topic of presidential or OMS consultations with Congress 'abou~ , 

goal~setting. ~Qn~executiv~ b~anch. involv~mef)t in goal-setting focused on allowing comments on' already completed reviews 

under 'a'rl:!vised PART (pp. 45, 53·54). The report emp~sized ,reaching Out to j'key audiences" to address their information 

needs (pp. 44-45, 50-51). With respect to Congress, for e~ample; the report recommended ,hat agendes consult wi'h "key 

comm~ttees to understand ~heir p~ormance information needs,'! ind!Jding how to format information (pi>. 50~5 t), 

At the s.me time, the report described GPRA as a potential tool to "adVance [the President's] agenda" (p. 10). The report'. 

recommendations ,seemed to be premised on th~ President and agencies using discret,ion. wher~ available. to engage, in goa,l. 

setting to "advance [the President's] priorities"and agenda (Pl'. 10, 38,49, 53). The report summarized a view under which 

Cohgr~s and the public would h~ve ~,reactiv.e role: "OOoals. reinforced by measuremen~, , .. ,[clarify} agency priorities to ~e 

pUblic, allOWing Congress and the public to take action ~ they disagree with the choices that. have been made" (p: 10). 

At the September 2009 hearing, Mr. Zients described how the performance framework would be 

developed. In addition to finalizing agencies' HPPGs, he and Ms. Metzenbaum also would develop an 

"improved Federal performance management framework that aligns these high priority performance 

goals, GPRA performance reporting, and many of the program-level performance measures developed for 

the PART. "gti He said the Administration'5 "government-wide performance measurement framework H 

would focus on outcomes, allow comparisons across programs and agencies, and show trends over time. 

Mr. Zients also addressed how the success or failure of the Obama Administration's efforts might be 

assessed and which stakeholders' needs he was seeking to address. He said that the "ultimate test of our 

performance management efforts is whether or not the information is used." In so doing, he identified the 

targeted audiences for the effort's performance measures. This information, he said, ideally should be 

used "not just by government agencies, but also by Congress, the public, our service delivery partners, 

( ... continued) 

http;//www.businessofgovcmmcnt.orglreportlperformance~munagement~rccommendations~new-administration. 

gli Prepared testimony of Jeffrey D. Zients, p. 3, at 

http;llhsgac.senate.gov/public!index.cfm?FuscAction=Hearings.Hearing&Hearing_ID=4a27d8ec-2e5D-4e6e-aaba-72b62ca9aDcc. 
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and others." Mr. Zients defined "useful" information in two categories, as that information which supports 

(1) "long-term, central office strategic decisions about targets and organizational strategies," and (2) "key 

decision-makers in the service delivery chain including those in Federal field offices, State and local 

partners, non-profit grantees, and contractors."" IT and "historic investments" in comparative 

effectiveness research and evaluations would make greater use possible, he said. 

At a subsequent hearing on October 29, 2009, Mr. Zients identified five "key principles" that would guide 

the Administration's efforts to develop a "performance management system."" The principles included 

ownership of the process by senior agency leaders, who would set agency goals and be 

"held responsible for performance against those goals"; 

cascading goals, where a "clear line must link agency strategic goals and measurements 

to unit-level, program-level and ultimately individual targets"; 

development of outcome-oriented, cross-agency goals and measurements, with "clear 

delineation of lines of responsibility" and an emphasis on "outcomes [that require) 

contributions from multiple actors" inside and outside government; 

"relentless" reviews of performance against plans at all levels of government, including 

"program, unit and agency level reviews" and reviews of overall agency performance by 

OMB and other White House entities; and 

transparency, with "active engagement" of the public, Congress, and federal workers. 

Where current practices did not meet the five principles, Mr. Zients said the Administration would seek to 

eliminate or streamline the practices. He also identified new plans. lIe said the Administration planned to 

implement "management dashboards," in addition to the previously announced IT Dashboard." The 

dashboards would focus on functions like procurement, financial management, and human resources. 90 

OMB Emphasis on Impact Evaluations 

On October 7, 2009, an OMB memorandum announced the Administration would put an emphasis on a 

specific type of program evaluation called impact evaluation. 91 Previous OMB statements suggested the 

&7 When Mr. Zients spoke about targeted audiences at his June 2009 conflnnation hearing, he emphasized use of performance 

information by "senior-most" stakeholders and decision makers. It was not clear if Mr. Zients' newer statements about audiences 

were intended to include middle and front-line managers and employees. The distinction may be significant, because service 

delivery personnel often have different needs compared to policy makers. See Charlie Bennett and Herb Hill, ''"Performance 

Management Systems; The Importance of Defining Their Purpose," (2002), fonnerly at http://WVf\.V.dpb.statc.va.usf. The paper is 

availabJe on request from the author of this CRS report. 

xx U.S. Congress, Senate Committee on the Budget, Ta'ik Force Hearings, hearings, 11 jth Cong., lSI sess. (October 29, 2009], 

S.Hrg. 111-381, pp. j,63. 

X9 For discussion of the IT Dasbboard, see footnote 68 and accompanying text. 

'Xl A month later, the President issued E.O. 13520, which called for a dashboard of indicators on federal improper payments. See 

Section 2(b) ofE.O. 13520, "Reducing Improper Pa;ments," 74 Federal Register 62201, November 20, 2009. OMB later 

established a related website, http://www.PaymentAecuracy.gov. See OMB Director Peter R. Orszag, "PaymentAccuracy.gov," 

June 24, 2010, at http://www.whitehouse.govlomblblogiI0/06124/Pa;mentAccuracygovl. With regard to personnel management, 

on May 11, 2010, President Obama issued a memorandum that required OPM and OMS to develop a website to track "key 

human resource data," including "progress on hiring ref'onn implementation." See The White House, Office of the Press 

Secretary, "Presidential Memorandum-Improving the Federal Recruitment and Hiring Process," press release, May 11,2010, at 

http://www.whitehouse.gov/the-press-office/presidential-memorandum-improving-federal-reeruitment-and-hiring-process. 

91 OMS, "Increased Emphasis on Program Evaluations," memorandum, M-1O-01, October 7, 2009, at 

(continued ... ) 
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memorandum specifically was referring to a particular meaning of that term: evaluations that 

quantitatively estimate the extent to which a policy causes a change in an outcome of interest, compared 

to what would have happened without the policy." To illustrate, if the U.S. were in a recession, observers 

might expect the number of jobs in the U.S. to decrease over time (see Figure 3). Further suppose that a 

policy was implemented during the recession with the objective of increasing employment, compared to 

what would have happened without any policy intervention. If an impact evaluation were conducted, and 

ifthe evaluation estimated that the policy caused an increase in the number of civilian jobs (e.g., 136 

million jobs) compared to what would have happened otherwise (135 million), the estimated "impact" 

would be the difference (one million).93 

Source: CRS. 

Figure 3. Illustration of Impact Estimate 

Outcome of 

Interest 

What happened with Program the government / starts. program 

~----L I } 

" 

", . Impact 

What would have happened'-:=: - -, " 

v.vi~hql{t the government ...... ' program Time 

Notes: In the figure, the dotted line is an estimate. The red line shows that performance continues to decrease after the 

start of a policy, but by less than it would have decreased withom the government program. 

The OMB memorandum cited several issues as problems. These included "many important programs 

[that] have never been evaluated"; insufficient influence of some evaluations on budget priorities and 

( ... continued) 

http://WVt'w,whitehouse.gov!omb/assets!memoranda_201 O/ml O~OLpdf. See also OMB Director Peter R. Orszag, "Valuing 

Evaluation," October 7, 2009, at http://w\VW.whitehouse.gov/omb/blogl09/1 0107!ValuingEvaluation!. 

n For background, see CRS Report RL3330 1, Congress and Program Evaluation: An Overvieti-' o/Randomized Controlled Trials 

(RCTs) and Related lssues, by Clinton T. Brass, Erin D. William'>, and Bias Nufiez~Neto. ' 

9) That is, under this meaning of the term impact evaluation, an impact is defined as the difference between two numbers: (a) a 

measurement of what happened to an outcome after a policy was implemented, and (b) an estimate of what would have happened 

to the outcome, if the policy had not been implemented. The concept of (b)-what would have happened without the programis not observed and must be estimated. Using the tenninology of evaluation, (b) is called the counter/actual or counter/actual 

estimate. Under a second meaning of the term impact evaluation, an evaluation may be used to infer a cause~and-effect 

relationship, but without estimating quantitatively what would have happened without the program. In other words, estimation of 

a counter factual is not the only way to demonstrate that a causal impact likely occurred. (For discussion, see Lawrence B. Mohr, 

Impact Analysisfor Program Evaluation, 2nd ed. (Thousand Oaks, CA: Sage Publications, 1995), pp. 65, 248~273; and Stephen 

Garard and Thomas Cook, "Where Does Good Evidence Come From?", International journal of Research & Method in 

Education, vol. 30 (November 2007), p. 311.) Some of the methods associated with the second meaning of impact evaluation 

may be used to understand how and why impacts occur. Hence, although the term impact evaluation may have two distinct 

meanings, both focus on whether a government policy causes a change and may be used to make causal inferences. A study's 

focus on causation may be important when factors external to a program are known to influence outcomes. Otherwise, a study 

may leave unclear whether a change in outcomes is due to the program, external factors. or both. 
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management practices; a lack of evaluation offices and staffing in many agencies; studies of "insufficient 

rigor or policy relevance"; and a lack of evaluations that identify which of "multiple approaches to the 

same problem '" are most effective." In response to these perceptions, OMB announced a three-part 

initiative to focus on impact evaluations of social and economic programs. 

First, OMB would work with agencies to put information online about all federal impact evaluations that 

are planned or underway. Second, OMB and several White House policy councils would "re-constitute" 

an inter-agency evaluation working group under the PIC, which was established by E.O. 13450 (see Box 

2, p. 11). The working group would build agencies' evaluation capacities and develop government-wide 

guidance on program evaluation practices, with a goal of helping agencies "determine the most rigorous 

study designs appropriate for different programs given their size, stage of development, and other 

factors. ,,94 Third, OMB invited agencies to propose funding for "high-priority" evaluation activities in 

their FY20J J budget submissions to OMB. OMB would include funding in the President's budget 

proposal for up to 20 "rigorous" evaluations or efforts to improve evaluation capacity. Agencies wishing 

to be considered for such funding would need to assess the "adequacy of evidence" supporting their 

priorities. New initiatives and program expansions would need to provide "credible evidence of the 

program's effectiveness." In addition, OMB asked submitting agencies to identify statutes that "[limit] 

their ability to carry out rigorous evaluations, allocate evaluation resources to key priorities, or otherwise 

impede efforts to build evidence of what works." OMB asked agencies to suggest strategies for working 

with Congress to address these topics. 

The OMB memorandum generally characterized impact evaluations as supplying "evidence" regarding 

"what works" and how best to allocate taxpayer dollars. As discussed later in this memorandum, several 

kinds of evidence typically are relevant when making policy or allocating resources. Impact evaluations 

may provide information about the extent of a change caused by a policy intervention, but they do not 

necessarily indicate whether a policy would have a similar impact at other times or settings. Impact 

evaluations also oftentimes do not assess how and why impacts occur, how and why subpopulations are 

affected, how a program might be modified to improve, or a program's cost-effectiveness. Other kinds of 

evaluations may provide complementary or more useful information to make such judgments. 

Statements on Implementation Challenges and OMB's Role 

In two October 2009 speeches, Mr. Zients reportedly made commitments for how OMB would work with 

Congress and agencies in the future. After a "listening tour" during his first 100 days on the job, he 

identified four barriers to getting things done. 95 These included (1) a focus by political appointees on 

~4 OMO's focus on "appropriate" study designs suggested a change from previous OMB guidance on impact evaluations, In 

2004, OMB almost exclusively emphasized RCTs for assessing impacts, and, less precisely, for assessing "effectiveness." See 

OMR "What Constitutes Strong Evidence of a Program's Effectiveness?", [2004], at 

http://\l;ww, whitehouse,gov/omb!assets/omb/perfonnanceI2004yrogram_ eval.pdf. OMB'5 2004 guidance apparently was 

written with assistance from the Coalition for Evidence-Based Policy, Some federal agencies' evaluation personnel and a task 

force of the American Evaluation Association (AEA) critiqued OMB's guidance for over-emphasizing RCTs and not addressing 

other methods, The federal evaluators gave a briefing that OMB posted on its website: "Evaluation Dialogue Between OMB Staff 

and Federal Evaluators: Digging a Bit Deeper into Evaluation Science," July 2006, at 

hUp:!/wv.'W, whitehouse,gov/omb/assetslomb/perforrnance/supp_ materials/fed _ eval_ 2006 _ slides, pdf. The AEA task force scnt a 

letter to OMD: Letter from William M.K. Trochim, President, American Evaluation Association, to Robert Shea, Associate 

Director for Administration and Government Perfonnance, OMB, March 7, 2008, at 

http://www,eval.org/aea08.omb,guidance,responseF.pdt: 

95 Jason Miller, "OMB Wants to Change the Tone of Management," Federalnewsradio.com, October 2l, 2009, at 

http://www.fcdcralncwsradio.com!?nid=35&sid=1791266; and Elizabeth Newell, "Perfonnance Chief Promises to Help 

Managers Overcome Challenges," GovEr::ec.com, October 5, 2009, at http://www.govexec.comJdailyfcd/l0091I00509e2.htm. 
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policy rather than management and implementation; (2) insufficient exploitation of IT, with gaps in 

quality and productivity compared to the private sector; (3) federal contracting that does not take 

advantage of the government's purchasing leverage; and (4) slow processes for hiring federal employees. 

Mr. Zients reportedly emphasized a need to prioritize, saying "[t]o focus on everything is to focus on 

nothing." Commenting on OMB's approach, he reportedly committed to regular communication with 

Congress and a collegial instead of command-and-control role with agencies. 96 

FY2011 President's Budget and Announcement of HPPGs 

The President submitted his FY2011 budget proposals to Congress on February 1,2010. The budget 

documents charted further evolution of the Administration's performance-related agenda, but also 

announced that substantial parts ofthc agenda were still to be developed. 

High-Priority Performance Goals and "Performance Management Strategies" 

Following up on OMS's June 2009 memorandum and guidance (see Box 4, p. 17), the Administration 

released HPPGs for 24 federal agencies and one executive order. 97 The Administration did not provide a 

precise count of the goals, but identified them using 128 bullets. Each bullet, in turn, identified one or 

more metrics, milestones, or objectives. Release of the finalized HPPGs provided an opportunity to see 

how agencies attempted to implement the Administration's previous guidance. In OMS's June 2009 

memorandum, OMS said the goals should be of "high direct value to the public" and not focus on 

"internal agency management or other administrative priorities." Although some of the finalized HPPGs 

focused on end outcomes, most of the goals and supporting metrics focused on inputs, activities, outputs, 

and intermediate outcomes, as means through which to accomplish end outcomes that might be of 

comparatively more direct value to the public (see Box 3 and Figure 2, pp. 12_13).98 

The FY20 II budget also announced a new framework. In the coming fiscal year and thereafter, the 

Administration would pursue three "performance management strategies." The strategies focused 

predominately on goal-setting and performance measurement. Highlights of the strategies are summarized 

in Table 1. 

96 Mr. Zients reportedly went into some detail on how OMB would work with agencies and Congress, saying "[wJe're going to 

move from OMB sets priorities to the agency sets priorities; from oversight to partnership; from shipping reams of guidance to 

two~way dialogue about how we achieve the desired outcome; from transparency not just for accountability, but for idea flow to 

find and share the best practices; from ad hoc engagement for stakeholders such as Congress, to regular communication . ... I'm 

positive we'll make mistakes. we'll slip into some old bad habits, but I commit to you that we will serve you differently than we 

have in the past." Ibid, 

"OMB, Analytical Perspective.s. Budget a/the Us. Government. FY20J J (Washington: GPO, 2010), p. 75. 

9~ The agencies' emphasis on process-related and other intermediate mctries may not be surprising, given the short-term nature of 

the goals, the Administration's emphasis that performance information should be useful during implementation, and the nature of 

how managers typically set short~ and medium-term agendas. A broad literature suggests managers tend to focus on intermediate 

milestones and accomplishments that are necessary in order to achieve more long-term, strategic objectives. See John p, Kotter, 

"What Effective Managers Really Do," Harvard Business Review, voL 77 (March-April 1999), pp. 145-159; and Henry 

Mintzberg, The Nature ~rManagerial Work (New York: HarpcrCollins, 1973), p. 153. 
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Table I. "Performance Management Strategies" in President's FY20 II Budget 

Strategy 

"Use performance 

information to lead, 

learn, and improve 

outcomes" 

"Communicate 

performance 

coherently and 

concisely for better 

results and 

transparency" 

"Strengthen 

problem-solving 

networks" 

Administration Plans 

In addition to pursuing HPPGs at the agency level, the Administration said it would ask agency leaders to 

carry out a similar goal~setting exercise at the bureau level in the coming year. Both agency leaders and 

OMB would put in place quarterly feedback and review sessions that are modeled after so-called "Stat" 

efforts in state and local governments,99 

The Administration said it would "eliminate performance measurements and documents that are not 

useful" and convey information about agency-, cross-agency-, and program-level measures, In combined 

perlormance plans and reports, the Administration would explain "why goals were chosen, the size and 

characteristics of problems Government is tackling, factors affecting outcomes that Government hopes 

to influence, lessons learned from experience, and future actions planned," In addition, agencies would 

"take greater ownership" in communicating GPRA-required performance plans and reports to "key 

audiences," In an effort to make performance data useful to "all audiences--congressional, public, and 

agency leaders," a new federal performance portal would provide "a dear, concise picture of Federal 

goals and measures by theme, by agency, by program, and by program type." The portal also would link 

to "mission-support management dashboards." The dashboards would include the IT Dashboard and 

"similar dashboards planned for other .. , functions including procurement. improper payments, and 

hiring." Information about all federal impact evaluations would be available through the portal as well, 

The Administration planned to use "existing and new practitioner networks," both inside and outside 

government. To address shared problems, the Administration would create cross-agency teams. The 

Performance Improvement Council (PIC), established by E,O. 13450 (see Box 2, p. II) would "function 

as the hub" of the overall network. OMB would work with the PIC to "advance a new set of Federal 

perlormance management principles, refine a Government-wide performance management 

implementation plan, and identify and tackle specific problems as they arise." The PIC. in turn, would 

establish communities of practice organized by program type. problem, and methods. 

Source: OMS,Analytical Perspectives. Budget o(the U.S. Government, FY20f I, pp. 73~75, 

Impact Evaluations and Characterizations of "Evidence-Based Policy" 

The FY20 11 President's budget proposal also displayed some evolution of OMB 's three-part initiative to 

emphasize impact evaluations, which had been announced in October 2009. '00 After reiterating that 

impact evaluations that are "planned or already underway" would be put online (see Table 1), the 

Administration offered more detail about the operation of an "inter-agency working group" (hereafter 

IWG). The IWG would work with four entities in the Executive Office of the President: OMB, the 

Council of Economic Advisers (CEA), the Domestic Policy Council, and the Economic Policy Council. 

Among other things, the IWG and these EOP entities would help build evaluation capacity and networks, 

assist in selecting evaluation designs, devise strategies for "using data and evaluation to drive continuous 

itnprovcment," and develop executive-branch-wide guidance on program evaluation practices with 

"sufficient flexibility for agencies to adopt practices suited to their specific needs." Nevertheless, the 

99 The "Stat" approach, at least under that name, was pioneered in New York City in the mid-1990s, when the police department 

there began a management system called "computerized statistics," or "Compstat" for short. The Obama Administration has. cited 

CampS tat and similar approaches when describing its goal-setting, performance measurement, and management efforts. See 

OMB, Analytical Perspectives, Budget a/the us. Government, Ff20! 1, p. 73, In July 2010, Senate Budget Committee's Task 

Force on Government Performance held a field hearing on the subject. See U.S. Congress, Senate Committee on the Budget, 

Performance "Stat ": Measuring Priorities, Progress and Results, hearing 111 III Cong., 2nd sess., July 12, 2010, at 

http://budget.scnate.gov/democratic/hearingstate.html. 

100 lJnfootnoted citations in this section are to OMB, Analytical Perspectives, Budget of the U.S. Government, PY2011 

(Washington: GPO, 2010), pp. 91-92. In a succeeding chapter of the same volume, the Administration devoted substantial 

discussion to benefit-cost analysis (BCA). Much of the discussion focused on the use ofBCA prospectively with regulations. 

However, the chapter also newly focused on the use of BCA for regular programs. The chapter may signal the possibility of an 

increased Administration emphasis on the use of BCA as fonn of program evaluation. 
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budget left unclear whether the IWa would act autonomously or, alternatively, become a means through 

which the EOP would direct agency practices. The relationship between the IWa, which primarily is 

oriented toward program evaluation, and the PIC (see Box 2, p. 11), which primarily is oriented toward 

performance measurement, also was unclear. 

25 

Following up on the third part ofthe initiative, the Administration listed 35 FY2011 budget proposals for 

IS agencies, amounting to "approximately $100 million," to conduct evaluations or build evaluation 

capacity. Of the 35 proposals, 28 focused on evaluating specific programs or policies. These proposals 

would fund new evaluations with "strong study designs that address important, actionable questions." The 

remaining seven proposals would "strengthen agency capacity to support such strong evaluations." OMB 

and CEA would "continue to work with these agencies on implementing strong research designs that 

answer important questions." What would constitute a "strong" study design was not clear. The 

Administration also did not indicate what kind of relationship OMB and CEA would have with agencies. 

The Administration also elaborated its views on the role that evidence should play when making policy, as 

well as how to define what constitutes evidence. The way the President or an agency characterizes 

evidence for policy making may ha ve implications for Congress in the legislative process; for example, 

when justifying budget or policy proposals. Similar implications for Congress may be evident for 

purposes of oversight and transparency, when agencies or the President use discretion to allocate 

resources and implement policies based on this evidence. 

Specifically, the Administration's budget proposal said the President "has made it very clear that policy 

decisions should be driven by evidence.,,101 The Administration identified two types: (I) evidence about 

"what works and what does not"; and (2) evidence that "identifies the greatest needs and challenges." The 

Administration said little regarding how to define the second type of evidence. By contrast, with regard to 

the first type, investments would be made in programs that are supported by "strong" or "rigorous" 

evidence. The budget did not define what would constitute strong or rigorous evidence. However, for new 

initiatives, the Administration indicated it would use a "three-tiered approach" to "evidence-based policy 

making." In the first or "top" tier, more resources would be allocated for programs backed by "strong" 

evidence. In the second tier, programs with "supportive" evidence would receive additional resources, "on 

the condition that programs will be rigorously evaluated." Third, agencies could pursue approaches 

"supported by preliminary research findings or reasonable hypotheses." The Administration said the 

three-tier approach provides "objective" criteria to inform resource allocation. As an example, the 

Administration cited the Department of Education's (ED's) Invest in Innovation Fund (i3).101 

The i3 program, therefore, may indicate how the Administration plans to define and use evidence in 

proposals to Congress and in administrative policy making. Shortly after publication of the President's 

budget proposals, ED defined "evidence" in a final rule almost solely as the estimate of a program's 

impact, as produced by an impact evaluation in the sense illustrated by Figure 3 (p. 21). According to ED, 

impact evaluations would facilitate making "causal conclusions" and generalizing findings for "scaling up 

to the State, regional, or nationallevel.",o3 By contrast, ED said it did not see a need to include in the 

definition of evidence the information provided by other types of evaluations that do not quantitatively 

estimate an impact, including qualitative, process, and "mixed method" approaches. 104 These evaluations 

101 Ibid., p. 92. 

102 Ibid. 

IO} U,S, Department of Education , "Investing in Innovation Fund; Final Rule and Notice," 75 Federal Register 12004-12071, at 

12063, March 12,2010. 

lO'Ibid., pp. 12053 and 12055. 
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often are used to understand mechanisms and contexts of causation and, therefore, circumstances under 

which a program may have an impact in different settings, populations, and times. 105 Given this focus on 

impact evaluations and the omission of other kinds of evaluation information from the definition of 

"evidence," past experience and the program evaluation literature suggest that if the Administration 

applied the i3 definition of "evidence" more widely, such a move may be controversial. 106 For example, 

similar controversy arose in 2010 in the context of a grant program established by the Patient Protection 

and Affordable Care Act of 2010 (PPACA; P.L. 111_148).101 

Line-by-Line Review and Proposals for Termination or Reduction 

The Administration issued its second annual Terminations, Reductions. and Savings document (FY2011 

TRS Document) based on a continued "Iine-by-line review" of the budget. 108 By its count, the 

Administration proposed 126 cuts or program restructurings amounting to $23 billion for FY2011. 109 

Fifteen of the proposals came from federal employee suggestions under the President's SAVE Award 

initiative. 110 Some of the proposals' justifications referred explicitly to program evaluations or 

performance measures, but most made analytical arguments in support of Administration proposals. Some 

justifications, for example, argned for reducing "duplication" and favored administrative decision making 

processes for allocating resources instead of congressionally directed spending. 

February 2010 Framework: Six "Performance Strategies" 

On February 18,2010, Mr. Zients followed up on the FY2011 budget with a speech that outlined a new 

framework for the Administration's performance agenda. The framework comprised six "performance 

strategies" that "offer the greatest potential to improve [government] perfonnance."lll In order of 

presentation, the strategies included (1) "eliminate waste"; (2) "drive top priorities"; (3) "leverage 

105 CRS Report RL33301, Congress and Progmm evaluation: An Ol-'erview of Randomized Controlled Trials (ReTs) and 

Related Issues, by Clinton T. Brass, Erin D. Williams, and mas Nufiez-Ncto. 

106 See ibid. and William Easterly, "The Civil War in Development Economics," (New York University Development Research 

Institute), December 3, 2009, at http://aidwatchers.eoml2009/12/the-civil-war-in-developmcnt-economics.!. 

107 The controversy arose in the context of a PPACA grant program (P.L. ] 11-148, Section 2951; l24 Stat. 335) and a relatcd 

proposal by the Department of Health and Human Scrvices (HHS) to establish "criteria for evidence of effectiveness of home 

visiting program models." HHS' 5 proposed criteria generally would elevate RCTs above other forms of impact evaluation in 

terms of study "quality" and, in addition, would not provide a role for program evaluation methods other than impact evaluations 

to infonn assessments of "evidence of effectiveness" for a program model. In the relevant PPACA provision, Congress required 

HHS to .articulate its proposal through public notice .and solicitation of comments. HHS's notice prompted expressions of concern 

from groups including the American Evaluation Association (AEA) and the Center for Law and Social Policy (CLASP). The 

AEA is a professional association of evaluators, and Cld\SP is an advocacy group that focuses on policies that relate to lowincome people. For the HHS proposal, sec U.S. Department of Health and Human Services, "Maternal, Infant, and Early 

Childhood Home Visiting Program," 75 Federal Register 43 172, July 23, 20ID. For comments from the AEA, see letter from 

Leslie Cooksy, Debra J. Rog, and Jennifer Greene, AEA, to Mary K. Wakefield, Administrator, Health Resources and Services 

Administration (HRSA), HHS, August 17,2010, at http://W\\.'W.eval.org/EPTF/aeal0.eptrvisitation.comments.box.pdf. Also see 

letter from Rutledge Q. Hutson and Tiffany Conway Perrin, CLASP, to Mary K Wakefield, Administrator ofHRSA, HHS, 

August 16,2010. at http://www.clasp.orgifederal_Jlolicy/pages?id~015. 

!O~ OMB, Terminations, Reductions, and Savings-Budget of the U.S. Government. Fiscal Year 2011 (hereafter FY2011 TRS 

Document) (Washington: 2010), at http://www.whitehouse.gov/omb/budgeUTRS/. 

\O() The Administration also said Congress enacted $6.8 billion of the Administration's PY2010 TRS Document proposals. 

110 Ibid., p. 1. According to the Administration, the 15 employee-suggested items did not require action by Congress to be 

implemented. For more on the SAVE initiative, see http://www.whitehouse.gov/savc-award, 

III Speech given at Center for American Progress, February 18, 2010. A transcript of the speech and a subsequent panel 

discussion is available at http://wvvw.americanprogress.orglevents/20JO/02/dww,html. 
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purchasing scale"; (4) "close the IT performance gap"; (5) "open government to get results"; and (6) 

"attract and motivate top talent." Mr. Zients placed many ot'theAdministration's previously announced 

initiatives within this framework. For example, he included within the first strategy the Administration's 

FY20J 1 TRS Document, emphasis on impact evaluations, and focus on reducing improper payments. 

HPPGs were the primary focus of the second strategy. Publicly visible, online dashboards would support 

many strategies, especially including initiatives relating to improper payments, IT, and human resources. 

He said periodic "Stat" reviews would occur for HPPGs and IT projects. '1l Mr. Zients also announced that 

the Administration would establish a "government-wide performance portal" in the summer of2010. 

Looking Ahead to the President's FY2012 Budget Proposals and 112th 

Congress 

In July 2010, a White House document described an Accountable Government Initiative (AGI) that 

included many oftbe Administration's performance-related initiatives from the framework that Mr. Zients 

outlined in his February 2010 speech.'13 Several weeks later, the President and Mr. Zients issued two 

memoranda to the Senior Executive Service (SES) that more formally transmitted the AGL '14 1t remains 

to be seen whether this framework will be presented in the President's FY2012 budget, which will be 

submitted in early 2011 to the I 12th Congress. 

During the summer of2010, OMB also issued documents in preparation for the FY2012 proposal and in 

anticipation of rolling out the Administration's performance-related initiatives. With regard to the FY2012 

budget, OMB and the White House issued two memoranda to the heads of agencies on June 8, 2010, that 

provided guidance for how agencies should submit their budget requests to OMB. In one memo, OMB 

Director Orszag and White House Chief of Staff Rahm Emanuel required agencies to identify 

discretionary programs that have the "lowest impact.. .. on your agency's mission and relevant Presidential 

initiatives."tllln particular, they urged agencies to identify at least 5% of their enacted FY2010 

discretionary appropriations, excluding emergency and supplemental funding, as having the lowest 

impact. In the second memo, Director Orszag directed agencies to include at least five termination and 

reduction proposals with supporting "analysis and evidence showing the effects of the reductions and why 

they are warranted.,,'16 OMB also issued a memorandum to emphasize impact evaluations with the 

President's FY2012 budget proposals, 117 continuing the emphasis that OMB began in October 2009 for 

the President's FY2011 budget proposals. 

l!2 For more on TechStat, see CIO Vivek Kundra, "Tech Stat: Improving Government Performance," February 24, 20] 0, at 

http://www. whitehouse.gov!b log/20 I O/02/24/techstat-improving-governmcnt-performance, 

I!J See The White House, Office of the Press Secretary, "Dackgroundcr: The Accountable Government Initiative: The Obama 

Administration's Effort to Cut Waste and Modernize Government," July 22, 2010, at 

http;/!www. whitehouse.gov!sites/default/files/Background _ on _ Accountable_ Government_lnitiative,pdf. The PDF link may be 

found at http://v..'WW. whitehouse. gov/the-press-office/president-obama~sign-itnproper-payments-eliminatjon~and~reeovcry-act. 

114 The White Ilouse, Office of the Press Secretary, "Presidential Memorandum-Accountable Government Initiative," 

September 14, 20 I 0; and OMD, "The Accountable Government Initiative-an Update on Our Performance Management 

Agenda," September 14, 20 I 0, at http;//www.whitehouse.gov!the-press-officc!201 0/091 14!presidentjal~memorandumaccountable-government -initiative, and http://www . whitehouse. gov/blogl20 10/09/14/sending-out-ses. 

115 They urged agencies to focus on programs that have "an unclear or duplicative purpose, uncertain Federal role, completed 

mission. or Jack of demonstrated effectiveness." OMB, "Identifying Low-Priority Agency Programs," memorandum, M-IO-20, 

June 8, 20 I 0, p. 2, at http://W\vw.whitehouse.gov/sites/defaultifiles/omb/assets/memoranda_ 201 O/m 1 0-20.pdf. 

116 0MB, "Fiscal Year 2012 Budget Guidance," memorandum, M-IO~19, June 8, 2010, p. 3, at 

http://www . whitehouse. gov/sites/defau It/files/ omb!assets/memoranda _ 201 Olm 1 0-19 .pdf. 

117 OMB, "Evaluating Programs for Efficacy and Cost-Efficiency," memorandum, M-I0~32, July 29, 20ID, at 

(continued ... ) 
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In June and July of2010, OMB also issued two documents that related to performance measurement and 

goal-setting. In a June memorandum, OMB Associate Director for Performance and Personnel 

Management Shelley Metzenbaum provided "transition" guidance to agencies on these matters. She said 

agencies "should consider this year a transition year during which OMB and the PIC will move to a more 

dynamic performance planning, management, improvement, and reporting framework."" 8 The 

memorandum provided general guidance to agencies on three topics: achieving HPPGs that had been 

announced in the President's FY20 11 budget, establishing quarterly reviews of progress toward meeting 

HPPGs, and developing GRPA-related plans and reports. Just weeks later, OMB issued its annual 

guidance to agencies in Circular No. A-II, which included new instructions on how to comply with 

GPRA. The circular drew from the June memorandum and added that quarterly reviews would be held 

between agencies and OMB. '19 

Potential Issues for Congress 

The Obama Administration's performance agenda has evolved, with several announcements of 

frameworks to guide priorities and actions. Some of these frameworks closely relate to program 

evaluation and performance measurement, and also to the relationship of these tools to management and 

budgeting. These announcements have included 

identification of five "key principles" for a "performance management system" (October 

2009, CPO testimony); 

three "performance management strategies" (February 2010, FY2011 budget proposal); 

and 

a "performance planning, management, improvement, and reporting framework" (June 

2010, OMB memo). 

Other announcements of frameworks appear to draw on the broader responsibilities of OMB's DDM 

position to lead OMB's statutory offices and establish general management policies for mission-support 

functions. The frameworks incorporated multiple efforts to use evaluation and measurement and included 

six themes for a "new management and performance agenda," with further options to be 

developed (May 2009, FY2010 budget proposal); 

five areas of presidential emphasis (June 2009, OMB DDM confirmation hearing); 

an upcoming process to craft a "management and performance framework" (June 2009, 

OMBmemo); 

six "performance strategies" (February 2010, CPO speech); and 

an Accountable Government Initiative (July-September 2010, White House documents). 

( ... eontinued) 

http://www.whitehouse.gov/sites/defau It!fi les!omb!memorandai20 I Oim I 0-32. pdf. 

WI OMB, "Perfonnance Improvement Guidance: Management Responsibilities and Government Performance and Results Act 

Documents," memorandum, M~1O~24, June 25, 2010, p. I, at 

http://www . whitchousc.gov!sites/dcfaultffiles/omb/assets/memoranda _20 I Dim I 0-24.pdf. 

119 0MB, Circular No. A-II, Preparation, Submission, and Execution of the Budget, July 2010, Part 6, Section 200, p, 2, at 

http://wv.w. whitehouse.govisitesi defaultifi lesiombiassets!a 11_ currentyearia _11_ 2010. pdf. 
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As the Administration further develops and implements its agenda during the 112'0 Conf,'fess, complex 

policy, fiscal, and performance challenges will continue to face Congress. Agencies and OMB likely will 

present policy analysis tools such as program evaluation and performance measurement to Congress in 

efforts to inform and influence its deliberation, lawmaking, and oversight. At the same time, agencies will 

engage in performance-related activities while they formulate and implement federal government policies. 

OMB also may attempt to exert influence on agency activities, acting on the President's behalf. Any of 

these activities might be subjects of congressional oversight. Nevertheless, significant aspects of the 

Administration's performance-related agenda have yet to be articulated. In some cases, it remains to be 

seen if previous announcements of plans will come to fruition. Whether tbe Administration's agenda 

draws on previously announced plans or moves in new directions, tbe agenda suggests potential issues for 

Congress. The issues might be placed in two general categories. 

First, if Congress acts to approach the agenda witbout attempting to modify it, and to consider tbe 

evaluation and performance information tbat agencies and OMB present to Congress, several issues may 

arise. During tbe legislative process, for example, appropriations and authorizing committees routinely 

receive proposals from agencies, OMB, and interest groups that cite evaluations and measurements to 

justify funding and policy changes. lOG Because evaluations and measurements may be flawed or may be 

presented in ways that some observers might view as biased, Congress might use several resources to 

scrutinize the credibility and relevance of the information. Congress also might conduct oversigbt over 

bow well agencies are using evaluations and measurements when implementing policy, allocating funds 

tbrough contracts or grants, creating incentives for good management, and conducting policy researcb.Ill 

A second, broader category of issues may arise if, instead of taking tbe Administration's agenda on its 

own terms, Congress decides to scrutinize policies and practices tbat relate to government performance. 

In tbis second category, Congress migbt examine tbe extent to which the Administration's agenda seems 

appropriate for the federal government's current and future cballenges. Congress also might consider 

whether federal performance-related statutes, like GPRA, and administratively pursued policies, such as 

E.O. 13450, merit reexamination. Furthermore, wben agencies or OMB justify legislative proposals witb 

evaluation and measurement information, issues that routinely face appropriations and authorizing 

committees, including issues of credibility and relevance, might be addressed more systematically 

through legislation or oversight. 

Analysis of several issues in each category follows below. 

Potential Issues When Evaluations and Performance Measures Are 

Presented to Congress 

Scrutinizing Program Evaluations and Performance Measurements 

Congress has numerous resources and opportunities to inform itself, make policy, and influence 

implementation. Consequently, participants in the policy process may, in an attempt to influence 

Congress, make representations about the supposed "performance" of a program or policy. Some of this 

120 for example, see CRS Report RL3307!, Even Start: Funding Controversy, by Gail McCallion; and CRS Report RL34306, 

Vulnerable Youth: Federal Mentoring Programs and Issues, by Adrienne L. Fernandes-Alcantara. 

i21 For related discussion, sec CRS Report RLJ3301, Congress and Program Evaluation: An Overview of Randomized 

Controlled Trials (RCTJ) and Related Issues, by Clinton T. Brass, Erin D. Williams, and Bias Nuncz-Neto; and GAO, A Variety 

of Rigorous Methods Can Help Identify Effective Interventions, GAO-l 0-30, November 2009. 
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information may come in the form of program evaluations or performance measurement. As discussed 

earlier in Box 3 and Figure 1 (pp. 12-13), program evaluations and performance measurement focus on 

different kinds of information and may have different uses. Furthermore, they have distinct capabilities 

and limitations. The Administration's performance agenda has emphasized some aspects of performance 

measurement with a focus on HPPGs (Box 4, p. 17) and various dashboards, and one type of program 

evaluation with impact evaluations (Figure 3, p. 21). Other approaches to evaluation and measurement, 

such as logic modeling as described in Box 3 and Figure 2 (p.I3), have not received explicit emphasis. 

30 

Issues that Congress may consider exploring, both generally and in specific policy areas, include whether 

the President, agencies, and interest groups are using evaluation and measurement methods consistently 

with their capabilities and limitations; whether findings are appropriately qualified and presented in an 

unbiased way; and whether the Administration's approaches to evaluation and measurement address the 

needs of key audiences. For example, for FY2010, the Administration proposed that Congress terminate 

ED's school-based "Student Mentoring Program" partly on the basis of an impact evaluation that found, 

"for Ihe full sample of students, the program did not lead to statistically significant impacts" on outcomes 

relating to school engagement, academic achievement, and other topics.'" The information presented by 

the Administration was aCCllrate, but did not provide a complete picture. For example, OMB and ED did 

not highlight that the study found statistically significant impacts in academic outcomes for a major 

subpopulation, girls; 123 did not provide cautions that the study's impact estimates may have been biased 

toward zero because of potential contamination of the experiment; 124 and did not address what the 

underlying study's lead author reportedly characterized as flaws in implementing the program and the 

failure to address those flaws, that, according to the author, "resulted in weak evaluation outcomes.,,125 

Members and committees of Congress might encounter issues like these in the context of annual 

appropriations, program and agency reauthorizations, and oversight. During the appropriations process, 

for example, appropriations subcommittees typically review the President's budget requests and 

justifications. In situations when proposals are justified by evaluation or measurement information, 

committees might use their own staff resources and other resources such as GAO and CRS to evaluate the 

credibility and relevance ofthe evaluations and measurements. Similar issues may arise in the context of 

substantive lawmaking, such as when a committee is considering changes to a program's authorizing 

statute. In an oversight context, Members and committees might examine whether agencies are using 

appropriate social science and other methods to support administrative policy making and allocation of 

funds. Finally, if Congress became more broadly interested in or concerned about how the Administration 

or agencies were using discretion to present or use performance information, Congress might address the 

topic on a government-wide basis as a matter of performance-related policy. 

122 Italics added, Scc OMS, FY20JO TRS Document, p. 6L For more detailed discussion of the program, sec CRS Report 

RLJ4306, Vulnerable Youth: Federal Afentoring Programs and issues, by Adrienne L. Fernandes-Alcantara. 

123 Lawrence Bernstein, et aI., Impact Evaluation o/the u.s. Department oj Education's Student Mentoring Program: Final 

Report, Institute of Education Sciences, U,S. Department of Education, March 2009, pp. xxii, 90~91, at 

http://ics.ed.gov/ncee/pubs/20094047/. 

124 Students not receiving mentoring services may have become aware that peers were receiving mentoring under the study, 

potentially leading non·served students and their families to seek mentoring elsewhere that they might not have sought otherwise. 

According to ED's What Works Clearinghouse (WWC, the department's '''central and trusted source of scientific evidence for 

what works in education") in response to a query frem CRS, if this contamination occurred.. the study's impact estimates "could 

be biased toward zero"; however, WWC "does not have standards for ev'aJuating this type of contamination" (e·mail 

communication frem W\VC to CRS, January 20,2010). For discussion of this threat of contamination to a study's validity, see 

Thomas D. Cook and Donald T. Campbell, Quasi~experimen(ation: Design & Analysis Issues/or Field Settings (Chicago: R. 

McNally. 1979), pp. 54-55. 

125 Jen Russell, "Evaluation Spotlight: School-Based Mentoring Needs a Friend," Youth Today, June 2009. 
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Scrutinizing How Agencies or OMB Define "Success" for a Program 

When considering the performance of an agency, program, or policy in any of these legislative contexts, 

Congress also might look more broadly at how an agency or OMB is defining "success." The definition of 

success that an agency or OMB uses in a particular circumstance, such as a budget proposal for 

Congress's consideration, may dictate whether currently existing performance information portrays a 

program in a positive or negative light. Consequently, Congress might in specific circumstances consider 

whether it agrees with these representations about how to define success. 

These situatiom frequently arise in the context of appropriations, substantive lawmaking, and oversight, 

because the definition of success for an existing program often is politically contested. That is, 

participants and stakeholders in the policy process may have differing views about the proper meum and 

ends of an existing program, policy, or agency. A related issue may arise when a program, policy, or 

agency has multiple goals that trade off against each other. For example, the mission statement of the 

Internal Revenue Service (IRS) arguably encompasses three general goals: tax compliance, customer 

service, and fairness. "6 For IRS, there is a trade-off between resources allocated to tax compliance and 

customer service. Judgments about policy success or failure in the presence of goal trade-offs may not 

receive widespread acceptance, because the process of making trade-offs involves value judgments that 

may differ among stakeholders. 

Past experience in the federal budget process suggests that a President may make representations about 

performance from the perspective of one definition of success, while omitting any mention of other 

perspectives. For example, federally supported vocational education could have been rated either effective 

or ineffective, depending on whether "success" was defined as increased earnings for education 

recipients, on one hand ( effective), or increased incidence of seeking higher education, on the other 

(ineffective). 127 Consequently, when the President or his or her Administration makes representations to 

Congress about performance for a particular policy or program, Congress may consider whether the 

definition of success that is being used reflects congressional intent for the underlying program and major 

perspectives that the broader community of stakeholders may have, or reflects a more limited perspective. 

In the context of presidential appropriations proposals, for example, an appropriations committee might 

examine whether a proposal for a budget increase or decrease is justified by program evaluations or 

performance measures. If OMB makes such a justification, a committee might examine whether claims of 

how to define good or bad performance conform with a program's authorizing statute and legislative 

history. The committee also might examine whether available performance information addresses 

stakeholders' conceptions of how to define success. Nongovernmental entities, reputable evaluators, and 

congressional support agencies like CRS and GAO might assist the committee with such analysis. 

Congress might undertake similar activities when considering changes to an authorizing statute on the 

basis of evaluations or measurements. In an oversight context, a Member or committee might examine 

how an agency is defining success when it uses discretion in how it identifies HPPGs (see Box 4, p. 17) 

or awards grant funding. If the agency is using a definition of success other than what Congress intended, 

or a definition that appears to reflect only part of what Congress intended, Congress might consider 

additional oversight activities or lawmaking. "8 

1lf> See IRS, "The Agency, its Mission and Statutory Authority," at http://W\V\¥.irs.gov/irs/artic1e!O .. id .... 98141.OO.html. 

127 See discussion of contrasting definitions of success for federally supported vocational education in CRS Report RL33301, 

Congress and Program Evaluation: An Overview 0/ Randomized Controlled Trials (RCTs) and Related issues, by Clinton T, 

Brass, Erin D. Williams, and BIas Nunez-Neto, 

12l! In some cases, Congress's or a committee's specific intent may not be clear from the statutory text or legislative history. 
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Identifying Possibilities of Perverse Incentives 

When agencies identify and pursue goals or other definitions of success, measurements can be a strong 

motivator to action. In some situations, measurements may create incentives that, from the perspective of 

congressional intent, may not be viewed as desirable. In its regular legislative work, and particularly when 

agencies and the President are identifying what they consider to be priority goals and potentially 

relegating other potential goals to a relatively lower priority, Congress might encounter such issues and 

consider whether remedies are advisable. 

The problem of perverse incentives has long been recognized. Industrial psychologist Mason Haire is 

frequently quoted: "What gets measured gets done. If you are looking for quick ways to change how an 

organization behaves, change the measurement system. ,,129 At the same time, even if consensus were 

possible on how to define an agency's or program's major purposes, it may be difficult to find a "vital 

few" outcome measures that fully and accurately cover an agency's or program's mission. In addition, 

many outcomes may be influenced by factors that are not under a federal program's control. In 

combination, these tendencies may create the potential for perverse incentives in any system of goalsetting and performance measurement. Figure 4 helps illustrate these possibilities. 

Figure 4. Potential (or Perverse Incentives 

r 

Perfect Measure 

of Performance 

Important aspects of,) perfect 

measure of performance that are not 

mcluded in the actu,1i measure the 

organization IS using 

Actual Measure 

of Performance 

Contamination 

Aspects 

\ 

unrelated to performance 

that are somehow included wIthin 

theactua! measure 

The ovedap between the perfect 

measure of pE'rfOrm,1nce and an 

actual measure 

Source: Adapted from Cynthia D. Fisher, Lyle F. Schoenfeldt, and James B. Shaw, Human Resource Management, 6th ed. 

(New York: Houghton Mifflin. 2006). p. 431. 

If the outcome measures that are used for a program (right-hand circle) do not fully cover its mission 

(lefl-hand circle), they are considered "deficient." Significantly, if the deficient outcome measures are 

emphasized over other considerations that are not measured or that may not be easily measurable, the 

omitted aspects of the mission might be neglected. Another problem may arise if one or more outcome 

measures are influenced by factors external to the program. In that case, the outcome measures are 

l~') Quoted in Richard L. Lynch and Kelvin F. Cross, Measure Up.' Yard<>ticksfor Continuous Improvement (Cambridge, MA: 

Blackwell, 1991), p. 144. 
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"contaminated" (portion ofright-hand circle). An organization's personnel tend to dislike being held 

accountable for factors outside their control, and they may sacrifice performance of the mission in order 

to avoid sanctions or blame for missing targets that may suffer from deficiency or contamination. In either 

case, measures may create perverse incentives, if program evaluations or a system of performance 

measurement focus on outcome measures that are deficient or contaminated. The IRS cited this problem 

in the late 1990s, for example, in the wake of high-profile hearings of the Senate Finance Committee. 130 

More recently, some observers alleged that the New York City Police Department's "CompStat" approach 

to performance measurement created pressure that caused personnel to manipulate crime statistics and 

establish quotas for issuing tickets."1 

Any of these issues might arise when the Administration and agencies undertake performance 

measurement, such as with the HPPG effort, or impact evaluation. Ifthe possibility of perverse incentives 

and behaviors were of concern, Congress might consider pursuing strategies to become aware of them and 

potentially acting to reduce the risks of unintended consequences. From an oversight perspective, for 

example, Congress might examine the HPPGs that agencies and the Administration have chosen and 

ascertain whether key dimensions of an agency's mission have been omitted. If some dimensions of an 

agency's mission are not receiving attention, the problem of deficiency may drive behaviors within the 

agency in ways that are not consistent with congressional intent. Alternatively, if achievement of some 

HPPGs were judged to be substantially outside the control of an agency, the challenge of contamination 

may be evident. Inquiries with agencies or oversight hearings might provide venues for these kinds of 

discussions. Alternatively, during the appropriations process, appropriations committees might examine 

the HPPGs and accompanying performance metrics that are submitted by agencies along with agencies' 

GPRA-required annual performance plans. If agency goal-setting seemed to be at risk of deficiency or 

contamination, a committee might investigate further to assess whether there is a risk of perverse 

incentives. Ultimately, if appropriations or authorizing committees became more broadly concerned with 

the potential for perverse incentives, they might consider pursuing remedies through lawmaking. For 

example, many organizations have attempted to formally address the problem of perverse incentives by 

focusing on multiple aspects of the mission and multiple stakeholder perspectives. 132 

Making a Connection Between Evidence and Policy Making 

Another recurring issue for Congress, and particularly for appropriations and authorizing committees, 

concerns how "evidence" may be defined and used in policy making. A related issue might be to raise the 

question when and whether evidence should be formally defined, as a matter of policy. In recent years, 

agencies, OMB, and advocacy groups have made occasional efforts to formally define evidence and how 

it should be used to allocate resources during the budget process and in allocating grant awards. In 

addition, the Obama Administration has offered views on what it considers to constitute evidence for 

policy making, especially with respect to impact evaluations. These views have been reflected in 

Administration proposals to Congress. Consequently, many of these efforts were viewed as high stakes in 

DO IRS Customer Service Task Force, Reinventing Service at the iRS (\Vashington: GPO, 1998), pp, 75~81. 

131 John A. Eterno and Eli D. Si!vennan, "The NYPD's Compstat: Compare Statistics or Compose StatisticsT', International 

Journal of Police Science & Management, voL 12, no. 3, September 20 I 0, pp. 426-449, For related media coverage, sec William 

K. Rashbaum, "Retired Officers Raise Questions on Crime Data," New York Times, February 7, 20 10, p. A 1; and AI Baker and 

Ray Rivera, "Secret Tape Has Police Pressing Ticket Quotas," New York Times (New York edition), September 10,2011, p. Al. 

132 In response to similar concerns, some organizations have attempted to create a "balanced scorecard." See Robert S. Kaplan 

and David p, Norton, "The Balanced Scorecard-Measures that Drive Perfonnance," Harvard Business Reviev.'. JanuaryFebruary 1992, pp. 7 J -79. For more on perverse incentives, see Steve Kerr, "On the Folly of Rewarding A, While Hoping for B," 

Academy (?f Management Journal, vol. 18, no, 4, 1975, pp. 769-783. 
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nature. At the same time, efforts to define and use evidence have generated some controversy in specific 

policy areas and among evaluation methodologists. 

34 

Some efforts to formally define and use evidence during the policy making process appear to have been 

motivated by frustrations with past experience. Reflecting on past performance-related initiatives, some 

observers have expressed concerns that policy makers and agency personnel were not "using" 

performance information to make budget and management decisions. \33 However, there does not appear 

to be consensus about the nature of underlying problems in fostering the use of evaluation and 

measurement information by agencies, legislative bodies, and the public. Some commentators have 

attributed a perceived lack of use to, among other things, politics and ideology. 134 Another explanation for 

lack of use relates to credibility, when legislative bodies or other stakeholders may not trust that agencies 

or the President are presenting performance and evaluation information without bias. 135 Another possible 

explanation is that performance information may not be used, because key audiences may not find the 

kind of information that is presented to also be useful.'36 

In addition to the explanations summarized above, it also is possible that some frustrations may be the 

result of unrealistic expectations. The perceived usefulness of performance measures and impact 

evaluations, unaccompanied by other kinds of program evaluation, may be limited. For example, ifan 

impact evaluation or a performance measurement shows that a program is not mecting an outcome 

objective, it could be argued that the implication for budget and management decisions would be 

ambiguous. A decision to cut, maintain, or increase spending might depend on assessments of whether the 

program could be modified or more effectively implemented. Conversely, for a program that is perceived 

as performing well, it is conceivable the program's budget could be cut without adverse performance 

consequences. Possibilities such as these suggest that a definition of evidence that focuses primarily on 

impact evaluations or performance measures could be considered to be narrow if it did not have support 

from other evaluations, logic modeling, and analysis that are focused on questions of "how" and "why" a 

program is performing as it is. Issues like these may become controversial in the context of legislative 

proposals and lawmaking. For example, several scholars criticized the Administration's FY2010 proposal 

IH for example, see discussion in Shawn Zeller, "Perfonnance Anxiety for 'New' Federal Standards," CQ Weekly, March 30, 

2009, pp. 708-709. Separately, GAO has done several surveys of federal managers and their use of perfonnance measures. For a 

2007 survey, see GAO, Government Performance: Lessons Learned for the Next Administration on U')ing Performance 

h~(ormation to improve Results, GAO-08-1026T, July 24, 2008. 

134 For example, see Jerry EHig, "Ten Years of Results From the Results Act," working paper no. 10-21, Mercatus Center at 

George Mason UnivcrsitYI May 2010, pp. 23~25, at http://mercatus.orglpublication/tcn-ycars-results-results-ac1. For discussion of 

such sentiments, see Shawn Zeller, "Performance Anxiety for 'New' Federal Standards," CQ Weekly, March 30, 2009, p. 708. 

us For discussion, see Carolyn Bourdeaux, "Legislative Influences ou Perfonnance-Bascd Budgeting Reform," FRC Report No. 

128, (Atlanta, OA: Andrew Young School of Policy Studies, Georgia State University, May 2006), pp. 27-30, at 

http://aysps.gsu.edulfrc/fileslreport128.pdf; and Clinton T. Brass, "Performance Management for Networked Government: A 

Transformation in Waiting?", paper presented at the 2007 annual conference of the American Society for Public Administration, 

March 25, 2007. at 

http://www,aspanet.org/source/CommunitiesJdocumentArchive,cfm?seetion""'Communities&Cmtyld= 1 78&ParJl):= 309. See also 

a classic 1990 study of congressional oversight, which found that Congress much more frequently used program evaluations done 

by its support agencies than it did evaluations done by executive agencies. Joel D. Aberbach, Keeping a Watchful Eye: The 

Politics of Congressional Oversight (Washington: Brookings, 1990), pp, 130-132. The study occurred beforc widespread 

proliferation of Inspectors General" (JGs). 

13ft Historically, many previous efforts in the executive branch to produce perfonnancc and evaluation infonnation have been 

driven by the perceived needs ofOMB and agency senior leaders. (For example, see GAO, Performance Budgeting: 

Observations on the Use (~( OMS's Program Assessment Rating Tool for the Fiscal Year 2004 Budget, OAO-04-174, January 

2004, p. 27.) However, it is not clear that past efforts at collecting pcrfonnance information were preceded by attempts to 

ascertain the kinds of information that may be useful to other key audiences such as Congress, agency program managers, and 

nonfederal stakeholders who might assist Congress 'With its oversight function. 
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to Congress to scale-up a nurse-home visitation program on the basis of impact evaluation findings 

through randomized controlled trials. In a high-profile letter to the President, the scholars said that "we 

know of no evaluation scholar who would conclude that randomized trials provide sufficient insight for 

making program replication decisions," because they argued that "the core features of a well-done 

randomized trial-a highly specified intervention, consistent implementation, and a specific target 

population-limit the ability to generalize its findings to diverse populations and diverse contexts.,,137 

35 

In that light, the kinds of "evidence" that may inform decisions about budgets, management, and policy 

arguably extend beyond estimating a program's impact in a particular time and setting, or assessing 

whether performance goals are met. From a broader program evaluation perspective, other kinds of 

evidence that likely would be important considerations in policy making include evaluation of whether a 

program or policy could be replicated or scaled up; conditions under which a government intervention 

would likely result in a similar impact or outcome in other settings or times, or with other subjects; 

whether measured outcomes are "valid," such as whether a test score actually measures student 

achievement or something else; whether a policy has been implemented as designed and intended; and 

whether a policy's impacts occurred through the expected causal mechanism. 138 Even more broadly, from 

the perspective of multi-disciplinary policy analysis, there are many other conceptions of what could be 

considered as evidence for policy making. These include basic and applied research; forecasting and 

scenario planning; risk assessment; professional judgment from individual and group experience; theory; 

logic; intuition; and finally, an amalgam of values, priorities, and ethics. "9 

Because conceptions of what constitutes evidence for policy making may vary depending on 

circumstances and values, several issues related to the role of evidence in policy making may be salient 

for Congress and its conunittees. If OMB or an agency appears to have adopted a formal definition for 

what constitutes evidence, a committee might scrutinize the definition in light of relevant legislative 

history. In the context of appropriations, this approach might involve examining the justification for 

funding changes and examining whether other conceptions of evidence also should be considered. From 

an oversight perspective, committees might examine how agencies are applying the concept of evidence 

when allocating grant and other awards. If agency practices were found to be problematic, committees 

might use oversight tools to influence agency behaviors or pursue remedies through lawmaking. 

137 Letter from Deborah Daro, Ph.n, et a1. to President Barack Obama, Apn121, 2009, p. 2, at 

http://v.'WW.preventchildabuseny.orglpdf7CommcntsonHomeVisitingProposal.pdf. For background on this policy area, see CRS 

Report R4070S, Home Visitation!or Families with Young Children, by Emilie Stoltzfus and Kllren E. Lynch. If the topic of 

evidence and policy making were of interest to Congress, Congress might look to the field of health care. Some conceptions of 

evidence in health care appear to be trending toward the critics' contextual view, where decisions about "external validity," such 

as judgments when specific interventions would work well in other contexts, would be made in a decentralized way by clinical 

decision makers, based on interpretations of evidence as applied to particular circumstances. Compare Deborah Daro, Ph.D,) et 

aI., p. 3, with Institute of Medicine, Knowing What Works in Health Care: A Roadmap for the Nation (Washington: National 

Academies Press, 2008), p. 21. Nevertheless, the issue in health care of how to define and use evidence from broad studies in the 

context of individual patients remains an area of active debate. For similar discussion about "comparative effectiveness research" 

and PPACA's authorization to establish the Patient-Centered Outcomes Research Institute (PCORI; P.L. I I 1-148; 124 Stat. 727), 

see Rebecca Adams, "Health Policy by Comparison," CQ Weekly, August 16,2010, pp. 1968-1981. 

lJl;t Using the terminology of program evaluation, these questions address matters of external validity and construct validity. 

139 See CRS Report RL3330 1, Congress and Program Evaluation: An Overview of Randomized Controlled Trials (RCTs) and 

Related Issues, by Clinton T. Brass, Erin D, Williams, and BIas Nufiez-Neto. Intuition often assumes importance in decision 

making when information is incomplete, consensus interpretations are lacking, the future is uncertain, or synthesis is necessary. 
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Potential Issues When Congress Focuses on Performance-Related Policy 

Opportunities for Congressional Oversight: Lessons Learned from Past Efforts? 

The Obama Administration's performance agenda arrives as the most recent in a line of presidential 

initiatives that have focused on government performance and related issues of management and 

budgeting. Past government-wide efforts include the Lyndon B. Johnson Administration's PlanningProgramming-Budgeting System (PPBS, 1965); the Nixon/Ford Administrations' Management by 

Objectives (MBO, 1973); and the Jimmy Carter Administration's Zero-Base Budgeting (ZBB, 1977). 

More recently, the Clinton Administration undertook a National Performance Review (NPR, 1993) and 

the George W. Bush Administration pursued the President's Management Agenda (PMA, 2001) and 

PART. All were generally abandoned due to changes in Administration, a widespread perception of 

unrealistic ambitions, or lack of congressional support. With regard to congressional support, two former 

officials who were involved in the NPR and PMA efforts observed that recent Presidents were largely 

unsuccessful at garnering support from Congress for their management initiatives. In the authors' view, 

"the lack of congressional support has been a chronic limitation to gaining full acceptance by the agencies 

or to maintaining continuity beyond a particular administration." 140 

Some observers have characterized a lack of congressional support as "political" in nature, in contrast 

with more "rational" presidential approaches that, in their view, would better serve the national interest."] 

Others have focused on underlying policy disagreements to help explain conflicts. Still others have noted 

that, if adopted, many of the proposals associated with presidential initiatives would have reduced the 

congressional role in federal government management and thereby redistributed power from Congress to 

the Prcsident or agencies, prompting congressional resistance. '42 Conflict between Congress and the 

President need not be one-way, of course. Congress has established the statutory framework for how the 

federal government is managed and how it performs, sometimes in ways resisted by Presidents. In the 

past, Congress has acted independently of, in reaction to, and in cooperation with Presidents on 

management and performance issues. "3 

If Congress wants to examine the federal government's current policies that relate to government 

performance, both in law and as pursued by the Obama Administration, a starting point might be to 

identify "lessons learned" from past efforts in the United States and even overseas.'44 For example, as 

noted in this memorandum's section entitled "High-Priority Performance Goals (HPPGs)," efforts such as 

the Nixon and Ford Administrations' MBO and the UK Blair Government's PMDU may be relevant to the 

l,w Jonathan D. OreuI and John M. Kamensky, "Federal Government Reform: Lessons from Clinton's <Reinventing Government' 

and Bush's 'Management Agenda' Initiatives," Public Administration Review, vol. 68 (NovemberfDecember 2008), p. 1023. 

141 See Jerry Ellig, "Ten Years of Results From the Results Act," working paper no. 10-21, Mercatus Center, May 2010, pp. 23-

25; and Shawn Zeller, "Performance Anxiety for 'New' Federal Standards," CQ Weekly, March 30, 2009, pp. 708-709. 

142 See Donald F. Ketti, "'Beyond the Rhetoric of Reinvention: Driving Themes of the Clinton Administration's Management 

Reforms," Governance, voL 7 (July 1994), p. 309; and CRS Report 31409, The President's Management Agenda, by Henry B. 

Hogue and Ronald C. Moe (archived and available on request from the first author). 

\43 CRS Report RL30795, General Management Laws.' A Compendium. by Clinton T. Brass ct at 

!44 The literature on this subject is large and offers diverse and oftentimes conflicting perspectives. For a sampling of analyses, 

see Donald P. Moynihan, The Dynamics ofPeliormance Management: Constructing information and Reform (Washington: 

Georgetown University Press, 2008); Clinton T. Brass, "Performance Management for Networked Government: A 

Transformation in Waiting?", paper presented at the 2007 annual conference of the American Society for Public Administration, 

March 25, 2007; Beryl A. Radin, Challenging the Performance Movement: Accountability, Complexity, and Democratic Values 

(Washington: Georgetown University Press, 2006); and GAO, Results-Oriented Government: GPRA Ha.<; Established a Solid 

foundation/or Achieving Greater Results, GAO-04-38, March 2004. 
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Administration's HPPG agenda, with their emphases on performance measurement and accountability to 

the President or Prime Ministcr. Other topics of congressional study might involve exploring reasons why 

past presidential efforts did not generate congressional support and whether any of these lessons might 

apply to the Obama Administration's agenda for government performance. If common themes were 

identified, Congress might work through non-lawmaking means to improve its working relationship with 

the President, OMB, and agencies, or, alternatively, to clarify points of contention. Committees that focus 

on government-wide performance issues also might conduct oversight in areas of the Administration's 

agenda where they perceive risks of the Obama Administration not applying lessons from the past. If 

some topics were of substantial concern, Congress might conduct more in-depth oversight or consider 

changes to performance-related statutcs, as discussed in the next two sections. 

Oversight of the Administration's Performance Agenda: Coverage and Potential Gaps 

When addressing the federal government's performance challenges, Mr. Zients has emphasized 

prioritization. These choices may not be obvious. On one hand, federal agencies, programs, and personnel 

must focus on accomplishing their current missions, subject to the resources and capabilities they already 

have. They work in myriad policy areas, including housing, transportation, and national defense. At the 

same time, improvement of the government's capabilities and practices is desired. For example, 

evaluations may be conducted and IT systems may be improved. However, the budgetary and staff 

resources that are available for capacity-building are limited. Finding a balance between "getting the work 

done," on one hand, and capacity-building, on the other, may be difficult. Given this tension, another 

issue that Congress might consider is the question whether the Obama Administration's agenda is 

covering the capacity-building areas that Congress views as most important, or, conversely, ifthere are 

gaps. For example, if eommittees that focus on government-wide performance perceive gaps, they might 

address the gaps by engaging with the Administration through communications, oversight, or lawmaking. 

Generic Framework for Assessing Influences on Government Perfonnance 

Figure 5 (see p. 39) provides a generic framework that might be used at any given time as a lens through 

which to assess where OMB and agencies are focusing their activities and capacity-building priorities, 

with respect to goal-setting, program evaluation, and performance measurement. Consequently, the figure 

also might be used to help identify the presence of gaps. The figure builds on the logic model framework 

shown in Box 3 and Figure 2 (pp. 12-13), which may be used to integrate evaluation and measurement. 

In this case, however, Figure 5 looks beyond a single program or agency. Instead, it illustrates how 

multiple agencies, policies, and nonfederal actors ITIay work together to achieve desired policy outcomes 

or, conversely, work at cross~purposcs_ 

In the figure, federal agencies "A" and "B" each implement several programs or policies through a causal 

chain of inputs, activities, and outputs. These causal chains may affect intermediate and end outcomes. 

The agencies and their activities are supported by a variety of mission-support functions like human 

resources and IT. Separately, some federal laws and policies that operate on their own, without substantial 

implementation by federal agencies, also may contribute to influencing outcomes. Tax expenditures, for 

example, arc special tax breaks that may be used instead of direct expenditures to influence the behaviors 

of nonfederal entities in a way that will contribute to the achievement of policy goals. 145 The federal 

government also relies more directly on nonfederal actors to help aceomplish policy goals. Many external 

factors that are not directly influenced by an agency or program also may influence outcomes. These 

!45 For related discussion, see CRS Report RL3364 t, Tax Expenditure,\': Trends and Critiques, by Thomas L. Hungerford, 
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external factors may include, for example, broad economic conditions, natural disasters, or lack of 

cooperation from nonfederal stakeholders. 

38 

On the left side of the figure, a variety of performance-related processes and activities may be conducted 

by Congress, the President, and agencies. These processes may include, among other things, goal-setting, 

planning, and coordinating across organizational boundaries. Using procedural and other tools, Congress, 

the President, and agencies may thereby interact and influence how policies are implemented. 

Example o/Using the Framework: Federal Housing Policies 

The framework might be applied in a specific policy context to help visualize these goal-setting, 

performance measurement, and evaluation activities, assess how they fit together, and identify whether 

they have gaps or raise further questions. For example, federal support for housing is a policy area that 

cuts across organizational and programmatic boundaries. The federal government also uses numerous 

policy tools to pursue housing policy objectives, including spending programs, tax expenditures, and 

regulations.'46 Using Figure 5, one might consider the efforts of two departments-the Departments of 

Housing and Urban Development (HUD) and Veterans Affairs (VA}-to reduce homelessness among 

veterans. The Obarna Administration designated this combined effort as an HPPG for FY20 II and set a 

specific goal of reducing the number of homeless veterans to 59,000 over two years.'47 

In Figure 5, HUD's and VA's activities might be viewed as programs "A" and "B," respectively. The 

departments said they would work toward this goal by assisting 16,000 homeless veterans each fiscal year 

to move into permanent housing: 6,000 through HUD's Continuum of Care grant programs, and ]0,000 

through their joint HUD-Veterans Affairs Supportive Housing (HUD-VASH) voucher program.'48 

Therefore, from the perspective of the 10 gic models in Figure 5, the departments identified output 

measures they would use: 6,000 and 10,000 veterans assisted per year, respectively. HUD and VA also 

estimated a combined, projected impact for an end outcome: a reduction of 135,000 homeless veterans 

over two years, compared to what would happen without the departments' intervention. "9 

146 All of these activities may contribute to accomplishing policy outcomes like supporting horneownership, making rental 

housing affordable for low-income families, and pursuing other, more intermediate ontcomes. However, consensus may not 

always be apparent regarding which outcome goals are most important and how, Of whether, the federal government should be 

involved in their pursuit. F or background discussion, see CRS Report RL34591. Overview 0..( Federal Housing Assistance 

Programs and Policy, by Maggie McCarty ct al.; CRS Report R4021 0, Preserving Homeownership: Foreclosure Prevention 

Il1itiatives, by Katie Jones; U.S. Conb'Tcssional Budget Office, An Overview of Federal Supporljor Housing, November 3, 2009; 

and OMB, Analytical Perspectives, Budget of the u.s. Government, FY201J (Washington: GPO, 2010), pp. 81-85, 91-92. 

147 HUD and V A said they would work together to reduce the number of homeless veterans from thc then-current estimate of 

131,000 to their goal of 59,000 by June 20 l2, in contrast with their estimate of 194,000 homeless veterans in June 2012 in the 

absence of the departments' "intervention." Thus, the departments estimated the projected impact of their efforts as 135,000: 

194,000 without their intervention, minus 59,000 with their intervention. See OMB, Analytical Perspectives, Budget of the u.s. Government. FY2011 (Washington: GPO, 2010), pp. 82,85; and VA, FY 2011 Funding and FY 2012 Advance Appropriations 

Request, voL II, pp. IA,2 and 1,112, IJ,14, at http://www.va.gov/budget/docs/summary/Fy2011_Volume_2· 

Medical_Programs _and _Infonnation _ T echnology.pdf. 

'48 Ibid, and see also supporting infonnation in the HUD FY2011 budget summary (http://hud.govlbudgetsummary2011Ifull, 

budget,20 II.pdf, p. 32) and VA FY20 II budget summary (http://www.va.gov/budget/docs/summary/Fy2011_ Volume _1, 

Summary_ Volume. pdf, p. IA-3). For background infomlation on the Continuum of Care and HUD-VASH programs, see 

http://www.hud.gov/offices/cpd/homcJess!programs/coc!, and http://www.hud.gov/offiecs/pihJprograms/hcv/vash/, respectively. 

!~9 Most of the Administration's other HPPGs that concern housing are focused on activities and outputs, as opposed to 

outcomes. See OMB. Analytical Perspectives. Budget of the U,s. Government. FY2011 (Washington: GPO. 2010), pp. 81,82. 

81404.067

Figure 5. Potential Framework for Assessing Influences on Government Performance 

Congress., the and 

agencies making choices 

regarding federal government: 

• organization 

• coordination 

• risk management 

• transparency 

• public participation 

• pldnning 

• budgeting 

• management practices 

• strategies 

KEY: 

----)0- '" Causal fE'!ationship 

--+ "" Potential interaction 

Source: CRS. 

CRS-39 

+------

"EXTERNAL FACTORS" 
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However, it is not clear how serving a total of 32,000 veterans over two years would reduce veteran 

homclessness by this overall number, unless other activities, agencies, and external factors were also 

instrumental in the effort. VA's FY20 II budget submission detailed other proposed activities that would 

contribute to addressing veteran homeless ness, 150 suggesting that the HPPG output measures and outcome 

goal may provide only a partial picture of how HUD and VA planned to accomplish the Administration's 

stated outcome goal. Other considerations that remain unclear from HUD's and VA's descriptions include 

what role external factors might play in decreasing the number of homeless veterans over time, separate 

from federal activities, and how the departments would validly or credibly estimate the impact of their 

efforts, separate from the influence of other factors. Other kinds of evaluations and performance measures 

also might provide information about service quality and the appropriateness of the departments' models 

of service delivery for the needs of clients. In combination, questions such as these suggest that it may be 

difficult to assess whether accomplishment of the Administration's HPPG output goals, such as assisting 

veterans in the specified ways, is significantly contributing to accomplishment of the Administration's 

outcome goal, reducing veteran homelessness. Consequently, questions like these may present challenges 

for Congress when deliberating about agency budgets, programs' authorizing statutes, and oversight 

priorities, and also present similar challenges for agencies, OMB, and the President during policy 

development and implementation. 

Assessing Administration Initiatives for Coverage and Potential Gaps 

The figure's framework also may be used more generally, when Congress is overseeing or attempting to 

influence the performance-related policies that are being implemented by an Administration across the 

entire executive branch. Several observations might be made specifically about the Obama 

Administration's executive-branch-wide performance policies. For example, the Administration appears 

to be pursuing substantial capacity-building in the realm of performance measurement through its 

development ofHPPGs and mission-support-relatcd dashboards. At the same time, most of the HPPGs 

are focused on individual agencies, rather than across organizational boundaries. The Administration also 

proposed a number of impact evaluations that would focus on intermediate and end outcomes. However, 

other kinds of program evaluation, which focus on understanding how and why programs are working, 

generally have not received explicit emphasis from the Administration. For example, the Administration's 

HPPG and impact evaluation efforts do not formally appear to be integrated through the use of logic 

models. Logic models might be used to improve understanding of how achieving activity- and outputfocused HPPGs, such as the number of clients served, may assist in achieving intermediate and end 

outcomes, like reducing the homelessness rate. 151 The Administration's online performance portal 

eventually may provide such evaluations and analyses, but it remains to be seen how the Administration 

will use the planned website. 

The Administration also appears to be emphasizing some performance-related processes, such as goalsetting. However, it is less clear whether the Administration is focusing prominently on other processes. 

For example, the Administration said it would involve Congress and the public in goal-setting for HPPGs. 

However, the HPPG effort appears to have operated substantially within the Administration's 

"deliberative process," outside of public view. If public and congressional participation in goal-setting 

ISO See VA's more detailed budget proposal, at http://www.va.govlbudget/docs/summary/Fy2011_Volume_2-

Medjcal]rograms~and_[nformatjonJechnology.pdf, pp. IA-2, IA-12 - IA-l3. 

151 For background, see Kathryn E. Newcomer and Mary Ann Scheirer, Using Evaluation to Support Performance /l.leasurement: 

A Guide jar Federal Executives (Washington: IBM Center for the Business of Government, January 2001), at 

http://wvr;v.businessofgovernmcnt.org/publicationsigrant_reports/details/index.asp?GID::..:25. 
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were of interest to certain congressional committees, they might inquire how, or if, the public and 

Congress were engaged when agencies developed HPPGs. In addition, it is not clear if the Administration 

is planning significant efforts to evaluate or analyze whether tax expenditures assist in the achievement of 

desired outcomes. In areas like these, Congress might conduct oversight to gain a more specific 

understanding of the Administration's plans and priorities. Several related processes also could be 

subjects of oversight or lawmaking, if they were perceived as gaps or needing to be addressed. These 

topics might include whether agencies have capacity to effectively undertake and use evaluations and 

measurement; how to have agencies produce evaluations and measurements that may be perceived by 

Congress as credible and not "politicized"; whether the needs of key audiences are being served; how to 

structure the production of evaluation information to serve the needs of key audiences; whether the 

potential exists in some cases for perverse incentives; and whether the Administration's efforts might be 

complementary or duplicative with "key national indicators" that, if funded, may be developed. ll2 

Examining GPRA and E.O. 13450 

Much oftbe foregoing discussion may have relevance, if Congress wants to use the Administration's 

agenda as an opportunity to evaluate the design and implementation of GPRA and E.O. 13450. 

Specifically, Congress might evaluate how the law and executive order have been used in practice, how 

they could be used by the legislative and executive branches in tbe face of current and future challenges, 

and any implications for lawmaking, oversight, or study. In addition, GPRA was substantially amended in 

the Ill'" Congress (H.R .. 2142, P.L. llI-352), and Congress may exercise oversight over the law's design 

and implementation. 

Enacted in 1993, GPRA typically has been regarded as the first general framework for goal-setting and 

performance measurement to be enacted into law, as opposed to implemented by presidential directive. III 

Congress had multiple objectives in enacting GPRA, as noted in the Senate committee report that 

accompanied the legislation. These included addressing the needs especially of Congress and program 

managers, because "congressional policymaking, spending decisions, and oversight are all seriously 

handicapped by the lack both of sufficiently precise program goals and of adequate performance 

information," and "[fJederal managers, too, are greatly disadvantaged in their own efforts to improve 

program efficiency and effectiveness by that same lack of clear goals and information on results. ,,154 The 

committee commented on these needs, saying "[t]he Committee realizes that, as valuable as the goalsetting and performance reporting under [GPRA] will be to Congress in its [policymaking] and oversight 

roles, its greatest value will likely be to the program managers themselves.,,1S5 Furthermore, "performance 

measurement under this Act should focus on tbose measures and that information useful to and used by 

program managers," an "emphasis [that] very much relies on a hottom-up approach, rather than a topdown imposition."I"ln the face of top-down imposition that could occur with a new President, the 

committee said "[e]ven when a change in Administration brings about a shift in political philosophy, the 

program's missions and long-tcrm general goals remain largely intact. The priorities and means of 

1$2 Section 5605 of the Patient Protection and Affordable Care Act (P.L. 111-148) established a Commission on Key National 

Indicators and authorized $70 million to be appropriated for a "Key National Indicator System." Congressional leaders appointed 

eight members of the commission; see "Congress Appoints Key National Indicators Commission," December 16, 2010, at 

http://v.'¥lw.stateoftheusa.org/contentJcommission·on·key-national-ind,php. 

151 As noted earlier, the law tended to emphasize perfonnance measurement more than program evaluation. 

154 U.S. Conbrress, Senate Committee on Governmental Affairs, Government Performance and Results Act <?l1993, report to 

accompany S. 20, lOyd Cong .. I" sess., June 16, 1993. S.Rept. 103-58 (Washington: GPO, 1993), p. 3. 

155 [bid., p. 9. 

'50 Ibid., p. 27. 
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achieving those goals, and the arr,roach to problem solving, may vary significantly, but the long-term 

goals usually remain the same." . 7 

42 

Experience from the last three presidencies suggests that GPRA's framework gave Presidents and OMB 

substantial influence over the law's de facto emphases. Some might argue, for example, that aspects of the 

law primarily served the interests of the institutional presidency. For example, the law requires that annual 

performance plans, with corresponding goals and metrics, accompany presidential budget proposals to 

Congress. However, the law has not required revision of these annual plans to reflect annual 

congressional budget decisions, which might establish a baseline to which agencies and the President 

could be held accountable. Until GPRA was amcnded in the Ill·h Congress, the law was silent about 

using and reporting these goals, metrics, and evaluations during policy implementation. GPRA also 

requircd agencies to "consult" with Congress and solicit views from stakeholders about strategic plans, 

which were required to be rcvised at least every three years.!5B Notably, these consultations may have 

been infrequent and were not subject to transparency requirements, such as requirements to identify how, 

or trom whom, views were solicited. Furthermore, the law did not require transparency or public 

participation in the selection of goals and metrics for inclusion in annual performance plans. The process 

of notice and comment rulemaking may be a point of contrast, under which agencies publish draft rules, 

receive comments from the public, and then address significant issues raised in the comments. Hence, 

thcse topics were left to the discretion of the President, OMB, and political appointees in agencies, with 

less opportunity for "fire alarm" oversight to assist Congress in idcntifying agency or Administration 

behaviors that may deviate from congressional expectations or intent.!59 Other topics, such as GPRA's 

primary emphasis on performance measurement (as opposed to program evaluation) and goal-setting (as 

opposed to operational planning, risk management, and "institutionalizing imagination") also might be 

considered,I6O in addition to topics discussed in the previous section on coverage and potential gaps in the 

Administration's agenda. 

E.O. 13450 appears to codify certain aspects of the PART and explicitly authorizes centralized decision 

making in OMB and the White House about many aspects of agencies' GPRA-related efforts. In contrast 

with Senate-confirmed agency "chief officers" (e.g., chief financial officers), the PIC and its PIOs have 

little to no independent authority under the E.O. They are tasked with providing advice to agency heads, 

the Director of OMB, and the President in many aspects of OMB 's and presidential decision making. 

Given the challenges of congressional ovcrsight of the White House's deliberative proccss, congressional 

oversight ofE.O. 13450 and the activities of PI Os and the PIC may present challenges. Some parts of the 

'57 Ibid .. p. 15. 

IS:;! GAO has suggested that strategic plans be updated every four years instead (Olf every three years, to coincide with presidential 

administrations and reduce agency workload. (See GAO, Results-Oriented Go\!ernment: GPRA Has Established a Solid 

Foundation!or Achieving Greater Results, GAO-04-38, March 2004, pp. 10, 110, and 129.) On the other hand, congressional 

intent for GPRA appeared to contemplate some agency independence from the President when producing strategic plans, raising 

the possibility that fOur-year updates might "politicize" GPRA to reflect the President's policy views instead of agencies' 

relatively stable statutory missions, GAO's recommendation, if implemented, might have had the effect of decreasing the 

frequency of agency consultations with Congress about strategic plans from once every three years to onee every four years. 

151i As formulated in a classic article, "fire-alarm" oversight refers to "'rules, procedures, and informal practices that enable 

individual citi7.ens and organized interest groups to examine administrative decisions (sometimes in prospect), to charge 

executive agencies with violating congressional goals, and to seek remedies from agencies, courts and Congress itself" See 

Mathew D. McCubbins and Thomas Schwartz. "Congressional Oversight Overlooked: Pollce Patrols versus Fire Alarms," 

American Journal 01 Political SCience, vol. 28, February 1984, p. 186. 

160 The reference to "institutionalizing imagination" comes from the 9/11 Commission's report and recommendations, which 

advocated routinizing risk identification, assessment, and management within and across organizations. (U.S. National 

Commission on Terrorist Attacks Upon the United States, The 9-11 Commission Report (Washington: GPO, 2004), p. 344,) lfthe 

topic were of interest to Congress, approaches that borrow from "enterprise risk management" (ERM) might be explored. 
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executive order, including those establishing PIOs and the PIC, were enacted into law with the most 

recent amendment to GPRA 

43 

In the 111'h Congress, some hearings focused on the Administration's agenda, as noted earlier. Separately, 

the Senate Committee on the Budget established a five-Senator Task Force on Government Performance. 

The task force held hearings and focused on several management and performance issues, including 

performance measurement, mission-support functions, and cross-agency coordination. 161 In the House, 

the introduced version ofH.R. 2142 would have enacted into law many aspects of the PART and E.O. 

13450. The bill was referred to a subcommittee of the House Committee On Oversight and Government 

Reform. It passed the House on June 16,2010, after significant changes in subcommittee and full 

committee markups. 162 The House-passed version would have made significant modifications to GPRA 

by enacting into law aspects ofE.O. 13450 and the Obama Administration's approach to government 

performance. On September 28,2010, several Senators introduced S. 3853, which also would have made 

significant modifications to GPRA and adopted portions ofE.O. 13450 and the Obama Administration's 

approach. The Senate Committee on Homeland Security and Governmental Affairs marked up H.R. 2142 

on September 29, 2010, substituting the text ofS. 3853 for the contents of the House-passed version, and 

ordered the measure reported out of committee. The committee reported the measure on December 7, 

2010, and the Senate passed the reported measure by unanimous consent on December 16,2010.'63 On 

December 17,2010, the House voted on the Senate amendment under suspension of the rules, but the bill 

did not receive the two-thirds vote necessary for passage. Four days later, on December 21, 20 I 0, the 

House voted on the Senate amendment under a rule and passed the measure with a vote of216-139. 

President Obama signed the legislation, the GPRA Modernization Act of201 0, on January 4,20 II (P.L. 

111-352). 

!Ii] For more information, see http://budget.senate.gov/democratic/TaskForce.html. 

!62 For an analysis of the subcommittee-reported version ofH.R. 2142, see CRS Congressional Distribution Memorandum, 

"Analysis of Subcommittee-Reported H.R. 2142 (III- Congress) and Related Issues," May 19.2010, by Clinton T. Brass. The 

memorandum is available upon request from the author. 

163 The committee filed a written report on December 16, 2010. U.S. Congress, Senate Committee on Homeland Security and 

Governmental Aflairs, GPRA ModemizalionAct 0/2010, report to accompany H.R. 2142, 11lth Cong., 2nd sess., December l6, 

2010, S.Rept. 111-372 (Washington: GPO, 2010). 
83 

Mr. STEARNS. Mr. Brass, thank you. I would like to lead off with 

my questions, but before I do, I would like to play the following 

video clip if I could. 

[Video playback.] 

Mr. STEARNS. Well, I think it is clear from that video, contrary 

to what Mr. Waxman indicated, the President indicated he is going 

page by page, line by line, item by item, program by program, so 

it is unfortunate that Mr. Waxman is not here to show that he 

meant, the President, that is, meant literally to go that way. 

Ms. DEGETTE. Will the chairman yield? 

Mr. STEARNS. Well—— 

Ms. DEGETTE. Do you know the President didn’t go through the 

budget line by line? 

Mr. STEARNS. Well, it appears Mr. Waxman was trying to indicate the President did not have to go line by line. 

Ms. DEGETTE. Well, do you know if he did or didn’t? 

Mr. STEARNS. Well, you should ask Mr. Waxman. 

Ms. DEGETTE. Why? 

Mr. STEARNS. Well, Mr. Waxman is making the charge. 

Mr. Brass, let me ask you the question just to put it on the 

record. Did the President issue an Executive Order after he took 

office directing the Executive Branch to undertake a line-by-line 

analysis of the Federal budget? 

Mr. BRASS. No, Mr. Chairman. 

Mr. STEARNS. He did not? 

Mr. BRASS. He did not issue an Executive Order. That is correct. 

Mr. STEARNS. Did OMB issue a specific directive to this effect? 

Mr. BRASS. That is unknown. Not in public form. There may be 

internal guidance that may have gone out to agencies or OMB examiners but from what is publicly available, I have seen no such 

document. 

Mr. STEARNS. So I think the basic fact is, the President we saw 

from the video has talked about line by line, item by item, program 

by program, page by page, yet you’re telling us this morning the 

President did not issue an Executive Order to the office to undertake a line-by-line analysis, so that is a little disconcerting. 

Other than the video clip that you saw moments ago, is there 

anything that you have come across in your research and analysis 

that defines or better explains what a line-by-line review of the 

budget entails? 

Mr. BRASS. I have only seen general representations of what is 

involved in a line-by-line review. When I initially saw it, I wasn’t 

sure what it meant to review something line by line in budget jargon, and had several meetings. My interpretation generally from 

the statements that have come out was that the President was signaling internally in the government and externally that he wanted 

to bring focus and scrutiny to all government programs. 

Mr. STEARNS. Well, let me just back up a bit. How does that 

characterization compare with how the Obama administration has 

conducted its line-by-line analysis? I mean, how does it compare in 

real life? 

Mr. BRASS. That is a good question, and unfortunately, I was not 

at OMB at the time to be able to observe that because in some 

ways the formulation of the President’s budget occurs within a 

84 

black box where it is not subject to public view and so it is hard 

to say exactly what occurred. 

Mr. STEARNS. Well, let us go back to other administrations. How 

would you compare how prior administrations conducted an annual 

budget analysis? Can you give briefly what your observations have 

been? 

Mr. BRASS. Well, in the past what is known is that the President’s budget is formulated through a rather elaborate process of 

agencies submitting requests to OMB, OMB passing back initial 

determinations—— 

Mr. STEARNS. Did prior administrations use a line-by-line analysis in your opinion? 

Mr. BRASS. Not in those words, no. 

Mr. STEARNS. In your review of the Obama administration’s lineby-line review, did you find any example of decision-making taking 

place that was based on evidence-based analyses? 

Mr. BRASS. I saw references to evidence-based analyses in citations to program evaluations and that sort of thing, and so there 

have been some instances, yes, where the administration has said 

proposals were based on evidence. 

Mr. STEARNS. Did they result in actual cuts being made, in your 

opinion? 

Mr. BRASS. I have not examined empirically item by item whether they were ultimately adopted. 

Mr. STEARNS. Forget the word ‘‘empirically.’’ Were there any cuts 

made that you can see? 

Mr. BRASS. I have not examined that, so what I have focused— 

that gets at the transparency issue to some extent. 

Mr. STEARNS. So you are saying if there were, you can’t tell 

them, and if they are not, you still can’t tell them? 

Mr. BRASS. I should preface that by saying I could tell if I could 

a lot of time looking at it but it is difficult to find time to go 

through a document like that. 

Mr. STEARNS. Do you think the average person, if they took the 

time, could find the cuts? 

Mr. BRASS. I don’t know if I am the average person or not but 

I could not easily find whether cuts were made. 

Mr. STEARNS. Is it possible there were no cuts? 

Mr. BRASS. I doubt that but—— 

Mr. STEARNS. Is it a possibility? Let me ask you this. Are there 

different ways to conduct an exhaustive line-by-line review beyond 

what occurs in the annual budget process, and what are they? 

Mr. BRASS. Certainly. You can have special processes that go on 

parallel to the budget process. In past administrations, you had 

what was called, for example, under the Jimmy Carter administration, zero-based budgeting, which was an effort to assume that 

nothing would continue where agencies would have to justify everything in their budget all over again. So yes, many techniques and 

approaches are possible. 

Mr. STEARNS. I thank the gentleman and recognize the ranking 

member, Ms. DeGette. 

Ms. DEGETTE. Thank you very much, Mr. Chairman. Let me just 

say at the outset what I said in my opening statement. I join you 

in wishing that we had someone from OMB here because Mr. 

85 

Brass, you work for the Congressional Research Services, which is 

an arm of Congress, correct? 

Mr. BRASS. That is correct. 

Ms. DEGETTE. You don’t work for the Executive Branch, correct? 

Mr. BRASS. That is correct. 

Ms. DEGETTE. Now, I am going to assume you have not talked 

to the President about whether he in fact went through the budget 

line by line as that extremely cute video showed, correct? 

Mr. BRASS. That is correct. 

Ms. DEGETTE. And you haven’t talked to anybody over at OMB 

to see if they went through it line by line over at OMB, have you? 

Mr. BRASS. Not in a way that I could attribute, no. 

Ms. DEGETTE. OK. And have you talked to the people over at 

OMB about whether they did a thorough analysis and investigation 

of the budget to see where cuts and adjustments could be made? 

Mr. BRASS. Informally, and—— 

Ms. DEGETTE. And what were you told by OMB? 

Mr. BRASS. Well, full disclosure, I used to work at OMB before 

I came to CRS, and so—— 

Ms. DEGETTE. OK. But when did you leave OMB? 

Mr. BRASS. In 2003. 

Ms. DEGETTE. OK. So you haven’t been at OMB for like sevenplus years, right? 

Mr. BRASS. That is correct. 

Ms. DEGETTE. And you left when a different administration was 

there too, right? 

Mr. BRASS. That is correct. 

Ms. DEGETTE. So to ask the question again, did you talk to your 

former colleagues at OMB about whether they did a thorough investigation and analysis of this budget? 

Mr. BRASS. Informally, yes. 

Ms. DEGETTE. And what did they say? 

Mr. BRASS. They said that they went through the President’s 

budget formulation process which is rather elaborate and extensive. 

Ms. DEGETTE. OK. Now, in response to one of the chairman’s 

questions, you said that your view of line-by-line analysis means a 

focus and a scrutiny given to all government programs, right? I 

wrote that down when you said that. 

Mr. BRASS. That is one possible, yes, interpretation. 

Ms. DEGETTE. OK. And do you have any sense whether the administration gave a focus and scrutiny to all government programs 

when they proposed their budget to Congress? 

Mr. BRASS. That is—I don’t think it is possible for CRS to authoritatively say whether or not—— 

Ms. DEGETTE. OK. You don’t know? 

Mr. BRASS. That is correct. 

Ms. DEGETTE. Right. Now, as I mentioned in my opening statement, the administration sends a budget to Congress but Congress 

plays a role in developing the Federal budget as well. Isn’t that correct? 

Mr. BRASS. That is correct. 

86 

Ms. DEGETTE. And in fact, the Constitution places the primary 

responsibility for the Federal budget at Congress’s feet, not the 

President, right? 

Mr. BRASS. That is correct. 

Ms. DEGETTE. So, I mean, the President could send us a budget, 

we could throw it in the trash, which we often do, and make our 

own budget, right? 

Mr. BRASS. Yes, ma’am. 

Ms. DEGETTE. OK. Now, Congress is expected to pass a budget 

resolution and 12 separate appropriations bills for fiscal year 2012, 

is it not? 

Mr. BRASS. Yes, ma’am. 

Ms. DEGETTE. And so I was a little confused when the chairman 

was asking you were cut made in the President’s budget because 

in fact the only body that can actually make cuts is Congress when 

it passes those 12 appropriations bills, right? 

Mr. BRASS. Cuts are made figuratively from previous spending 

amounts. 

Ms. DEGETTE. Right. So there is a spending amount from last 

year and then Congress passes an appropriations bill which either 

increases the appropriation or cuts the appropriation, right? 

Mr. BRASS. Congress and the President jointly. 

Ms. DEGETTE. Right. The President can’t unilaterally make cuts, 

he can propose cuts, right? 

Mr. BRASS. That is correct. 

Ms. DEGETTE. The only way you actually make cuts is if Congress passes legislation which the President then signs, correct? 

Mr. BRASS. That is correct. 

Ms. DEGETTE. Now, do you know whether the President has proposed cuts to any programs in his budget to Congress? 

Mr. BRASS. Yes, he has. 

Ms. DEGETTE. And do you know offhand how many cuts those 

are? 

Mr. BRASS. I have not racked up the figures, no. 

Ms. DEGETTE. OK. So just to summarize, you don’t know whether the President or any over at OMB or in his administration actually went through the budget line by line. Is that right? 

Mr. BRASS. That is correct. I do not personally know that. 

Ms. DEGETTE. OK. And you do know—well, you know from talking to your buddies over at OMB that there was some rigorous 

analysis done of the budget over at the White House, correct? 

Mr. BRASS. That is how examiners at OMB would characterize 

that, yes. 

Ms. DEGETTE. OK. And you know that the administration gave 

us a proposed budget which did include proposals for cuts to some 

programs, correct? 

Mr. BRASS. That is correct. 

Ms. DEGETTE. Now, have you yourself read the President’s proposed budget line by line? 

Mr. BRASS. No, ma’am. 

Ms. DEGETTE. Do you know anybody who has? 

Mr. BRASS. I do not. 

87 

Ms. DEGETTE. Because generally like when you used to work at 

OMB and now you work at CRS, people mean an overall review 

when they say—it is a figure of speech, generally speaking, right? 

Mr. BRASS. That is one interpretation of the use of the term here. 

Ms. DEGETTE. OK. Thank you very much. 

Mr. STEARNS. I thank the gentlelady. I think your questioning 

pointed out the reason why we need OMB here, and secondly, we 

got documents from OMB Friday night, and it turns out all those 

documents are already in the public record, so in addition to not 

being here, they sort of foolishly and subversively submitted documents that were already in the public record. So I think it is a double sort of affront that they are not here and it is unfortunate when 

your questions are asked—— 

Ms. DEGETTE. Mr. Chairman, did you ask OMB for those 

records? 

Mr. STEARNS. We sure did. 

Ms. DEGETTE. So if they didn’t give you the records, you would 

be mad at them, so now you are mad at them because they did give 

you records? 

Mr. STEARNS. No, they gave us records that were already in public record. It is like getting a book that you already have in your 

library. 

Ms. DEGETTE. Are there records that you asked for that they 

didn’t give you? 

Mr. STEARNS. Yes. 

Ms. DEGETTE. Well, let us work on that. 

Mr. STEARNS. OK. Let us work on that. 

With that, I recognize Mr. Murphy, the gentleman from Pennsylvania. He is not here? Mr. Griffith is recognized for 5 minutes. 

Mr. GRIFFITH. Thank you, Mr. Chairman. 

You say the President has proposed some cuts to the budget but 

overall the budget is going up so they had more increases in their 

proposals than they had decreases. Is that not correct? 

Mr. BRASS. I don’t know. I don’t cover that, the budgetary aggregates at CRS, but I would be happy to get folks in touch with you 

or your office on that question. I do more kind of budget process, 

program evaluation, the role of agencies and OMB and the President in the budget process, focusing less on what empirically occurs 

at your tier. 

Mr. GRIFFITH. You would agree in the clips that we saw, the 

President made it clear that he was going to do a careful analysis 

of what was going on in the budget and your areas of the budget 

process. Have you seen any signs that the President has made any 

recommendations to Congress in ways that we could make the 

budget process more transparent for the American public? 

Mr. BRASS. Yes, they have put out this TRS volume, this termination, reduction and savings volume. It is not required by law. 

The George W. Bush administration also did that to highlight 

budget cut proposals, and so there are some examples like that 

where some transparency is occurring beyond what is required by 

law. 

Mr. GRIFFITH. But the same thing was done by the Bush administration so there is not any new innovation by the Obama administration. Would that be correct to say? 

88 

Mr. BRASS. Not necessarily in that respect with the caveat that 

it is difficult to know what is going on in the background. 

Mr. GRIFFITH. That is why we like transparency, because it is 

difficult to know what is going on in the background. Isn’t that correct? 

Mr. BRASS. Many people like transparency for that reason, yes, 

sir. 

Mr. GRIFFITH. All right. And as a part of that in the budget process, has the White House made any recommendations that you are 

aware of to Congress that would make the process smoother, easier, et cetera, such as maybe moving to a biannual budget? 

Mr. BRASS. That is another area I don’t cover closely at CRS. I 

am sorry. But there is a chapter usually in the budget appendix— 

excuse me, not the appendix but the analytical perspectives volume 

of the President’s budget that focuses on Congressional budget 

process, but there have been some allusions to, for example, enhanced rescission authority, that kind of thing, but that is not a 

subject that I follow closely. 

Mr. GRIFFITH. So you don’t have a recommendation or you don’t 

know of any recommendations from the White House or the administrative branch of government that might make the process in the 

budget a little smoother? 

Mr. BRASS. Not right offhand. I could get back to you on that. 

[The information follows:] 

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:;;;;: $ Research , ~ Service-------------------

MEMORANDUM October 17, 2011 

To: 

From: 

Subject: 

Honorable H. Morgan Griffith 

Member, House Committee on Energy and Commerce, Subcommittee on Oversight and 

Investigations 

Clinton T. Brass, Analyst in Government Organization and Management, 7-4536 

Post-Hearing Response to Question About Obama Administration Proposals to Change 

the Federal Budget Process 

This memorandum responds to one of your questions from an October 5, 2011, hearing that was held by 

the Subcommittee on Oversight and Investigations ofthe House Committee on Energy and Commerce. 

The hearing was titled "Administration Efforts on Line-by-Line Budget Review." At the hearing, you 

requested that CRS get back to you with information about recommendations from the Barack Obarna 

Administration to make the federal budget process more transparent for the public, or "smoother or 

easier," where you said that moving to a biennial budget would be an example of the latter kind of 

proposal. 

In recent years, many presidential proposals to change the budget process have been included in the 

Analytical Perspectives volume of the President's annual budget proposal. This memorandum briefly 

identifies some ofthe Obama Administration's proposals that have been included in this annually 

submitted volume. Next, the memorandum discusses testimony from the Obama Administration about 

biennial budgeting. Finally, the memorandum describes some transparency-related provisions of the 

American Recovery and Reinvestment Act of2009, which the Administration supported and may have 

helped to formulate. To place these topics and proposals in context, the memorandum begins by 

describing three major phases of the federal budget process. 

Background 

Changes to the federal budget process, including changes that may result in increased transparency, might 

occur in any of the process's major phases. Three phases may be highlighted, insofar as the budget 

process pertains to executive branch agencies. First, in the "executive branch budget formulation 

process," most agencies, the Office of Management and Budget (OMB), and the President work to 

formulate the President's budget proposals. By law, the President annually submits these proposals to 

Congress.' In the second phase, Congress may consider these proposals during action on appropriations or 

I With enactment of the Gudget and Accounting Act of 1921 (42 Stat. 20), now codified in part at 31 U.S,c, § J 105, Congress 

required the President to annually submit a consolidated budget proposul to Congress. OMB closely manages and monitors the 

budget formulation process on behalf of the President to, among other things, prevent so~cal1ed "pre-decisionar' infoffilation 

from leaving the executive branch. 

7-5700 W1-Fi11.crs.gov 
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authorizing legislation, or may disregard the proposals.' Statutes and rules of the House of 

Representatives and Senate provide a framework for this "congressional budget process." In the third 

phase, "budget execution" occurs. During each federal fiscal year, agencies implement federal laws, 

obligating and expending funds along the way as directed by relevant statutes. 

These three phases sometimes may overlap with one another. In addition, Congress may be involved in 

any of these three phases through lawmaking or oversight. For example, Congress may statutorily change 

the processes of budget formulation or budget execution for one or more agencies. 

Budget Process Refonn Proposals in Analytical Perspectives Volume of 

President's Budgets for FY2010, FY2011, and FY2012 

In recent years, Presidents have included proposals for changes to the federal budget process in the 

Analytical Perspectives volume of the President's budget. As of the time of this writing, the Obama 

Administration has submitted annual budget proposals to Congress for FY2010, FY2011, and FY2012. 

Many of the ObamaAdministration's budget process proposals have focused on changing the 

congressional budget process or the President's role in the congressional budget process, as opposed to 

formulation of the President's budget. The following items provide an illustration of proposals and plans 

that were included in the FY201 0, FY20 II, and FY20 12 Analytical Perspectives volumes. 3 

Statutory Pay-As-You-Go (PA YGO): a statutory budget enforcement mechanism 

generally requiring that direct spending and revenue legislation enacted into law not 

increase the budget deficit.' A version of this sort of mechanism was enacted in 2010.' 

Expedited procedures for presidential rescission proposals: a statutory mechanism that 

attempts to generally require Congress to consider and vote on presidential proposals for 

rescissions.' These kinds of expedited procedures have not been enacted into law.' 

OMB controls on agency entitlement programs: a non-statutory mechanism requiring 

agencies to seek OMB approval before they take actions allowed by law that would result 

in mandatory spending higher than what OMB assumed in its most recent ~rojection of 

spending.s These procedures have been implemented by OMB since 2005. 

2 For discussion, sec CRS Report 98~ 721, Introduction to the Federal Budget Process, coordinated by Billlleniff lr. 

3 U.S. Executive Office of the President, Office of Management and Budget (hereafter OMil), Budget of the US. Government, 

FYlO/O, Analytical Perspectives (Washington: GPO. 2009) (herealler FY2010 Analytical Perspectives); OMB. Budget oJthe 

U.s. Government, fT2011, Analytical Perspectives (Washington: GPO, 2010) (hereafter FY2011 Analytical Perspectives); and 

OMB. Budget oJthe Us. Government. FY2012. Analytical Perspectives (Washington: GPO. 20 II) (hereafter FY2012 Analytical 

Perspectives). 

4 FY2010 Analytical Perspectives, p. 215, See also FY201 I Analytical Perspectives, p. 143, and FY20]2 Analytical Perspectives, 

p. 145, 

5 For additional discussion. see CRS Report R41157, The Statutory Pay-As-You-Go Act 0/2010: Summary and Legislative 

History, by Bill HenilrJL 

6 FYlOJ() Analytical Perspectives, p. 215, See also FY20ll Analytical Perspectives, p. 150. and FY2012 Analytical Perspectives, 

p. 156. 

7 if enacted, a rescission constitutes the permanent cance!lation of designated budget authority that was previously appropriated, 

For additional discussion, see CRS Report R41373, Expedited Rescission Bills in the 1 11th and 1 12th Congresses: Comparisons 

and Issues. by Virginia A. McMurtry, 

8 FY20}O Analylical Perspectives, p, 215. Sec also FY2011 Analytical Perspectives, p, 144, and FY20l2 Analytical Perspectives, 

p.149. 
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The first two items, above, do not address transparency in the budget formulation process, but might be 

viewed as providing additional salience to the budget deficit and presidential budget proposals, 

respectively, The third item has operated with little transparency to Congress and the public. With regard 

to the question of whether proposals and plans like these would result in the budget process working more 

smoothly or easily, that judgment may be in the eye ofthe beholder. As noted in the CRS reports that are 

included in the footnotes for these items, Members of Congress sometimes have differed on the 

advisability of the proposals and plans. 

Biennial Budgeting Proposals 

Biennial budgeting is a concept that may involve several variations, including two-year budget 

resolutions, two-year appropriations, as well as other changes in the timing ofiegislation related to 

revenue or spending.'" As noted in another CRS report," proponents of biennial budgeting have generally 

advanced three arguments-that a two-year budget cycle would (I) reduce congressional workload by 

eliminating the need for annual review of routine matters; (2) reserve the second session of each Congress 

for improved congressional oversight and program review; and (3) allow better long-tenn planning by the 

agencies that spend federal funds at the federal, state, or local level. Critics of biennial budgeting have 

countered by asserting that the projected benefits would prove to be illusory. Projecting revenues and 

expenditures for a two-year cycle requires forecasting as much as 30 months in advance, which might 

result in less accurate forecasts and could require Congress to choose between allowing the President 

greater latitude to make budgetary adjustments in the off-years, or engaging in mid-cycle corrections to a 

degree that might undercut workload reduction or intended improvements in planning. Opponents also 

have argued that less frequent review of appropriations may diminish congressional influence over 

agencies, and may correspondingly increase the President's influence. 

The Obama Administration has not expressed a formal position on biennial budgeting. In September 

2010, at a Senate confirmation hearing for OMB Director-designate Jacob J. "Jack" Lew, Mr. Lew was 

asked whether he thought biennial budgeting was a good idea. He answered that the "annual budget 

process gives us precious little time to focus on program implementation, both in the executive branch 

and in the legislative branch," but also that "there are many challenges to biennial budgeting."" In his 

oral testimony, he further elaborated on these issues. 

American Recovery and Reinvestment Act of 2009 

The American Recovery and Reinvestment Act of2009 CARRA; P.L. 111-5) may provide an example of 

changes proposed by the Obama Administration for the budget execution process that resulted in greater 

transparency. In the wake of a rapidly deteriorating economic picture and year-long recession that the 

(,..continued) 

9 For additional discussion, see CRS Report R41375, OJilB Controls on Agency MandatOJ)' Spending Programs: "Administrative 

PA YGO" and Related Issues/or Congress, by Clinton T. Brass and Jim Monke. 

10 Thb section draws on CRS Report R41764, Biennial Budgeting: Options, Issues, and Previous CongreSSional Action, by 

Jessica Tollestrup. 

lilbid. 

12: U,S. Congress, Senate Committee on the Budget, Nomination o/the Honorable Jacob J, Lew, a/New York, 10 be Director of 

the Office of Management and Budget, hearing and executive business meeting, 111 th Cong., r d sess" September 16,2010, 

S.Hrg. 111·737 (Washington: GPO, 2010), pp. 24-25. 
92 


81404.153

Congressiom.ll Research Service 4 

Congressional Budget Office called the most severe since World War I1,l3 Congress passed ARRA in early 

2009. An early version of the legislation reportedly was drafted by then President-elect Barack Obama's 

transition team working with Members of the House Committee on Appropriations.'4 ARRA was enacted 

in two divisions. Division A, titled "Appropriations Provisions," included many discretionary 

appropriations provisions in 16 titles. Division A also included substantive legislative provisions in some 

titles. These included provisions to, among other things, create a variety of mechanisms and entities 

focused on oversight of ARRA funds (Title XV). For example, Title XV required recipients of funds to 

provide information to agencies for posting on a public website. In addition, the public website was 

required to include a plan from each federal agency receiving funds from Division A on how it would use 

the funds. A title containing general provisions for Division A also focused on oversight (Title XVI). 

*.* 

I trust that this memorandum is responsive to your request. Please feel free to contact me if you have 

questions or would like to discuss any of these topics further. In areas outside my subjects of expertise, I 

also would be happy to put CRS analysts or attorneys in touch with you or your office. 

13 U.S. Congressional Budget Office, A Preliminary Analysis o/the President's Budget and an Update o/CBO's Budget and 

Economic Outlook, March 2009, pp. 19, 33. 

14 For further discussion. see CRS Report R40572, General Oversight Provisions in the American Recovery and Reinvestment 

Act (~l20()9 (.4.RRA): Requirements and Related issues, by Clinton T. Brass. 
93 

Mr. GRIFFITH. Yes, if you could get back to me on that. Do you 

think that a biannual budget would be a smoother process and 

smooth out some of the bumps in the road that we have experienced in this my first term? 

Mr. BRASS. That is a question that comes up frequently. A biannual budget would allow Congress to look at 2 years of expenditures, at a time and advocates have focused on using that second 

year for additional oversight, and another argument that they use 

to plug that proposal is that it would allow Congress to focus more 

in-depth time during that consideration. That said, there might be 

some disadvantages too. The budget process in a way is an annual 

way of holding agencies accountable, and if they are only held accountable every 2 years with a budgetary hammer, it might weaken Congressional controls. 

Mr. GRIFFITH. But you haven’t seen any indications that the 

White House has been working on ways to smooth out the process 

or make recommendations that might smooth out the process for 

the various administrative agencies that the White House is responsible for overseeing and making sure that they work smooth? 

You haven’t seen anything like that? 

Mr. BRASS. Unfortunately again, when it comes to proposals like 

that, many of them relate to the Congressional budget process. I 

focus more on what is going on within the Executive Branch. Within the Executive Branch, I have not seen big initiatives to open the 

lid, for example, on formulation of the President’s budget. 

Mr. GRIFFITH. So that is not something—so we are not sure 

whether they have done line by line, whether figurative or otherwise, and we have not seen anything where—you have not seen 

anything where it looks like they are opening the lid to look at 

making the process smoother, whether it be the biannual budget or 

any other proposal that they are just not looking in that direction. 

Would that be a fair characterization of what you just said? Isn’t 

that true? 

Mr. BRASS. I will have to get back to you on that, Mr. Griffith. 

I will need to—— 

Mr. GRIFFITH. But it is fairly reasonable based on what you just 

said that you have not seen anything along those lines. Is that correct? 

Mr. BRASS. I would characterize it just that it has been a busy 

couple of years and I have been focused on other topics, and so 

things aren’t coming readily to mind. That doesn’t mean they are 

not out there, though. 

Mr. GRIFFITH. Certainly nothing front burner? Might be some 

back-burner stuff. Is that what you are saying? 

And I yield back my time, Mr. Chairman. 

Mr. STEARNS. The gentleman yields back his time and we recognize the gentlelady from the Virgin Islands, Dr. Christensen, for 5 

minutes. 

Mrs. CHRISTENSEN. Thank you, Mr. Chairman. 

I have to say that as I read the memo and some of the testimony, 

this seems like a hearing looking for a reason to exist, and I have 

to agree also with Ranking Member Waxman that seasoned members who admittedly rarely read budget bills can’t be taking that 

line-by-line statement literally. I might agree to looking at develVerDate Aug 31 2005 14:15 Jul 16, 2013 Jkt 037690 PO 00000 Frm 00097 Fmt 6633 Sfmt 6633 F:\112-09~1\112-92~1 WAYNE
94 

oping clearer guidelines, goals and principles but I think we have 

to recognize that we are not the Executive Branch and be careful 

not to usurp their authority and to use the authority that we do 

have to address some of these issues. 

My questions—let me preface my questions by saying some of my 

Republican colleagues on the subcommittee appear to be calling 

into question whether the Obama administration has done a 

thoughtful review of budget issues. In their September 15, 2011, 

letters to OMB and other agencies, Chairman Stearns and Chairman Upton cited a statement by the White House press secretary 

that the President had not gone line by line through omnibus 

spending legislation as a concession that raises questions about fiscal discipline in the administration. In order to best understand the 

attention the administration has paid to budget issues, I think it 

would helpful to walk through the process involved in preparing 

the President’s budget. 

So Mr. Brass, it is my understanding that government agencies, 

one of my favorites, the National Institutes of Health, begin the development of their budgets far before the beginning of the fiscal 

year. Is that correct? 

Mr. BRASS. That is correct. 

Mrs. CHRISTENSEN. And I also understand that agencies like NIH 

prepare a first draft and then submit them for review to the department of which they are part, in this case, HHS. Is that correct? 

Mr. BRASS. That is correct. 

Mrs. CHRISTENSEN. And do all agency proposals make it through 

the departmental review, to the best of your knowledge? 

Mr. BRASS. No, they do not. 

Mrs. CHRISTENSEN. And then departments prepare their budgets 

for review by the Office of Management and Budget. Is that part 

of the process? 

Mr. BRASS. That is correct. 

Mrs. CHRISTENSEN. Do all departmental proposals make it 

through the OMB process? 

Mr. BRASS. They do not. 

Mrs. CHRISTENSEN. In fact, OMB tells departments what proposals it will support and which ones it will discard in a document 

that is usually known as the OMB passbook. Is that correct? 

Mr. BRASS. Passback, correct. 

Mrs. CHRISTENSEN. Passback. As a matter of fact, I remember 

going to the White House when we were doing the health care reform bill and we had several issues that we wanted the President 

to consider—this is an aside—and the President actually said to 

me, well, I am not going to support anything that doesn’t work. So 

I have seen some of this process in action. 

But let me go on with my questions. I also understand that Cabinet members get one last chance to propose an item for the budget 

in a process that is an appeal to the President and the OMB director in a process that is called appeals. Is that a part of the process 

as well? 

Mr. BRASS. Yes, it is. 

Mrs. CHRISTENSEN. So do all Cabinet members’ appeals get 

granted? 

Mr. BRASS. No, they do not. 

95 

Mrs. CHRISTENSEN. Is this procedure, meaning the agency proposes to the department, the department proposes to OMB, the 

OMB passes back a decision, the Secretary appeals to the President, and final decisions are made. Has this procedure been used 

by both Democratic and Republican administrations? 

Mr. BRASS. Yes, it is. It is a longstanding practice. 

Mrs. CHRISTENSEN. To the best of your knowledge, when this 

procedure is being followed, does anyone review the entire Federal 

budget line by line? 

Mr. BRASS. Again, that is a figure of speech that is subject to interpretation, but if it is meant actually reading every line and not 

figurative, no, I do not know of anyone who read the entirety of it. 

Mrs. CHRISTENSEN. Well, in your opinion, does not reading it line 

by line and going through it line by line but really doing a careful 

review, doesn’t that kind of equate to each other? 

Mr. BRASS. So in colloquial speech to do a line-by-line examination of something frequently means a careful, exhaustive, scrutinizing review of a document, so yes. 

Mrs. CHRISTENSEN. And yet both Republican and Democratic administrations do produce budget proposals despite going that process and not having done a line-by-line review but we end up with 

a budget regardless of what administration is in office? 

Mr. BRASS. Presumably, yes, just again, not having observed it 

personally, but yes, reports are. 

Mrs. CHRISTENSEN. Well, I just want to thank you for your responses. As we evaluate whether there are ways to improve the 

budget process, it is helpful to understand the existing process 

which is lengthy and involves detailed analysis from experts at 

agencies across the administration. I also would just like to say 

that I think that an honest and objective look at what President 

Obama and his team have done in his tenure would clearly show 

that the President has done much to eliminate duplication, waste, 

fraud and abuse and cut spending, and as a matter of fact, in going 

along with what the tea party Republicans have called for and cuts 

while we are still in a deep depression, I think the President has 

gone too far, and I yield back the balance of my time, Mr. Chairman. 

Mr. STEARNS. The gentleman from Nebraska is recognized for 5 

minutes. 

Mr. TERRY. Well, I appreciate what my tax-and-spend uber-liberal Democrat friends state in their statements here. Let me just 

go through and try to get this clear in my mind. We can play that 

game too, Donna. 

Now, Mr. Brass—pardon me? 

Mrs. CHRISTENSEN. They have hurt middle-class and poor Americans and they have gone too far. 

Mr. TERRY. By trying to restrain spending. 

Let us look at that. Now, who decides the head of agencies? 

Mr. BRASS. Who appoints them? 

Mr. TERRY. Yes. Well, who makes the determination of who will 

be the Secretary or Director of an agency? 

Mr. BRASS. It is joint between the President making an appointment and the Senate—— 

Mr. TERRY. The Senate confirming. 

96 

Mr. BRASS [continuing]. Confirming. 

Mr. TERRY. And the management, day-to-day management is the 

Executive Branch, right? 

Mr. BRASS. That is correct. 

Mr. TERRY. And they answer to the President, correct? 

Mr. BRASS. That is correct. 

Mr. TERRY. And I think the gentlelady from the Virgin Islands 

made the good point that the process in budgeting is that the respective agencies, since they answer to the Executive Branch, start 

their budgeting process really right now and then submit those to 

OMB, which is an Executive Office branch, right, or an Executive 

Office agency? 

Mr. BRASS. It is an Executive Branch entity, yes, and the process 

starts in the spring and summer preceding February submission of 

the President’s budget. 

Mr. TERRY. Right. They don’t submit those to Congress, they submit those to the President? 

Mr. BRASS. In general, yes. There are agencies where Congress 

has seen fit to carve them out from the law requiring that a budget 

be submitted to OMB first. 

Mr. TERRY. Right, and those are the exceptions, but generally all 

the agencies submit their proposed budgets to OMB. The President 

and OMB make reviews of those budgets before they put them in 

the President’s budget, correct? 

Mr. BRASS. That is correct. 

Mr. TERRY. OK. And then when the President decides whether 

there should be—whether they have found duplicative agencies or 

subagencies, does the President have to come to Congress to eliminate a subagency? 

Mr. BRASS. If the subagency is established by law, yes. If a subagency is created through administrative action, the appropriations 

committees may get involved where in report language they require 

some communication to occur. 

Mr. TERRY. Are you aware of any instance where the Executive 

Branch has eliminated a duplicative subagency? We know that no 

agency has been eliminated so it has to be the subagencies within 

an agency, so are you aware of whether by Executive Order or by 

request for legislation one has been eliminated? 

Mr. BRASS. I have not studied that question in detail so I would 

have to—— 

Mr. TERRY. Who would we ask? 

Mr. BRASS. At CRS? 

Mr. TERRY. Well, just generally. Can CRS answer that question 

for us if we request it? 

Mr. BRASS. Sure, of course. 

Mr. TERRY. Or would we have to have OMB here? 

Mr. BRASS. You could—to get a complete answer, you might ask 

both. CRS oftentimes is constrained to readily publicly available resources. Something like that, also you might ask GAO for more indepth examination. 

Mr. TERRY. All right. Then if we want to know what recommendations OMB has made after their review of the budgets, we 

would have to ask them? 

97 

Mr. BRASS. Well, the recommendations, you could ask them, but 

their recommendations are generally speaking in publicly available 

documents. The challenge oftentimes is going through them in detail and discerning what is a budget cut to a program where the 

program still exists or an entity still exists versus what is a zeroing 

out of an entity. 

Mr. TERRY. I appreciate that. Then in that regard, exercising our 

constitutional rights, we do a budget. The Republican House did 

pass a budget. So the issue isn’t whether we are exercising our discretion or constitution rights, it is whether they agree with our cuts 

or changes. Are you aware of whether the Senate has passed a 

budget? 

Mr. BRASS. A budget resolution? 

Mr. TERRY. Budget resolution. 

Mr. BRASS. I believe they have not. 

Mr. TERRY. I yield back. 

Mr. STEARNS. The gentleman yields back, and the gentleman 

from California, Mr. Bilbray, is recognized for 5 minutes. 

Mr. BILBRAY. Let me say first of all, Mr. Chairman, I commend 

you for having this hearing. In fact, if I have a complaint, we 

should have had it before. Any member that thinks that this is a 

hearing without a problem needs to take a look at 43 percent deficit running up. We are 43 percent underwater. There is not a city, 

a county or a State in this country that would think that 43 percent underwater is viable. Mr. Brass, can you name off just what 

city, maybe Philadelphia—can we find somebody that is 43 percent 

annually underwater? 

Mr. BRASS. I don’t cover that area. I am sure it—— 

Mr. BILBRAY. OK. Let me assure you in California, which has one 

of the worst economic downturns in the entire country—I mean, we 

have unemployment over 12 percent—we don’t have that, and so, 

you know, I just think we ought to recognize, there is a reason to 

have this hearing. It should have been held before, and I don’t 

think that it is just a problem that we can point to the White 

House. Even though the leader of the Senate happens to be a family friend with the Bilbrays, to take a look at the fact that it appears the Senate has not done their due diligence of the budget, basically have delayed it almost three times longer than what they 

are supposed to be doing. I think there is a lot of concern we should 

have with everybody in this process. 

I have just got to say personally, Mr. Chairman, it kind of reminds me of when Proposition 13 passed in 1978. I was a young, 

27-year-old mayor and we had to make 40 percent cuts to be able— 

because that is what we lost in revenue in 1978. And so if I sound 

like it is de ́ja` vu all over again, there is a reason to it. Sadly, I have 

to tell you, that we ended up having to disband our police department because of the fiscal issues. You ought to try to make fun cuts 

like that and then hope to ever get the endorsement of the police 

department again. 

Zero-based budgeting seems like a no-brainer when you are sitting at the 43. When we were challenged with this, and I am saying across the State of California, everybody went to zero-based; 

every item had to be justified. What would be the justification for 

not doing zero-based? 

98 

Mr. BRASS. Zero-based budgeting can be implemented in different 

ways, and in fact, people may interpret it differently. I can reflect 

back on the experience in the Jimmy Carter administration where 

GAO did a study 2 years after it was implemented that found that 

it was quite burdensome to go through. The notion of zero-based, 

that is, not just doing incremental budgeting but actually looking 

at everything, many budget analysts would agree it is a correct 

thing to do but some of the art and science of budgeting is how to 

do things like that. So one of the troubles there is just identifying 

what is meant by zero-based budgeting. 

Mr. BILBRAY. OK. Let us go to the biannual budget system. Some 

members may forget but under a Democratic Congress, Democratic 

White House, we passed bipartisan support for a biannual budget 

for the veterans. Have we run into any major problems with the 

Veterans Department being on a biannual budget? 

Mr. BRASS. I don’t know. I don’t follow that area closely. 

Mr. BILBRAY. OK, Mr. Brass, let me just tell, one advantage was, 

when we get through this crisis, the veterans were addressed during the C.R. because we were on that, and I challenge both sides 

that we found bipartisan support for a biannual budget for the veterans. Maybe we ought to be considering maybe this is one place 

that Republicans and Democrats can cooperate and start expanding 

this effort. 

I have heard of lockbox. Black box is sort of an interesting new 

term as somebody who has been around the block a couple of times, 

and I am just wondering about this concept of budgeting and not 

really allowing anybody to know what is going in on that, and I am 

wondering how far does this go? The Executive Branch will keep 

it in the dark all the time ever and only until they release their 

budget no one has the right to be able to know what is being said 

or what is being proposed. 

Mr. BRASS. People have argued that they have the right. Committees with subpoena power can certainly go after certain information that is considered pre-decisional in the Executive Branch 

but this goes back to 1921 with a law called the Budget and Accounting Act where Congress told agency personnel, do not submit 

budgets directly to Congress, you have to go through the filter of 

the institutional presidency before that is submitted. And so Presidents have used that law to shield some of what goes on inside the 

Executive Branch. That said, Congress has occasionally for specific 

agencies removed that lid to—— 

Mr. BILBRAY. Well, I think as much as possible—Mr. Chairman, 

I appreciate it. I just want to point out one thing. A lot of people 

talk about budget cuts and hitting the poor and the needy, but let 

me remind you, when the economy goes south, when the system 

crashes, it is not the rich and the powerful that get hurt. When 

there is an irresponsible budget handling, it is the poor and the 

needy always end up being hit. It is not the rich guys along the 

line. And if anybody believes that the President has been responsible on every expenditure on the budget and agrees with this, I 

have looked at everything, maybe they ought to look at so-called 

green fuel technology subsidies or certain money that has gone into 

certain renewable strategies that no science in the world would 

support but the administration has, and I yield back. 

99 

Mr. STEARNS. I thank the gentleman, and the gentleman from 

Texas, Mr. Green, is recognized for 5 minutes. 

Mr. GREEN. Thank you, Mr. Chairman. 

Mr. Brass, an underlying concern of my Republican colleagues at 

today’s hearing appears to be the President of the United States 

did not conduct a line-by-line review of the budget proposal he submitted to Congress. For example, in requesting information from 

the agencies on line-by-line budget review, the letters from the subcommittee and the full committee chairs underscore that the President’s Secretary conceded that the President did not conduct a lineby-line review of the omnibus spending bill in 2009. 

Let me start with a few questions, just simple yes and no. Mr. 

Brass, with your information, can you tell us for certain whether 

the President read every word of his 2012 budget proposals? 

Mr. BRASS. I cannot. 

Mr. GREEN. Mr. Brass, have you ever read the entire budget submission by the President, and do you have any sense of how long 

that would take? 

Mr. BRASS. I have not. It would take a long time. 

Mr. GREEN. And would you expect the President to read every 

word of his budget proposals? 

Mr. BRASS. I would be surprised if the President were able to do 

that. 

Mr. GREEN. Now, there is no question there are differences between the Obama administration and my colleagues across the 

aisle regarding priorities, especially Federal spending. I am concerned, however, that the series of hearings the subcommittee is 

launching today is serving more as a forum for airing grievances 

about the Obama administration’s policy priorities rather than 

meaningful attempt to improve the budget review process, and I 

think all of us want to improve the process. 

Mr. Brass, do you believe that a line-by-line reading of the Federal budget is likely to lead to dramatic changes to Federal programs like turning Medicare into a voucher program or are those 

sorts of discussions more likely to be made in the context of highlevel policy decisions? 

Mr. BRASS. I would say that hinges on how one defines a lineby-line review. If line-by-line review is interpreted as an exhaustive 

examination of the budget and fiscal policy more generally, then 

major policy changes could be proposed coming out of that. 

Mr. GREEN. But still, line by line is only the basic part you have 

to do. You have to understand the budget before you then come 

back and say OK, these are some of the policy decisions we may 

need, and those policy differences are obviously party differences, 

regional differences and lots of different differences that could get 

there. 

Mr. Brass, I think it is appropriate for Congress to examine 

whether the cuts and priorities reflected in the President’s budget 

proposal are fair and wise. I am not convinced, however, that reiterating demands for the President to conduct a line-by-line budget 

review is the most productive means on carrying out this goal. 

Maybe in Congress we ought to require line-by-line review of the 

budget from our side, one of the branches of government. 

100 

And I will close by, Mr. Chairman, I served in the legislature a 

number of years and I had a State house member who had served 

many, many years before me, and he said when he was first elected 

his first term, he read every bill that was introduced into the State 

legislature. His second term, he realized that was impossible because he was reading bills that would never see the light of day. 

He tried to read all the ones in his committee. And by the time his 

third term came around, he tried to read the ones he introduced. 

So sometimes reading it, it is more the comprehensive than it is 

just reading a line. It is actually comprehending what it is. And I 

appreciate the time, Mr. Chairman. 

Mr. STEARNS. I thank the gentleman, and since you have a 

minute and 40 seconds left, I might have a colloquy with you. 

Mr. GREEN. I would love to. 

Mr. STEARNS. You weren’t here when we showed the video of the 

President in which he said he was going to go not only line by line, 

he said he was going to go page by page, item by item, program 

by program. So then we thought, well, let us go back and see what 

the OMB Director, Jack Lew, said in his testimony before the 

House Budget Committee on February 15, 2011. This is an exact 

quote from him: ‘‘Each year since entering office, President Obama 

has asked his administration to go line by line through the budget 

to identify programs that are outdated, ineffective and duplicative.’’ 

So I just submit to the gentleman, this doesn’t sound like he thinks 

it was just a figure of speech, and I think in all deference to you 

and your side, you are trying to interpret this that the President 

didn’t mean to go line by line but it appears from what he said and 

from what his OMB Director said that he actually wanted to go, 

and that was his intent. 

Mr. GREEN. If I could reclaim my time? 

Mr. STEARNS. Sure. 

Mr. GREEN. Since you are the chair and you can have all the 

time you want, and I agree, but the President has an Office of 

Management and Budget who has staff that can do that, and I 

would hope that the President—— 

Mr. STEARNS. Which is Jack Lew. 

Mr. GREEN. Well, Jack Lew, that they would have staff who 

could do that and look at it, but I think the big issue is that we 

need to look at the policy decisions, whether it be the President 

makes, whether it is this President makes or the previous or the 

next President. That is our issue, and instead of focusing on whether the President read every line or maybe he had one of those literally dozens if not hundreds of people who work for the Office of 

Management and Budget or in any of the agencies to say OK, I 

want you to do this. I think that can happen. But let us talk about 

the policies and the priorities instead of just, you know, getting 

into whether somebody read a line or not, because I don’t think—— 

Mr. STEARNS. Well, I agree with that program, we should look at 

the big picture, but I am just saying that we are trying to be fair 

to the President. But the other point is, we can’t find out—— 

Mr. GREEN. I would be shocked. 

Mr. STEARNS. And we also can’t even find out what in view of 

his line-by-line, item-by-item, program-by-program, page-by-page 

101 

review, we can’t find any of these cuts. So we are going to move 

off Mr. Brass to our second panel and ask them to come forward. 

Let me—while they are setting up here, panel two is Thomas 

Schatz, President of Citizens against Government Waste; Mr. Patrick Knudsen, Grover M. Hermann Senior Fellow in Federal Budgetary Affairs, The Heritage Foundation; Veronique de Rugy, Senior 

Research Fellow, the Mercatus Center of George Mason University; 

Tad DeHaven, Budget Analyst, Cato Institute; Andrew Moylan, 

Vice President of Government Affairs, National Taxpayers Union; 

and Gary Kalman, Director, Federal Legislative Office, U.S. PIRG. 

So with that, I think we got everybody. Did we introduce everybody? Oh, we have a few more. We have Stan Collender, Qorvis 

Communications, and Scott Lilly, Center for American Progress. 

All right, gentlemen, it looks like we have got you all lined up here. 

All of you are aware that the committee is holding an investigative 

hearing, and when doing so, has the practice of taking testimony 

under oath. Do you have any objection to taking testimony under 

oath? The chair then advises you that under the rules of the House 

and the rules of the committee, you are entitled to be advised by 

counsel. Do any of you wish to be advised by counsel? In that case, 

if you would please rise and raise your right hand? 

[Witnesses sworn.] 

Mr. STEARNS. You are now under oath and subject to the penalties set forth in Title XVIII, section 1001 of the United States 

Code. You may now each give an opening statement of 5 minutes, 

and we will recognize Mr. Schatz. 

STATEMENTS OF THOMAS A. SCHATZ, PRESIDENT, CITIZENS 

AGAINST GOVERNMENT WASTE; TAD DEHAVEN, BUDGET ANALYST, CATO INSTITUTE; PATRICK L. KNUDSEN, GROVER M. 

HERMANN SENIOR FELLOW IN FEDERAL BUDGETARY AFFAIRS, THE HERITAGE FOUNDATION; VERONIQUE DE RUGY, 

SENIOR RESEARCH FELLOW, MERCATUS CENTER, GEORGE 

MASON UNIVERSITY; ANDREW MOYLAN, VICE PRESIDENT, 

GOVERNMENT AFFAIRS, NATIONAL TAXPAYERS UNION; 

GARY KALMAN, DIRECTOR, FEDERAL LEGISLATIVE OFFICE, 

U.S. PUBLIC INTEREST RESEARCH GROUP; STANLEY 

COLLENDER, PARTNER, QORVIS COMMUNICATIONS; AND 

SCOTT LILLY, SENIOR FELLOW, CENTER FOR AMERICAN 

PROGRESS 

STATEMENT OF THOMAS A. SCHATZ 

Mr. SCHATZ. Thank you, Mr. Chairman and members of the subcommittee. I appreciate being here today. My name is Thomas 

Schatz. I am President of Citizens Against Government Waste, a 

nonprofit organization dedicated to eliminating waste, fraud and 

abuse in government, and we have more than 1 million supporters 

and members nationwide. 

On November 25, 2008, President-elect Barack Obama vowed to 

conduct a page-by-page, line-by-line review of the budget to eliminate unneeded programs and increase the efficiency of the rest of 

the government. On May 7, 2009, OMB Director Peter Orszag said 

that there was a significant installment in this effort when they released the fiscal year 2012 terminations, reductions and savings 

102 

document which identified 100 recommendations that would reduce 

Federal spending by $17 billion over 1 year. While the identification of these savings was laudable, it was not unique, and as the 

prior witness has stated, a list of terminations, reductions and savings has been submitted to Congress each year since 2006. A list 

of similar proposals entitled Major Policy Initiatives was submitted 

by President Reagan throughout his two terms in office. 

Now, the line-by-line review of the budget is one of six initiatives 

that President Obama has launched in an effort to streamline the 

Federal government and cut costs. Most recently, on June 13, 2011, 

he issued an Executive Order to deliver an efficient, effective and 

accountable government, and while the words ‘‘line by line’’ do not 

appear, he both identified previous proposals and created new initiatives. He talked about prior achievements and good progress but 

there was no list of accomplishments including how much money 

had been saved by taxpayers or what had been implemented from 

any prior list. 

Now, the subcommittee’s request for information on the implementation of the review is therefore appropriate but the administration should already be answering these questions and there 

should be one place in the budget where this information is available. We have found over the years that the most effective method 

of promoting an initiative to increase efficiency has been to announce a single major idea and provide information about progress 

and results. President Reagan created the President’s Private Sector Survey on Cost Control, better known as the Grace Commission. President Clinton had the National Performance Review and 

President George W. Bush initiated the Program Assessment Rating Tool. To achieve any level of success, such initiatives require 

a clear methodology, an appropriate time frame, transparent reporting and concrete steps to ensure that the recommendations are 

adopted. 

When the Grace Commission completed its report in January 

1984, Commission Chairman J. Peter Grace joined with syndicated 

columnist Jack Anderson to create CAGW to follow up on the recommendations. President Reagan immediately submitted recommendations of the Grace Commission in his annual budgets as 

part of the volume called Management of the United States Government. In fiscal year 1986, appendix B described how the President had accepted 80 percent of the Grace Commission’s 

unduplicated recommendations and that 326 recommendations 

would be included in the following year’s budget. The management 

report in 1987 noted the adoption of those 326 recommendations 

would save $7.4 billion in one year and $68.8 billion over 5 years, 

and that $30.6 billion was included in the budget baseline for the 

prior fiscal year. Similar reports were included in the fiscal year 

1988 management report and 1989 management report, and that 

last report showed that $40.5 billion had been included in the 1989 

budget baseline. And despite the clarity and efficacy of these management reports, they disappeared after the Reagan administration, and nothing of similar substance and value has taken their 

place. 

In March 1993, President Clinton asked Vice President Gore to 

spearhead the National Performance Review, a 6-month project 

103 

that ended up detailing 1,250 specific actions intended to save $108 

billion. Eventually one-quarter of those recommendations requiring 

legislation were adopted. And in July 2002, the Bush administration launched the Program Assessment Rating Tool. This technique 

was used in the President’s 2004 budget. It was specifically identified. The Web site expectmore.gov was also created to track the 

evaluations. 

In order for taxpayers to determine whether President Obama is 

achieving success in his line-by-line examination of Federal spending or his other initiatives, the results really should be provided 

clearly and concisely and on a regular basis. Really, new initiatives 

should not be announced without demonstrating substantial 

progress in the administration’s current efforts to improve efficiency and effectiveness in government. The President, when he 

was in the Senate, did support and cosponsor the Federal Accountability and Transparency Act. There is USAspending.gov as a result, and a similar type of transparent reporting would be very 

helpful to taxpayers to determine whether the Obama administration is making progress on its efforts to eliminate wasteful spending. 

That concludes my testimony, and I ask that my full statement 

be submitted for the record, and thank you, Mr. Chairman. 

[The prepared statement of Mr. Schatz follows:] 

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roS' AGAINST 

CITIZENS 

oS' GOVERNMENT 

WASTE 

I. Introduction 

Testimony of Thomas A. Schatz, President 

Citizens Against Government Waste 

Before the House Energy and Commerce 

Subcommittee on Oversight and Investigations 

Wednesday October 5,2011 

II. President Obama's Promise: A Line-by-Line Review of the Federal Budget 

III. Methodology for Budget Review 

IV. A Lesson from History: The Grace Commission 

V. The Survey: Who Participated 

VI. The Survey: How It Was Conducted 

VII. The Survey: Finished Product and Recommendations 

VIII. The Survey: What It Cost 

IX. The Survey: Tracking the Savings 

X. New Tracking Systems 

Xl. Grace Commission Success in the States: South Carolina and Nevada 

XlI. The Grace Commission Lives On: CAGW's Prime Cuts 

XIII. Conclusion 

1301 Pennsylvania Avenue, N.W. 

Suite 1075 

Washington, D.C. 20004 

202-467-5300 
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1. Introduction 

Mr. Chairman, members of the subcommittee, thank you for the opportunity to 

testify today. My name is Thomas A. Schatz. I am president of Citizens Against 

Government Waste (CAGW), a nonprofit organization made up of more than one million 

members and supporters, dedicated to eliminating waste, fraud and abuse in government. 

Citizens Against Government Waste has not, at any time, received any federal grant and 

we do not wish to receive any in the future. 

II. President Obama's Promise: A Line-by-Line Review of the Federal Budget 

On November 25, 2008, President-elect Barack Obama vowed to conduct a 

thorough review of the federal budget and eliminate wasteful and unnecessary 

government expenditures. He said, "We cannot sustain a system that bleeds billions of 

taxpayer dollars on programs that have outlived their usefulness, or exist solely because 

of the power of a politicians, lobbyists, or interest groups. We simply cannot afford it. 

This isn't about big government or small government. It's about building a smarter 

government that focuses on what works. That is why I will ask my new team to think 

anew and act anew to meet our new challenges .... We will go through our federal budget 

- page by page, line by line - eliminating those programs we don't need, and insisting 

that those we do operate in a sensible cost-effective way." 

On May 7, 2009, Office of Management and Budget (OMB) Director Peter 

Orszag declared that the Obama administration had made a "significant installment" in its 

"commitment to review the federal budget line by line" by releasing its fiscal year (FY) 

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2012 "Terminations, Reductions, and Savings" document which identified 100 

recommendations that would reduce federal spending by $17 billion over one year. 

While the identification of these savings is laudable, it is not unique; a 

recommended list of Terminations, Reductions, and Savings has been submitted to 

Congress each year since 2006. A list of similar proposals entitled "Major Policy 

Initiatives" was included as a separate document in President Reagan's budget 

submission throughout his two terms in office. More often than not, these 

recommendations are ignored. For example, the fiscal year 1987 Major Policy Initiatives 

document suggested a 20 percent reduction in funding and re-targeting of Community 

Development Block Grants (CDBG), and President Obama's fiscal year 2012 

terminations submission included a less ambitious recommendation to scale back funding 

for CDBGs by 10 percent. 

The traditional, standard submission of requested program cuts is therefore 

nothing new, and does not quite live up to the promise of a "page by page, line by line" 

review of the federal budget. However, the failure of Congress to adopt many longstanding recommendations is also nothing new, and the push for the elimination of even 

the most obvious wasteful spending has been a constant struggle for both Democratic and 

Republican administrations. 

The line-by-line review of the federal budget is one of six major initiatives that 

President Obama has launched in an effort to streamline the federal government and cut 

costs. In January 2009, the President created a new position at OMB for a chief 

perfonnance officer to increase the "efficiency, transparency and accountability" of 

federal agencies. In June 2010, the Obama administration suggested specific actions to 

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advance IT reform and cut waste. In September 20 I 0, President Obama launched the 

Accountable Government Initiative, an effort to cut waste and make government more 

open and responsive to the American public. 

On June 13,2011, President Obama issued an Executive Order to "Deliver an 

Efficient, Effective and Accountable Government" which attempted to consolidate his 

previous initiatives. While he talked about prior achievements and "good progress," 

there was no list ofthose accomplishments, including how much had money had been 

saved for taxpayers. He citcd the prior Accountable Government Initiative and called for 

"periodic" meetings between Vice President Biden and Cabinet officials report on 

progress; for agencies to place quarterly reports on performance improvements on their 

websites; identification of program overlap by the OMB Director as guidance for fiscal 

year 2013 budget submissions by agencies; and established the Government 

Accountability and Transparency Board to provide "strategic direction" to increase 

transparcncy of federal spending. 

These initiatives were announced as part of the President's "Campaign to Cut 

Waste," which also included a plan to close down or consolidate about 500 government 

websites and scrap plans to launch any new ones. The White House also set a goal of 

reducing spending on management support service contracts by 15 percent by the end of 

FY 2012, a reduction of$6 billion. Vice President Joe Biden was put in charge of the 

entire Campaign to Cut Waste. 

While the Campaign to Cut Waste appears to be a renewed effort to increase 

effectiveness and accountability, and taxpayers hope that it will be successful, there is no 

single methodology governing the various projects, and there is no single place online or 

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in the budget to monitor and track the results. The Accountable Government Initiative 

has been in place for a year, yet for the first time it appears that there will be periodic 

meetings and reports. The President's Management Councilor a similar entity, as well as 

the Federal CFO Council, have been in existence for many years, and at best this is a 

reiteration of what should already be done by these entities. 

In regard to the Executive Order, it is not clear which of the initiatives is the most 

important, which of the existing programs has produced the best results, and how this 

latest announcement will increase the organization of the effort to improve government 

efficiency. Taxpayers hope that this latest campaign and its promised reporting and 

transparency will result in serious changes in the management of their hard-earned 

money. 

In regard to the administration's prior attempt to increase efficiency, CAGW's 

research and policy staff spent several hours attempting to locate information about the 

various initiatives on the OMB and White House websites, and found one item devoted to 

the Campaign to Cut Waste. There was no information about progress, only the promise 

that such results would occur. 

The request for information from this subcommittee to OMB for specific 

information on the implementation of the line-by-Iine review is therefore appropriate and 

timely. However, it should be unnecessary. The administration should already be 

providing a regular, easily located and searchable report on progress - either annually or 

quarterly so that the answers to the subcommittee's questions would be obvious. 

The most effective method of promoting an initiative to reduce wasteful spending 

or increase performance and efficiency has been to announce a single major idea and 

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provide easily accessible information about progress and results. President Reagan 

created the President's Private Sector on Cost Control, better known as the Grace 

Commission; President Clinton established the National Performance Review; and 

President George W. Bush initiated the Performance Assessment Rating Tool. Each of 

these is described in more detail below. 

Today, the nation faces a massive, record-breaking $14.8 trillion debt. A Joint 

Select Committee on Deficit Reduction has been formed to find $1.2 trillion in savings so 

that the country can avoid default and continue to make good on its financial obligations. 

There has never been a more critical time for an extensive, thorough and serious 

evaluation of all federal budget expenditures, and 1 urge members of Congress to work 

with the administration to help execute this vital effort. 

IlL Methodology for Budget Review 

While the need for a line-by-line budget review is obvious to every President, the 

question of how to go about sueh a task will vary from one administration to another. 

The President could launch a new commission that would use private sector experts to 

conduct in-depth reviews of the operations of federal agencies and evaluate 

improvements in agency operations; provide recommendations for increased efficiency 

and reduced costs thal can be realized by executive action or legislation; offer additional 

information and data relating to government expenditures, indebtedness and personnel 

management; and seek opportunities for increased managerial accountability and 

improvements. For all of these efforts, however, a clear methodology will be needed to 

establish effective criteria for program evaluation; set an appropriate timeframe with 

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strict deadlines; create transparent reporting procedures; and layout concrete steps to 

ensure that recommendations are adopted. 

IV. A Lesson from History: The Grace Commission 

On June 30, 1982, President Ronald Reagan issued Executive Order 12369, 

establishing the President's Private Sector Survey on Cost Control (Survey), and asked 

businessman J. Peter Grace to chair what became known as the Grace Commission. 

President Reagan directed the Grace Commission to "work like tireless bloodhounds to 

root out government inefficiency and waste of tax dollars." 

One hundred and sixty-one business executives, assisted by 2,000 volunteers from 

the private sector, contributed more than $75 million worth of their time and resources to 

examine all major federal programs and agencies. In January 1984, the Grace 

Commission's work culminated in a 47-volume report containing 2,478 

recommendations to save taxpayers $424.4 billion over three years. An additional 54 

recommendations and 188 issue areas for further study also were identified by the 

Survey. Three-year savings and revenue potential associated with the 54 specific 

recommendations for further study totaled $30.2 billion. 

In establishing the Grace Commission, President Reagan drew not only upon his 

experience as governor of California, but also on a rich tradition of public-private 

partnerships, including the Taft Commission on Economy and Efficiency (1910-1912), 

the Brownlow Committee (1936-1937), Hoover J (1947-1949) and Hoover 11 (1953-

1955), the Ash Council (1969-1971), and the Carter Reorganization Project (1977-1979). 

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V. The Survey: Who Participated 

A private sector study on cost control and managerial efficiency in the federal 

government needed the help of private citizens who possessed the experience and the 

capacity to understand the processes of the federal government, analyze them 

intelligently, and recommend operational improvements in response to President Regan's 

mandate. Because of this understandable need to call upon people knowledgeable in the 

functions to be studied, the commission was highly sensitive to possible conflicts of 

interest and took every rcasonable step to avoid them, including the establishment of 

internal rules and standards that went beyond the requirements of the law. The 

commission brought the best expertise of the private sector into the public analysis of 

government, while avoiding any compromise of the public trust. 

All members of the Grace Commission Executive Committee were cleared for 

appointment by the White House Office of Legal Counsel. In addition, members of the 

Executive Committee who were asked to serve as co-chairs of individual task forces were 

cleared for those assignments by both the White House Office of Legal Counsel and the 

respective departments and agencies. Task force members, who were not subject to the 

same conflict of interest statutes as were appointees to the Executive Committee, were 

subjected to an internal review for purposes of identifying and, if necessary eliminating 

any potential or perceived conflicts of interest. 

VI. The Survey: How It Was Conducted 

The Grace Commission's mandate was to review the operations of the entire 

executive branch and to bring the experience and expertise of the private sector to bear on 

the management practices of the federal government. In other words, the President asked 

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the Executive Committee to look at the component parts of the Executive Branch of 

Government with the same degree of detail and consideration with which a private 

company would consider a new acquisition. The Grace Commission evaluation focused 

on "improved management practices, more efficient methods of operation, and better 

direction of spending on program targets." Budget considerations were secondary. 

As stated in the summary report of the Grace Commission, "The overriding theme 

of these Task Force reports is that the Federal Government has significant deficiencies 

from managerial and operational perspectives, resulting in hundreds of billions of dollars 

of needless expenditures that taxpayers have to bear each year. These reports make clear 

that these deficiencies are not the result of a lack for competence or enthusiasm on the 

part of Federal employees. Rather, responsibility rests squarely on the Executive Branch 

and Congress, which in the final analysis are the joint architects of the Federal 

Government's management systems, policies and practices." 

The Grace Commission's first task was to divide the challenge into manageable 

pieces. The commission established 36 task forces for purposes of reviewing 98 percent 

of the federal dollars and 100 percent ofthe federal work force. Ofthe 36 task forces, 22 

focused on specific departments and agencies and 14 examined horizontal, cross-cutting 

issues. In some instances, more than one task force was assigned a department or agency 

and in other instances the task force looked at a collection of departments and agencies 

(for example, those specifically focusing on business and, banking). The horizontal, 

cross-cutting task forces focused on those issues which cut across all of Government, 

such as personnel procurement, automated data processing, etc. In addition, the Survey 

Management Office issued a series of selected issues reports on topics not covered by the 

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task forces because of limited time and resources or, in some instances, on topics of 

sufficient import to warrant further study and a separate report. 

Particular attention was devoted to coordinating the efforts of the task forces so 

that overlap and, duplication would be minimized and consistency ensured. Each task 

force was co-chaired by two or more members of the Executive Committee and had a 

full-time, Washington-based project manager who oversaw day-to-day operations. Task 

forces ranged in size from 20 to 90 members and their review of departments and 

agencies was divided into four distinct phases: organization and start-up, diagnostic 

survey, in-depth survey, and report preparation. 

Reporting to the Grace Commission chairman, the Survey Management Office 

consisted of a director, a deputy director (the sole federal employee designated as the 

government liaison by the White House), a chief operating officer, and a staff of about 50 

office personnel. There were 12 desk officers, most of whom were senior Washinbrtonbased executives with broad experience in working with the federal government. Each 

desk officer was responsible for the orientation of three to four task forces, guiding their 

efforts toward the most productive areas of review; coordinating planning and 

communications, monitoring progress, and assuring the quality of final task force reports. 

The work of this group supplemented and expanded upon that of a government resources 

group, which included the inspectors general offices, OMB, the General Services 

Administration, and the assistant secretaries for management. These two groups acted as 

a bridge between members of the task forces and the departments and agencies they 

reviewed. 

It was not the principal purpose of Grace Commission to examine basic public 

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policy. For example, the commission did not focus on whether the federal government 

should concentrate its resources on defense, education, highways, health and welfare, or 

nutrition, nor did it address the question of what priority should be accorded each of these 

endeavors. Instead, the commission concentrated on overall government operations as 

distinguished from policy, but included an examination of the execution of policy. Its 

primary concern was the degree of efficiency in the expenditure of tax resources and 

whether those expenditures achieved the desired public purpose at an acceptable cost 

through workable mechanisms and organizations equipped with the proper tools. 

In carrying out its investigation, therefore, the Grace Commission concentrated 

first and foremost on operations. At times, however, it was extremely difficult to draw a 

precise line clearly separating operations and policy. Indeed there were numerous 

instances where a very, significant overlap existed between operations and policy, with 

task forces unable to look at one without the other. Many of the historical initiatives that 

preceded the Grace Commission, particularly Hoover I and Hoover II, also found it 

difficult to make this differentiation. Unlike past attempts to improve the management of 

the federal government, and in contrast to the numerous federal advisory committees and 

other private groups which at any given time are working to serve specific agency 

projects, the Grace Commission took a broad look at the executive branch. 

VIL The Survey: Finished Product and Recommendations 

The task forces produced a series of appendices and a comprehensive set of 

working papers to supplement data contained in the task force reports. Executive 

summaries for each of the commission's reports are contained in each volume. Work 

papers and supplemental data are on file with the Department of Commerce. 

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The work of the Grace Commission focused on both short-term and long-term 

opportunities. In fact, their savings projections were not tied to fiscal years; they were 

tied to full implementation of the recommendations, reiterating that they were looking at 

increased efficiency and improved management, not just cutting programs without 

justification or documentation. In many instances, unimplemented recommendations can 

still be easily and immediately adopted at the agency or department level. In other cases, 

implementation of some recommendations will require legislation and, therefore, will 

take a longer time. The point is that many of the Grace Commission recommendations 

are timeless and are still relevant today. 

VIIL The Survey: What It Cost 

Except for the one full-time government employee assigned to it, the Grace 

Commission cost the federal government nothing. A private, not-for-profit foundation 

was established for purposes of raising gifts in kind as well as financial contributions to 

support the work of the Survey Management Office (including space, equipment, and 

support staff) and the overall administration of the task forces. Approximately $3.3 

million was raised directly by the foundation. More specifically, members of the 

Executive Committee, the Survey Management Office and the task forces served without 

cost to the federal government. All of their salaries and expenses, including travel, hotel, 

and other out-of-pocket costs, were paid either personally or by their private sector 

employers. The total value of such resources dedicated to the Grace Commission effort 

was more than $75 million. The extent to which the Grace Commission was a private 

sector, volunteer, no-cost-to-the-government effort makes it a unique undertaking. 

Virtually all of its historical precedents were financed by congressionally appropriated 

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funds. 

IX. The Survey: Tracking the Savings 

President Reagan told Peter Grace after the final Grace Commission report was 

issued on January 12, 1984, that he should not let the material "gather dust on a shelf." 

That helped inspire Mr. Grace to join with syndicated columnist Jack Anderson and 

create Citizens Against Government Waste in February, 1984, in order to educate the 

American people, the media, and policymakers about the commission's 

recommendations, seek their implementation, and track their progress. 

President Reagan heeded his own advice and followed up on the commission's 

work as well. He immediately submitted recommendations of the Grace Commission in 

his annual budgets. In the annual "Management of the United States Government" 

documents, which President Reagan first provided to Congress as a separate document 

following the submission of the FY 1986 budget, and subsequently at the same time as 

the rest of the budget, OMB provided a description of efforts to improve the management 

of federal agencies. There was a section in each of these management reports through 

fiscal year 1989, during President Reagan's last year in office, which cited the Grace 

Commission recommendations submitted with each year's budget, as well as those which 

had been adopted in the prior year. 

The management reports also detailed plans and progress on improvements in 

productivity, return of responsibilities to state and local governments, streamlining of 

administrative processes, program delivery improvements, cost reductions, cash and 

credit management, delinquent debt collection, payment integrity efforts, upgrades made 

to information technology systems, and increased use of user fees and private sector 

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contracts. Despite the clarity and efficacy of these management reports, they disappeared 

after the Reagan administration and nothing of similar substance and value have taken 

their place. It would certainly be of great benefit to taxpayers, lawmakers and the media 

to restore this method of reporting. 

X New Tracking Systems 

In March 1993, President Clinton asked Vice President Gore to spearhead a sixmonth review of the federal government. The National Partnership for Reinventing 

Government's (NPR) mission was to create a government that "works better, costs less, 

and gets results Americans care about." The initial task force included 250 career civil 

servants, and several state and local government employees and consultants. They were 

organized into two teams: one to review individual agencies and the other to focus on 

government-wide systems, including procurement, budget, and personnel. 

The President also directed agencies to create their own internal "reinvention 

teams" to work with the administration to develop recommendations. Agency heads 

were also asked to create "reinvention laboratories" that would pilot innovations in 

service delivery and be granted waivers from internal agency rules. 

President Clinton's initial six-month Performance Review detailed 1,250 specific 

actions intended to save $108 billion, reduce the number of overhead positions, and 

improve government operations. The Clinton administration worked with Congress to 

enact a quarter of all recommendations requiring legislation. These recommendations 

included authority to reduce the size of the workforce by offering bonuses for employees 

leaving voluntarily and major reforms to the government's procurement system. 

Agencies identified $28 billion a year in reduced regulatory burdens and proposed 

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eliminating 16,000 pages of regulations. The administration also developed the 

"Hammer Award" for federal employees who had reinvented their part of the 

government. Made simply of a $6 hammer, the award parodied the Pentagon's infamous 

bloated hardware costs, which were infamously publicized by the Grace Commission, 

CAGW and others, including how the Pentagon paid $436 for a hammer. 

For the record, that amount was calculated as follows: The Navy paid $41 to 

order the hammer and figure out how to use it; $93 to make sure the hammer worked; 

$102 for "manufacturing overhead"; $37 to make sure there were spare parts for the 

hammer; $3 for packing the hammer for shipment; $90 for the contractor's "general 

administrative costs"; $56 for the finder's fee; and $7 for the "capital cost of money." 

The Grace Commission also provided other examples, including the $640 toilet seat and 

15 pages of specifications for making chocolate chip cookies for the military. 

A September 1998 Brookings Institution report determined that the Clinton 

administration had achieved important accomplishments in procurement reform and 

customer service, but progress in reducing the size of government was more uneven. 

While administration did reached its target of reducing the number of civilian employees 

by about 300,000, progress in planning to match people who remained on the payroll 

with jobs needing to be done was weak. Although troubled agencies like the Federal 

Emergency Management Agency showed signs of improvement, the highly publicized 

problems with the Internal Revenue Service demonstrated NPR's problems in identifying 

and preventing management disasters. Integration of the reinventing government 

campaign with performance measurement was inconsistent and faced difficulties earning 

the public's confidence and rebuilding trust in government. 

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Regardless of the outcome, there was a systematic effort to publicize and track the 

results of the NPR. Vice President Gore was clearly identified as being in charge of the 

initiative, and spent a great deal of time promoting the effort and discussing the results. 

In July 2002, the Bush administration launched the Program Assessment Rating 

Tool (PART) to assess the performance of federal programs and to drive improvements 

in program performance. PART covers four broad topics for all programs selected for 

review: program purpose and design; strategic planning; program management; and 

program results. Points are awarded to a program based on the answer to each question, 

and an overall rating of effectiveness is then assigned. There are five categories of 

possible ratings: Effective, Moderately Effective, Adequate, Ineffective, and Results Not 

Demonstrated. 

The first year was spent on assessments and ratings of234 programs covering 

approximately 20 percent of the federal budget, followed by publication of the results in 

the President's FY 2004 budget and subsequent budgets. The effort was expanded to an 

additional 20 percent of federal programs (or budget coverage) each year, along with 

selected re-evaluations of previously evaluated programs if there was a reason for a 

change in the rating. 

The website ExpectMore.gov was created to track PART evaluations, and it 

produced a list of results. PART was also referenced in President Bush's budget 

submissions as a rationale for the list of program reductions, savings and terminations. 

The Federal Funding Accountability and Transparency Act of2006, which was 

co-sponsored by then-Senator Obama and Senator Tom Coburn (R-Okla.), required that 

OMB establish a single searchable website, accessible to the public at no cost to track 

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federal awards. As a result, USAspending.gov was launched in December 2007. The 

website provides details on more than $1 trillion in contracts and financial assistance 

awarded annually by federal agencies. 

While the website is a step in the right direction toward increasing transparency 

and accountability in the area of government spending, in March 20 10, the GAO found 

that agencies did not always report awards on USAspending.gov and that numerous 

inconsistencies existed between USAspending.gov data and agency records. These errors 

were due to a reliance on voluntary agency compliance and a lack of specific guidance. 

While the effort can be improved, at least there is now a single source for information 

about grants and contracts being awarded by the federal government. It would be helpful 

to have a similar single location for proposals and progress related to the Obama 

administration's efforts to eliminate wasteful spending. 

XI. Grace Commission Success in the States: South Carolina and Nevada 

On June 10, 2003, South Carolina Governor Mark Sanford signed Executive 

Order 2003-15, establishing the Commission on Management, Accountability, and 

Performance (MAP). According to the official MAP website, the commission was 

"modeled after President Reagan's Grace Commission, [and] we seek to determine how 

government can be more productive, efficient and cost effective while providing quality 

service." 

The state was struggling with the eighth highest state unemployment rate in the 

country (5.4 percent) and the thirteenth highest percentage of people living in poverty 

(14.1 percent). South Carolina was also suffering from shrinking revenues with out-ofcontrol spending. From fiscal 2002 to fiscal 2003, approximately $443 million had to be 

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cut from the state budget to prevent the state from operating in a deficit, which is unconstitutional according to South Carolina law. 

The MAP Commission was formed as a bi-partisan entity with 12 private sector 

business and industry leaders and two constitutional officers, Lt. Governor Andre Bauer 

and Comptroller General Richard Eckston. The commission's aim was to make the 

South Carolina state government more productive, efficient and cost-effective while 

maintaining quality service. 

Along with its own ideas, the commission actively sought out suggestions from 

state employees that were directly responsible for providing services to the public. 

CAGW was asked by Governor Sanford to provide guidance to the commission, and I 

was honored to testify at the first hearing. The commission held meetings from June 17, 

2003 to September 30, 2003 and suggested 213 improvements for nine areas of the state 

government. 

Gov. Sanford reported success in abolishing wasteful government spending 

through MAP. In June 2004, he signed the Fiscal Discipline Act which limited state 

spending from the General Fund over the next four years to ensure that borrowed funds 

from the General Reserve Fund were restored by fiscal 2008-2009. After this legislation 

was passed, Gov. Sanford was able to get the General Assembly to agree to pay off the 

remaining $155 million deficit. 

The Spending and Government Efficiency Commission (SAGE Commission) was 

created by Executive Order of Nevada Governor Jim Gibbons on May 7, 2008 and held 

its first meeting on June 26, 2008. The Commission was created to review state 

government operations that fall under the Executive Branch and to provide the Governor 

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with recommendations for streamlining operations, improving customer service and 

maximizing the use of taxpayer dollars. 

The SAGE Commission was established as a privately funded, bi-partisan panel. 

The Chairman and 13 members were appointed by Governor Gibbons based on 

recommendations from Nevada's leadership in the Assembly and the Senate as well as 

the Governor's own election. 

Governor Gibbons appointed Bruce R. James, the former Public Printer of the 

United States and a local business executive, as chairman of the commission. Mr. James 

and the other citizens appointed by Governor Gibbons are all recognized, established 

business leaders, either active or retired, who have the expertise and experience required 

to carry out the commission's mission. Members received no compensation for their 

service and paid their own expenses. 

The commission released several reports that detailed billions of dollars in 

savings. By May 2010, Gov. Gibbons reported that eight of 44 recommendations from 

the panel of private business people he appointed in May 2008 had been fully 

implemented. Another 19 were already in progress or planned for implementation 

following the 2011 legislative session. 

Even though there was a concerted effort in South Carolina and Nevada to 

emulate the Grace Commission, tracking and reporting was not as formalized as it was 

under President Reagan. 

XII. The Grace Commission Lives On: CAGW's Prime Cuts 

For the past 27 years, CAGW has been working tirelessly to carry out the Grace 

Commission's mission to eliminate government waste. Since 1984, the implementation 

-19-
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81404.091

of Grace Commission and other waste-cutting recommendations supported by CAGW 

has helped save taxpayers $1.2 trillion. These recommendations provided a blueprint for 

a more efficient, effective and smaller government. 

CAGW maintains and annually updates a comprehensive list of spending cuts that 

has been a valuable tool for taxpayers, legislators and the media. CAGW's Prime Cuts 

2011 contains 691 recommendations that would save taxpayers $391.9 billion in the first 

year and $1.8 trillion over five years. 

Prime Cuts relies on expert opinions, bipartisan reports, and analysis and 

recommendations provided by think tanks, independent organizations, GAO, OMB, the 

Congressional Budget Office, the White House, and many other resources. At a 

minimum, Congress and the administration should review these recommendations as they 

look for ways to save taxpayer dollars. 

XIIL Conclusion 

It is important to conduct a line-by-line review of the federal budget, but such an 

undertaking will not be successful unless taxpayers, legislators, and federal agencies 

understand the parameters and methodology of such an effort. There must be strict, 

comprehensive and transparent reporting and tracking procedures in place. It is essential 

that Congress, the administration and taxpayers are able to clearly identify how much 

money is being spent in a particular area, which programs are meeting their objectives, 

and which are in need of reform or elimination. Without such a methodology, efforts to 

conduct a line-by-line budget review will be futile. 

As the national debt tops $14.8 trillion, continuing to pour money into wasteful, 

unnecessary and duplicative programs without proper scrutiny or oversight is not only 

-20-
124 


81404.092

inefficient, it is fiscally irresponsible and an affront to taxpayers and future generations 

who will ultimately bear the burden of our massive financial obligations. We again thank 

the subcommittee for holding this hearing, and encourage members to work on a bipartisan basis to ensure that tax dollars are spent effectively. 

When President Obama announced that he would make sure that there would be a 

linc-by-line examination offedcral spending, taxpayers had high hopes that the result 

would be an in-depth, comprehensive examination of government waste, fraud, abuse and 

mismanagement. The President has discussed many times how his administration will be 

accountable and transparent, including the latest effort in the Campaign to Cut Waste. 

Taxpayers are hoping that the results will both improve efficiency and that the 

information will be provided to them clearly and concisely, and on a regular basis. 

This concludes my testimony. I will be glad to answer any questions. 

-21-
125 

Mr. BILBRAY [presiding]. It shall be accepted. 

Mr. DeHaven. 

STATEMENT OF TAD DEHAVEN 

Mr. DEHAVEN. Members of the committee, thank you for inviting 

me to testify. 

After the November 2008 election, President-elect Obama 

pledged that his Office of Management and Budget will go through 

the Federal budget page by page, line by line, eliminating those 

programs we don’t need. When the President released his first 

budget proposal in May of 2009, it included a separate volume, terminations, reductions and savings, which identified $17 billion in 

savings for fiscal year 2010. To put that figure in perspective, the 

President proposed to spend $3.6 trillion that year, which means 

that he proposed savings equal to 0.47 percent of what he planned 

to spend. Assuming that OMB did conduct a line-by-line review of 

the Federal budget, the President’s proposal implied that he believed that 99.53 percent of the Federal government was definitely 

needed at a time when we were running deficits in excess of $1 trillion. 

Did OMB really conduct a thorough, line-by-line search of the 

Federal budget for savings? The list of savings created in all their 

thoroughness because it targeted some obscure programs. For example, the proposed savings included terminating tiny programs 

like the Christopher Columbus Fellowship Foundation, $1 million 

saved, the Javits Gifted and Talented Education program, $7 million saved. In all, the administration identified and provided a detailed explanation for 121 targets for savings. The fact that the administration proposed a cut, what amounts to needles in the budgetary haystack, suggests that the President truly believes that almost everything the Federal Government does is needed. Indeed, 

subsequent terminations, reductions and savings released with the 

President’s annual budget proposals in 2011 have offered similarly 

insignificant but detailed offering of spending cuts. 

It would be interesting to know whether some cuts recommended 

by OMB staff were shot down by the White House. Was it communicated internally to OMB staff that they should only look for savings that would be the least likely to ruffle the feathers of special 

interests? If that is the case, then the President’s suggested savings were nothing more than a political prop designed to fool the 

American people into believing that his administration was serious 

about reducing Federal spending. Or was OMB given the green 

light by the White House to truly go program by program, line by 

line? In that case, OMB itself could be responsible for producing 

the insignificant cuts. 

I spent 2 years as a Deputy Director at the State of Indiana’s Office of Management and Budget under Governor Mitch Daniels. If 

the circumstances at the Federal OMB are similar to that which 

I experienced as a State budget official, then it is quite possible 

that the White House chose to ignore OMB’s suggestions for more 

substantive budget cuts. I was part of the dedicated team within 

Indiana’s Office of Management and Budget called Government Efficiency and Financial Planning. The group was tasked with conducting a long-overdue inventory of the State’s operations. We proVerDate Aug 31 2005 14:15 Jul 16, 2013 Jkt 037690 PO 00000 Frm 00129 Fmt 6633 Sfmt 6633 F:\112-09~1\112-92~1 WAYNE
126 

duced two reports with hundreds of recommendations for making 

State government more efficient and effective, and we also made 

recommendations to cut or eliminate programs and boards. Unfortunately, the Governor did not follow through and execute very 

many of the recommendations. I also suspect his political advisors 

also dissuaded him from ordering action. In fact, the advisors were 

so worried about the potential political fallout from aggrieved special interests over the recommendations contained in the second 

GEFP report that it was intentionally released when the media 

wasn’t paying attention. They needn’t have worried because those 

interests who might have had cause for concern already saw that 

the first report was barely acted upon. The Governor’s advisors 

typically sided with turf-protecting department heads and they did 

little to support GEFP. The reason was simple: the perceived political cost of pursuing our recommendations usually exceeded the 

perceived political benefit. 

I learned from my Indiana government experience under a Governor thought to be a fiscal hawk that political leaders are good at 

generating sound bites designed to make taxpayers believe that 

their interests come first. In reality, taxpayer interests usually end 

up taking a backseat to the interests of select individuals or 

groups. I also learned that a failure to back up sound bites with 

follow-through action only serves to embolden special interests. 

Cato has publicly challenged the President on his pledge to go 

through our Federal budget page by page, line by line, eliminating 

those programs we don’t need. Attached to my written testimony 

is a copy of a full-page ad that Cato ran in major newspapers. We 

suggested 10 areas to target for cutting that would result in substantial savings, and the suggestions were arrived at based on 

Cato’s own page-by-page, line-by-line review. You can see the results of our review at www.downsizinggovernment.org. We posted 

essays laying out the case for terminating hundreds of agencies 

and programs, and it is worth noting that we have been able to 

cover all that budgetary terrain through the efforts of a very limited number of people. 

Lastly, it is important to note that the administration’s inability 

or unwillingness to recognize that more than just half a percent of 

the Federal budget is unneeded is not a partisan affliction. President Obama inherited a Federal budget that had massively expanded under the previous Republican administration of George W. 

Bush. The massive warfare welfare state built by Republicans and 

Democrats is morally bankrupt, and if the Federal government 

were a business, it would be financially bankrupt. That means that 

the Federal budget’s meat has to be cut in addition to the fat. 

Therefore, if President Obama isn’t serious about terminating 

unneeded Federal programs, then it is up to Congress to do the job 

for him. Thank you. 

[The prepared statement of Mr. DeHaven follows:] 

127 


81404.093

Cutting the Federal Budget Line by Line 

Tad DeHaven, Budget Analyst, Cato Institute, 

before the House Subcommittee on Oversight and Investigations 

of the House Committee on Energy and Commerce 

October 5,2011 

SUMMARY 

• Assuming that OMB did conduct a line by line review of the federal budget, the 

president's first budget proposal implied that he believed that 99.53 percent of the 

federal government was definitely needed. 

• The president's list of savings created an aura of thoroughness because it targeted some 

obscure programs. 

• It would be interesting to know whether some cuts recommended by OMB staff were 

shot down by the White House. 

• My experiences as an Indiana state budget official taught me that political leaders are 

good at generating sound bites designed to make taxpayers believe that their interests 

come first. In reality, taxpayer interests usually end up taking a back seat to the 

interests of select individuals or groups. 

• Cato has conducted its own page by page, line by line review of the federal budget. The 

results are posted on Cato's website, www.DownsizingGovernment.org. 

• Policymakers need to do more than simply pledge to "eliminate waste, fraud, and 

abuse" in government programs. It's time to cut "meat"- not just "fat." 

• If President Obama isn't serious about terminating unneeded federal programs, then 

it's up to Congress to do the job for him. 
128 


81404.094

Cutting the Federal Budget Line by Line 

Tad DeHaven, Budget Analyst, Cato Institute, 

before the House Subcommittee on Oversight and Investigations 

of the House Committee on Energy and Commerce 

October 5, 2011 

Chairman Steams and members of the committee, thank you for inviting me to testify 

today regarding the administration's purported effort to conduct a line by line review of the 

federal budget. 

After the November 2008 election, president-elect Obama pledged that his Office of 

Management and Budget (OMB) "will go through our federal budget - page by page, line 

by line - eliminating those programs we don't need, and insisting that those we do operate 

in a sensible cost-effective way.'" 

When the president released his first budget proposal in May 2009, it included a separate 

volume, Terminations, Reductions, and Savings, which identified $17 billion in savings for 

fiscal 2010.2 To put that figure in perspective, the president proposed to spend $3.6 trillion 

that year, which means that he proposed savings equal to 0.47% of what he planned to 

spend. Assuming that OMB did conduct a line by line review of the federal budget, the 

president's proposal implied that he believed that 99.53 percent of the federal government 

was definitely needed at a time when we are running deficits of more than $1 trillion. 

2 
129 


81404.095

Did the OMB really conduct a thorough line by line search of the federal budget for 

savings? The list of savings created an aura of thoroughness because it targeted some 

obscure programs. For example, the proposed savings included terminating tiny programs 

like the Christopher Columbus Fellowship Foundation ($1 million) and the Javits Gifted 

and Talented Education Program ($7 million). In all, the administration identified - and 

provided a detailed explanation for - 121 targets for savings. 

The fact that the administration proposed to cut what amounts to needles in the budgetary 

haystack suggests that the president truly believes that almost everything the federal 

government does is needed. Indeed, subsequent Terminations, Reductions, and Savings 

released with the president's annual budget proposals in 2010 and 20 II have offered a 

similarly insignificant - but detailed - offering of spending cuts. 

It would be interesting to know whether some cuts recommended by OMB staff were shot 

down by the White House. Was it communicated internally to OMB staffthat they should 

only look for savings that would be the least likely to ruffle the feathers of special 

interests? If that's the case, then the president's suggested savings were nothing more than 

a political prop designed to fool the American people into believing that his administration 

was serious about reducing federal spending. Or, was OMB given the green light by the 

White House to truly go program by program, line by line? In that case, OMB itself could 

be responsible for producing the insignificant cuts. 

3 
130 


81404.096

I spent two years as a deputy director at the state ofIndiana's Office of Management and 

Budget under Governor Mitch Daniels. If the circumstances at the federal OMB are similar 

to that which I experienced as a state budget official, then it's quite possible that the White 

House chose to ignore OMB's suggestions for more substantive budget cuts. 

I was part of a dedicated team within Indiana's OMB called Government Efficiency and 

Financial Planning (GEFP). The group was tasked with conducting a "long-overdue 

inventory of the state's operations." We produced two reports with hundreds of 

recommendations for making state government more "efficient" and "effective." We also 

made recommendations to cut or eliminate various programs and boards. 

Unfortunately, the governor did not follow through and execute very many of the 

recommendations. I suspect his political advisors also dissuaded him from ordering action. 

In fact, the advisors were so worried about the potential political fallout from aggrieved 

special interests over the recommendations contained in the second GEFP report that it was 

intentionally released when the media wouldn't notice. They needn't have worried because 

those interests who might have had cause for concern already saw that the first report was 

barely acted upon. 

GEFP was respected internally, but it was not very effective. The governor's advisors 

typically sided with the turf-protecting department heads and they did little to support 

GEFP. The reason was simple: the perceived political cost of pursuing our 

recommendations usually exceeded the perceived political benefit. 

4 
131 


81404.097

I learned from my Indiana government experience under a governor thought to be a fiscal 

hawk - that political leaders are good at generating sound bites designed to make taxpayers 

believe that their interests come first. In reality, taxpayer interests usually end up taking a 

back seat to the interests of select individuals or groups. I also learned that a failure to back 

up the sound bites with follow-through action only serves to embolden the special 

interests. 

Downsizing the Federal Government 

Cato has publicly challenged the president on his pledge to "go through our federal budget 

- page by page, line by line - eliminating those programs we don't need." Included below 

is a copy of a full-page ad that Cato ran in major newspapers with the headline, "With all 

due respect Mr. President, we're still waiting.,,3 We suggested 10 areas to target for cutting 

that would result in substantial savings. For example, eliminating energy subsidies would 

save about $20 billion a year. 4 The suggestions were arrived at based on Cato's own page 

by page, line by line review of the federal budget. 

The results of our review are posted on Cato's website, www.DownsizingGovernment.org. 

We have posted essays laying out the case for terminating hundreds of agencies and 

programs. It's worth noting that we've been able to cover all of that budgetary terrain 

through the efforts of a limited number of people. 

5 
132 


81404.098

Our research comes from publicly av~ilable data, including government resources such as 

reports from the Government Accountability Office and audits from various agency 

inspector general offices. However, a simple internet search for information on 

government programs will tum up countless examples of government failure. The 

information on widespread government failure is there for policymakers to see if only they 

would look. I suspect many OMB career analysts know how poorly many federal programs 

actually work, but their political masters keep it quiet. 

It is important to note that the administration's inability or unwillingness to recognize that 

more than just 0.5 percent of the federal budget in unneeded is not a partisan affliction. 

President Obama inherited a federal budget that had massively expanded under the 

previous Republican administration of George W. Bush. 

Republican policymakers have been doing a lot of talking lately about the need to cut 

spending, reduce deficits, and rein in our national debt. Unfortunately, there are only a few 

Republicans who have put the effort into creating detailed proposals for what agencies and 

programs they would terminate. Instead, far too many Republicans join their Democratic 

colleagues in taking the easy way out by pledging to simply "eliminate waste, fraud, and 

abuse" in government programs. 

Policymakers always tell their constituents that they'll work to eliminate government 

waste. For example, previous House Speaker Nancy Pelosi instructed her committee chairs 

to uncover waste, fraud, and abuse as part of an effort to "ensure fiscal discipline for the 

6 
133 


81404.099

long term." The House Republicans' "Pledge to America" included a promise to "root out 

government waste." What few in Washington want to acknowledge is that waste, fraud, 

and abuse always comes with government programs - the same way a Happy Meal always 

comes with a toy and a drink. 

The massive warfare/welfare state built by Republicans and Democrats is morally 

bankrupt. And if the federal government were a business, it would be financially bankrupt. 

That means that the federal budget's "meat" has to be cut in addition to the "fat." 

Therefore, if President Obama isn't serious about terminating unneeded federal programs, 

then it's up to Congress to do the job for him. 

Thank you. 

Tad DeHaven 

Budget Analyst 

Co-editor, www.DownsizingGovernment.org 

Cato Institute 

202-842-0200 

tdehavenialcato.org 

I http://change.gov/newsroom/entry/president_elect_ barack _ obama _announces_office _ of_ management_and 

_ budgec dire/ 

2 Budget o[the u.s. Government, Fiscal Year 2010, Terminations, Reductions, and Savings (Washington: 

Government Printing Office, 2009). 

3 http://www.cato.orgifiles/DownsizingAd.pdf. 

4 http://www.downsizinggovernment.orglenergy. 

7 
134 


81404.100

We will go through our federal budgetpage by page, line by line-elinllnating those programs we don't need. -l'RES1DEST~ELECT BARACK ORAMA, NOVEMBER 2008 

With all due respect 

Mr. President,we're still waiting. 

I

t'S been tw~ years smc.eyou made that pledge, Mt PreSl~t Since then, you've signed il~t~ law an $800 billion "stllTlUJUS" package 

and a massIve new health care entidement-adding trilholls of dollars in IDrfimded babiJmes to our grandchildren's lab. 

TIle Amt.'fican people made it clear on electIon day this month that they want a smaller, less expensive government But because of 

the deficits. your administration has piled up, our national debt .,.",11 be larger than the entlre U.s, economy by 2012. Isn't it past time we 

started eliminating those programs \>,.'C don't need? 

In fairne:.'S, both patties got us mto this mess Speaker~to-be John Bochner mitted that \\oben Republicans controlled Congress: 

'We were spendmg too much, government was b'TO\ving too much. Our team failed to live up to our 0\\·11 principle, .. " Indeed, federal 

spending under the Bush adininiSU'ation nl!arly doubled in eight Yl!al's. To this day, C.rOP calls for le5-'; spending bave been woefully short 

on specifics 

Our bipartisan flight from responsibility is a national disgrace-and it's fast becoming <I national disaster. Calls to eliminate "waste, 

fraud, <lnd abuse" won 'I cut It anymore. Both parties would seem to need help taking dlC first step in reducing the burden of government 

N; a start they can consult DownsizingGovemroent..org. where the Cato InstllIJtc has beglU1 postlllg the results of our page by page, 

line by line revie\\l of the tederal budget. With the Constitution as our gujde, we've identified scores ofagencies to eliminate andprogrmns 

to zero out, putting America on die path to ..... -ard fiscal sanity. 

Education Subsidies EJuc3tion is a state, local, and priYate matter-and that's where 

the Constitution left it Federal K-12 education progranlS have cost 

American taxpayers $1.85tnUlOll sUl(:e 1%5 ..... ilhout noticeably mlprovmg outcomes. Eliminating them will saYe $40 billion annually. 

Farm Subsidies Far from "saving the family farm," federal agricultural subsidies 

are cnvirorunentally deslructlVe coI]XlI'ille welfare, with more than 70 

percellt of aid gomg to the largest 10 percent of agriblt~illesses Zemillg out fann w'e\fare will save $25 billiQn annually. 

Military Overreach The ConstitutIOn enVISIons a U S. military that ''provide{s) tor the 

conUllon defence" Dfthe United States, not one tl13t serves as the 

world's policeman and natton-bUildet. By withdrawing our trOOpS 

from Iraq and Afghanisl<ln, we could save at leastS12S billion next 

year. Etiminatmg other wmecessary overseas missions would aUow 

for a leaner force slructure and defen.<>e budget, sa"ing alleast $100 

billion a year """thout undennining U.S security. 

Transportation Programs The fedcrol government has 00 business funding the slate IDld local projects!hat make up the bulk offudentllr3ll~port:aLion spending. Federal in· 

vo!vement results In potk-barreJ spcndmg. excess bureaucracy, 1I!ld costly 

onc-SJZe-nts-all regulations. Moving fWlilinS 1(lr activities such a~ highwlIYs 10 the states and rur traffic control tD the private sector would spur 

greater inoova/loll while also saVll1J,l $8S billion II y-ear. 

Housing Subsidies Federal interference in housmg markets has done enonnous 

damage 10 our cines and the ecollonly allMSe. HUD subsidies 

have conce:nlnited poverty and fed urban blight, while Panrrie Mae 

and Freddie Mac stoked the filllltLciai ensis by putting Irulliof\S of 

people mlo homes they couldn't afford. Getting Ihe government 

out of the housing business wll! save $45 biJIifln annually. 

Federal Worker Pay Federal workers e.njoy far greater job security than their privatesedor counteIpMtso-and far better total compensal1oo: an average 

of$120,000 a year in wages and benefits. Cut federal cOfnpensarion 

by 10 percent to save $20 bilUon annually. 

Energy Subsidies The 30-)'eM legacy offedcral energy subs.Khes is replete with COlPOJ31C 

cronyism and failed "inveslmem$-,. Entrepreneun; with their own capital 

have incentives to develop viable ahematlvc encrgy sources Ending 

federal eneJID'subSidies wOldd save $10 billion a year: 

Government-run Health Care Medicare and Medicaid are drivmg the e.xpklsiolllll federal debt The 

2010 heah:hcare law shO\~d never h1\ve been passed. The same level 

ofMedlcare CO$! saVlllgs could have beenrealazed by moving to a carr 

sumer-driYCll health plan through vouchers. ""iuch would protect: the 

elderly fromgovemmenl rationing Medicaid should be converted to a 

fixed block granl to S3\le money and encourage state innovation. TOlai 

savings would be more than st trillion over the next decade 

Drug War Sinee the start of the federal War on Drugs U\ 1970, we've spentlnmdreds of billions on a fhtile Cl\1sadc: that's done little 10 curlJ drug use 

and n\llch to impair our clVll libemes. In (act, a Calo study showed Ihat 

Portugal's decrimmalizatlOIl of dmgs actually lowered drug-rclated 

problems. Returning drug policy to the states-where it belongs-

~'Quld save alleast SI5 billion annually. 

Social Security As the Baby Boom generatJoli retires. our hugest entitlementpfogram 

lurches tovv-ard OlSI~ SOCial SeelUll}' should be p~d out as a mandaImy progrum and all allemative voilmfary system of private acCOwtts, 

pruvuhng for owucrslup and mheritability, should be offered. Current 

obliganollS call be reduced by lying annual benefit growth to price milarion mther than v,llge grO'.vth, sa"ing $50 billion annually by 2020. 

Visit DownsizingGovernment.org 

for 

Cato 

a free 

Institute's 

download 

acclaimed 

of the 

book CNO 

The Struggle to Limit Govermnent. INSTITUTE WWW.CATO.ORG 
135 

Mr. BILBRAY. Thank you very much. 

STATEMENT OF PATRICK L. KNUDSEN 

Mr. KNUDSEN. Thank you, Mr. Chairman. My name is Patrick 

Louis Knudsen. I am the Grover M. Hermann Senior Fellow in 

Federal Budgetary Affairs at The Heritage Foundation. I should 

mention in the interests of full disclosure that until just recently, 

I was the Policy Director of the House Budget Committee here, a 

position I held for 20 years. My remarks should not be construed 

as expressing any official position of The Heritage Foundation. 

That said, I would like to take a slightly different angle on this 

subject and attempt to put it in context, a context that all the committee members are aware of, because this discussion about terminations and reductions and so on comes in the midst of a budget 

that is really wildly out of control, as Chairman Stearns mentioned 

earlier. If I may recite a few facts that I am certain all of you are 

familiar with but they bear repeating. 

Fiscal year 2011 was the third consecutive year with a budget 

deficit in excess of a trillion dollars. Debt held by the public is 

about three-fourths the size of the entire economy right now and 

growing. It can’t be said often enough that three entitlement programs—Medicare, Medicaid and Social Security—are in the process 

of swallowing up the entire budget. All three are growing more rapidly than the economy, more rapidly than inflation, and those of 

you who wish to protect these programs need to be aware of that 

because they cannot be sustained at that level. They will collapse 

under their own weight. By 2005, those three programs alone will 

absorb all the tax revenue the government collects, if historical patterns hold. That means you will be borrowing every year for such 

other interesting activities as defending the country. 

Now, in this vein, the administration’s discretionary terminations 

and reductions amount to less than 2 percent of the cap in the 

Budget Control Act. They are barely more than 1 percent of the 

projected deficit for 2012, and they are only about one-half of 1 percent of projected total spending in 2012. All of that is just context 

setting, and I say that not to dismiss the discussion that is going 

on here today or the practice of submitting terminations and reductions and so on but simply to recognize that this is the bare minimum of what administrations and Congresses need to be looking 

at. You should be able to adopt these kinds of proposals on an annual basis just as a starting point to get this fiscal situation under 

control because the things I just described represent a crisis. I believe there is no exaggeration in saying that. 

Now, that said, there are a number of tools that the President 

and Congress do already have and could use to get spending under 

control. The President does have a veto. President Bush was criticized for not using vetoes of spending bills often enough, and that 

criticism may have been fair. It could be leveled at President 

Obama as well. As far as I know, he has vetoed one appropriations 

bill and that was because it didn’t spend enough. 

Congress also can apply spending caps, and right now you are 

facing a cap in the Budget Control Act. I would urge you most 

strenuously to stick with it and if possible reduce spending even 

below that level, because remember, the savings you are talking 

136 

about under that cap are savings from a baseline that inflates 

every year, so they are really just savings from an illusion of projected spending. 

Other items you could look at are unauthorized appropriations. 

Every year the Congressional Budget Office submits a report of appropriations that have lost their authorizations or whose authorizations are to expire by the end of that fiscal year. This year’s report 

identified $42 billion worth of non-defense programs whose authorizations were to run out on September 30. To my knowledge, all 

those programs have still been financed in the continuing resolution. You could easily make a rule that any program that loses authorization does not get funded anymore, and then you would have 

to justify restoring the program. That, it seems to me, is a more 

valuable approach than having to justify cutting a program. There 

are other recommendations in my written testimony that I would 

invite you to look at. 

What I would conclude by saying is, from time to time in my 

years at the Budget Committee, I would hear members complain 

that they spent all their time on the budget. I have two responses. 

And if you did the things I am recommending, you would be spending even more time on the budget. But I have two responses to that 

complaint. The first is, if you believe as I do that budgeting truly 

is governing, then budgeting is an exercise of your fundamental responsibilities and I would think you would relish the opportunity. 

Second, and far more important, considering the very real spending and debt crisis this country faces, I would hope every one of 

you and every one of your colleagues in the House and Senate 

would spend every minute of your time on the budget until you get 

it under control because the stakes are very real and the future of 

the country may very well be in your hands. Thank you. 

[The prepared statement of Mr. Knudsen follows:] 

137 


81404.101

PlII'I . 

~. 'fiefitag!tCZil!!!J!l!lliJ?!L I 214 Mas.VQchusetts Avenue, NE· Washington, DC 20002· (202) 546-4400 • heritage.org 

CONGRESSIONAL TESTIMONY 

The Imperative of Spending 

Control 

Testimony before 

The House Energy and Commerce Subcommittee on 

Oversight and Investigations 

October 5, 2011 

Patrick Louis Knudsen 

Grover M. Hermann Senior Fellow 

in Federal Budgetary Affairs 

The Heritage Foundation 
138 


81404.102

Overview 

• This hearing is precisely the kind of activity that should be going on much more 

broadly and regularly in Congress: budget oversight. Year after year, Congresses 

create new programs and expand government activities, but rarely go back to 

review how those things are working. Consequently, programs that are 

ineffective, inefficient, bloated, obsolete, or just plain unnecessary gain 

immortality-while Congress looks the other way. This hearing is a refreshing 

departure from that pattern, and some of my recommendations today aim at 

making it a model for other committees-to make a routine of the process you are 

pursuing today, as one step toward breaking the culture of spending. 

• First, however, it is necessary to put this discussion in context. While no serious 

efforts toward reining in government spending should ever be dismissed, the 

items under consideration today are-to be candid-the barest minimum of what 

Congress should be considering. 

• Fiscal year 2011 was the third consecutive year with a deficit exceeding $1 

trillion. Debt held by the public is roughly three-fourths the size of the entire 

economy. It cannot be said often enough that three large entitlement programsMedicare, Medicaid, and Social Security-are increasingly dominating both the 

budget and the economy. Social Security is projected to grow at an average 

annual rate of 5.8 percent starting in 2013; Medicare at 6.3 percent; and Medicaid 

at 9 percent. By 2050, these three programs will by themselves absorb nearly onefifth of total economic output, and all the historical annual average revenue intake 

of the federal government (18.2 percent of gross domestic product). It is no 

exaggeration to call this a crisis, and it must be addressed soon. 

• The current Administration's proposed discretionary terminations and reductions 

would total less than 2 percent of the fiscal year 2012 spending limit under the 

Budget Control Act, barely more than I percent of the projected deficit for 2012, 

and about one-half of I percent of total projected spending in 2012. 

• The process of scouring the budget, line by line, searching for programs that can 

be struck out or reduced should be standard operating procedure for every 

administration and every Congress-something like what former Budget 

Committee Chairman Jim Nussle called "weeding the garden." But that is just a 

fraction of what needs to be done to restore the fiscal health of the federal 

government. 

• Second, Congress and the President should not ignore tools already available to 

control and reduce spending. If a President truly wants to cut spending, he or she 

has a powerful instrument called a veto. It is a broadsword, to be sure, and it can 

disrupt government activities; but that is exactly why it can be effective. 

Meanwhile, Congress should apply strong, enforceable caps on all spending-not 
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just discretionary. There is nothing like a firm limit on spending to get rid of 

waste and force choices among priorities. 

• Other things Congress can do include (but are not limited to): (I) prohibit funding 

for any unauthorized appropriations; (2) amend federal laws that provide 

permanent or indefinite authorizations for federal programs or agencies; (3) close 

the "emergency" loophole; and (4) require 75-year projections of new programs 

to make clear the long-term impact of the Congress's decisions. Such proposals 

have been around for years, even decades; it is just a matter of Congress acting on 

them. 

• With regard to the specific matter of terminations and reductions, one way to 

institutionalize the practice would be to require such proposals in every 

President's annual budget submission. Congress also could require 

administrations to formally account for the results of these proposals. 

• Further, Congress itself should be engaged in the process. If the Administration is 

required to propose terminations and reductions, Congress should also be required 

to follow up with hearings such as this one. That would help promote the habit of 

spending reduction. Committees also should be required to account for how they 

dispose of any savings assumptions in the budget resolution. This does not mean 

committees have to adopt every budget proposal; but they should be required to 

consider them and respond. 

• From time to time, Members of Congress complain they spend nearly all their 

time on the budget-and if you were to follow my recommendations here, that 

would be even truer. But I would say two things about that. First, if you believe, 

as I do, that budgeting truly is governing, then budgeting is the most fundamental 

exercise of your responsibilities. Second, considering the very real spending and 

debt crisis this country faces, I would hope all of you are willing to spend every 

minute of your time on the budget, until you get it sustainably under control. The 

stakes are as high as they have ever been, and the outcome truly does lie in your 

hands. 

2 
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81404.104

tESTIMONY 

Mr. Chainnan, Madam Ranking Member, and subcommittee members, thank you for 

inviting me to testify here today. My name is Patrick Louis Knudsen. 1 am the Grover M. 

Hennann Senior Fellow in" Federal Budgetary Affairs at The Heritage Foundation. Prior 

to joining Heritage, I served for a bit more than 20 years as policy director at the House 

Budget Committee--a position I held until just recently. The views I express in this 

testimony are my own, and should not be construed as representing any official position 

of The Heritage Foundation. 

Introduction 

Spending control has never been more important than it is today. All of you are well 

aware of the extraordinary deficit and debt crisis the government faces; and although you 

may differ on the causes of this problem, and how best to solve it, surely you all agree it 

must be addressed. My own view is that the root problem is spending. It is spending that 

creates the need for taxes and borrowing, and so curtailing the growth of spending is 

indispensable for shrinking deficits and debt. Therefore, if a President offers credible 

proposals to reduce spending, Congress should give them serious consideration. 

In light of to day's immense budget challenge, this hearing-which amounts to budget 

oversight-is precisely the kind of activity that should be going on much more broadly 

and regularly in Congress. Year after year, Congresses create new programs and expand 

government activities, but rarely go back to review how they are working. Consequently, 

programs that are ineffective, inefficient, bloated, obsolete, or just plain unnecessary gain 

immortality-while Congress looks the other way. This hearing is a refreshing departure 

from that pattern, and some of my recommendations today aim at making it a model for 

3 
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other committees-to make a routine of the process you are pursuing today, as one step 

toward breaking the culture of spending. 

Similarly, over the years various administrations have proposed terminations and 

reductions, and in some cases have done so repeatedly. But there tends to be inadequate 

follow up, unless the administration chooses to report the results. During the Bush 

Administration, only once, in 2005, did the Administration present a summary of what 

had happened with its recommendations. The Obama Administration has summarized the 

results of its proposals annually, but it may be difficult to confirm those accounts 

independently. [n any case, all too often the recommendations end up just collecting dust 

on a shelf somewhere. 

Moreover, the current Administration's proposals are deeply inadequate, considering the 

more than trillion-dollar deficits the government is running these days. 

While your interest is mainly on the programs and agencies within your jurisdiction, mine 

is on the budget in general. Consequently, I view what you are doing as a potential model 

for other committees, and as a practice that should become a regular part of the budget 

process. My recommendations today, therefore, speak to that broader subject. 

The Depth of the Budget Crisis 

Before describing those recommendations, however, I feel obliged to put this discussion 

in context. One should not dismiss any earnest effort to cut government spending. But to 

be candid, the amounts under consideration here today pale in comparison to the huge 

spending and deficit crisis the government faces. Fiscal year 2011 was the third 

consecutive year with a deficit exceeding $1 trillion. Debt held by the public is roughly 

three-fourths the size of the entire economy. It cannot be said often enough that three 

large entitlement programs-Medicare, Medicaid, and Social Security-are increasingly 

dominating both the budget and the economy. Social Security is projected to grow at an 

average annual rate of5.8 percent starting in 2013; Medicare at 6.3 percent; and 

Medicaid at 9 percent. By 2050, these three programs will by themselves absorb nearly 

one-fifth of total economic output, and all the historical annual average revenue intake of 

the federal government (18.2 percent of gross domestic product). It is no exaggeration to 

call this a crisis, and it must be addressed soon. 

The Administration's proposed discretionary terminations and reductions would total 

about $18 billion.' That is not an insignificant figure. But it represents less than 2 percent 

of the fiscal year 2012 spending limit under the Budget Control Act, barely more than I 

percent of the projected deficit for 2012, and about one-half of 1 percent of total 

projected spending in 2012. The previous Administration in 2005 proposed $15.8 billion 

in terminations and reductions-slightly more than one-half of 1 percent of total spending 

that year. 

'Office of Management and Budget, Fiscal Year 2012 Terminations, Reductions, and Savings: Budget of 

the u.s. Government, at http://www. whitehouse.gov/sites/defaultlfileslomblbudget!fY201 2/assetsltrs.pdf 

(October 4, 2011) .. 

4 
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81404.106

Now, to offer another contrast. During a previous Congress, the House Budget 

Committee Chairman proposed a list of discretionary spending reductions totaling $100 

billion over 5 years, or about $20 billion a year. The year was 1995, when total federal 

spending was about $1.5 trillion-less than half of what it is today. 

Again, this is not to dismiss any serious spending reduction efforts. It is simply a 

reminder that these are very small steps compared to the huge challenge Congress faces. 

Proposing terminations and reductions in government programs should be standard 

operating procedure, but far more needs to be done to restore the government's fiscal 

health. 

Use the Tools Already Available 

Second, while you are examining ways to make the process more transparent and 

credible, bear in mind that nothing can substitute for real action to reduce spending-and 

there are mechanisms already available, on both ends of Pennsylvania Avenue. 

One is the President's veto. If a President really wants to terminate or reduce specific 

programs, he or she can prove it with a veto of any bill that fails to do so. During the 

current Administration, the President has vetoed only one appropriations bill-and that 

was because the bill did not spend enough. President Bush vetoed only two 

appropriations bills in eight years-and only once because a bill spent too much.2 The 

veto may be a blunt instrument, and may threaten to disrupt government services. But if a 

President really wants spending reductions, the veto is a way to get them. 

Another tool is spending caps. If you are trying to eliminate unnecessary spending, or 

force choices of priorities, placing a firm limit on how much you can spend-and 

sticking with it-is a fine way to do it. These caps must be enforceable, and should apply 

to all spending, not just discretionary. 3 

Here are some other steps: 

I) Unauthorized Appropriations. Every year, the Congressional Budget Office 

publishes a report on appropriations for programs whose authorizations have expired. 

The most recent report, published in January this year, reflects $42 billion worth of 

non-defense appropriations whose authorizations were to expire on September 30.4 

These programs are being funded through the continuing resolution. The budget law 

'See Kevin R. Kosar, Regular Vetoes and Pocket Vetoes, Congressional Research Service, October 18, 

2010, at http://wwwfas.org/sgp/crslmisclRS22188.pdf(October 4, 20 II). 

'See Brian M. Riedl and Alison Fraser, Four Principles of Budget Process Reform, Heritage Foundation 

Backgrounder No. 1746, April 8,2004, at http://s3.amazonmvs.comlthLmedia/2004/pdjlbg17 46,pdf 

(October 4, 20 I I). 

'Congressional Budget Office, Unauthorizations Appropriations and Expiring Authorizations, January 

201 I, at ht/p://www.cbo.gov![tpdocs/120xx/docI2044/01-14-UAEA_Approps.pqf(October 4,2011). 

5 
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should be amended to strictly prohibit appropriations for such programs. Then 

Congress would have to reconsider these authorizations and decide whether they 

should continue. That would force a regular review that could help weed out the 

obsolete, the unnecessary, and the'ineffective. 

2) Permanent Authorizations. A similar idea that Heritage has recommended in the 

past is to "amend existing laws that provide permanent or indefinite appropriations 

for federal agencies or programs (including entitlement programs)."s Again, this 

would force a regular review of these programs, providing opportunities to eliminate 

or reduce those that deserve it. 

3) Emergencies. Congress also should close the emergency loophole. Gvery year there 

are weather events or wildfires that require immediate funds for relief. The specific 

events obviously are not predictable-that is what makes them emergencies. But the 

fact that such events will occur is entirely predictable, and, for the most part, even a 

ballpark estimate of what they will cost. Various budget process reform bills and 

budget resolutions have proposed creating a kind of rainy-day fund for such events. 

Implementing this idea would prevent Congress from exploiting such must-pass bills 

as vehicles for other non-emergency spending. Clearly, an extraordinary event such 

as Hurricane Katrina might be an exception to this idea. But even in those cases, 

Congress could try to offset at least part of the cost. More recently, in the continuing 

resolution, there were Members who actually defended their refusal to offset less than 

$1 billion for the Federal Emergency Management Agency (FEMA) disaster relief 

fund for fiscal year 2011. One Member even said such offsets would be a "radical 

departure" from past practice. But perhaps such a radical departure is exactly what is 

needed. 

4) Long-Term Projections. As described in a Heritage Foundation backgrounder earlier 

this year: "To make the budget process more visible, understandable, and accountable 

to the American people, Congress should estimate and publish the projected cost over 

75 years of any proposed policy or funding level for each significant federal 

program.,,6 

Breaking the Culture of Spending 

Those things said, even small proposals to reduce spending deserve serious consideration. 

To that end, certain budget procedures, built on transparency and accountability, can 

reinforce efforts at spending control. Developing some deliberate and systematic method 

of tracking termination or reduction proposals would help change the culture of spending 

in Washington. The current Congress has taken valuable steps toward reversing the 

'David S. Addington, "Don't Raise the Debt Limit Without Getting Spending Under Control," Heritage 

Foundation Backgrounder No. 2549, April 21, 2011, at 

http://www. heritage, org/Research/ Reports!2 0 II I041Donl -Raise-the-De bl-Li mit-Without -Gelling-SpendingUnder-Control. 

6 Addington, "Don't Raise the Debt Limit Without Getting Spending Under Control." 

6 
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81404.108

inertia that tends to make government programs immortal, and keeps spending rising. But 

that zeal comes and goes from Congress to Congress; it is necessary to find ways to make 

it permanent. 

The ideas I am suggesting here may sound technical, and they fall in the arcane realm of 

budget process (which the House Budget Committee is currently exploring). But they 

boil down to a fairly simple premise: How to make a regular practice of the kind of 

oversight taking place here today? The principal aim is to make specific program 

terminations and spending reductions a regular part of the budget discussion-and to hold 

the administration, and yourselves, accountable for the outcomes. 

Building on the Bush Administration Model 

The subcommittee staff has pointed to a December 2005 publication by the Bush 

Administration titled, Major Savings in the 2006 Budget: Results.7 It describes what 

happened with 154 terminations or reductions in non-defense discretionary programs the 

President proposed in his fiscal year 2006 budget. To my knowledge, this is one of the 

few examples of a follow-up to such recommendations. It contains a good deal of useful 

information. It provides summaries of proposals that were accepted, in whole or in part, 

and the savings amounts involved. It gives a breakdown by agency. It also gives an item 

by item presentation. This is a fine model for the kind of accounting an administration 

could conduct regUlarly. One useful addition might be an assessment of recommendations 

that were not accepted. 

To make this a regular and more meaningful practice, Congress should find some means 

of requiring it; and one good way to do that is to put it into law. As one example, 

Congress could modify Chapter II of Title 31-which identifies required contents of the 

President's budget-to add (I) that the President's budget should regularly include 

programs recommended for termination or reduction; and (2) that the budget also include 

an accounting of the disposition of proposals made in the prior year's budget submission. 

That would make this procedure-having the administration recommend terminations 

and reductions, and accounting for the results-a regular, annual practice. Surely this 

would be reasonable even if the budget were in balance. After all, with the thousands of 

programs operating in the government, there must be plenty that can be reduced or 

terminated because they are unsuccessful or inefficient, or have served their purpose; it is 

a practice former Budget Committee Chairman Jim Nussle would compare to weeding 

the garden. lust as surely, the Office of Management and Budget has all the data it needs 

to identi fy and track these proposals. 

An additional option would be to amend the Budget Act to require all committees of 

jurisdiction to account for how they disposed of the President's termination 

recommendations. Committees already are required to report Views and Estimates; this 

would be an expansion of that concept. The requirement could be satisfied either through 

oversight hearings such as this one, or by reports submitted to the Budget Committee, and 

'Executive Office of the President, Major Savings in the 2006 Budget: Results, December 22, 2005, at 

http://hotiineblog.nationaijournal.com/save2.pdf(October 4, 2011). 

7 
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81404.109

made available to the public. The main point is to induce the committees of Congress to 

follow through with these proposals in some respect-much as this subcommittee is 

doing today. Again, the point is to break the culture of spending, and replace it with a 

constant, regular practice of seeking out programs that can be terminated or reduced. 

Applying Similar Practices to Congress 

Another useful step would be for Congress to apply similar disciplines to itself, by 

requiring more deliberate responses to the budget resolution. 

This year's House budget resolution assumed a broad range of significant policy 

reforms-including some for Medicare and Medicaid that would matter to this 

committee. But the budget contained no reconciliation instructions, and so no committee 

was compelled to address the proposals one way or another. 

It has long been a frustration among budgeteers-and I am one of them-that when the 

Budget Act was adopted in 1974, it created a weak budget resolution. Stripped down to 

its essentials, the resolution really consists of nothing more than a few broad numbers 

backed by a handful of enforcement mechanisms that can be waived fairly readily. Any 

assumptions underlying the budget levels are nothing more than illustrative; they are 

merely the Budget Committee's recommendations. Even if reconciliation is applied, 

compelling committees to meet specified savings targets, the policies chosen are entirely 

up to the authorizing committees. 

Of course, that arrangement came about deliberately: Authorizing committees did not 

want to cede their authority to this new entity of the Budget Committee. But the 

regrettable outcome is that proposals incorporated in the budget resolution can simply be 

ignored-and all too often are. 

So my suggestion is this: Create a requirement that, before the start of the new fiscal year, 

committees of jurisdiction must report how they disposed of proposals in the budget 

resolution~r what alternative policies they applied to meet their allocations. Again, this 

should be a regular practice, and it could be achieved with a modest amendment to the 

Budget Act. The proposal does not force committees to accept specific policy 

recommendations in the budget. It requires only that they account for how they 

responded, so they cannot simply ignore the budget that has passed in the Chamber. I 

believe this would strengthen the meaning of the budget resolution itself, and would 

increase accountability on the part of committees. 

Summary 

From time to time, Members of Congress may complain they spend nearly all their time 

on the budget-and if you were to follow my recommendations here, that would be even 

more true. But I would say two things about that. First, if you believe, as I do, that 

budgeting truly is governing, then budgeting is the most fundamental exercise of your 

responsibilities. Second, considering the very real spending and debt crisis this country 

8 
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81404.110

faces, I would hope all of you are willing to spend every minute of your time on the 

budget until you get it sustainably under control. The stakes are as high as they have ever 

been, and the outcome truly does lie in your hands. 

9 
147 

Mr. BILBRAY. Thank you. 

STATEMENT OF VERONIQUE DE RUGY 

Ms. DE RUGY. Chairman Stearns, Ranking Member DeGette and 

members of the subcommittee, thank you for the opportunity to testify today about the President’s promise to review the Federal 

budget line by line and eliminate programs we don’t need. My 

name is Veronique de Rugy. I am a Senior Research Fellow at the 

Mercatus Center at George Mason University, where I study tax 

and budget issues. 

The goal to conduct an exhaustive review of the Federal budget 

and seek to eliminate wasteful spending is not only worthy of Presidential and Congressional attention, it should actually be your 

highest priority and taxpayers’ too. It is hard to overestimate the 

harm caused by the current Congressional spending pattern and 

the economic damage caused by the misallocation of capital and the 

creation of perverse incentives. However, while the idea of putting 

an end to wasteful spending makes for great speeches and interesting headlines, waste as defined by the President is only a small 

portion of the overall wasted taxpayers’ dollars. Depending on your 

point of view, concepts like waste or even inefficient spending 

means something different to each Member of Congress, each taxpayer and the President. 

Today I would like to go over guiding principles that I recommend be used to produce an effective review of government 

spending. There are four. 

First, Congress and the President should eliminate overt waste, 

the low-hanging fruit, so to speak, such as duplicative programs 

and overpayments. Taxpayers are currently paying for 47 job training programs, and according to the GAO, it spends $125 billion in 

improper payments. 

Second, Congress and the President should eliminate spending 

for programs that don’t measure the performance of the program 

they manage. Take the Small Business Administration, for instance. It only measures its performance by measuring how much 

it spends to guarantee loans. Instead, it should measure whether 

these loans are actually growing the economy. If it did, it would realize that this program isn’t as relevant as one thinks, and that it 

isn’t even fulfilling its stated mission. 

Third, Congress and the President should eliminate spending for 

programs that should be provided by the private sector. Having the 

government run businesses such as Amtrak and oversee infrastructure such as the air traffic control system is not just inefficient, it 

also hinders economic growth and costs taxpayers money while providing low-quality services to customers. 

Fourth, Congress and the President should eliminate spending 

on functions in the purview of the States. President Reagan wrote 

that federalism is rooted in the knowledge that our political liberties are best assured by limiting the size and scope of the national government. Sadly, Congress has ignored this advice and is 

now spending $500 billion in grants to the States for activity that 

it has no legal or practical reason to be involved in such as healthy 

marriage promotion and museum professional training grants. This 

is inefficient and it creates an unacceptable lack of accountability. 

148 

What is more, when lawmakers are busy running State and local 

and private affairs, they have less time to oversee Federal agencies 

and focus on critical national issues such as defense or security. 

Outlining these principles is a necessary condition to conduct an 

effective line-by-line review of the Federal budget that would get 

rid of the wasteful spending that plagues our government and our 

economy. Make no mistake, there is absolutely no excuse for government and the President to allow such large amounts of wasteful 

spending to continue year after year. 

This is exceptionally shocking considering numerous programs 

have already been identified as wasteful, inefficient, or duplicative 

by Congress, OMB, and the GAO, as well as scholars, think tanks 

and universities. Their work should help facilitate Congressional 

oversight of the effectiveness of government programs and operations yet they are being ignored. So obviously there are a lot of 

questions still unanswered about how to enforce this principle and 

how to actually achieve real budget cuts. I mean, I don’t know 

what this budget process is if in the end programs that have been 

identified as wasteful are still getting money and are being funded. 

Understanding that there are certain things that only the Federal 

government can do and that there are things that the government 

shouldn’t do will guide the review process and help make hard decisions about where to cut spending. 

I have one final thing to add. It is key that all spending be on 

the table. Congress needs to make sure that no areas of the budget 

are untouchable, not entitlements, not defense. All parts of the 

budget must be on the table for review and potential cuts. With 

this guiding principle in mind, Congress and the President will be 

able to start making the difficult spending priorities that they need 

to make and the American people will start having confidence in 

their future and confidence in the way that the Federal government spends its money. 

Thank you for the opportunity to testify before you today, and I 

am looking forward to your questions. 

[The prepared statement of Ms. de Rugy follows:] 

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ADMINISTRATION EFFORTS ON LlNE-BY-LlNE BUDGET REVIEW 

OCTOBER 5,2011 

Veronique de Rugy, PhD 

Senior Research Fellow, Mercatus Center at George Mason University' 

United States House of Representatives, Energy and Commerce Committee 

Subcommittee on Oversight and Investigations 

The United States' deep and structural financial imbalances are the result of decades of overpromising 

and overspending. With a near-stagnant economy, an already heavy debt burden, and the looming 

explosive growth of programs such as Medicare, Social Security, and Medicaid, Washington must take 

immediate, significant steps to get spending under control. If it does not, Americans will face very real 

and very painful economic and fiscal consequences. 

During the 2008 presidential campaign, then candidate Obama promised to streamline Washington so tha 

it would work in tough economic times. To achieve this, he would "conduct an exhaustive line-by-Iine 

review of the federal budget and seek to eliminate government programs that are not performing and 

demand that new initiatives be selected on the basis of their merits, not through a political process that 

rewards lobbyists and campaign donors.'" 

After his election, President-elect Obama underscored this pledge, declaring: 

In these challenging times, when we are facing both rising deficits and a sinking 

economy, budget refonn is not an option. It is an imperative. We cannot sustain a system 

that bleeds billions of taxpayer dollars on programs that have outlived their usefulness, or 

exist solely because of the power of a politicians, lobbyists, or interest groups. We simply 

cannot afford it. This isn't about big government or small government. It's about building 

a smarter government that focllses on what works. That is why I will ask my new team to 

think anew and act anew to meet our new challenges .... We will go through our federal 

budget-page by page, line by line---eliminating those programs we don't need, and 

insisting that those we do operate in a sensible cost-effective way.' 

President Obama solidified this mission in his first budget proposal, stating: 

The President believes that we should be investing taxpayer dollars in efforts and 

programs with proven records of success and reallocating or cutting programs that do not 

J The ideas presented und opinions expressed in this document are the author's and do not represent official positions of 

the Mercatus Center or George Mason University. 

2 Barack Obama, Blueprintfor Change: Oboma and Biden 's Planfor America (Chicago: II: Obama '08, 2008), 20, 

http://www.wobook.com/WB_YOWV4Gf7W-20. 

) Barack Obama, news conference, November 25, 2008, http://www.c1ipsandcomment.comI2008111/25/transcript-barackobama-news-conference-the-economy-november-25-2008. 
150 


81404.112

work Or whose benefits are not worth their cost. To this end, the Administration has 

begun an exhaustive line-by-line review of the Federal Budget, the first stage of which 

will be partially reflected in the spring release of the full FY 2010 Budget and will 

continue in subsequent years: 

The president was right. Unfortunately, little evidence suggests that the president's promise has been 

realized. However, if Congress and the Administration replaced the institutional incentives that 

sanction-perhaps even promote-waste and inefficiency with institutional incentives that encourage the 

prudent stewardship of taxpayer dollars, the promise could become a reality. To this end, this testimony 

highlights guiding principles and goals for a line-by-Iine review with which the agencies can assess which 

programs must be eliminated. 

GUIDING PRINCIPLES FOR A LlNE-BY-LiNE REVIEW 

Eliminate the low-hanging fruit of wasteful spending 

Some wasteful spending is so obvious that it is hard to understand how it continues year after year. The 

federal government wastes money when it funds programs that duplicate another program or function, 

such as the 47 job training and 56 financial literacy programs that exist throughout the federal 

government.' The federal government also loses a considerable amount of money to overpayments or 

improper payments, such as those made by the Department of Health and Human Services, which 

estimates it made $48 billion in Medicare improper payments in fiscal year 20 I 0.6 Congress and the 

Administration must take immediate steps to eliminate this obviously wasteful spending. 

Eliminate programs that do not demonstrate or even measure their own impact 

There is a troubling tendency among agencies to poorly, if ever, measure the performance of the programs 

they manage. Agencies often fail to identify the goal a program is supposed to achieve or the need the 

program is supposed to address, and they infrequently conduct rigorous cost benefit analyses that assess 

whether there are any legitimate reasons to continue spending taxpayers' dollars. 

Take the Small Business Administration for instance. It has been often noted that the agency does not 

collect any outcome-based information on its loan guaranteed programs, such as the 7a loan, and "none of 

the measures link directly to the SBA's long-term objectives.'" Tn other words, the SBA touts the benefits 

of its 7a loan program by reporting how much money the agency spends on it, a true measurement of the 

performance of SBA loans should include the loans' effects on economic growth. It is possible, for 

instance, that even though a large share of SBA borrowers default on their loans, thus costing taxpayers 

money, the economic growth triggered by the other borrowers compensates for the losses. In other words, 

taxpayers are left in the dark about the performance and economic impact of SBA loans. 

If a program cannot be bothered to measure its impact or if cannot demonstrate it is having an impact, it 

should not exist. Agencies should eliminate any such programs. 

Eliminate spending on goods and services that the private sector should provide 

4 Barack Obama, A New Era of Responsibility: Renewing America's Promise (Washington, DC: U.S. Government Printing 

Office, 2009), 34, http://www.washingtonpost.com/wp-srv/politics/budget20 I O/fy I O-newera.pdf?hpid=topnews. 

5 Senator Tom Coburn, Table: "Duplication in Federal Programs" in "Back in Black" (deficit reduction plan, Senator Tom 

Co bum). 29, http://coburn.senate.gov Ipublicllindex. cfm 7a=Fi les. Serve&File _ id=bc I e2d4S-ff24-4ID-8a 11-64e3 dfbe94e 1. 

6 Government Accountability Office Auditor's Rcport, "Improper Payments: Reported Medicare Estimates and Key 

Remediation Strategies," GAO-II-842T July 28, 2011 http://www.gao.gov/new.items/dI1842t.pdf 

7 Government Accountability Office, Small Business Administration: 7(0) Loan Program Needs Additional Performance 

Measures, GAO-08-226T, November I, 2007, http://www.gao.gov/new.items/d08226t.pdf. 
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81404.113

Economic theory suggests that just as governments provide public goods more efficiently than the private 

sector would, private markets provide non-public goods-especially commercial ones-more efficiently 

that the government does. Unfortunately, according to OMB, about half of all federal employees perform 

tasks that arc not "inherently governmental.'" Having the government run businesses-such as Amtrakand oversee infrastructure-such as the air traffic control system-is not just inefficient, it hinders 

economic growth, wastes taxpayers' money, and results in lower-quality services to customers.' The 

government should eliminate spcnding on goods and services that the private sector should provide. 

Eliminate spending on programs and activities best provided by state and local governments 

Just as the federal government is not the best-suited entity to deliver services that the private sector should 

deliver, it also is not the best entity to provide public goods better delivcred at state or local levels. 

Take thc protection of the United States. In theory, the protection of the country against intcrnational 

enemies is a public good. Yet the federal government should not provide all of the protections. The 

federal government should invest in areas that have national scope, such as espionage, intelligence, and 

immigration control. But the protection of public infrastructure-such as bridges and water treatment 

plants- that benefit the residents of a particular state or locality should fall to the state or local 

government.'o 

Unfortunately, in recent history, the federal government has expanded its reach and taken over many state 

functions." This confusion over federal versus state authority extends to spending on programs in areas 

such as education, transportation, and homeland security. As I have documented in detail during my 

testimony before the House Committee on Oversight and Governmcnt Reform, federal spending on 

programs that should be the responsibility of the state and local governments spurs wasteful spending and 

should be eliminated." 

CONCLUSION 

The federal government wastes a lot of money. Thus the president's promise to go through the budget 

line-by-line to idcntify and eliminate such spending is welcome. 

Unfortunately, government agencies have little incentive to engage in such an effort. That is why 

Congress and the Administration must outline some clear goals and principles that agencies could follow 

to identify obsolete, mismanaged, or otherwise dysfunctional programs for elimination. Such principles 

are a necessity for the effective implementation of the president's promise: the line-by-line budget review 

will not be able take place without them. 

8 Chris Edwards, "Privati7ation" at Downsizing the Federal Government. February 2009~ 

http://www.downsizinggovernment.orglprivatization. 

9 Dong Fu, Lori L. Taylor, and Mine K. YUcel, "Fiscal Policy and Growth" (Federal Reserve Bank of Dallas Working 

Paper0301,January2003),IO. 

10 Even ifthere might be adverse effects throughout the economy if a specific bridge were to be destroyed. the principal 

economic impact of such an unfortunate event would be felt primarily locally. 

II See Executive Order 12612, 3 CFR 252 (1988) http://www.archives.gov/feder81~rcgisterjcodification/cxccutivcorcter/12612.html. 

12 Vcroniquc de Rugy. ';Wastetu! Spending Does Not Stop at Earmarks and Overpayments," Testimony hefore the House 

Committee on Oversight and Government Reform, February 17,2011. http://mcrcatus.orgipublication/wastefui·spcndin£-

docs~not~stop-carmarks-and*ovcrpavments. 
152 

Mr. BILBRAY. Thank you. 

Mr. Moylan. 

STATEMENT OF ANDREW MOYLAN 

Mr. MOYLAN. Acting Chairman Bilbray and Ranking Member 

DeGette, members of the subcommittee, thank you for the opportunity to testify on behalf of the American taxpayer regarding the 

important issue of reviewing the Federal budget to identify waste. 

My name is Andrew Moylan and I am Vice President of Government Affairs for the National Taxpayers Union, a nonpartisan citizen group founded in 1969 to work for lower taxes and smaller 

government at all levels. NTU is America’s oldest nonprofit grassroots taxpayer organization. We have over 362,000 members nationwide in every single State and most of the territories, as well, 

including several dozen in the Virgin Islands. 

I would like to sort of lighten the mood and start with an old joke 

that our budget tells us what we can’t afford but it sure doesn’t 

keep us from buying it. Unfortunately, that has been true of Washington for far too long. Our current budget situation is bleak, and 

I want to point to two nuggets that I think are instructive. First, 

in the President’s recent budget outline, the lowest single-year deficit in the coming decade is $607 billion, a number higher in absolute terms than every annual deficit in our Nation’s first 220 years 

and roughly equal, in inflation-adjusted terms, to our overspending 

in war-mobilized 1944. Additionally, while many in Congress have 

attributed the recent explosion in spending and resulting trilliondollar deficits to crisis response due to a financial meltdown and 

a recession, the Federal government has actually seen deficits during 45 of the last 50 years, and we believe that this ought to give 

pause even to diehard Keynesians who believe that surpluses 

should be the norm in most economic growth cycles. 

President Obama has repeatedly pledged to scour the budget line 

by line to eliminate waste, inefficiency and duplication. He and 

Senator McCain both made such a claim in a 2008 Presidential debate after which we joined with our friends at Citizens Against 

Government Waste to send a letter to the candidates offering our 

existing research and our ongoing assistance in completing that 

task. 

Unfortunately, the tidal wave of red ink in our future suggests 

that a tremendous amount of work still remains. I want to give 

credit where it is due, however, and refer to a few areas in which 

the President has truly been a leader. First, the issue of billions 

of dollars in improper payments made by Federal agencies. From 

a 2009 Executive Order to the 2010 signing of the Improper Payments Elimination and Recovery Act, a bill that NTU strongly supported, the President has been a consistent and effective advocate. 

In addition, his administration’s recent efforts to reinvigorate whistleblower protections will help to protect Federal employees that 

identify waste and fraud from professional retribution. We hope 

Congress will follow that lead by moving swiftly to pass the bipartisan Whistleblower Protection Enhancement Act. 

While these efforts are laudable, there are still tremendous gaps 

that call into question the President’s pledge. For example, the administration’s most recent terminations, reductions and savings reVerDate Aug 31 2005 14:15 Jul 16, 2013 Jkt 037690 PO 00000 Frm 00156 Fmt 6633 Sfmt 6633 F:\112-09~1\112-92~1 WAYNE
153 

port, which has been mentioned several times, laid out $33 billion 

in suggestions to trim our deficit and was its most ambitious such 

effort to date, but still it represents just 2 cents out of every dollar 

that we currently borrow and less than 1 cent of every dollar that 

we spend. Surely, a comprehensive line-by-line review of the Federal budget did not determine that it operates at 99 percent efficiency. 

A more specific complaint is that the President has not yet crafted a comprehensive replacement for the Bush administration’s Program Assessment Rating Tool. While it was imperfect with complaints that its structure did not yield objective results, PART was 

actually a good start at evaluating program performance and deserved to be improved and expanded upon, not ended. 

In order to further the debate on wasteful spending, we joined 

with the U.S. Public Interest Research Group to author a report 

called ‘‘Toward Common Ground: Bridging the Political Divide with 

Deficit Reduction Recommendations for the Super Committee.’’ In 

it, we identified over 50 specific recommendations totaling more 

than $1 trillion over the next decade for spending reductions. While 

we disagree with PIRG on a great many issues, we are united in 

the belief that we spend far too much money on programs that do 

not deliver results for taxpayers. For example, we are spending billions of dollars on things like export promotions for profitable corporations, excess spare parts orders for defense equipment and 

maintenance costs for thousands of unused or underutilized Federal buildings. Many of these items have been on budget watchdog 

lists for years and the opposition to these recommendations tends 

not to be primarily political or ideological in nature but rather parochial. 

Some highlights of the joint findings with U.S. PIRG include 

$215 billion in savings from eliminating wasteful subsidies, $445 

billion from ending low-priority or unnecessary military programs, 

$222 billion in savings from improving program execution and government operations, and $132 billion from commonsense reforms to 

entitlement programs. 

We believe that the NTU/PIRG report demonstrates that reducing wasteful spending is not a question of right or left, it is a question of right or wrong, and we stand ready to assist this committee, 

the Congress as a whole and the President in the quest for a sustainable budget future, and I look forward to your questions. 

[The prepared statement of Mr. Moylan follows:] 

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81404.114

IVTU 

National Taxpayers Union 

Statement of 

Andrew Moylan 

Vice President of Government Affairs 

National Taxpayers Union 

Prepared for 

The Subcommittee on Oversight and Investigations 

Committee on Energy and Commerce 

United States House of Representatives 

Regarding the Subcommittee's Hearing on 

Administration Efforts on Line-by-Line Budget Review 

Submitted October 5, 2011 

Contact Information: 

Andrew Moylan 

Vice President of Government Affairs 

National Taxpayers Union 

108 N. Alfred 8t. 

Alexandria, VA 22314 

703-683-5700 

amoylan(al,ntu.org 

108 North Altl-ed Street * Alexandria * Virginia 22314 * Phone: (703) 683·5700 * Fax: (703) 683-5722 * Web: ""wntu org 
155 


81404.115

Introduction 

Chairman Steams, Ranking Member DeGette, and distinguished Members of the 

Subcommittee, thank you for the opportunity to testify on behalf of the American Taxpayer 

regarding the important issue of "line-by-line" review of the federal budget. My name is Andrew 

Moylan and I am Vice President of Government Affairs for the National Taxpayers Union 

(NTU), a non-partisan citizen group founded in 1969 to work for lower taxes and smaller 

government at all levels. NTU is America's oldest non-profit grassroots taxpayer organization, 

with 362,000 members nationwide. 

Few citizen groups in Washington can match NTU's 42-year history of principled 

advocacy, which is why I hope you will find these comments on efforts to identify wasteful 

spending in the federal budget of value to the Subcommittee's vital work. You can also find 

further research into these topics on our website at www.ntu.org. 

The Spending Problem 

In the past decade, under the direction of Presidents and Congressional leadership from 

both parties, our federal budget has expanded dramatically no matter what measure one consults. 

At the dawn of the new millennium in 200 I, federal outlays were about $1.8 trillion, a level 

below post-World War II averages at 18.2 percent of our economy. Through the middle of the 

decade, we saw an explosion in spending driven by such factors as the creation of a new cabinetlevel Department of Homeland Security as well as increased expenditures on defense and 

education. By 2003, the modest spending discipline of the late 1990s had given way to federal 

outlays that now seem permanently fixed at or above the post-war average of 19.6 percent of 

GDP. Add in the more recent surge in so-called "crisis response" spending, such as the $700 

billion Troubled Asset Relief Program (T ARP) of 2008 or the $862 billion "economic stimulus" 

bill of2009, and the picture grows even bleaker. 

In 20 II, President Obama submitted a budget request more than twice as large as in 

2001, about $3.8 trillion. As a percentage of our economy, this would set outlays at a level 

unseen since the era of full-scale war mobilization in the 1940s at roughly 25 percent. Perhaps 

most disturbing, our projected overspending problem of roughly $1.4 trillion this year is about 

equal, in inflation-adjusted terms, to the entirety of federal receipts in 1985. Put another way, the 

part of the budget we actually have the money to pay for is, in real terms, roughly equal to the 

2003 federal budget while the part that we have to go into debt to borrow is about as big as the 

1985 federal budget. 

The federal government has seen deficits during 45 of the last 50 years. This fact ought to 

give pause even to die-hard Keynesians, who believe surpluses should be the nonn in most 

economic growth cycles. While NTU's dedication to limited government would on its own lead 

us to conclude that this spending spree is unacceptable, sheer mathematics tell us that it is 

unsustainable. As of today, we are perilously close to the point where our country's debt exceeds 

its economic output. This sad statistic places us in rare company - just slightly below countries 

already staggered by debt crisis (like Ireland) and just above countries thought to be under grave 

threat of one (like Portugal). 

If corrective action isn't taken soon, the United States could face its own debt calamity 

that would likely precipitate not only dramatic spending cuts but also massive tax hikes in very 

short order. If we are to have a sustainable fiscal future, this Congress and the President must 

2 
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begin the hard work of reviewing the budget with an eye toward reducing spending and putting 

us back on a path toward balance. 

President Obama's Record 

It seems that every candidate for and holder of the Presidency in recent years has pledged 

to comb through the budget "line-by-line" to identify waste, inefficiency, and duplication. 

President Obama is no exception, having repeated the claim innumerable times beth before and 

after his election. While his Administration deserves a modicum of praise for the efforts it has 

instituted to tackle bloated budgets, there is a tremendous amount of work still to be done before 

it can be said that the President has fully lived up to his commitment. 

The Obama Administration has several achievements in the realm of budget review that 

are worth noting. The President has been a leader in addressing improper payments made by the 

federal government. From issuing an executive order in November 2009 to the signing of the 

Improper Payments Elimination and Recovery Act (lPERA) in July 2010, he has consistently 

made reducing improper payments a priority. IPERA, which NTU strongly supported, will likely 

save taxpayers billions of dollars in the coming years by preventing mistaken or fraudulent 

federal disbursements. 

Another cause for at least some encouragement is the Administration's recent initiative to 

reinvigorate the whistIeblower protection operation at the Office of Special Counsel, a policy 

which seeks to protect those who identify waste or fraud in federal agencies from retribution. 

The new effort includes plans for public outreach, better allocation of existing legal resources, 

and more aggressive leadership. Congress also has a role in the whistleblower process, one that 

can best be fulfilled by passage this year of the bipartisan Whistleblower Protection 

Enhancement Act (S. 743). We are hopeful that Congressman Issa of the Committee on 

Oversight and Government Reform will soon introduce companion legislation in this chamber. 

In addition, the Office of Management and Budget compiled for publication a report 

identifying ways to streamline federal spending entitled "Terminations, Reductions, and 

Savings." The most recent version of the "TRS" study, which is far and away this 

Administration's most ambitious to date, totaled about $33 billion in 2012. While it also 

unfortunately included thinly-disguised tax increases on disfavored industries as a method of 

"savings", the report represents perhaps the Administration's most comprehensive attempt at 

fulfilling its "line-by-line" pledge. That said, it should be noted that the TRS report has become a 

fixture in the budget process, one that predates President Obama's tenure, and the sum total of its 

recommendations still represent little more than two cents out of every dollar that makes up our 

staggering $1.4 trillion deficit. 

Despite the existence of some successes, there are also tremendous gaps in the Obama 

Administration's attempts to systematically review the budget. Perhaps the most obvious signal 

that the President has not completed a line-by-Iine review is the sheer size of his budget requests. 

The last official budget submission called for $3.7 trillion in spending next year, with more than 

$1.1 trillion of it borrowed, and expenditures as a percentage of our economy near post-war 

records. It strains credulity to claim that a comprehensive waste assessment could have been 

completed hand-in-hand with such a stunningly profligate budget outline. 

The President has, through his subsequent actions, essentially admitted as much. He 

followed his February budget submission with an April speech where he laid out a new 

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"framework" that purportedly further trimmed spending by $4 trillion over twelve years (though 

details of this new structure were never submitted for official review and scoring). During the 

subsequent debates over raising America's debt ceiling, the President repeatedly cited the need to 

trim additional wasteful spending from future budgets and ended up signing a bill that would 

reduce the deficit by about $2.4 trillion. These are not the actions of someone satisfied that his 

official budget submission had trimmed all excess fat from the federal books. 

Further evidence of that mentality has come to light in the recent scandal over more than 

$500 million in loan guarantees given to a now-bankrupt solar panel maker Solyndra. It appears 

that political pressure helped to push financially-questionable loans through the process and even 

helped to restructure Solyndra's original terms when it became clear the company was on a path 

to disaster. NTU has worked for years with allies on the left and the right in opposition to various 

loan guarantee programs due precisely to the fears that politics, and not economics or market 

dynamics, can drive government investment decisions and leave taxpayers footing huge bills for 

failures. 

A more specific complaint, however, is that the Obama Administration has not yet moved 

to replace the "Program Assessment Rating Tool" (PART), an effort to evaluate program 

performance undertaken by the Office of Management and Budget under President George W. 

Bush. Setting aside its shaky record on fiscal discipline, PART was one of the Bush 

Administration's most laudable projects for its attempt at systematic review of the "bang for the 

buck" of myriad programs. 

PART was somewhat controversial because it was created and operated almost entirely 

within the Executive Branch rather than in Congress, which of course still holds the purse strings 

necessary to fund or de-fund programs. There were also complaints that its structure did not yield 

objective results, but it was a good start that deserved to be revamped and improved, not ended. 

The Obama Administration has yet to announce any comprehensive replacement for this 

program. To be fair, the President's campaign to cut waste along with the Administration's 

commitment to implementing quarterly data-driven reviews mandated by the Government 

Performance and Results Act of 20 I 0 are hopeful signs that worthy successors to PART may 

evolve. Yet, it is too soon to tell how quickly and fully these evaluative processes will become 

embedded in the bureaucracy's institutional culture. 

While NTU believes there is room for the President to do much more in terms of regular 

and thorough review of waste in the budget, the good news is that there is no shortage of outside 

groups willing and able to fill in the gaps. 

A Cross-Ideological "Line-by-Line" Effort 

Congress should begin with a thorough review of existing outlays to identify the "lowhanging fruit" of federal spending: the waste, inefficiency, and duplication that plague so many 

federal programs. The newly-created Congressional Joint Select Committee on Deficit 

Reduction, or Super Committee, will attempt to do some ofthis work by recommending at least 

$1.2 trillion in deficit reduction over the next ten years. Toward that end, NTU has joined with 

the U.S. Public Interest Research Group (U.S. PIRG) to submit to the committee a report entitled 

"Toward Common Ground: Bridging the Political Divide with Deficit Reduction 

Recommendations for the Super Committee". It contains more than 50 specific recommendations 

backed by credible sources which, if enacted in their entirety, would reduce spending by more 

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than $1 trillion in the coming decade by eliminating wasteful and inefficient programs. I have 

included a copy ofthe report with my testimony. 

While our two organizations have widely divergent views on the proper size and scope of 

our federal government, we are steadfast in the belief that Washington squanders billions of 

dollars every year on programs that do not serve the interests of the American people. We 

authored this joint report in an attempt to identify spending reductions that could be undertaken 

without fundamentally harming the core operations of the federal government, as either 

conservatives or liberals understand them. 

The report lays out savings of up to $214.9 billion by eliminating wasteful subsidies. 

These focus largely on agriculture supports, subsidies for energy production, and "corporate 

welfare" programs. For example, the Market Access Program has been on the lists of watchdog 

groups for years. It consumes taxpayer dollars to fund advertising and promotion in foreign 

countries for products of American companies, including McDonald's, Nabisco, and Fruit of the 

Loom. American businesses should compete abroad by making excellent products, not by 

drawing upon taxpayer subsidies. 

In addition, we identify up to $444.8 billion in savings from recommendations to address 

outdated, inefficient, unnecessary, or developmentally troubled military programs. For example, 

the V -22 Osprey airplane has suffered from numerous schedule, management, cost, and 

production issues. Canceling it and replacing its functionality with a mix of other aircraft could 

save taxpayers $15 billion. 

Furthermore, we offer several suggestions to improve program execution and government 

operations for a potential savings of$22 1.6 billion. These items include small programs like 

elimination ofthe "Abandoned Mine Restoration Program," a $1.23 billion funding stream 

which is unrestricted and often spent on unrelated projects. They also include high-dollar 

recommendations, such as reforming federal information technology management. This policy 

option, involving steps such as closing as many as 800 federal data centers and embracing 

innovative "cloud computing" approaches, could yield savings of $160 billion. Of particular 

interest to this Committee are suggestions pertaining to energy policies, among them reductions 

in research best handled in the private sector and more aggressive reforms to rate-setting among 

Power Marketing Administrations. 

Finally, we compile common-sense tweaks to our entitlement programs that could save a 

total of$132.1 billion. While these recommendations do not delve into the extraordinarily 

important and necessary work of fundamental entitlement reform, there are suggestions for longoverdue changes like reducing excess Medicare payments that exist in "high cost" areas. When 

combined with other "no-brainer" changes, like empowering the Social Security Administration 

to recoup overpayments in disability programs, these suggestions can make a significant dent in 

our overspending problem before even getting to the more politically difficult questions on 

benefits and taxation. 

Other Resources 

While the joint report with U.S. PIRG is our most recent endeavor in federal budget 

restraint, it is by no means the only project from NTU seeking to identify wasteful spending. Our 

research affiliate, the National Taxpayers Union Foundation (NTUF), released a study last year, 

"Cleaning Up After the Stimulus: A Sweeping New A to Z Spending Cuts Plan", which 

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designated a spending reduction candidate for each letter of the alphabet. In addition, NTUF 

analysts attempt to determine the spending impact of every piece of legislation introduced in 

Congress through its exhaustive BillTally program. In the process, they have compiled a long list 

of bills that would reduce spending if only Congress would take them up and act on them. 

Though we are of course proud of our work, NTU is far from the only organization 

undertaking investigations of federal expenditures. Our friends at Citizens Against Government 

Waste have for years maintained a database of potential spending reductions that they call 

"Prime Cuts." In fact, our two organizations joined together during the Presidential debates in 

2008 to offer then-candidates Barack Obama and John McCain of our resources and assistance in 

helping them complete a line-by-line review of the federal budget. That offer still stands today. 

Conclusion 

The arithmetic of our budget problems is elementary; it is the political calculus that has 

proven difficult. Though the results have been decidedly mixed thus far, the President and many 

Members of Congress have pledged to attack waste wherever it exists in the federal budget. NTU 

urges this Subcommittee, the Congress as a whole, and the President to begin a systematic 

review of our obligations with sharp eyes toward thrift and effectiveness. NTU and its members 

are ready to join you in these tasks - tasks whose completion will be vital to our very future as a 

nation. Thank you for the opportunity to submit this testimony. 

6 
160 

Mr. STEARNS. Thank you. 

Mr. Kalman, you are recognized for 5 minutes. 

STATEMENT OF GARY KALMAN 

Mr. KALMAN. Thank you, Mr. Chairman. 

Chairman Stearns, Ranking Member DeGette and members of 

the subcommittee, I thank you for inviting me to testify today on 

behalf of the U.S. Public Interest Research Group, U.S. PIRG. U.S. 

PIRG, the federation of state PIRGs, is a nonprofit, nonpartisan organization that advocates and educates on matters to encourage a 

fair, sustainable economy, promote the public health and foster responsive democratic government. As the Congressional Super Committee begins its search for $1.2 

trillion in deficit reductions, my organization was proud to partner 

with NTU, as Andrew had mentioned, to offer a set of recommendations to this committee and the bipartisan panel of more 

than $1 trillion over 10 years of spending cuts and government reform with appeal from across the political spectrum. 

How government collects and spends money is critically important. Tax and budgeting decisions are the most concrete way that 

government declares its public priorities and balances between 

competing values. 

Unfortunately, budget-making rules and public laws about taxes 

and spending sometimes fail the public interest. U.S. PIRG advocates for improvements in fiscal policy to stop special interest giveaways, increase budget transparency and accountability, eliminate 

waste and ensure that subsidies and tax breaks serve the public. 

Public money should be spent for the most effective pursuit of clear 

public benefits or to encourage beneficial behaviors undervalued by 

the market. Budgeting should be open, accountable and follow longterm planning. 

Our September 2011 report with National Taxpayers Union, ‘‘Toward Common Ground’’, details the specific spending cuts, and a 

copy of the report has been included in our written testimony submitted for the record. 

NTU and PIRG, as Andrew had mentioned, do not often agree 

on policy approaches to solving our Nation’s problems. In recent 

high-profile debates around health care reform and oversight of the 

financial markets, the two groups proposed and advocated very different solutions. Even on a number of tax and budget issues, we 

often disagree. Here, we successfully identified programs that both 

Republican and Democratic lawmakers should recognize as wasteful and inefficient uses of taxpayer dollars. 

In calling for this hearing, the committee asked about ‘‘identification of characteristics of Federal programs suggestive of waste, 

fraud and abuse.’’ U.S. PIRG’s approach to the spending cuts is 

guided by four principles. We cite these principles as an appropriate lens through which deficit reductions can be judged. 

One: Oppose subsidies that provide incentives to companies that 

do harm to the public interest or do more harm than good. An example here is funding for biomass research and development. 

Large-scale agricultural production of corn and other crops used for 

biomass can accelerate problems caused by deforestation and compete with food production, raising prices globally. 

161 

Two: Oppose subsidies to mature, profitable industries that don’t 

need the incentive. These companies would engage in activity regardless of taxpayer support. We would include in this category 

subsidies for dairy management, which among other things pays 

pizza chains to make and market extra-cheesy pizza. Companies 

like Domino’s have both the incentive and the resources to develop 

their own products to meet consumer tastes without taxpayer 

handouts. 

Three: We would support reforms to make government more efficient, and here examples include requiring the Department of Defense and the Veterans Administration to jointly purchase prescription drugs, saving more than $6 billion over 10 years. 

And finally, four, oppose subsidies where there is authoritative 

consensus to do so. By this, we mean strong independent agreement across the political spectrum that a program is wasteful 

where the agency or department itself receiving the funding has argued against it. Within Secretary Gates’s recommended cuts, he included the expeditionary fighting vehicle. The Secretary of the 

Navy and the Commandant of the Marine Corps both agreed with 

the Defense Secretary’s proposal. 

These recommendations are specific, targeted, and name individual programs for reductions and elimination. We are long past 

the time for general references and rhetorical calls for attacking 

nameless and faceless programs that contain waste, fraud and 

abuse. This is the precise reason that U.S. PIRG does not support 

a—— 

Mr. STEARNS. Mr. Kalman, I need you to summarize, if you 

could. 

Mr. KALMAN. I am sorry. We are just going to say that the precise reason we don’t support across-the-board cuts is just that they 

don’t differentiate between genuine waste and inefficiencies in the 

system. We believe that there are good programs. They need to be 

separated out from the waste that we identified in the report. 

[The prepared statement of Mr. Kalman follows:] 

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81404.120

Testimony of the 

U.S. Public Interest Research Group 

By 

Gary Kalman 

October 5, 2011 

Line-by-Line Budget Review 

Before the 

United States House 

Committee on Energy and Commerce 

Subcommittee on Oversight and Investigations 

The Honorable Cliff Steams, Chair 
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81404.121

Testimony of Gary Kalman, U.S. PIRG Federal Legislative Office Director 

On 

Federal Deficit Reduction Recommendations 

October 5, 2011 

Chairman Steams, Ranking Member DeGette, and members ofthe committee I thank you for 

inviting me to testify today on behalf of the U.S. Public Interest Research Group -- U.S. PIRG. 

U.S. PIRG, the federation of state PIRGs, is a nonprofit, nonpartisan organization that advocates 

and educates on matters to encourage a fair, sustainable economy, protect the public health, and 

foster responsive, democratic government. 

As the Congressional "Super Committee" begins its search for $1.2 trillion in deficit reduction, 

my organization, the U.S. Public Interest Research Group (U.S. PIRG), and the National 

Taxpayers Union (NTU) offer a set of recommendations to this committee and the bipartisan 

panel of more than $1 trillion of spending cuts and government reforms with appeal from across 

the political spectrum. 

How government collects and spends money is critically important. Tax and budgeting decisions 

are the most concrete way that government declares its public priorities and balances between 

competing values. 

Unfortunately, budget-making rules and public laws about taxes and spending often fail the 

public interest in a number of ways. For instance: 

Special-Interest Giveaways - Subsidies and tax breaks are often granted on the basis of 

private influence or connections instead of their public merits. 

Lack of Transparency and Accountability - It is not possible to ensure that government 

decisions are fair and efficient unless information is accessible and officials can be held to task 

for their actions. 

Wasteful and Counter-Productive Expenditures - Resources too often get wasted or programs 

create incentives that are unwarranted or undesirable 

Unfair Taxes - Ordinary households bear an increasing burden while large corporations 

increasingly avoid paying their share. 

Short-Sighted Decisions - Laws and regulations often fail to address long-term 

consequences, instead deferring difficult decisions or opting for short-term "fixes" that can make 
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81404.122

problems worse. 

U.S. PIRG advocates improvements in fiscal policy to stop special-interest giveaways, increase 

budget transparency and accountability, eliminate waste, ensure that subsidies or tax breaks serve 

the public, and make taxes fairer. 

Public money should be spent for the most effective pursuit of clear public benefits or to 

encourage beneficial behaviors undervalued by the market. U.S. PIRG believes that taxes should 

be fair, reliable, transparent, and guided by policy goals rather than political deal making. 

Budgeting should similarly be open, accountable, and follow long-term planning. 

Our September 2011 report with the National Taxpayers Union, Toward Common Ground: 

Bridging the Political Divide with Deficit Recommendations for the Super Committee details 

more than $ J trillion in specific spending cuts over ten years and a copy of the report has been 

included in our written testimony submitted for the record. 

NTU and U.S. PIRG do not often agree on policy approaches to solving our nation's problems. 

On recent high profile debates around health care reform, oversight of the financial markets and 

energy policy, the two groups proposed and advocated very different solutions. Even on a 

number of tax and budget issues, we often differ. 

Here, we successfully identified federal programs that both Republican and Democratic 

lawmakers should recognize as wasteful and inefficient uses of taxpayer dollars. 

The U.S. PIRG and NTU study identifies 54 specific cuts in federal spending, including: 

$214.9 billion in savings from eliminating wasteful subsidies to agribusiness and other 

corporations. 

$ 444.8billion in savings from ending low-priority or unnecessary military programs 

$ 221.6billion in savings from improvements to program execution and government 

operations. 

$132.1 in savings from reforms to major entitlement programs 

In calling for this hearing, the committee asked about the "Identification of characteristics of 

federal programs suggestive of waste, fraud, and abuse." U.S. PIRG's approach to spending cuts is 

guided by four basic principles. We cite these principles as an appropriate lens through which 

deficit reduction measures can be judged. 

I. Oppose subsidies that provide incentives to companies that do harm to the public 

interest or do more harm than good. An example here is funding for biomass research 

and development. Large-scale agricultural production of com or other crops used for 

biomass often involves massive amounts of fertilizer, large quantities of water and vast 

swaths of land that can drastically change the landscape of our country, accelerate 

problems caused by deforestation and compete with food production, raising food prices 

globally 
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81404.123

2. Oppose subsidies to mature, profitable industries that don't need the incentive. These 

companies would engage in the activity regardless of the taxpayer support. We would 

include in this category subsidies for dairy management which, among other things, pays 

pizza chains to make and market "extra cheesy" pizza. Companies like Dominoes have 

both the incentive and resources to develop their own products to meet consumer tastes 

without taxpayer handouts. 

3. Support reforms to make government more efficient. Examples here include reducing the 

inventory of unused or underused government buildings. While there is some question 

around how much can be made by selling the unused buildings, taxpayers would save 

$1.7 billion per year in reduced maintenance costs. We should also require the 

Department of Defense and the VA to jointly purchase prescription drugs saving more 

than $6 billion over ten years. 

4. Oppose funding where there is authoritative consensus to do so. This means: (I) strong, 

independent agreement across the political spectrum that a program is wasteful, or (2) the 

agency or department receiving the funding has argued against it. Within Secretary 

Gates' recommended cuts, he included the Expeditionary Fighting Vehicle. The Secretary 

of the Navy and Commandant ofthe Marine Corps agreed with the Defense Secretary's 

proposal. 

These recommendations are specific, targeted and name individual programs for reductions or 

elimination. We are long past the time for general references and rhetorical calls for attacking 

nameless, faceless programs that contain waste fraud and abuse. 

This is the precise reason that U.S. P[RG does not support "across the board" cuts -- such 

policies fail to differentiate between true public priorities and where there is genuine waste or 

inefficiencies in the system. Our organization has argued in favor of programs to aid access to 

higher education and measures to ensure the safety of the nation's food supply. "Across the 

board cuts" equate these programs with the wasteful spending we highlight in the report. Public 

opinion has been clear and consistent on this point supporting measures to cut wasteful, 

inefficient programs while preserving services that have value to the broader public. 

While not in the report, we would also urge committee members to review special interest carve 

outs through tax expenditures and loopholes. These expenditures have the same bottom-line 

effect on our nation's deficit as direct line-item spending. Regardless of whether spending takes 

place through the tax code or the appropriations process, it should be part of the conversation and 

it should be transparent, accountable and serve the public. 

Take for example loopholes that allow for the increasing use of off-shore tax havens. Many 

corporations operating in the United States funnel money through offshore tax havens in order to 

avoid paying billions in U.S. taxes. [n fact, an independent study found that nearly two-thirds of 

corporations pay no income taxes at all. Goldman Sachs, which received a $10 billion taxpayer 

bailout, managed to get their effective tax rate down to one percent a few years ago by utilizing 

maneuvers they describe as "changes in geographic earnings mix." 

Those who use tax havens benefit from easy access to American markets, workforce, 

infrastructure and security but pay little or nothing for it. Ordinary taxpaying households and 
166 


81404.124

small businesses end up picking up the tab for the missing revenue to the U.S. Treasury. The 

avoidance and evasion of taxes for a few becomes the burden for many - and for the future. 

Offshore tax havens cost taxpayers revenue totaling as much as $100 billion per year - $1 trillion 

over 10 years, according to a report by the Senate Permanent Subcommittee on Investigations. 

Individuals and corporations based in the U.S. who pay taxes on their revenues must shoulder 

this burden for those who do not. 

We recognize that many of the items on our list challenge long-standing subsidies to narrow yet 

powerful special interests. Despite the fact that these expenditures serve little or no continuing 

public purpose and their elimination would likely be supported by the public, there will no doubt 

be intense lobbying efforts to preserve the handouts. We urge you to resist those efforts and take 

the first important steps toward addressing our federal budgeting problems and ensuring that any 

public expenditure is for the public interest. 

Thank you 
167 


81404.125

Toward 

Common 

Ground 

Bridging the Political Divide with 

Deficit Reduction Recommendations 

for the Super Committee 

· NTU " National Taxpayers Union 
168 


81404.126

Toward Common Ground 

Bridging the Political Divide with Deficit Reduction 

Recommendations for the Super Committee 

U.S.PIRG 

SlandlngUp 

To Powerlullnleresls 

September 2011 

". 

-¥- ... ~ ' ..... \. " 

~ NTf'j , National Taxpayers Union 

Authors 

Andrew Moylan, National Taxpayers Union 

Dan Smith, U.S. PIRG 

Rich Williams, U.S. PIRG 
169 


81404.127

Acknowledgements 

The authors thank Nicole Tichon, Executive Director of the Tax Justice Network 

USA, The Truman Project, the authors of the Green Scissors 2011 report, and the 

staff of Senator Tom Coburn for their thoughtful and informed assistance. Thanks 

also to Pete Sepp ofNTU and Phineas Baxandall, James Dubick, and Gary Kalman 

of U.S. PIRG for their editorial support. 

The authors bear responsibility for any factual errors. The recommendations are 

those of U.S. PIRG and National Taxpayers Union. The views expressed in this report are those of the authors and do not necessarily reflect the views of our funders 

or those who provided review. 

Copyright 2011 U.S. PIRG and NTU 

National Taxpayers Union 

National Taxpayers Union (NTU) is America's independent, non-partisan advocate for overburdened taxpayers. NTU mobilizes elected officials and the general 

public on behalf of tax relief and reform, lower and less wasteful spending, individual liberty, and free enterprise. Founded in 1969, we work at all levels for the day 

when every taxpaying citizen's right to a limited government is among our nation's 

highest democratic principles. 

For more information about NTU or for additional copies of this report, please 

visit www.ntu.org 

U.S. Publi~ Interest Resear~h Group (U.S. PIRG) 

U.S. PIRG is an advocate for the public interest. When consumers are cheated, or the 

voices of ordinary citizens are drowned out by special interest lobbyists, U.S. PIRG 

speaks up and takes action. We uncover threats to public health and well-being and 

fight to end them, using the time-tested tools of investigative research, media exposes, grassroots organizing, advocacy and litigation. U.S. PIRG's mission is to deliver 

persistent, result-oriented public interest activism that protects our health, encourages a fair, sustainable economy, and fosters responsive, democratic government. 

For more information about U.S. PIRG or for additional copies of this report, please 

visit www.uspirg.org 

Cover Photo: mikdamlBigstock, Architect of the Capitol 

Cover Design: Alec Meltzer 
170 


81404.128

Executive Summary 

To break through the ideological divide that has dominated Washington this past year and offer 

a pathway to address the nation's fiscal problems, the National Taxpayers Union and U.S. PIRG 

joined together to identify mutually acceptable deficit reduction measures. This report 

documents our findings. 

What follows is a general summary of recommendations that fall into four rough categories: 

1. $214.9 billion in savings from ending wasteful subsidies, 

2. $444.8 billion from addressing outdated or ineffective military programs, 

3. $221.6 billion from improving program execution and government operations, and 

4. $132.1 billion from reforms to entitlement programs. 

Each speCific recommendation includes an estimate of its savings over the next ten years, and 

a reference to the source from which the estimate was drawn. 

Introduction 

As 2011 enters its final stretch, our nation faces enormous fiscal challenges. As part of 

the deal that was recently struck to raise America's debt ceiling, Congress established a new 

Joint Select Committee on Deficit Reduction to narrow the total budget gap by $1.5 trillion over 

the next decade. This so-called "Supercommittee" must report its findings by November 23, 

2011 and if a majority of its 12 members support its conclusions, both houses of Congress will 

consider the resulting legislation under expedited procedures by December 23, 2011. 

As a result, the next 100 days will mark a major turning point in America's unsustainable 

fiscal trajectory. That's why the National Taxpayers Union (NTU) and U.S. Public Interest 

Research Group (U.S. PIRG) have joined together to propose to the Supercommittee and to 

Congress as a whole a list of more than 50 recommendations to reform our future spending 

commitments. If enacted in their entirety these changes would save taxpayers more than $1 

trillion over the coming decade. 

While our organizations have often differed about the proper regulatory scope of 

government and a host of tax policies, we are united in the belief that we spend far too much 

money on ineffective programs that do not serve the best interests of the American people. This 

joint project is an attempt at identifying the "low hanging fruit" of waste and inefficiency in the 

federal budget, in hopes of transcending the ideological and partisan bickering that has helped 

to create the fiscal mess we see today. In a similar report submitted last year to the President's 

National Commission on Fiscal Responsibility and Reform, we outlined over $600 billion in 

spending reductions by that entity's target date of 2015. Though many of our specific 

recommendations were incorporated into the "illustrative cuts" section of the Commission's final 

report, Congress has largely failed to act on them and significant reforms remain as necessary 

as ever. 
171 


81404.129

The recommendations in ''Toward Common Ground 2011" touch every portion of federal 

expenditures, including entitlements, defense spending, wasteful subsidies, and a broad range 

of improvements to the efficiency and effectiveness of discretionary programs. They include 

large items, such as a $160 billion overhaul of federal information technology management, and 

small ones, like $10 million in spending on biodiesel fuel education grants. Each 

recommendation includes a ten-year savings estimate backed up by authoritative sources such 

as the Congressional Budget Office, Government Accountability Office, Office of Management 

and Budget, or bipartisan working groups. They are specific, detailed, and actionable items that 

Congress could pursue right now to reduce spending and help meet its goal of $1.5 trillion in 

deficit reduction. 
172 


81404.130

Ending Wasteful Subsidies Total Savings of up to $214.9 billion 

Every year, the federal government hands out billions of dollars in subsidies for a wide 

variety of activities, often best described as commercial in nature. Though the vast majority of 

such programs are well-intentioned efforts to provide targeted support to businesses or 

individuals, in practice many are a poor use of scarce taxpayer dollars and fail to achieve their 

stated objectives. This section recommends spending reductions that focus primarily on 

"corporate welfare" programs, inefficient agricultural supports, and subsidies for energy 

production. If Congress were to enact all 22 recommendations, it would save taxpayers $214.9 

billion over the next decade. 
173 


81404.131

Eliminate Crop Insurance 

Program 

Eliminate tax credit for 

ethanol 

Eliminate direct payments 

for commodity crops 

Reduce Fossil Energy 

Research, Development 

and Demonstration by 50% 

Mixed Oxide - Fissile 

Materials Dispositions 

Construction 

system less reliant upon 

They have since 

a fixture despite being identified 

by watchdog groups on the 

. They also distort the 

market by favoring certain 

$77,000 

$60,000 

$50,000 

$5,016 

$6,970 

$3,760 

$2,184 

CBO March 

2011 Baseline 

GAO 

GAO 

CBO March 1~::~~~:lQfJ!Ll 2011 Baseline I~ 

CSO March 

2011 Baseline 

Department of I~~::~:::: Energy 1£ 

Department of 1ll,j'~:~~:::~1 Energy I!! 
174 


81404.132

Restructure the Power 

Marketing Administration to 

Charge Market-Based 

Rates 

Eliminate Hollings 

Manufacturing Extension 

Program 

Reduce funding for 

Economic Development 

Administration 

Eliminate feedstock 

flexibllity program 

Eliminate marketing Joan 

assistance program 

Program 

Foreign Market 

Development Program 

Eliminate Export-Import 

Bank 

U.S, Trade Development 

Agency 

Development 

supposed to aid needy 

grants for economic 

, but the program has been 

inefficiencies for years and 

a source for many wasteful 

earmarks, 

Flexibility Program is one 

of price supports and trade 

that conspire to raise the 

i of sugar to twice that faced 

of the world. The program 

that the federal government 

I sugar and sell it at a 

producers to make 

$2,080 Budget esa Options 2009 If '~:i:~~:!QQ;n 

National 

51,300 Standards 

Technology 

Center for 

$1,000 American 

Progress 

eBO March $374 2011 Baseline 

$319 esa 

$474 esa 

52,000 esa 

$355 esa 

$427 esa 

$552 USTDA 
175 


81404.133

Biomass Research and 

Development 

Biomass crop assistance 

program Idevel<)pITlenl 

Biodiese! fuel education 

program 

Mal,aaemem. an agriculture 

uses about $5 million 

funding to promote 

consumption of dairy products. 

with businesses that 

$400 

$390 

$277 

$50 

$10 

USDA 

eBO March 

2011 Baseline 

eBO March 

2011 Baseline 

GSA data 

analyzed by 

"Back in Black" 

report 

USDA 
176 


81404.134

Addressing Outdated or Ineffective Military Programs Total Savings of up to 

$444.8 billion 

While the need for a strong national defense is clear, it is equally clear that the 

Department of Defense (000) has a number of programs that do not advance those goals and 

instead waste vital resources. As the largest portion of the "discretionary" budget and about 20 

percent of the total federal budget, it stands to reason that prudently examining DoD's funding 

and priorities could generate significant savings for taxpayers. Due to the delicate nature of 

decisions relating to national security, we have relied on authoritative recommendations from 

officials and independent experts from across the political spectrum to guide this report. 

Following these 13 recommendations to carefully reform or eliminate weapons programs and 

make other procedural improvements could save taxpayers as much as $444.8 billion over the 

next decade. 
177 


81404.135

Implement Acquisition 

reforms identified by the 

bipartisan defense 

acquisition panel 

Adopt Gates efficiency 

recommendations 

Cancel F~35 Joint Strike 

Fighter and replace with 

more advanced, cheap and 

reliable alternatives 

Cancel Navy/Marines F-35 

Joint Strike Fighter 

Reduce spending for 

"Other Procurement" 

Procurement" category 

spending on items like night 

and radios. According to 

National Commission on 

Re"oO<l<;c,;iln Iv and Reform, the 

spent $400 billion more than their 

for these items. Reducing 

this spending would save 

billion while still providing a 50 

increase over "Other 

wn)c",,,m,em levels in 2000. 

$135,000 

$100,000 

$78,000 

$18,000 

$52,000 

Services 

Committee 

Department Defense of It.! I~::~:~:~f 

CBO 2009 1~:~:~~li'[Qg;U Budget Options I~ 

CBO 2011 

Budget Options I::"''':''''''C''-::c'''::''':'''::'''' .• 

Fiscal 

Commission 

Majority Report 1""',W..L.Du,;== 
178 


81404.136

management. cost Sustainable Reduce V~22 Osprey issues, Reducing future $15,000 Defense purchases replacing the functionality Taskforce I MH~60 helicopters would 

$15 billion 

current armored transport 

recent purchases of mjne~ 

Pause development of ambush-protected (MRAP) $14,000 eso 2011 

Ground Combat Vehicle appears to have reduced the Budget Options 

it. Delaying it and researching 

alternatives could save 

venture between the 

and Italy to provide for a 

system. Neither Italy $10,000 eBO 2011 

plans to purchase the Budget Options 

when finished and the Patriot 

Change depots pricing $2,470 eBO 2009 

structure Budget Options 

Cancel the C-27 J Joint $1,460 Department of 

Cargo Aircraft Defense 

Defense Logistics Agency, Army, $7,100 GAO 

and Air Force have substantial 

problems that have resulted 

i far too many spare parts (in $3,600 GAO more than 50 percent too 

If the agencies were to work 

existing surpluses while reforming $7,500 GAO and tracking systems, 

could save at least $37 billion in 

spare parts and supplies $18,700 GAO 

for the 
179 


81404.137

Improving Program Execution and Government Operations Total Savings of up to 

$221.6 billion 

Payment errors, duplicative programs, and inefficient processes combine to squander 

tens of billions of taxpayer dollars every year. Taking a comprehensive approach to streamlining 

the operation of myriad programs could not only spare taxpayers additional expense but also 

improve the quality of services they receive. If enacted in their entirety, these 15 

recommendations could save as much as $221.6 billion over the next decade. 
180 


81404.138

l:i~I~~:l n~:~~~ai::s:~fd O~~~i~~S such as h computing 

Reform federal IT while closing up to 800 of the 

management - implement 2,100 federal data centers nationwide, as 

cloud computing 

Reduce backlog of 

buildings owned by the 

federal government that 

are not utilized or underutilized 

Reform Airport 

Improvement Grants 

Terminate harmful and/or 

wasteful Army Corps of 

Engineers projects 

fleet and costs by 20%) 

$160,000 

$17,000 

$21,970 

Brookings 

Institution 

CSO 

FAA 

$6,600 GAO 

$5,600 

$5,600 

Green Scissors 1hl!ill;,,'bi.'t£:!:i'.JQ§.Qr:gLg.r:;:'ffij 

Report 

GSA data 

Senator analyzed Coburn by -IE~:~~:~~ "Back in Black" 

report 
181 


81404.139

Service program 

End excessive "doubledipping" for reemployed 

annuitants 

End funding for the 

National Drug Intelligence 

Center 

Livestock Protection 

Program 

ElIminate funding for 

Woodrow Wilson 

International Center for 

Scholars 

Eliminate Small 

Community Air Service 

Development Program 

Small Community Air Service 

IDEweloprnen! Program was intended to 

I of commercial air service 

airports, but nearly 70 percent of 

it funds end in failure. 

$1,680 

$1,230 OMB 

OPM 

discussions with 

$611 Coburn 

"Back in Black" 

report 

$591 CBO 2009 

Budget Options 

$440 DOJ 

CampbeU-

$110 DeFazio 

Amendment to 

farm bill 

$100 'vWVIC Annual 

Report 

$60 
182 


81404.140

Eliminate Space Flight 

Awareness program $16 
183 


81404.141

Reforming the Operation of Entitlement Programs - Total Savings of up to $132.1 billion 

Medicare, Medicaid, and Social Security combined comprise roughly 40 percent of the 

federal budget and, as a result, their budgets also deserve close scrutiny, Giving program 

administrators greater access to technology and other tools to root out fraud and improper 

payments could yield tremendous savings, The 6 recommendations in this section, if taken 

together, could save taxpayers as much as $132,1 billion over the next decade, 
184 


81404.142
185 

Mr. STEARNS. And I thank the gentleman. 

Mr. Collender, you are recognized for 5 minutes. 

STATEMENT OF STANLEY E. COLLENDER 

Mr. COLLENDER. Thank you, Mr. Chairman. My testimony today 

is my own personal view on the subject of the hearing. My comments absolutely are mine and mine alone. A very brief word of 

personal introduction. 

I am generally thought of as a deficit hawk. I get criticized from 

both the far right for being too left and by the left for being far 

too right. I actually take a great deal of comfort in this. I am 

pleased that when it comes to the Federal budget, I am considered 

a centrist and rational. 

My budget background is also decidedly bipartisan. I proudly 

worked with three Democratic Members of the House of Representatives and the Democratic staffs of the House and Senate Budget 

Committees when I was much younger. But I was also the first 

speaker at the first meeting of the House Tea Party Caucus held 

on February 28th of this year. I spoke to the Tea Party Caucus at 

the invitation of Congresswoman Bachmann, who liked a column 

on the debt ceiling I had written for Roll Call in January. She 

asked that I discuss it in depth with the House Members and the 

other tea party supporters who attended the meeting. It was a 

privilege for me to be able to do so. 

My background is important because I want what I am about to 

say about this hearing to be understood in the bipartisan centrist 

context I am often criticized for having. Based on everything I have 

studied, observed, participated in and commented on about the 

Federal budget over the past almost four decades, it is hard for me 

to understand why this subcommittee is spending any time and 

wasting so many taxpayer dollars holding this hearing. 

The answer to the question on which this hearing supposedly is 

based is as straightforward as they come. Of course the Obama administration has done and continues to do a line-by-line, programby-program review of the budget. There is simply no reason for the 

subcommittee to think otherwise. A line-by-line review is standard 

when every White House puts its budget together but it is especially the case in a year like this when spending cuts are the main 

course on the Federal budget menu. Here again, the reason is 

straightforward. Unless you are using a meat axe and eliminating 

whole departments and agencies, budget cuts require additional detailed line item reviews beyond those that routinely happen when 

the President’s budget is being formulated. These additional reviews typically include the senior White House staff, the Cabinet 

and the President and Vice President. The inevitable policy choices 

and political decisions involved with those cuts cannot be made at 

lower levels. 

There are three extraordinary ironies about today’s hearing. The 

first is that none of the witnesses, including me, has any firsthand 

knowledge of whether or how the Obama administration conducted 

the line-by-line review about which the committee says it is so concerned. That immediately raises a serious question about why any 

of us was asked to testify. 

186 

Second, never mind the White House, Congress is the branch of 

the U.S. government that seldom, if ever, does the line-by-line review of the Federal budget this committee seems so desperate to 

have done. That makes a hearing on Congressional line item review procedures far more justified than one like this on what the 

White House is doing. 

Third, final irony is that one of the primary reasons most Representatives, Senators and Congressional committees don’t review 

every line item is because the White House provides Congress with 

voluminous, painstakingly detailed materials that are based on the 

in-depth line item reviews it conducts when it formulates the President’s budget. 

Mr. Chairman, there is a good deal more I could say about this 

subject and I will be happy to try to answer your questions. But 

honestly, I really don’t see any reason to waste any more taxpayer 

dollars by prolonging a hearing that never needed to be held in the 

first place. Thank you. 

[The prepared statement of Mr. Collender follows:] 

187 


81404.143

TESTIMONY OF 

STANLEY E. COLLENDER 

BEFORE THE SUBCOMMITTEE ON 

OVERSIGHT AND INVESTIGATIONS 

OFTHE 

HOUSE COMMITTEE ON ENERGY AND COMMERCE 

OCTOBER 5, 2011 

Thank you Mr. Chairman. 

My testimony today is my own personal view on the subject of this hearing. I am 

not here representing a client, my firm, or any other organization with which I'm 

associated and my comments absolutely are mine alone. 

A few very brief words of introduction: 

I have spent most of my adult life working on the federal budget in some 

capacity. I am one of only a handful of people who has worked on the staffs of 

both the House and Senate Budget Committees. I have been director of federal 

budget policy for what today are known as PriceWaterhouseCoopers and 

Deloitte. I am the author of The Guide to the Federal Budget, one of the most 

assigned texts on the topic in the 19 years an annual edition was published. For 

1 
188 


81404.144

the past 15 years I have written a weekly column on the budget, first "Budget 

Battles" in NationalJournal.com, and now "Fiscal Fitness," a feature you no doubt 

all read religiously when it appears in Roll Call each Tuesday. I am also the 

founder and one of the principal writers for "Capital Gains and Games," a blog 

devoted mostly to federal budget issues that in 2009 the Wall Street Journal 

included in its list of the top 25 economic blogs in the United States. 

I consider myself to be a deficit hawk, but I sometimes get criticized from both the 

far right for being too left and by the left as being too far right. I take a great deal 

of comfort in that and am proud that, when it comes to the budget, I am 

considered a centrist and rational. Because of it, I have been invited on a number 

of occasions to do the briefing on the budget for the newly elected members of 

Congress at the orientation held after each congressional election at the 

Kennedy School of Government at Harvard. 

Before anyone asks me about it, I did indeed work for three very liberal 

Democratic members of the U.S. House of Representatives when I was much 

younger. But you should also know that I was privileged to be the first speaker at 

the first meeting of the House tea party caucus held on February 28. I was there 

at the invitation of Congresswoman Michele Bachmann who liked a column on 

the debt ceiling I wrote for Roll Call back in January and asked me to discuss the 

topic with the members of Congress who attended the meeting. 

2 
189 


81404.145

I tell you all of this to put what I am about to say about this hearing in a 

nonpartisan, centrist context. Based on what I've studied, observed, participated 

in and commented about the federal budget on over the past almost four 

decades, it's hard to understand why this hearing is being held. 

The answer to the subject of this hearing is obvious and straightforward: Of 

course the Obama administration has done ... and continues to do a line-by-line, 

program-by-program review of the budget. There's simply no reason for this 

subcommittee to think otherwise. 

In fact, that's what budget "formulation" - the sometimes tortuous, repetitive, and 

exceptionally detailed process the executive branch goes through to put together 

the president's budget each year - is all about. 

A line-by-line review is standard every year when an administration puts together 

its budget. But it is especially the case in a year like this when the White House is 

proposing Significant spending cuts rather than spending increases. Budget cuts 

such as the ones in the fiscal 2012 budget the president sent to Congress at the 

in February require additional detailed reviews that typically include senior White 

House staff, the cabinet, and the president and vice president. These days, when 

the low-hanging budget changes were made long ago, the policy decisions 

required to make the call about what to cut cannot be made without involvement 

at the highest levels. 

3 
190 


81404.146

Sadly, this same type of highly detailed, line-by-line review is not typical of the 

way the legislative branch typically looks at the federal budget. The 

Congressional Budget Office and the Appropriations Committee staff do indeed 

do a detailed program-by-program review. But in my experience, because of their 

personal time constraints and the limits on staff resources, few members of 

Congress, including many with direct responsibility for approving or overseeing 

department and agency budgets, ever review more than the handful of line items 

within their jurisdiction. In many cases they don't even do that. And in many 

years in the recent past, and apparently in this year as well, the ultimate 

spending decisions made in Congress center largely on across-the-board 

changes to the previous year's levels rather than a line-by-line review. 

The ultimate irony of today's hearing is that one of the reasons most 

representatives and senators don't review every line item in the budget each year 

is the voluminous material the executive branch provides to the House and 

Senate based on the detailed review it conducts. The budget appendix - the part 

of the president's budget submission that looks like a Manhattan telephone 

directory and has print just as small- is just the tip of the fiscal iceberg. So-called 

"justification books" with extensive details are provided to the appropriations 

committees, briefing documents galore are prepared for authorizing committees, 

and computer runs with more-detailed data than anyone could possibly use on 

every program in the budget are sent to CBO. The level of detail provided by the 

4 
191 


81404.147

White House to Capital Hill is what allows Congress to put its own fiscal focus 

elsewhere. 

In conclusion, the answer to your question about whether the Obama 

administration has conducted a "page-by-page, line-by-line" review of the federal 

budget is an unambiguous yes. 

5 
192 

Mr. STEARNS. I thank the gentleman. 

Mr. Lilly, you are recognized for 5 minutes. 

STATEMENT OF SCOTT LILLY 

Mr. LILLY. I would like to pick up where Stan left off and say 

I do think there is a good side of this hearing because I think lineby-line budgeting is extraordinarily important. It is not the best 

way to do a budget, it is the only way to do a budget, and I think 

it is slipping from our grasp for a number of reasons I would like 

to talk about. 

First of all, is the administration doing line by line? I would have 

to agree with Stan. I find a lot of the conversation this morning remarkably silly in that regard. Every April, every budget officer of 

every agency sits down with every section chief and goes through 

item by item of what was spent in the past year, what is needed 

in the coming year, what they could afford, how they could reduce 

their spending, how they could cut back on services, what would be 

the impact of a 10, 20, 30 percent cut. That happens all across the 

board. It produces amounts of budget material that I think this 

committee can only imagine. 

Ranking Member DeGette pointed to the appendix of the budget. 

In that appendix, and there it is, there is probably half a page that 

talks about the United States Park Service. I have materials that 

the Park Service submitted to the Congress this year—this is a reprint of it—583 pages on the Park Service. If you want to go into 

whether this is detailed or not, this is an item on the Kennesaw 

Mountain National Park. Cobb County, Georgia, has bought and 

provided the Wallace House to that foundation and they are including $157,000 and two full-time-equivalent positions in order to staff 

that. That is a lot more than line by line. That is the detail that 

gets into everything that every employee of this government does, 

and so the idea that that is not happening is ridiculous. 

Do you like the decisions that were made? Well, maybe you do, 

maybe you don’t. One big cut that this administration made that 

nobody has mentioned was the termination of the F–22, which I 

didn’t agree with, but it was a huge, huge cut. 

Now, the other thing I would say is, I think there has been a real 

deterioration in line-by-line budgeting. The Executive Branch bears 

part of the burden for that. We have reams of needless, stupid data 

that is included in budget materials every year on a formulistic 

basis. It deprives our resources to get in and dig into the budget 

in a real way, and it ought to be eliminated. We have been relying 

because of the Executive Branch, year after year, on huge 

supplementals. Veronique has written eloquently about that. That 

has been at least slowed down in this administration. It has been 

a big step forward. 

But frankly, what puzzles me about this hearing is, it is a lot 

like the umpire stopping the game and going out and chastising 

the pitcher for not calling balls and strikes. The framers of the 

Constitution did not charge the Executive Branch with being a 

check and balance on excessive spending in the Executive Branch. 

That is why you guys are here. That is the purpose of the Congress 

and that is where the line-by-line budget review has to take place. 

If you don’t do it, nobody will do it. 

193 

Before 1921, from the first Congress in 1789 until 1991, the Executive Branch played no role in putting the budget together. 

Every agency went directly to the Appropriations Committee and 

asked for funds. So we don’t even need the Executive Branch to be 

in here. It is your job to put the budget together. 

Now, I think that has been seriously deteriorating in my period 

of time here and there are three things that have happened, Mr. 

Chairman. First of all, we have deliberately destroyed expertise. 

The limitation on subcommittee chairmanships meant that a guy 

like Ralph Regula, who knew as much about parks and forests as 

any Member of Congress, had to move from the Interior Subcommittee to the Labor H Subcommittee where he had never 

served a day, just deliberately destroying the expertise necessary 

to do this process. 

The second is the earmark orgy that we went through over the 

last decade. From 1995 until 2005, we had a quadrupling of earmarking. We had as many as 15,000 requests for earmarks go to 

the Labor H Subcommittee, which is the biggest domestic appropriations subcommittee. Do you know how much staff time it takes 

to do that? It completely eviscerated the ability of that subcommittee and every other subcommittee to do the kind of oversight and line-by-line review that is necessary. 

Now, we have finally gotten rid of that, and I am very thankful, 

and there are people on both sides of the aisle that worked to get 

rid of it. What did we do with all the time and the resources that 

we gained by getting rid of that? We went on vacation. Look at the 

calendar that the Majority Leader posted this year. In January, the 

House was in session 6 full days. In February, we had 2 weeks off. 

In March, which is the height of the season for testifying by agency 

witnesses on their budgets, we were in 8 days. We had the firstever St. Patrick Day recess. The same thing is true of April, May 

and June when the—— 

Mr. STEARNS. Mr. Lilly, I just need you to sum up. 

Mr. TERRY. Yes, I think you are the silliness right now. 

Mr. STEARNS. OK. Let us just have you sum up. You are a 

minute and a quarter over. 

Mr. LILLY. I would just simply say this. Line-by-line budgeting 

is hard work. It is the work of the Congress. The Congress has to 

be here to do it. It has to organize the resources. It needs to be 

tough with the Executive Branch in demanding the information 

that is necessary, but that has not been happening for more than 

a decade. 

[The prepared statement of Mr. Lilly follows:] 

194 


81404.148

Improving Oversight and Review of Federal Agencies 

A Line by Line Approach to Getting More for Each Tax Dollar 

Testimony of 

Scott Lilly 

Senior Fellow, Center for American Progress 

Before the Oversight and Investigations Subcommittee of the 

House Committee on Energy and Commerce 

There is no function in any organization that is more critical to its success than the intelligent allocation 

of resources. By far the biggest resource allocation process in the world is the massive effort that occurs 

each year in putting together the budget of the U.S. government. That budget touches the lives of every 

American in numerous ways. But in my judgment and the judgment of a good many other people who 

have spent their lives preparing, reviewing, negotiating and enacting federal budgets, this budget 

process has deteriorated as an effective means of identifying low-performing programs, setting 

necessary priorities, and allocating resources. 

While there are no clear metrics that measure whether or not deterioration has occurred, my research 

indicates that the perception of deterioration is widely shared by a wide range of participants in the 

federal budget process, including career civil servants at various levels of government and long -term 

staff who serve on congressional committees. My testimony today features not only my own 

impressions but those of a variety of career budget analysts who worry that the taxpayer is getting less 

for his money than he should. 

Before detailing that research, however, let me get straight to the point. The consequences of this 

deterioration are severe. Critical programs are likely to be denied the resources necessary to achieve 

their objectives. Inferior, non-performing and wasteful program continue to get funds that they either 

don't need or can't use effectively. In either case, the taxpayer gets less than he deserves or should 

expect. 

In my judgment, this deterioration occurred in both executive and legislative branches and evolved over 

a period of years. Factors contributing to the deterioration include the requirement for and inclusion of 

large amounts of formulized but largely meaningless data in program and agency budget submissions as 

mandated under the Government Performance and Results Act. Equally destructive is the chaos created 

by the excessive use of supplemental appropriations, which essentially results in the government having 

no effective decision-making tool at any single point in time. If enough funds were not taken from the 

Treasury in the initial appropriations process, then more (much more) could be taken later on in the 
195 


81404.149

year. The excessive use of supplementals not only breaks down discipline but also breaks the 

bureaucracy necessary to make intelligent choices. One need look no further than what has happened 

to the staffing ofthe Defense Departments Comptroller's office to get a clear picture of what I mean. 

While the executive branch may have made major blunders that impede a serious line-by-line approach 

in examining programs and spending priorities, the legislative branch has made even larger blundersand it is the legislative branch that is vested with the power of the purse. Furthermore, it is the 

legislative branch that is the check against executive branch excess. It is my strong feeling that federal 

budgeting works as well as the Congress demands that it work. 
196 

Mr. STEARNS. Thank you, and I thank the gentleman. 

Ms. DEGETTE. Mr. Chairman, I would respectfully ask that the 

members of this committee at least be civil to the witnesses who 

have given up their day to come here. 

Mr. STEARNS. I agree with you. 

Now that we have finished with our opening statements, I will 

start with my line of questioning. I would point out to Mr. 

Collender and Mr. Lilly, I agree with you, Congress should also do 

a line by line, and I think your points are well taken that Congress 

has a fiduciary responsibility and has had historically to do that. 

We have a letter that we received from the Office of Management 

and Budget, and one of the things we were concerned about is that 

when the President comes up with initiatives that are savings, we 

never know how much money this is saving. For example, you have 

Securing American Values and Efficiency that talks about the 

President’s SAVE Act, that his award is going to save all this 

money, but we are not clear how much money it is saving, so it is 

hard sometimes for us and Members of Congress to hear the President say he is going to create all these savings line by line, whether you agree that the President should do it or Congress, but when 

the President says it and he says line by line, item by item, program by program, page by page, and then we try to understand 

where these savings are, it is difficult for us to find them. So the 

hearing today is to try and have a better understanding. 

Now, Mr. Schatz, your office actually with your staff has developed a database and you have actually gone in to do this, as I understand it, and so it is possible for the Citizens Against Government Waste to do this and you would certainly think Congress 

could do it as well as the President’s Office of Management and 

Budget. Wouldn’t you agree? 

Mr. SCHATZ. Well, since I am under oath, Mr. Chairman, we 

didn’t do it exactly line by line. But we did use the resources that 

exist in the public and private sector and consolidated them into 

our list of prime cuts, so it is Congressional Budget Office, it is 

Congress itself, it is the President’s budget recommendations that 

go through GAO or Inspectors General and just put together a comprehensive list, 691 recommendations—I am sorry—yes, recommendations save $691 billion—I am sorry—over 1 year and $1.8 

trillion over 5 years. So the information is there. A lot of these recommendations have been around for many years. Our origin, as I 

mentioned, goes back to the Grace Commission under President 

Reagan so those recommendations were incorporated into the 

President’s budget, and our major point has been, if there is going 

to be an initiative, there should be a way to find out what has happened with that so that the taxpayers can say this was proposed, 

this is what happened, and in a sense, it doesn’t matter what it is 

called, it just needs to be presented in a way that these questions 

shouldn’t be asked. 

We are having a hearing because we don’t have the answers, not 

because there shouldn’t be a comment about whether it is line by 

line or not or what it means. It is just, there have been ideas in 

the past that have been proposed where someone can go and see 

what has been done, what has been saved, and what is being proposed the next year. 

197 

Mr. STEARNS. Well, I know when the Republicans first took over 

with the Contract with America, we had a long list pretty much 

that we developed from many of you in the audience and witnesses 

today that we tried to use to reduce spending, and the methodology 

that you use or your criteria for your program evaluation, could 

you just briefly tell us what that was? 

Mr. SCHATZ. Well, at least within what we looked at in the prime 

cuts, it was looking at the resources that had already reviewed a 

lot of these recommendations. For example, the Congressional 

Budget Office or our own evaluation, and certainly looking back at 

how these recommendations had been made. We have used some 

of the similar criteria that NTU and U.S. PIRG have used. 

If a program is going to be proposed and funded by the Federal 

government, there should be a way to determine whether that program is achieving its goals, and if it is not, it should be eliminated, 

and that is in a sense the simplest way to do it. Another way is 

to look at whether the government should be involved at all, the 

old Yellow Pages test under President Reagan that he used to 

speak about, and whether the government should even be, quote, 

unquote, in a business or in a situation that allows them to compete with the private sector. So, in some ways it depends on which 

area of spending we are looking at. 

Mr. STEARNS. Regardless of what everybody says here, based 

upon the video we just watched, was your interpretation that he 

was going to go page by page, item by item, line by line? Was that 

your interpretation of what the President said? 

Mr. SCHATZ. Yes, but again, through the process that is supposed 

to occur. The better question is, what happened after—— 

Mr. STEARNS. Yes, what happened and where are those savings? 

Let us talk about transparency for a moment. Is the Federal government required to establish a single searchable Web site to track 

Federal procurement? 

Mr. SCHATZ. It is now under the Federal Accountability and 

Transparency Act after it occurs, yes. 

Mr. STEARNS. When was this Web site launched and how effective is the site in providing transparency to the more than $1 trillion in Federal contracts? Do you have any idea? 

Mr. SCHATZ. It is USAspending.gov, and it was proposed originally by then-Senator Obama and Senator Coburn. It passed both 

Houses, was signed into law. It does have useful information. Interestingly, we received an email the other day from a gentleman who 

looked through it and just put in the word ‘‘coffee’’ and found, you 

know, hundreds and hundreds of expenditures on coffee. So there 

is a way to search it. It is useful, but it is after the fact. It is spending that has already gone out the door as opposed to looking at the 

spending before it occurs, and that to us is more important. 

Mr. STEARNS. I guess the question would be, if the administration is actually—are they using the information at 

USAspending.gov to complete its line-by-line review? I don’t know. 

Mr. SCHATZ. I can’t answer that. 

Mr. STEARNS. Does anyone on the panel know, have any hint if 

the President is actually using that site at all? No? 

Mr. LILLY. I do know that they have been very focused on contracts as an area of potential savings, reducing the contracts, cutVerDate Aug 31 2005 14:15 Jul 16, 2013 Jkt 037690 PO 00000 Frm 00201 Fmt 6633 Sfmt 6633 F:\112-09~1\112-92~1 WAYNE
198 

ting the margins on contracts, and so that site is one way to find 

out what is going on there, and I know that that is being factored 

into their—— 

Mr. STEARNS. All right. My time is expired, and I recognize the 

gentlelady from Colorado. 

Ms. DEGETTE. Thank you very much, Mr. Chairman. 

Mr. Knudsen, up until very recently, you were the Policy Director at the House Budget Committee, correct? 

Mr. KNUDSEN. Yes. 

Ms. DEGETTE. When did you leave that position? 

Mr. KNUDSEN. In August. 

Ms. DEGETTE. August of this year, so very recently? 

Mr. KNUDSEN. Yes. 

Ms. DEGETTE. And so as you know, what happens in the budget 

process, the administration develops a budget. Mr. Lilly said they 

get all kinds of data through the different agencies. They come up 

with their budget. They send that to the House of Representatives, 

correct? 

Mr. KNUDSEN. They send it to all of Congress. 

Ms. DEGETTE. Right, and then the House and Senate Budget 

Committees go through that. In a good year, they come up with 

their own budget, they pass that budget. Then they do the 13 appropriations bills, correct? 

Mr. KNUDSEN. I believe it is now 12, but yes, that is the process. 

Ms. DEGETTE. The 12 appropriations bills. Those bills actually 

appropriate the money from the budget, and Congress has the discretion about whether or not they are going to fund those programs, correct? 

Mr. KNUDSEN. Yes, ma’am. 

Ms. DEGETTE. Then that goes to the White House and then the 

President decides whether he is going to sign or veto those bills, 

right? 

Mr. KNUDSEN. Yes. 

Ms. DEGETTE. Now, in recent years, what has happened—and I 

actually think it is unfortunate and I think the chairman will probably agree with me on this—we have sort of devolved over the last 

number of years to doing a big omnibus appropriations bill, and as 

a result, Members of Congress don’t have the ability to vote on 

those separate 12 bills, correct? They just vote on the omnibus, 

whatever it is? 

Mr. KNUDSEN. That is right, yes. 

Ms. DEGETTE. And the President doesn’t have an opportunity to 

veto bills either because they spend too much or too little for each 

of those 12 areas of government, right? It is like an up or down on 

omnibus, right? 

Mr. KNUDSEN. That is correct, although, as you know, in the 

Constitution, he may provide a list of his objections and—— 

Ms. DEGETTE. Right, but he doesn’t have line item veto authority? 

Mr. KNUDSEN. That is correct. 

Ms. DEGETTE. We have argued about that over the years. So 

thank you very much for illuminating that for me because the point 

I would like to make, Mr. Chairman, I thought about asking all the 

witnesses whether they talked to the President to see if he in fact 

199 

did a line-by-line review, and I thought about asking all these witnesses what does a line-by-line review mean, does it mean the 

agency looks at it or whatever, and then I realized, that is really 

aside from the point. 

It seems to me the point of this hearing was to bring a whole 

bunch of people in to testify as to their political beliefs about what 

the President should or shouldn’t be doing, but the bottom line is, 

right here in Congress is where the rubber hits the road. Right 

here in Congress is where we can do a line-by-line review of the 

budget either figuratively or literally and decide where programs 

should be cut. The only useful testimony that I have heard, with 

all due respect, this whole day is the testimony by Mr. Moylan and 

Mr. Kalman, who came together from opposite ends of the political 

spectrum and actually made serious recommendations as to places 

that we could cut. And so Mr. Chairman, what I intend to do after 

this hearing is get their report and look at it and then I think I 

might forward it on to the Budget Committee, not the Energy and 

Commerce Committee, which is where we develop the budget in 

Congress. 

With that, I am happy to yield back the balance of my time. 

Mr. STEARNS. All right. The next person is Mr. Griffith from Virginia who is recognized for 5 minutes. 

Mr. GRIFFITH. Thank you, Mr. Chairman. I do note with some interest the whole debate that is taking place today in regard to the 

line-by-line item, and whether or not the President, you know, can 

in fact go line by line or whether he should go line by line, and all 

that is very interesting to me. What I think is more important with 

that line of questioning is that this was a promise that the President made and it does not appear, if I understood some of the testimony correctly, that he has actually done that. Was that my understanding of your testimony, that based on your analysis, Mr. 

Moylan, that you don’t believe the President actually has followed 

through or his people have followed through on a line-by-line analysis? 

Mr. MOYLAN. Well, I think the President and his administration 

have done a tremendous amount of work to analyze the budget line 

by line. I think the question is really what the result of that has 

been, and the result of that from our perspective has not been 

enough in terms of tackling wasteful spending. 

But if I might take this time to respond at least in part to what 

Ms. DeGette said. I would actually largely agree that the President 

plays an important role in this process but it is a limited one, and 

this is part of the reason, for example, why NTU has for years supported something of an anti-appropriations committee, to have a 

standing committee in Congress that has as its job to do a consistent line-by-line review of the Federal budget to look for savings 

as opposed to what the Appropriations Committee does. So I think 

that there is a lot of work that can be done in concert there to help 

improve these processes. 

Mr. GRIFFITH. In that regard, have you all taken a look at the 

House Rules and particularly Rule 21 in that area to determine 

whether a change in the House Rules might change things, the way 

business is done in the House Appropriations and Budget Committees? 

200 

Mr. MOYLAN. Sure. We have for years analyzed many different 

suggestions to change the rules of the House in order to put in 

more incentives to tackle wasteful spending, to give Congress more 

tools to do so. Some of the concepts that we have talked about earlier, things like biennial budgeting as well, have been things that 

we have been supportive of because we think they would bring 

more accountability to the process. 

Mr. GRIFFITH. Because my frustration, quite frankly, to the entire panel but particularly Mr. Moylan is coming out of the State 

legislature in Virginia where I served for a number of years, there 

the budget controls, and if we don’t have the money to do something, the budget doesn’t spend the money. I have learned here, at 

least what I have been told, is that if we have a law on the books 

as a result of these rules, we have to fund that whether we have 

the money or not, which is where we get into the whole debate 

about mandatory versus discretionary spending. Do you think that 

we as a Congress need to change the psychology where we maybe 

take a look at the way that Virginia does it where if we don’t have 

the money, we don’t spend it and the budget controls? As opposed 

to the law controlling the budget, the budget controls the laws. 

Mr. MOYLAN. That has actually been the subject of considerable 

debate in recent years, not just the fact that dollars that are considered mandatory spending are growing, in large part because of 

entitlement programs like Medicare and Medicaid, but how many 

other programs are now mandatory that their funding is more formula-based rather than a discretionary action by Congress, so yes, 

I do think that there is much work that can be done there to appropriately distinguish between what mandatory spending is and what 

discretionary spending ought to be and what ought to fall in which 

category. 

Mr. GRIFFITH. Because notwithstanding Mr. Green’s discussion of 

his legislative experience and the senior legislator saying that, you 

know, by the third year he only read his own bills, I have always 

tried to read the bills in both my State experience and here, and 

I have discovered some things in there that I would like to work 

on, some of which I have been told I can’t yet because it comes up 

later in the mandatory, because it is mandatory, it is in a 5-year 

bill, et cetera, and that has been somewhat frustrating. And there 

are things like that. I discovered a 1970 law that says when we 

take horses off Federal lands, we can’t humanely euthanize them, 

and as a result of that, we have what I call retirement homes for 

wild horses and burros at the tune of about $70 million a year. And 

so when I am looking line by line, when I am actually reading the 

budget bill, and I am not going to tell you, as was pointed out, that 

every reference and cross-reference that I am familiar with at this 

point, I hope to be sometime if I am allowed to stay in the Congress 

for a few years, but when I am looking at these things, those are 

the kind of things that I think a line-by-line analysis would find 

and would then, you know—if I were—and I don’t plan to run—but 

if I were President that I would say, hey, let us change that 1971 

law and straighten that out because it just doesn’t make sense 

when we don’t have the money to be spending money on that when 

we have citizens who may need that money for other purposes. 

That being said, Mr. Chairman, I yield back my time. 

201 

Mr. STEARNS. I would say to the gentleman from Virginia, if you offer a bill to eliminate that $70 million for the Social Security for 

horses—is that what it is? 

Mr. GRIFFITH. The retirement home for horses. 

Mr. STEARNS. The retirement home. OK. Well, you might drop 

that bill and I would be happy to be one of the cosponsors. 

Mr. GRIFFITH. I will see if we can get that drafted up, Mr. Chairman. 

Mr. STEARNS. All right. Thank you. 

We go to the gentlelady from Tennessee, Ms. Blackburn. 

Mrs. BLACKBURN. Thank you, Mr. Chairman, and thank you to 

each of you for being with us today. 

Mr. DeHaven, you were the Deputy Director of the Indiana Office 

of OMB, right? 

Mr. DEHAVEN. A Deputy Director. 

Mrs. BLACKBURN. OK. And did you ever do a line-by-line review 

for your State? 

Mr. DEHAVEN. No, I would not say we did a line by line. We actually went program by program. We actually conducted—when 

Mitch Daniels was the head of OMB, he came up with the PART 

system. When he became Governor, he directed the—he created the 

State Office of Budget and Management of Indiana and had them 

come up with PROBE, and basically do the same thing. We met 

with programs. We went through—we met with program heads. We 

went through the programs, on and on and on, and the result was, 

these reports would come up. In addition to those reports, we came 

up with these performance measures, and I do note with interest— 

I hear talk about PART and I hear talk about performance measures. I actually implemented performance measures in Indiana. 

That was my job. They were political. The numbers we got back 

were often BS—excuse me—and the whole purpose of the performance measurement system for Governor Daniels was to put out 

these temporary press reports and show the Indiana taxpayer that 

look, we are getting better, we are going from red to green, I am 

a better steward of the taxpayer dollar. 

As I put in my testimony, all the decisions that were made when 

it came to cutting programs or government efficiency or all that 

other stuff boiled down to politics and special interest. 

Mrs. BLACKBURN. OK. Let me ask you this. Did you all ever do 

what Governor Christie did in New Jersey with across-the-board 

cuts? He did a 9 percent cut. In my State of Tennessee, the former 

Governor did significant cuts like that. Did you all ever do any 

kind of across-the-board cut to help get the spending under control? 

Mr. DEHAVEN. When I was there, we did not do across-the-board 

cuts. I left right after the recession started to hit and State revenues dried up. Since then, I do believe that there were suggestions 

made for across-the-board cuts. The Governor can also withhold 

money a lot easier in Indiana. 

Mrs. BLACKBURN. All right. I know that Mr. Orszag did a memo 

that I have with me where he recommends a 5 percent across-theboard cut and stated, and I am quoting, ‘‘To reach the 5 percent 

target, your agency should identify entire programs or sub-programs or, number two, substantial cuts amounting to at least 50 

percent of total spending within a program or a sub-program. The 

202 

intent of this exercise is to identify those programs with the lowest 

impact on your agency’s mission.’’ 

I think what I want to do, I know Mr. Kalman is against acrossthe-board cuts but I would like to start with Mr. Schatz at the end 

and work down. How many of you favor across-the-board cuts? You 

know, this is something I favor, 1, 2 or 5 percent across the board 

just to trim the fat, if you will, and help agencies focus their attention on what needs to be reduced. So let us go down the line and 

let me see who all favors an across-the-board cut. 

Mr. SCHATZ. I would say yes, but I also note that you had proposed many of these amendments over the years, and when you 

talk about a penny on the dollar or 2 cents on the dollar or 5 cents 

on the dollar, your amendments were consistently defeated in the 

prior Congresses, so it is not the first thing that should be done because waste is identifiable and should easily be eliminated, but it 

certainly points out that in any organization, if you need to balance 

your books because you can’t keep spending money or borrowing it, 

it is something that could be done, but again, it wouldn’t be the 

first thing I would do. 

Mrs. BLACKBURN. OK. Mr. DeHaven? 

Mr. DEHAVEN. No, we need a deeper philosophical discussion 

about the fundamental role of government. When you had the 

budget agreement for 2011, I actually noted that a lot of the cuts 

ballyhooed by Speaker Boehner were similar to cuts that Newt 

Gingrich engineered. The fact of the matter is, if you cut the head 

off the hydra and you don’t burn the stump, it grows back. So you 

get your 5 percent or more, even if you are going to get it. So long 

as they exist, they will grow back. 

Mrs. BLACKBURN. OK. We have got 44 seconds left, so quickly 

down the list. 

Mr. KNUDSEN. The disadvantage is that obviously across-theboard cuts don’t choose priorities and so on but they have the same 

advantage that a spending cap does, and that is, they impose a 

limit and the limit can compel choices. 

Ms. DE RUGY. I believe that there is easily 10 percent waste in 

each department, each program. However, again, I think it is not 

our priority because it doesn’t allow us to differentiate between different programs. 

Mrs. BLACKBURN. OK. 

Mr. MOYLAN. I would say that NTU’s view is that it is a secondbest solution but it is one that—as you know, we have consistently 

supported those amendments because we believe spending reductions are necessary. 

Mr. KALMAN. Very quickly, because obviously I said I was—we 

have an issue with across-the-board cuts. And just to be very specific about it, there are a couple of programs, for example, that 

have received bipartisan support such as Pell grants and so cutting 

Pell grants in the face of when there is massive waste that NTU 

and PIRG found, we find that troubling. And so we prefer a closer 

look at the budget. 

Mr. COLLENDER. I would rather you make decisions based on priorities as opposed to an across-the-board meat axe approach. 

Mrs. BLACKBURN. OK. 

203 

Mr. LILLY. I think there are programs that are overfunded, there 

are programs that are underfunded. Across-the-board cut is the antithesis of line by line, which is what this hearing is about and 

what I think we need to dedicate ourselves to. 

Mrs. BLACKBURN. I yield back, Mr. Chairman. 

Mr. STEARNS. I thank the gentlelady, and the gentleman from 

Texas, Mr. Green, is recognized for 5 minutes. 

Mr. GREEN. Thank you, Mr. Chairman, and for my colleague who 

I heard earlier that he mentioned he read all the bills, congratulations. You are in your first term. Like I said, I am hoping to read 

the bills in my subcommittees on Energy and Commerce. 

In today’s hearing, the majority is focused on the Obama administration’s budget process and directed substantial criticism towards the administration. But ensuring a sound and efficient budget process should be a goal that doesn’t break down on partisan 

lines. In fact, a number of the witnesses for us today have expressed concerns about the budgeting process that spans administrations and political parties. 

For example, Mr. DeHaven and Dr. de Rugy, in one article you 

both co-authored you said, and I quote, ‘‘The fact that we are having a mounting deficit is because George W. Bush is the most gratuitous big spender to occupy the White House since Jimmy Carter. 

One could say that he has become the mother of all big spenders.’’ 

Can I take this from you that you both agree that the Bush administration created a lot of the debt problem we now confront? 

Ms. DE RUGY. Yes. 

Mr. DEHAVEN. It is an undeniable fact. 

Mr. GREEN. Both for each of you, Vice President Cheney is 

quoted by his Treasury Secretary as saying, ‘‘Reagan proved that 

deficits don’t matter.’’ Do you think Vice President Cheney was 

wrong? 

Mr. DEHAVEN. Yes, absolutely. 

Ms. DE RUGY. Yes, they matter. 

Mr. GREEN. OK. 

Ms. DE RUGY. I mean, there could be a debate, an academic debate, right? Until recently, academics, you know, could not find a 

correlation, still haven’t found a correlation between the size of 

deficits and interest rates. However, I mean, there has been—we 

don’t know so there is this side of the debate, right? And then however, we know that there is a point where deficits are so big and 

the size of the government is so big and the size of the debt is so 

big that it becomes—the tumor becomes so big that it starts destroying everything, and then there is a principle issue, which is 

in theory the amount of taxes that are—— 

Mr. GREEN. Well, I only have 3 minutes and I have a whole 

bunch of questions, but do you agree that—— 

Ms. DE RUGY. Yes, yes. 

Mr. GREEN [continuing]. Deficit is where we are at now—— 

Ms. DE RUGY. You guys shouldn’t be spending more money. 

Mr. GREEN [continuing]. No matter where we have come in the 

last 10 years, because I will remind you all that in 1999 and 2000, 

we had a balanced budget, or annual balanced budget. 

204 

Ms. DE RUGY. Well, not if you—if you had planned reasonably 

and put money aside to pay for all the unfunded liability and promises made, no, it is not a balanced budget. 

Mr. GREEN. Oh, well, granted, but officially, not counting Social 

Security and—— 

Ms. DE RUGY. Yes, officially. 

Mr. GREEN [continuing]. But officially we were actually buying 

down our national debt in 1999 and 2000. 

Ms. DE RUGY. Officially, but budget gimmicks is what Congress 

has used to actually make something look black when it is red. 

Mr. GREEN. And those are bipartisan gimmicks, but let me go on. 

Dr. de Rugy, in one of your papers on an off-budget emergency 

spending, you document how most of the 8 years of the wars in 

Iraq and Afghanistan were paid for with money that was not part 

of the Congressional budget limits. That was literally hundreds of 

millions of dollars. As you point out in the paper, emergency spending is supposed to be used when the need is unexpected and unpredictable like hurricanes or something like that that we had a debate over the last month. Question: When the President proposed 

this misuse of offline emergency spending year after year, which 

President proposed this misuse of offline emergency spending year 

after year, long after they were expected and predictable? 

Ms. DE RUGY. President Bush. 

Mr. GREEN. OK. And again, it was complacent with Congress obviously? 

Ms. DE RUGY. Absolutely. 

Mr. GREEN. And both parties in control. 

Ms. DE RUGY. Absolutely, and Congress, you know, was happy to 

let the budget rules that was supposed to restrict some of that 

abuse expire. 

Mr. GREEN. In one of your papers, you also called the Bush administration profligate, which coming from Texas, we don’t see that 

very often. But did you say that in the paper, that President Bush’s 

administration was profligate? 

Mr. DE RUGY. In spending? 

Mr. GREEN. Yes. 

Ms. DE RUGY. I am French, just in case you didn’t notice. 

Mr. GREEN. Doctor, which President proposed to Congress that 

it stop using the off-budget emergency spending of which you have 

been so critical? 

Ms. DE RUGY. Well, I mean, President Obama has accepted—you 

know, there is no evidence that the abuse is not going to be continued. There are no rules that actually are on the books now to actually prevent it, and if the debate over the latest round of emergency spending is any indication, there is no one in Congress who 

is actually really serious about reconsidering the abuse of that 

loophole. 

Mr. GREEN. So this is both a Congressional and Presidential 

problem that we have? 

Ms. DE RUGY. Yes. 

Mr. GREEN. Dr. DeHaven, in the past you have written about agriculture subsidies as ‘‘the orgy of supplemental spending bills that 

have increased the spending.’’ Would you tell that Congress agriVerDate Aug 31 2005 14:15 Jul 16, 2013 Jkt 037690 PO 00000 Frm 00208 Fmt 6633 Sfmt 6633 F:\112-09~1\112-92~1 WAYNE
205 

culture spending is part of that low-hanging fruit for deficit reduction? 

Mr. DEHAVEN. I would consider it to be so, especially when you 

have record incomes, but then we saw that back in 1996. Congress 

comes up with Freedom to Farm because incomes are high and 

they said we are going to wean you off and we are going to give 

you temporary payments to do that. Farm income prices promptly 

dropped the next few years. They came up with emergency 

supplementals and then in 2002, under the Bush administration 

and Republican Congress, they take the temporary payments and 

make it a permanent handout, so—— 

Mr. GREEN. Mr. Chairman, I don’t think I have any more time, 

but I appreciate the answers to the questions. 

Mr. STEARNS. I thank the gentleman, and the gentleman from 

California, Mr. Bilbray, is recognized for 5 minutes. 

Mr. BILBRAY. Thank you, Mr. Chairman. 

Mr. Chairman, I think there is an item we might be able to agree 

on here, and there might be a real opportunity to really get a focus 

on where both sides can cooperate on this. Let me first ask Mr. 

Lilly, you remember the comments about the earmarks in 1995. 

You also remember that the first initiation was that we had an administration that was taking line items and moving them from line 

item to another to basically get around cuts and so there was a lot 

of that originally was to lock things in so the administration 

couldn’t shuffle funds and, you know—and also you do remember 

that a thing called an earmark was the Predator, which was probably the most cost-effective and efficient weapons system ever developed in this country since the Monitor went out to Hampton 

Roads and confronted the C.S. Virginia. Those two items, in all 

fairness, you know—I am saying when it started off, there was a 

major reason why there was concern there. 

Mr. LILLY. I think if you look at my written testimony, I make 

the point that the Predator was—if it is not in the testimony I submitted today, I have often referred to this. I don’t think that earmarks are evil as such but I think the practice where we went— 

on the Labor H appropriation bill, we had zero earmarks in 1995. 

We had about 40 in 1996. We had over $1 billion in earmarking 

by 2004. 

Mr. BILBRAY. And I think the sad part about it—— 

Mr. LILLY. It completely overwhelmed the system. 

Mr. BILBRAY [continuing]. That we didn’t get the education out 

that the real abuse was a thing called the air drop where people 

were dropping things in in conference where no one had the right 

to be able to extract it, as the person who had to inherit the seat 

of a certain Congressman who abused that. 

Let me go over and ask U.S. PIRG, U.S. PIRG today, I enjoy listening to your testimony about so-called renewable fuels and the 

abuses in the system because I remember in 1995 when I came 

here, you had the Lung Association and U.S. PIRG strongly pushing the auction and mandate, strongly pushing as an environmental and health issue the requirement that ethanol be put in our 

gasoline, MTBE and ethanol, and I appreciate the fact that U.S. 

PIRG has reassessed not only the lack of health and environmental 

benefits but also the cost on this. 

206 

Mr. KALMAN. Yes, I was not around in U.S. PIRG in the 1990s 

to the extent that I am unfamiliar with our previous position on 

ethanol but it is in the report. We believe that, you know, it doesn’t 

serve the purpose and it is a wasteful—— 

Mr. BILBRAY. Not all items that people think, even the so-called 

experts think are great for the environment and health turn out to 

be what is projected. 

And so I am real touchy about it, guys, because I had ads run 

against me that I wanted children to die because I opposed that, 

and I opposed it because my scientists in California knew that it 

was a problem back then. 

Let us go to something we can agree on. Mr. Knudsen, your idea 

about if it is not authorized, we should not be spending money on 

that. 

Mr. KNUDSEN. Yes. 

Mr. BILBRAY. Now, that is something that I think Republicans 

and Democrats, and it comes back to your point about Congress 

now taking the responsibility and starting to take the reins back. 

Go down the list, each one of the people here, would you encourage 

us to demand that Congress take a look at that and make that a 

policy? 

Mr. SCHATZ. Yes. 

Mr. DEHAVEN. Yes. 

Mr. KNUDSEN. Yes. 

Ms. DE RUGY. Yes. 

Mr. MOYLAN. Yes. 

Mr. KALMAN. I would have to look more closely at it. 

Mr. COLLENDER. Yes, but it is not required by the Constitution. 

Mr. LILLY. Let me just say—— 

Mr. BILBRAY. Neither is a balanced budget but—— 

Mr. LILLY [continuing]. That we have had not only a collapse of 

the budget process in the appropriations process but the big collapse has been the authorization process. If you look at CBO’s report to the Congress from last January, over half of the non-defense appropriations were for things that weren’t authorized. Some 

of them haven’t been authorized for 20 years. Now, most people 

don’t want to see those programs ended but unless the authorizers 

are able to reactivate this process and review those programs, then 

I think you are kind of stuck with appropriating money without authorization, and it is a terrible thing. 

Mr. BILBRAY. You believe that we shouldn’t force the issue and 

require authorizers to do their job and not reauthorize? 

Mr. LILLY. We should, but I don’t think people that depend on 

those programs should suffer as the result of the failure of the authorizing committees to do their work. 

Mr. BILBRAY. So you think that future generations should suffer 

by using continuing to spend 43 percent more than we have money 

for? 

Mr. LILLY. That is different from cutting spending. I am not saying we shouldn’t cut spending. I am saying that is a very arbitrary 

way that is going to hurt a lot of people that you probably are 

going to find out you didn’t want to hurt. 

Mr. BILBRAY. OK. Democrats and Republicans work together and 

authorize a 2-year budget cycle for the veterans. Do you believe 

207 

that we should look at applying the same application for the rest 

of the budget or large portions of it? Down the line. 

Mr. LILLY. I think that would be—if the Congress wants to maintain control of the budget, that is a bad thing for them to do. 

Mr. COLLENDER. I agree with Scott. It will reduce responsibility, 

not increase it. 

Mr. KALMAN. Again, I would have to look at it more carefully. 

Mr. MOYLAN. I would say it has to be done with care, but yes, 

it should be considered. 

Mr. BILBRAY. Next. 

Ms. DE RUGY. No. 

Mr. KNUDSEN. No. 

Mr. DEHAVEN. You get a bunch of more supplemental spending. 

Indiana had one, and that is—no. 

Mr. SCHATZ. Yes. 

Mr. BILBRAY. OK. My argument is, if we did that, maybe would 

have time to start doing authorizations and be able to get our job 

the other way, but that is a disagreement. 

I yield back, Mr. Chairman. 

Mr. STEARNS. I thank the gentleman. 

Mr. BILBRAY. I think, though, we found an agreement of something hopefully the Democrats and Republicans on this committee 

can take to the other committees and say here is a common ground 

that we have found on this committee and that is why this hearing 

needed to be held. Thank you. 

Mr. STEARNS. The gentleman from Louisiana, Mr. Scalise, is recognized for 5 minutes. 

Mr. SCALISE. Thank you, Mr. Chairman. I know that there were 

some people who said they didn’t think we should be having this 

hearing. I want to thank you for calling the hearing because I 

think as we have more hearings like this, I think it does put more 

pressure and put more sunshine on the fact that we really do need 

to be doing more on all fronts to not only find waste in government 

but also to hold people accountable for the things they say. I have 

been kind of amused by or intrigued by the comments from some 

of my colleagues. You know, when the President actually said these 

words, we will go through our Federal budget page by page, line 

by line, eliminating those programs we don’t need and insisting 

that those we do operate in a cost-effective way, I am kind of 

shocked that some of my colleagues on the other side are now 

claiming that when the President said this, he really didn’t mean 

it. I would be curious to know what other things the President has 

said that he doesn’t mean. 

Ms. DEGETTE. Would the gentleman yield? 

Mr. SCALISE. I would be happy to yield. 

Ms. DEGETTE. I don’t think anybody said that the President 

didn’t mean it. What we wanted to know—— 

Mr. SCALISE. The ranking member said—— 

Ms. DEGETTE. I am the ranking member. 

Mr. SCALISE. The ranking member of the full committee. 

Ms. DEGETTE. And I said—— 

Mr. SCALISE. Mr. Waxman said—— 

208 

Ms. DEGETTE [continuing]. And Mr. Waxman said that we didn’t 

know if the President actually read it line by line or not but the 

OMB did, so don’t put words in his mouth. 

Mr. SCALISE. Well, but he said that he didn’t mean it literally, 

he just—you know, I guess he just says things and whether he 

means them or not. But if he said it and he meant it, and, you 

know, I would love to have the OMB here, and as the chairman 

pointed out, we wanted to have the OMB here. They refused to 

come. We could ask them, you know, because obviously they must 

have had those conversations with the President and his staff of, 

you know, whether or not they were directed to go line by line 

through the budget but I think from seeing some of the things that 

we have seen clearly, that hasn’t happened, you know, and of 

course, we had the President come before our House chamber and 

say, you know, with this latest stimulus bill saying ‘‘pass this bill,’’ 

and we found out there wasn’t even a bill. He didn’t even have a 

bill to pass yet he is saying ‘‘pass the bill,’’ so maybe he does say 

things he doesn’t mean, but he ought to mean what he says. And 

I think the American people deserve to hold him to the things he 

says, and I think that is the bigger issue is that if he is going to 

say these things, he thought to be—he ought to expect to be held 

accountable for those things he is saying, and that means as we try 

to go line by line through the budget, I think if you look at what 

we did in the House, we actually passed a budget, something novel, 

something that hasn’t happened for years. In the Senate, it has almost been 900 days since the Senate passed any budget. We passed 

a budget and our budget was actually geared at getting us back on 

the path to a balanced budget. Our budget was $6.7 trillion less 

than the President’s budget. 

And so we did in fact go line by line and found many areas of 

things that the government is doing that it can’t afford to do. We 

are borrowing money we don’t have. We have to stop spending 

money we don’t have and we started to make that fiscally responsible decision that we were going to get our country back on the 

path to a balanced budget so we can create jobs and get the economy back on track, and in fact, our budget got more votes in the 

Senate than the President’s own budget. The President’s budget 

was brought up in the Senate. Not one member of the Senate voted 

for the President’s budget, not one Democrat, not one Republican, 

nobody. You would think if the President was serious about going 

line by line and he saw such an embarrassment that not one 

United States Senator voted for his budget, maybe he ought to go 

back to the table. Maybe he ought to start over and write a different budget that maybe included ideas from both sides that 

showed some effort at bipartisanship instead of a budget that people on neither side of the aisle chose to vote for. 

And so it brings us to some questions because if you look at some 

of the things we have been going line by line in this committee. 

This committee is the committee that exposed the Solyndra scandal, and in fact, when we tried to go line by line and get more details, we actually had to get a subpoena because the administration 

wasn’t even giving us the information. And so unfortunately, by the 

time we got the information, went line by line per se, we didn’t 

have the ability to stop that from happening. The taxpayers lost 

209 

$530 million. You know, the President, if the President would have 

just gone line by line with the memos that were written by his own 

staffers who said, you know, 2 days before he went to Solyndra for 

a photo op, they said frankly, you shouldn’t be going down there 

and this thing is probably going to go bust and the taxpayers are 

going to lose hundreds of millions of dollars but instead they wanted the photo, you know, so maybe he went line by line and say you 

know what, I still want to go have the photo op anyway. But the 

taxpayers lost out and we tried to go line by line here in the House 

and we were denied. They stonewalled us and we had to subpoena 

the record, and fortunately, we finally got them. Unfortunately, the 

taxpayers are already on the hook. 

So I will ask—let me ask—let us see. The Heritage Foundation 

I know is here. The President has talked a lot about Medicare and, 

you know, saying he is going to go root out waste, fraud and abuse 

in Medicare, and it is something we have all encouraged to do. We 

all ought to be rooting out waste, fraud and abuse in Medicare, but 

has even that happened where they have gone line by line and gotten those hundreds of billions of savings that we have all heard 

about that he was going to go and find there? 

Mr. KNUDSEN. I can’t say what really has happened inside the 

administration. What I would say, waste, fraud and abuse is always something you want to cut out just as these items the President has proposed. They should not be dismissed. They ought to be 

considered seriously and disposed of in some way. But when it 

comes to Medicare, the problem is much more fundamental than 

waste or overpayments or any of those things. The Medicare system is collapsing, and unless there is some fundamental restructuring of it to change the incentives and the way it works, the system can’t stand up or it will swallow up increasing amounts of the 

budget and the economy—— 

Mr. SCALISE. And the President’s own actuaries, President 

Obama’s handpicked actuaries confirmed that Medicare goes bankrupt in 12 years if we don’t do anything. So those folks that say 

do nothing, basically they are saying let Medicare go bankrupt, and 

that is not acceptable. So I appreciate that. 

Thank you, Mr. Chairman, and I yield back. 

Mr. STEARNS. I thank the gentleman. 

We are going to go a second round, at least I am going do a second round, so any member that would like to is welcome to stay. 

This is an extraordinary hearing in the sense that we have these 

fiscally responsible groups, so many of you, in one room, and it is 

rare—I have been in Congress, this is my 23rd year—that I have 

ever seen this collection of reputable organizations who are—really, 

their sole mission is to try and protect the United States from a 

bankruptcy or at least to try and have a responsible budget, and 

so I think kudos to all of you for, one, your interest and pervasive 

attempt to control spending and to give insight to Congress. 

I know many of us, before we vote, will ask, you know, whether 

the Citizen Against Government Waste, the National Taxpayers 

Union, The Heritage Foundation, at least on this side, we will ask 

and say what is your view, so I think it is important that all of 

you realize that you are important to us and that is why I think 

it is important to have all of you here. 

210 

I want to ask Mr. Moylan, the National Taxpayers Union, I 

have—in your opening statement, you talk about this termination, 

reduction and savings plan that the Office of Management and 

Budget issued, and they total about $33 billion in savings for 2012, 

and I guess when you look at that, at $3.8 trillion, that is less than 

1 percent, and yet those are the expenses that the President and 

the OMB are offering, and it is so minimal. So the question all of 

us, well, where are the other savings in light of the fact that we 

have this huge budget deficit yearly and this huge debt growing, 

we borrow 41 cents of every dollar, pay for the budget, and so these 

figures are staggering, yet to think that there is only $33 billion 

is the only level of cuts. Am I missing something? That just seems 

very austere and very minimal. 

Mr. MOYLAN. Well, I think your sense of it is very similar to ours 

in that when we review a report like that and see what is ultimately a relatively small number—and I would also point out that 

many of the specific recommendations that the OMB made in the 

terminations report are actually not just spending side, there are 

also tax provisions in there that would have the effect of raising 

revenue, so it is not all just spending cuts but, you know, this indicates to us that there is a tremendous amount more work that can 

be done in terms of tackling waste and inefficiency, and we think 

that, you know, we are offering ourselves up as a resource and our 

work and, you know, there is a lot of sort of partisan rancor in 

Washington about a lot of things, but there is actually a fair 

amount of agreement in the watchdog community about where the 

waste exists in the Federal budget. We think that our report with 

PIRG demonstrates that, and we hope to take that message not 

just to the President but to Congress as well. 

Mr. STEARNS. Let me ask a few of the others. Mr. DeHaven, $33 

billion seems so minimal. Now, you are saying that is not complete 

because there are tax increases, so there might be more savings 

that have been balanced out because of the tax increases. 

Mr. DEHAVEN. To clarify, it is $33 billion in deficit reduction. 

Some of that is extra revenue and some of that is spending reduction. 

Mr. STEARNS. All right. Just a comment, Mr. DeHaven, what you 

think about that kind of—I think with the Cato Institute, that 

seems pretty minimal to you too, doesn’t it? 

Mr. DEHAVEN. Well, it is paltry and insignificant, but I also want 

to point out, and I left this out of my spoken testimony, that the 

stuff about waste, fraud and abuse, waste, fraud and abuse in government programs will—like Christ said, the poor will always be 

with us—waste, fraud and abuse will always be with us. And the 

only way to get rid of waste, fraud and abuse in a government program is to make that government disagree. Now, whether it is Republicans or Democrats, they all fall back on this waste, fraud and 

abuse stuff and we need to be having a more fundamental discussion about the role of government and a deeper ideological discussion about where we are going to go and what the Federal government should and should not be doing. 

Mr. STEARNS. One of the things that—I think many of us felt 

that government programs should sunset and then before they are 

reinstituted, that there should be an oversight hearing to deterVerDate Aug 31 2005 14:15 Jul 16, 2013 Jkt 037690 PO 00000 Frm 00214 Fmt 6633 Sfmt 6633 F:\112-09~1\112-92~1 WAYNE
211 

mine whether that program was effective. Would all of you agree 

with that, that we should take government programs and sunset 

them? 

Mr. SCHATZ. Yes, I would. 

Mr. STEARNS. Mr. DeHaven? 

Mr. DEHAVEN. I don’t have a problem with some sort of process 

by which we have these discussions. The problem is—and I was 

going to bring in the budget appendix up there, and I didn’t bring 

it in because I don’t have the arm strength these days. It is massive and so when it comes to oversight, when you have a government that big when it comes to authorization and stuff like that, 

it is very hard for even a master of the budget to know what all 

is in there, let alone a Member of Congress, let alone Joe or Jane 

Lunchbucket out there that actually has a real life outside of 

Washington, DC, and it is just too big and overbearing and somehow you have to cut that down to make more sense of it. Otherwise 

we are going to continue to have these discussions year in and year 

out. 

Mr. STEARNS. OK, just quickly, go ahead. 

Mr. KNUDSEN. Yes, I would support that idea. 

Ms. DE RUGY. I agree and sunsetting is a good first step. 

Mr. STEARNS. Mr. Moylan? 

Mr. MOYLAN. We have long supported sunsetting as a way to inject some more accountability into the process. 

Mr. STEARNS. Mr. Kalman? 

Mr. KALMAN. We would not support that. We think there are programs that have wide support and are widely agreed and, you 

know, Pell grants, as I said before, is one of them. 

Mr. STEARNS. Then how would you get oversight of these programs without the threat of termination? You wouldn’t get any 

oversight. These things would go on indefinitely. But anyway, I appreciate your opinion. 

Mr. Collender? 

Mr. COLLENDER. Sure, but it is not the panacea you think it is. 

Most programs will just be continued anyway. 

Mr. STEARNS. Because of the politics? 

Mr. COLLENDER. Of course. 

Mr. STEARNS. Mr. Lilly? 

Mr. LILLY. I think the reason we have 20 committees in Congress 

is so that we have the capacity to do the oversight. The problem 

is, those committees are not doing the oversight. I will give you one 

example. I did a report last year on a government contractor that 

is charging 80 percent gross margins. The product that that contractor produces was developed by the United States government. 

The facilities that they use to manufacture it were paid for by the 

United States government and we are paying 80 percent for it, and 

that contractor is getting paid under authority from this committee. Now, why aren’t you having a hearing on that rather than 

this? You have got to get down in the weeds. 

Mr. STEARNS. Let me ask you, can you name that contractor? 

Mr. LILLY. Emergent BioSolutions. I have a report on it here. 

Mr. STEARNS. Well, if you don’t mind, I would like to make that 

part of the record. Without objection? 

Ms. DEGETTE. No objection. 

212 

Mr. STEARNS. No objection, we will be glad to make that part of 

the record. 

And I think there are probably more programs like that out 

there, Mr. Lilly, and so—— 

Mr. LILLY. Yes, there are. 

Mr. STEARNS [continuing]. If you find any more, please let us 

know, and you are saying that is the jurisdiction of the Energy and 

Commerce Committee? 

Mr. LILLY. That is correct. 

Mr. STEARNS. Well, I have finished my second round. Does anyone else on the Democrat side? No? Mr. Griffith, you are recognized. 

Mr. GRIFFITH. Just a couple matters, Mr. Chairman. Thank you 

so much for the time. I appreciate your courtesy. 

First, let me just say, you all might want to go back to those who 

did not agree with the biannual budget and just take a look at 

some of the models that those hotbeds of ideas in the various Republican States of this union are coming up with. My experience 

was that as long as you had some ability to amend so that you can 

correct the errors that you might have made the first time around, 

that the biannual budget makes for a smoother process. The battles 

philosophically over what gets spent are not quite as pitched in 

some circumstances when you have that biannual budget the second time around and people seem to try to work with it. That is 

just my take on that. 

In regard to sunsetting, you know, it shows you I am new around 

here. I thought that is what reauthorization was, that if you ran 

out of authorization, that was a sunset. But I would have to say 

in relationship to those comments, if the program is worthy and 

somebody gets hurt accidentally, Congress will start to scramble 

quickly to reauthorize the program. I think reauthorization is very 

important because it is the tool by which a sunset is enforced, and 

if you don’t have to worry about reauthorizing, then why put it in 

there in the first place. Just authorize it permanently and be done 

with it. 

In regard to the comments by Dr. de Rugy and Mr. DeHaven, 

you were asked some questions about the spending of the Bush administration and you gave your very frank and honest opinion. I 

am wondering if you are saying a major change in that spending 

growth under the current administration. If each of you could answer that, I would appreciate it. 

Ms. DE RUGY. No, I don’t. In fact, I often say that President 

Obama is President Bush on steroids. 

Mr. GRIFFITH. Mr. DeHaven? 

Mr. DEHAVEN. I have made that same comment, but if we are 

still in Iraq and Afghanistan, we are still spending money on everything that Bush spent money on, maybe just more. I barely see the 

difference some days. 

Mr. GRIFFITH. I appreciate that and agree with you all that, you 

know, we have got to take a look at the—somebody said it, I don’t 

want to attribute it to everybody by using the colloquial ‘‘you all.’’ 

But the person who said that we have got to take a look at the role 

of government, which is why when I am reading bills and taking 

a look at these things, you know, a lot of times I am scratching my 

213 

head wondering why the government got into this in the first place, 

even though they may be very good programs. I have seen quite a 

few of those. If you all can help us figure out where they are, and 

I do look forward to looking to the report that the two groups, both 

left and right, did. That is the kind of thing that is very helpful 

to us. I think there are a lot of things that we as Americans, both 

Democrats and Republicans, left and right, can agree on. 

I have found this hearing today to be very helpful and educational. I appreciate you all taking your time, and Mr. Chairman, 

I appreciate you calling the hearing. Thank you. 

Mr. STEARNS. I thank the gentleman, and I just remind all members that we have 10 days to hold the record open for any additional comments or opening statements, and again, I want to thank 

all of the witnesses today for your time and willingness to help us 

out, and with that, the subcommittee is adjourned. 

[Whereupon, at 12:18 p.m., the subcommittee was adjourned.] 

[Material submitted for inclusion in the record follows:] 

214 


81404.154

Chairman Fred Upton 

Subcommittee on Oversight and Investigations 

Administration Efforts on Line-by-Line Budget Review 

October 5, 2011 

Today, the Subcommittee will examine a question of great 

importance: At a time of record deficits and debt, what 

programs should be downsized and what should be 

eliminated? 

Excessive government spending is impeding job growth 

and economic prosperity. What was unimaginable only a 

few years ago has become the new normal for this 

administration. The federal government has had three 

straight years of trillion-dollar plus deficits. The federal 

government borrows 41 cents of every dollar it spends. 

This is simply not sustainable. Yet, in the face of these 

looming debts, the Obama administration continues to 

insist that we grow the size of the government and raise 

taxes to pay for it all. 

Today's hearing is a great opportunity to see what actions 

are being taken and what new ideas can be pursued to 

reduce the deficit and the debt. It is a real disappointment 

that the Office of Management and Budget claims it has no 

appropriate witnesses to testifY today - we gave the 

administration adequate notice and an invitation to be here. 
215 

Æ 


81404.155

The Obama administration has talked about its commitment 

to line-by-line budget reviews for the last three years. If 

this is truly a top budget priority, either the Director of the 

OMB or the Deputy Director for Management/Chief 

Performance Officer could have testified on this subject. I 

worked at OMB for President Reagan I know what an 

important role OMS plays in imposing financial discipline 

on the executive branch. Under President Obama, OMB 

was tasked to lead the effort to review the budget "line by 

line" to find wasteful and ineffective spending. Our goal 

today was to tind out whether they have attempted to 

eliminate programs that are duplicative or no longer work 

and to make the programs we do need more efficient and 

less costly. 

r can't think of a time when congressional oversight was so 

essential to shine a spotlight on wasteful and ineffective 

spending. We need to find ways to reduce spending while 

still producing results for the American people. In the book 

"MoneybaU," which is now a movie as well, we see how 

the Oakland A's used new ideas and strategic thinking to 

compete with baIl clubs with triple their budget. They did 

more with less. We need that kind of thinking applied to 

the federal budget.