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+
+ - TREASURY, POSTAL SERVICE, AND GENERAL GOVERNMENT APPROPRIATIONS FOR FISCAL YEAR 1998
+
+[House Hearing, 105 Congress]
+[From the U.S. Government Publishing Office]
+
+
+
+
+ TREASURY, POSTAL SERVICE, AND GENERAL
+ GOVERNMENT APPROPRIATIONS FOR
+ FISCAL YEAR 1998
+
+========================================================================
+
+ HEARINGS
+
+ BEFORE A
+
+ SUBCOMMITTEE OF THE
+
+ COMMITTEE ON APPROPRIATIONS
+
+ HOUSE OF REPRESENTATIVES
+
+ ONE HUNDRED FIFTH CONGRESS
+
+ FIRST SESSION
+
+ ________
+
+ SUBCOMMITTEE ON THE TREASURY, POSTAL SERVICE, AND GENERAL GOVERNMENT
+ APPROPRIATIONS
+
+ JIM KOLBE, Arizona, Chairman
+
+FRANK R. WOLF, Virginia STENY H. HOYER, Maryland
+ERNEST J. ISTOOK, Jr., Oklahoma CARRIE P. MEEK, Florida
+MICHAEL P. FORBES, New York DAVID E. PRICE, North Carolina
+ANNE M. NORTHUP, Kentucky
+ROBERT B. ADERHOLT, Alabama
+
+ NOTE: Under Committee Rules, Mr. Livingston, as Chairman of the Full
+Committee, and Mr. Obey, as Ranking Minority Member of the Full
+Committee, are authorized to sit as Members of all Subcommittees.
+
+Michelle Mrdeza, Elizabeth A. Phillips, Jeff Ashford, and Melanie Marshall,
+ Staff Assistants
+
+ ________
+
+ PART 3
+
+ EXECUTIVE OFFICE OF THE PRESIDENT AND
+ FUNDS APPROPRIATED TO THE PRESIDENT
+
+
+
+ ________
+
+ Printed for the use of the Committee on Appropriations
+
+ ________
+
+ U.S. GOVERNMENT PRINTING OFFICE
+40-018 O WASHINGTON : 1997
+
+------------------------------------------------------------------------
+
+ For sale by the U.S. Government Printing Office
+ Superintendent of Documents, Congressional Sales Office,
+ Washington, DC 20402
+
+ ISBN 0-16-054937-X
+
+
+
+
+
+
+
+
+ COMMITTEE ON APPROPRIATIONS
+
+ BOB LIVINGSTON, Louisiana, Chairman
+
+JOSEPH M. McDADE, Pennsylvania DAVID R. OBEY, Wisconsin
+C. W. BILL YOUNG, Florida SIDNEY R. YATES, Illinois
+RALPH REGULA, Ohio LOUIS STOKES, Ohio
+JERRY LEWIS, California JOHN P. MURTHA, Pennsylvania
+JOHN EDWARD PORTER, Illinois NORMAN D. DICKS, Washington
+HAROLD ROGERS, Kentucky MARTIN OLAV SABO, Minnesota
+JOE SKEEN, New Mexico JULIAN C. DIXON, California
+FRANK R. WOLF, Virginia VIC FAZIO, California
+TOM DeLAY, Texas W. G. (BILL) HEFNER, North Carolina
+JIM KOLBE, Arizona STENY H. HOYER, Maryland
+RON PACKARD, California ALAN B. MOLLOHAN, West Virginia
+SONNY CALLAHAN, Alabama MARCY KAPTUR, Ohio
+JAMES T. WALSH, New York DAVID E. SKAGGS, Colorado
+CHARLES H. TAYLOR, North Carolina NANCY PELOSI, California
+DAVID L. HOBSON, Ohio PETER J. VISCLOSKY, Indiana
+ERNEST J. ISTOOK, Jr., Oklahoma THOMAS M. FOGLIETTA, Pennsylvania
+HENRY BONILLA, Texas ESTEBAN EDWARD TORRES, California
+JOE KNOLLENBERG, Michigan NITA M. LOWEY, New York
+DAN MILLER, Florida JOSE E. SERRANO, New York
+JAY DICKEY, Arkansas ROSA L. DeLAURO, Connecticut
+JACK KINGSTON, Georgia JAMES P. MORAN, Virginia
+MIKE PARKER, Mississippi JOHN W. OLVER, Massachusetts
+RODNEY P. FRELINGHUYSEN, New Jersey ED PASTOR, Arizona
+ROGER F. WICKER, Mississippi CARRIE P. MEEK, Florida
+MICHAEL P. FORBES, New York DAVID E. PRICE, North Carolina
+GEORGE R. NETHERCUTT, Jr., Washington CHET EDWARDS, Texas
+MARK W. NEUMANN, Wisconsin
+RANDY ``DUKE'' CUNNINGHAM, California
+TODD TIAHRT, Kansas
+ZACH WAMP, Tennessee
+TOM LATHAM, Iowa
+ANNE M. NORTHUP, Kentucky
+ROBERT B. ADERHOLT, Alabama
+
+ James W. Dyer, Clerk and Staff Director
+
+ (II)
+
+
+
+
+
+
+ TREASURY, POSTAL SERVICE, AND GENERAL GOVERNMENT APPROPRIATIONS FOR
+ 1998
+
+ ----------
+
+ Tuesday, March 11, 1997.
+
+ EXECUTIVE RESIDENCE AT THE WHITE HOUSE
+
+ WITNESSES
+
+TERRY R. CARLSTROM, ACTING REGIONAL DIRECTOR, NATIONAL PARK SERVICE
+JAMES I. McDANIEL, DIRECTOR, WHITE HOUSE LIAISON, NATIONAL PARK
+ SERVICE, NATIONAL CAPITAL REGION
+MARILYN J. MEYERS, BUDGET ANALYST, NATIONAL PARK SERVICE, NATIONAL
+ CAPITAL REGION
+
+ Opening Comments From Chairman Kolbe
+
+ Mr. Kolbe. This meeting of the Subcommittee on Treasury,
+Postal Service and General Government will come to order. Mr.
+Carlstrom, welcome. I welcome you and your colleagues here.
+ This morning we're going to be hearing from two witnesses.
+We're going to hear first from Terry Carlstrom, the Acting
+Regional Director of the National Park Service; and after that,
+we're going to hear from Ada Posey, the Acting Director of the
+Office of Administration within the Executive Office of the
+President.
+ The National Park Service is here because they are charged
+with caring for the Executive Residence, including the
+surrounding White House grounds. While they are not responsible
+for the actual day to day operations of the residence--that
+falls under the White House Chief Usher--they are in charge of
+keeping the books.
+ I know that some of the questions that are going to be
+asked today are going to be tough ones. For myself, personally,
+I have serious concerns about the recent allegations and
+suggestions of the use of the White House for political events,
+and I know that many of my colleagues share some of these
+concerns.
+ While I respect the privacy of the President and the First
+Family, and am cognizant that the Executive Residence serves as
+their home, I also strongly believe that the White House is the
+people's house.
+ Not only to the American people have the right to know if
+their tax dollars are being used to host political events in
+this House, but the Appropriations Committee has the obligation
+to investigate the expenditures of Federal funds on those
+events.
+ I know that the Park Service will testify that there are no
+additional costs associated with having 938 overnight guests--
+that's not the number of nights, but the number of different
+guests--in the White House. I think most Americans would find
+this claim laughable.
+ Beyond that, what strikes me about all of this is that it
+seems to be a part of a pattern. Each revelation is invariably
+followed by an explanation, an excuse, an apology or denial.
+Vice President Gore just announced that he has been using his
+office to make telephone calls soliciting political campaign
+contributions. He said he didn't do anything wrong, but even
+so, he won't be doing it anymore. There is evidence that White
+House computer systems are compiling lists of political
+contributors, and in some instances are perhaps being used by
+volunteers and others in the White House to secure political
+contributions.
+ I'm sure we'll hear today that this is nothing more than
+the White House database to track presidential events.
+ The President held 103 political coffees on White House
+grounds. We are told that these political coffees were all
+legal, and reimbursed at no cost to the taxpayers. And on
+Friday, March 7th, the subcommittee received a letter from the
+White House General Counsel informing us that a witness
+appearing before our subcommittee three years ago gave us
+inaccurate testimony regarding the use of volunteers on the
+payroll of the Democratic National Committee.
+ Again, no laws were broken, but I am left dumbfounded that
+it took the White House three years to correct the record.
+ Last week, I sent a letter to the Senior Advisor to the
+President for Legislative Affairs requesting that either the
+Chief Usher and or the Administrative Officer of the Executive
+Residence accompany the Park Service representatives to today's
+hearings.
+ I didn't ask that they testify, only that they be present
+so that members could have the opportunity to have their
+questions answered. As everyone knows, the Park Service is not
+the Administrator of the Executive Residence. They are simply
+the pass through agency.
+ Although my letter was addressed to the Senior Advisor to
+the President for Legislative Affairs, the official response I
+received only yesterday came from no less than the White House
+General Counsel. Apparently everything is being kicked up to
+the White House General Counsel these days.
+ He said that the White House has respectfully declined my
+request to have the Chief Usher or the Administrative Officer
+here today, and that the Park Service would be able to answer
+all of our questions.
+ The General Counsel also noted that the appearance of the
+Chief Usher or Administrative Officer would be unprecedented. I
+agree. Then again, the degree to which the White House has been
+used for political purposes also seems to be unprecedented.
+ My colleagues should be aware that, in the event the
+National Park Service cannot address our questions, I am
+prepared to recess this hearing until such time as the White
+House will send up a witness who can answer our questions about
+the use of the White House for political purposes.
+ All this goes beyond a simple question of legality. In my
+mind, 938 different overnight guests, 103 coffees, phone calls
+being made from White House grounds, and untruths told to this
+committee points to a clear and simple abuse of the powers and
+the privilege of the Presidency.
+ From all appearances, the White House is living on the edge
+of impropriety. Maybe they haven't broken any laws or rules or
+regulations, but they are certainly testing the limits, not
+only for what is legal, but for what most Americans would think
+is acceptable and ethical.
+ I look forward to hearing from our witnesses today, and let
+me call first on my colleague, Steny Hoyer, for anopening
+statement.
+
+ Comments of Mr. Hoyer
+
+ Mr. Hoyer. Thank you, Mr. Chairman. At the outset I want to
+apologize for my voice. I am hopefully recovering from a cold I
+have had for a couple of days.
+ First of all, let me welcome Mr. Carlstrom and Mr. McDaniel
+and Ms. Meyers to our committee room and thank them for
+appearing. Bob Stanton has heretofore testified and done an
+outstanding job. Many of us are real fans of Bob Stanton's. He
+is an outstanding public servant, and I look forward to having
+him serve for a long period of time to come.
+ I have had the opportunity to work with Mr. Carlstrom over
+the years, and had a very positive experience, and I look
+forward to hearing from you on this day.
+ Let me make some brief comments which I have not prepared,
+that respond to the Chairman's observations. First, I think
+everybody on this committee would be unanimous in saying that
+the expenditure of public moneys is in fact the business of the
+public, and the business of the public representatives, the
+Congress of the United States.
+ Second, let me say I think that applies to the White House
+as it does to the entire Executive Department. Third, the
+committee has a right to know how moneys that it appropriates
+are spent.
+ And I share the Chairman's view that we ought to have
+people who can, in fact, answer the questions that this
+committee legitimately has about the expenditure of public
+funds.
+ With respect to the other comments that the Chairman has
+made, let me, not with relation to the Chairman--I want to make
+that very clear--but I do want to talk a little bit about
+hypocrisy. I want to talk about the breadth of investigations
+and hearings on the use of public facilities, whether it be
+Speaker Gingrich's office or his balcony, whether it be Senator
+Dole's office for lunch, breakfast. And without outlining a
+litany, let me say that the American public knows that you're
+not going to take politics out of politicians.
+ The 938 overnight guests in a country of 260 million people
+does not strike me as a uniquely large number. The public has a
+right to know that the coffees that we're going to hear about
+were not paid for with tax dollars. And the Chairman is correct
+that we need to determine that to be the fact.
+ Let me say something about the phone calls that the
+Chairman has also referenced. When I go to make a phone call,
+if I make it in this office or I make it across the street, the
+American taxpayers don't pay people to follow me or to protect
+me. They don't have Secret Service having to advance me. Moving
+Steny Hoyer around is very easy. Moving the President or Vice
+President around is very difficult.
+ The Congress concluded that to be the case, and therefore
+exempted the President and Vice President from the statute.
+That was not an inadvertent act by the Congress of the United
+States.
+ They did that fully realizing that the Vice President and
+the President are unique individuals in this country, and
+susceptible to threats on their lives and their persons. As a
+result, we try to keep them from moving around without
+protection.
+ I don't want to get into how many calls were made. The Vice
+President's Office made a determination that he's going to make
+them at another site. Of course he lives, at home, in a
+Government residence, as does the President. These are provided
+to them by the people of the United States and the Congress of
+the United States, because we have determined that they both
+ought to live in residences on public properties.
+ That was a determination of the Congress and of the people
+of this country. So, unlike the rest of us, who go home to our
+own homes, and can use those phones, and I can go down to DCCC
+very simply, unlike the Vice President who would have to have
+Secret Service going down there and advancing it and making
+sure it's all right.
+ It is easy to move Steny Hoyer and Jim Kolbe around. We
+went out to Beltsville yesterday morning, no hassle.
+Interesting enough, we went out to visit the Secret Service
+facility, and there was no problem.
+ So that I think the American public understands that the
+President and the Vice President are not just people who can go
+down to the corner, put a dime in or a quarter in and make a
+phone call. They could, but it would cause a great deal of
+stir.
+ Now, we're going to have additional testimony either from
+the Park Service or from Ms. Posey with reference to the
+expenditures that the Chairman has referred to with respect to
+the coffees, and I'm sure with respect to other matters.
+ I want to say that I believe the Chairman in good faith
+requested the Usher to come down here, or the other appropriate
+individual who oversees the White House accounts. Some of my
+friends from the White House are here. I reiterate, the
+Chairman is correct in requesting to have an appropriate
+individual who can, in fact, answer those questions, and I
+support him in that request.
+ The Usher is a unique individual in that he and his
+colleagues are concerned with the personal lives of the
+President and the First Lady, and their family. Every President
+has had great reluctance about having the Usher appear, and, in
+fact, as the Chairman indicated, there is no precedence for
+having the Usher testify.
+ In fact, my own party asked questions of the Usher under
+the Bush administration--probably inappropriately. The Bush
+administration determined the Usher wasn't going to committee
+hearings even to sit in the audience any more, much less
+testify.
+ So I am hopeful that these hearings will proceed in a fair
+manner, as I expect them to, because I know the Chairman to be
+fair. I hope that we will elicit testimony related to the
+budget, related to expenditures, related to taxpayers dollars,
+and if, in fact, they were inappropriately spent, Mr. Chairman,
+we ought to pay attention to that. You are absolutely right.
+ On the other hand, the treatment of the White House budget
+has been, in my opinion, in this administration,
+unprecedentedly partisan. Patently partisan. Unfortunately
+partisan.
+ That was not the case in the Bush or Reagan
+administrations. Did we have disputes? Yes, we did. Did we
+raise issues? Yes, we did. But in point of fact, the
+President's family and the President were treated with respect,
+and they, too--and I will end with this, Mr. Chairman--they,
+too, conducted similar activities at the White House.
+ The Chairman refers to the degree--key word, degree, not--
+not the fact that others haven't done this, but that President
+Clinton perhaps did it more.
+ President Clinton, very frankly, as all of us know, does
+more of everything than most of us. He has extraordinary
+energy, an extraordinary intellect, and is involved
+extraordinarily in a broad range of activities. He just does
+everything more than the rest of us.
+ But the key is, is the character of what he did different
+than the character of that which Mr. Bush and Mr. Reagan did?
+Not the degree. If one coffee is not proper, ten coffees are
+not proper.
+ And conversely, if 103 coffees are not proper, one coffee
+was not proper.
+ Now, I look forward to the testimony, and Mr. Chairman, I
+appreciate you giving me a great deal of leeway in making this
+opening statement. It is important for the public to separate
+out the proper oversight of the expenditure of public moneys,
+and the political objective of embarrassing the White House and
+the President.
+ Mr. Chairman, thank you very much for giving me that
+opportunity.
+
+ Introductions of Witnesses
+
+ Mr. Kolbe. Thank you, very much, Mr. Hoyer, and this
+Chairman will always give you sufficient leeway to make
+whatever statements you need to make. I hold you in high
+regard, and would always do so.
+ Mr. Carlstrom, if you would like to make your statement, we
+will then proceed with questions following that.
+ Mr. Carlstrom. Yes, sir, Mr. Chairman.
+ I would just preface this by saying that, once again, I am
+Terry Carlstrom, and if you notice, I am the Acting Regional
+Director, National Capital Region, National Park Service.
+
+ Statement of Witness
+
+ I am pleased to be accompanied this morning by Jim
+McDaniel, who is the Director of White House Liaison, National
+Capital Region, National Park Service, and Ms. Marilyn Meyers,
+senior budget analyst, National Capital Region, National Park
+Service.
+ Mr. Chairman, and members of the Committee, I am pleased to
+appear before you to present for your consideration the funding
+requirements for the maintenance and operation of the Executive
+Residence at the White House for fiscal year 1998.
+ The appropriation for this account for fiscal year 1997 is
+$7,827,000 for the operations of the Executive Residence.
+Beginning in fiscal year 1996, a separate no-year account for
+White House repairs and restoration was established with
+initial funding of $2,200,000 for repair of the roof system.
+ No funds were appropriated in fiscal year 1997 for this
+account.
+ The fiscal year 1998 request is $8,045,000 for the
+operating accounts, and $200,000 for the no-year repair and
+restoration account. The increase of $218,000 for the operating
+accounts encompasses the 2.8 percent pay raise scheduled for
+January of 1998, routine step and merit pay increases, as well
+as the annualization of the 1997 pay raise.
+ The $200,000 for the repair and restoration account is for
+moving and centralizing the laundry facilities at the residence
+into a room which contains an old transformer vault scheduled
+to be vacated this summer.
+ The work on the laundry facility would begin in fiscal year
+1998.
+ We are happy to report to the committee that after 13 years
+and the removal of many layers of paint--I believe it was 30 to
+50 layers of paint--the exterior restoration of the residence
+has been completed.
+ The exterior window project and kitchen renovation are
+ongoing as time permits.
+ The design of the roof project is 90 percent complete, and
+the contract award is scheduled for early May, with
+construction of five months beginning in late May or early
+June.
+ That concludes our budget request, Mr. Chairman. Mr.
+McDaniel, Ms. Meyers and I would be pleased to answer any
+questions you and the other members of the committee may have
+about the operation of the Executive Residence at the White
+House.
+ [The information follows:]
+
+[Pages 7 - 11--The official Committee record contains additional material here.]
+
+ Mr. Kolbe. Thank you very much for your statement. We'll
+begin the questions. I'll start here and then we will, as
+always, go to Mr. Hoyer and others as they come in. I would
+just say that I will make an exception for Mr. Wolf who is
+chairing a subcommittee next door. If he comes in, we'll take
+his questions when he has a moment to break away from his own
+subcommittee. In other words, I would take him next in line.
+
+ Costs of Political and Non-Political Events
+
+ Mr. Carlstrom, last night, at our request, you submitted
+some additional information that I think has been made
+available to the members regarding the costs of official
+political or non-political events within the Executive
+Residence. But a little bit of it confuses me.
+ Does this document reflect the total reimbursements that
+are received by the Executive Residence for official and for
+political and non-political events. In other words, for
+reimbursement from other Federal agencies, and outside and non-
+Federal reimbursement, both political and non-political?
+ Mr. Carlstrom. You're referring to the comparison of total
+costs of events, 1992 to 1997?
+ Mr. Kolbe. Yes.
+ Mr. Carlstrom. Yes. Yes, it summarizes the political and
+non-political costs--that is correct--for those six years.
+ Mr. Kolbe. So would it be accurate to say that this
+reflects the cost of overnight stays within the Executive
+Residence?
+ Mr. Carlstrom. In terms of the overnight stays within the
+Executive Residence, that is a part of what the First Family
+pays for expenses. That includes food, beverage, personal
+items, and those of their guests on a monthly basis.
+ There is no differentiation on what constitutes an
+overnight guest.
+ Mr. Kolbe. But nonetheless, you just said there would be
+reimbursement for food, mainly food, for those guests.
+ Mr. Carlstrom. Within the First Family expenses, which
+includes food and food for their guests. There is no separation
+of food for themselves and their guests within their living
+quarters.
+ Mr. Kolbe. Okay. So they would be reimbursing for
+themselves and for guests. What is the account that that would
+show up in?
+ Mr. Carlstrom. Let me just answer--they would be
+reimbursing the National Park Service through our procedures on
+a monthly basis. Marilyn, is that figure in here? I am not
+sure.
+ Ms. Meyers. Yes, sir, that figure is in there.
+ [Clerk's note.--The witness later changed this to say that
+``non-political reimbursements'' does not include
+reimbursements made by the President.]
+ Mr. Kolbe. That would then show up, I take it--I've
+reorganized the information you gave me just a little bithere,
+but it's the same information under the non-Federal funds, non-
+political, is that correct?
+ Ms. Meyers. Non-political, yes, sir.
+ Mr. Kolbe. Okay. And I believe it is accurate to say that
+that account, the reimbursement of that account, has increased
+by 421 percent from, taking two years, the last year of the
+Bush administration to the last year of the first Clinton term,
+from $87,000 to $454,000. Is that correct?
+ Mr. Carlstrom. It obviously has increased 421 percent, if
+that's what it is. I don't have that figure, but I think as
+Congressman Hoyer indicated, the activities of the President
+are extraordinary. The activities that occur within the
+Executive Residence have increased, and the amount of
+reimbursements have increased as well, from the Executive
+Residence, as well as from the usual political and non-
+political events.
+ The expense to the Federal Government during that time,
+however, in the face of those increasing activities, I believe,
+has remained fairly constant.
+ Mr. Kolbe. I assume that the non-political account includes
+more than reimbursements by the First Family. Is that correct?
+That $454,000.
+ Mr. Carlstrom. This is correct.
+ Mr. Kolbe. There is where I get confused. Give me some
+examples of what would be reimbursements for non-Federal, non-
+political events, other than the First Family?
+ Mr. Carlstrom. The Medal of Freedom, Kennedy Center Honors.
+I suppose probably receptions dealing with some of the Olympic
+events that occur, sports heroes, that sort of thing.
+ Mr. Kolbe. Those would be reimbursed by those outside
+organizations? I assume the organization in question. The U.S.
+Olympic Committee, for example, to use that one, if we're
+honoring Olympians.
+ Mr. Carlstrom. It could be part of the official,
+ceremonial, and functional duties that are included within the
+operating budget for the Executive Residence.
+ Mr. Kolbe. The reimbursement, though, it's non-political,
+non-Federal. So it's not coming from the Department of State or
+Department of HUD or anybody else. It's coming from outside and
+it's not considered political. So it would be something like,
+say, just to use that as an example--they may never have had an
+event there--but it would be like the U.S. Olympic Committee
+reimbursing for an event for Olympic Medal winners or
+something. Would that be correct?
+ Mr. Carlstrom. That's my understanding.
+ Mr. Kolbe. How much of this reimbursement of that $454,000
+is actually reimbursed by the President's family?
+ Mr. Carlstrom. By the President's family?
+
+ reimbursement by president
+
+ Mr. Kolbe. Yes. You just told me, surely--I mean, that
+increase, the 421 percent increase, is not all--and as Mr.
+Hoyer said, this President does a lot of everything. But I am
+trying to get some breakdown as to how much of that is
+reimbursement by the President.
+ Mr. Carlstrom. I do not have that figure, that breakdown,
+Mr. Chairman.
+ Mr. Kolbe. Who would have that kind of information?
+ Mr. Carlstrom. Well, I can check with the Executive
+Residence and see if we may make it available to you as it
+pertains to the Executive Residence.
+ Mr. Kolbe. Of course, this is exactly who I asked to be
+here in the audience to be able to answer these kinds of
+questions.
+ Mr. Carlstrom. It's my pleasure to be here today, sir.
+ Mr. Kolbe. We had asked somebody from the Executive
+Residence to be here to answer these kinds of questions. So
+here we are, right away, on the first line here, that you can't
+answer the question.
+ That's specifically why I just--I didn't ask them to
+testify. I just wanted them to be here, as we always have them
+lined up along here, and the staff people can chime in for
+their boss with information that would help to answer the
+questions. So here we are with the first question, and I can't
+get the answer to that.
+ I would like to know what the total amount of
+reimbursements made by the President to the Executive Residence
+account in fiscal year 1996 was and a comparison of that to
+fiscal year 1992.
+ Mr. Carlstrom. As it pertains to the Executive Residence,
+we will attempt to get that answer for you.
+ [The information follows:]
+
+ Reimbursement by First Family
+
+ The First Family pays their monthly bill, which includes
+the expenses of their personal guests, in a timely fashion by
+personal check made payable to the Treasurer of the United
+States. GAO has validated this procedure during previous
+audits. Attached is information on the same question provided
+to the Committee during previous hearings on the Executive
+Residence budget in 1993.
+ Answer to the question for the record that was provided to
+the Committee in 1993.
+
+ Reimbursements by First Family
+
+ The accounting system for tracking and capturing personal
+costs of the First Family has undergone audits by GAO and no
+deficiencies have been noted. The amounts reimbursed by the
+First Family are considered personal and access to this
+information has been limited to GAO for purpose of official
+audits.
+
+ Mr. Carlstrom. And all the questions that we have, we
+responded to in good faith as best we could without having a
+formal transmittal.
+ Mr. Kolbe. I'm sorry?
+ Mr. Carlstrom. We don't have the full break out that you're
+requiring, and again, as we can do within the Executive
+Residence, and as it applies to the Executive Residence, we'll
+make an attempt to get those answers for you.
+ We did not break all these out in various ways. We broke
+them out as best we could, based upon the information we had.
+So we, in good faith, responded to the questions, and we will
+make an attempt to respond to your request on that, sir.
+ Mr. Kolbe. Just so I understand, what do you mean by
+attempt to get it? You did say that the First Family is billed
+monthly for the food? Is that correct? And the incidental
+expenses of overnight guests?
+ Mr. Carlstrom. That is correct.
+ Mr. Kolbe. And they then write a check out of his personal
+account to this account, is that correct? To the U.S. Treasury,
+and it goes into this account?
+
+ billing procedures
+
+ Mr. Carlstrom. It goes through the National Park Service,
+and we are an arm of the Treasury. It follows an exhaustive
+procedure that applies both to events, as well as to theFirst
+Family at the Executive Residence.
+ The same procedure has been used for over 20 years, and
+it's done under the auspices of the General Accounting Office,
+and they audit the accounts on a semi-regular basis. To date no
+discrepancies have been uncovered.
+ I have the procedure. I am prepared to describe that
+procedure to you, if you are interested.
+ Mr. Kolbe. This is the procedure for?
+ Mr. Carlstrom. The billing.
+ Mr. Kolbe. The billing?
+ Mr. Carlstrom. Yes.
+ Mr. Kolbe. You can either describe it or you can give it to
+us for the record, either way. But if it's lengthy, let's just
+put it in the record. If you would like to describe it----
+ Mr. Carlstrom. I'm not going to make a mistake in
+describing it. Two ways to do it. One, I can read it to you,
+and the other is we can put it in for the record.
+ Mr. Kolbe. Let's just put that in the record, then.
+ Mr. Carlstrom. All right.
+ [The information follows:]
+
+[Pages 16 - 18--The official Committee record contains additional material here.]
+
+ Mr. Carlstrom. Let me just say that you might want to know
+where that procedure developed. It is developed as a result of
+requests from President Carter in 1977 to increase the
+accountability of the expenditure of funds within the Executive
+Residence, and there are a number of guidelines that provide
+for the system that is paraphrased here that we'll submit for
+the record.
+
+ GAO AUDITS
+
+ Mr. Kolbe. I'm going to come back to the issue--well, no.
+Let me do it right now. You just said that these--you led to
+another question that I was going to ask a little bit later on
+here, and I will go on to other members, to ask some questions
+and come back. I have obviously several more.
+ But you said that this is subject to the GAO process, or
+the procedures?
+ Mr. Carlstrom. They're our own procedures.
+ Mr. Kolbe. They are your procedures.
+ Mr. Carlstrom. And the GAO has monitored these for some 20
+years.
+ Mr. Kolbe. And when was the last audit of these funds done?
+ Mr. Carlstrom. The last audit was conducted in 1993, and it
+was for fiscal year 1991, and no discrepancies were found at
+that time, nor have there ever been any discrepancies.
+ Mr. Kolbe. Is it normal to go now--well, we're looking at
+five years, six years.
+ Mr. Carlstrom. I don't know if it's normal or not. GAO
+establishes their own schedule, and conducts audits as they see
+fit. We don't make a request for them.
+ Mr. Kolbe. But it would be absolutely accurate to say there
+has been no audit of these funds during the 4 years of the
+Clinton administration.
+ Mr. Carlstrom. Not to my knowledge, sir.
+ Mr. Kolbe. Not to your knowledge? You mean----
+ Mr. Carlstrom. Well, not by GAO. If there have been other
+audits, I'll defer to the budget analyst.
+ Ms. Meyers. No, there has not been other audits. There has
+not been a GAO audit.
+ Mr. Kolbe. So we don't know. And when you said no
+discrepancy has been found, no discrepancy has been found from
+1991. That's 6 years. So we have no audit that would cover
+anything that--in the area that is in question here.
+ I'm going to come back to some other questions here. Let me
+go to Mr. Hoyer.
+ Mr. Hoyer. Thank you, Mr. Chairman. Is it correct that GAO
+has verified the procedures during their audits?
+ Mr. Carlstrom. They have found these procedures to be
+appropriate. They have thoroughly reviewed the procedures, and
+they have never made any recommendations that we should change
+our procedures. Marilyn?
+ Ms. Meyers. They did not in the last audit. I know nothing
+about the prior audits.
+ Mr. Hoyer. When was the last audit?
+ Mr. Carlstrom. The last audit? Fiscal year 1991. Conducted
+in 1993.
+
+ REIMBURSABLE POLITICAL EVENTS
+
+ Mr. Hoyer. Do you have a list of fiscal year 1992
+reimbursable political events?
+ Mr. Carlstrom. Yes, I do.
+ Mr. Hoyer. On April 8, 1992, you refer to the Republican
+Eagles reception. I presume that's a fund raising group. Do you
+know?
+ Mr. Carlstrom. April 8th, 1992?
+ Mr. Hoyer. April 8th, 1992.
+ Mr. Carlstrom. Okay.
+ Mr. Hoyer. Republican Eagles reception. Do you know
+anything about that group?
+ Mr. Carlstrom. No, I don't.
+ Mr. Hoyer. All right. Let's go to the next entry, which is
+more specific--April 29th, 1992. Donors of the 1992, quote,
+President's Dinner, closed quote, reception. Do you see that
+event?
+ Mr. Carlstrom. Yes, I do.
+ Mr. Hoyer. If you look at your next page, on October 4th,
+1992, or approximately 30 days prior to the 1992 election, we
+have an RNC breakfast. I presume that refers to the Republican
+National Committee?
+ Mr. Carlstrom. I would presume that.
+ Mr. Hoyer. Two days later, there was a coffee, Republican
+National Committee. So my Chairman will not have to do it, that
+was for $6.24. Everybody knows the story about costs, as
+opposed to character.
+ November 21, 1992, after the President had lost the
+election, RNC dinner at the White House. I presume that also
+refers to the Republican National Committee. Am I correct?
+ Mr. Carlstrom. That is correct.
+ Mr. Hoyer. On January 6th, 1993, some 14 days before the
+President was to retire, there was a Republican Eagles and
+Trustees reception. Are you familiar with what the Republican
+Eagles and Trustees do?
+ Mr. Carlstrom. No, sir, I am not.
+ Mr. Hoyer. All right. The next day there was a reception
+for that same group, on January 7th, 1993. Is that correct?
+ Mr. Carlstrom. That is correct.
+ Mr. Hoyer. And then four days later, for the Team 100
+Dinner, there was an expenditure of $40,000--or $39,969.51. Are
+you familiar with Team 100?
+ Mr. Carlstrom. No, sir.
+ Mr. Hoyer. All right. Now, my question, in reviewing the
+accounts for the last six years, from 1992to today, and you may
+or may not be able to answer this, but in your review of that, do you
+see a difference in the character, legality or type of events? I'm not
+talking about the amounts. Clearly you have indicated the amounts are
+greater. But is there a difference between events I've just read to you
+and the events that have transpired over the last 4 years?
+ Mr. Carlstrom. No, sir, I could not make that analysis.
+ Mr. Hoyer. You didn't make the analysis. So you cannot draw
+a conclusion whether the character is different?
+ Mr. Carlstrom. No, I cannot.
+ Mr. Hoyer. Now, in terms of your responses to the
+chairman's questions, you don't make a distinction between the
+First Family and what they eat and what their guests eat.
+Correct?
+ Mr. Carlstrom. That is correct.
+ Mr. Hoyer. I want to make an observation. This is a
+personal observation, not a question. When I have guests over
+at my house, Crestar, the successor to Citizens Bank and Loyola
+Federal, who has my mortgage payment, never asks me for more
+money on my mortgage payment that month, because I had guests
+staying at my house using another bed.
+ I presume that is consistent with your testimony that there
+is not an additional cost to the taxpayer in running the White
+House because somebody sleeps in one of the beds.
+ Mr. Carlstrom. That is correct.
+
+ REIMBURSEMENT OF FOOD BY PRESIDENT
+
+ Mr. Hoyer. All right. But the food that they consume is
+reimbursed, is that correct?
+ Mr. Carlstrom. It is.
+ Mr. Hoyer. Well, that's consistent with the way I run my
+house, because it costs me a little bit more when I have guests
+over at my house, but it doesn't cost me any more for the extra
+beds that I have in my house. So I presume that's consistent.
+Is that the rationale?
+ Mr. Carlstrom. I could go from your personal to my personal
+house and say that if I had a pound of butter, and I had guests
+over, they would eat some of the butter, and I wouldn't be
+keeping track of what they ate.
+ Mr. Hoyer. But you also have to buy a little more butter.
+That's the reimbursement for food the President makes, correct?
+But the fact that they slept in your bed and stayed overnight
+in your extra bed in your guest room does not cause your
+mortgage to go up. I presume they're not using more heat. It's
+71 or 70 or whatever, right?
+ Mr. Carlstrom. That is correct in my house.
+ Mr. Hoyer. I just wanted to make that point. Let me divert
+just a little bit to ask you about what you actually do. I will
+shock everybody.
+
+ INCREASE IN BUDGET AUTHORITY
+
+ You are requesting an additional $218,000 to cover
+mandatory pay increases for your staff, and $200,000 for a
+capital project to consolidate the laundry facilities at a
+different location.
+ These are small amounts, but did you consider the
+possibility of absorbing these amounts within current levels?
+ Mr. Carlstrom. The budget analyst said we did consider
+absorbing them.
+ Mr. Hoyer. The budget analyst? I'm sorry?
+ Mr. Carlstrom. Yes, we did consider absorbing those.
+ Mr. Hoyer. And it was done?
+ Mr. Carlstrom. Do you want to elaborate?
+ Ms. Meyers. It was not possible to absorb these amounts
+from the standpoint that we had absorbed pay increases for the
+two years prior, and we felt that we needed to ask for this
+year's. I have those figures if you would like.
+ Mr. Hoyer. Okay. The last question in this round for me,
+I've requested data on political events back to 1980.
+ Ms. Meyers. We will be able to provide that for you by the
+beginning of next week.
+ Mr. Hoyer. Fine. I didn't do that until late, and I want to
+make it clear that I didn't expect that you would be able to do
+it this quickly. But in fairness, again, to the character of
+these events, as opposed to the amount, they are all
+reimbursed--is that correct? Whether it's 1 event, or 50
+events, they're all reimbursed?
+ Mr. Carlstrom. That is correct.
+ Mr. Hoyer. Thank you, Mr. Chairman.
+ Mr. Kolbe. Thank you, Mr. Hoyer. Let me just make it clear
+that the full list of the reimbursable political events,
+including six pages that Mr. Hoyer didn't refer to, following
+January of 1993 will be placed in the record.
+ [The information follows:]
+
+[Pages 23 - 39--The official Committee record contains additional material here.]
+
+ Mr. Kolbe. Mrs. Meek.
+
+ Statement of Mrs. Meek
+
+ Mrs. Meek. Thank you, Mr. Chairman. I want to thank the
+members of the Department for coming in this morning to assist
+us in understanding the situation as it has been described by
+the Chairman and by our Ranking Member.
+ I'm a new member of this committee, and I have been a
+member of the Government Reform and the Oversight Committees.
+So I'm quite familiar with the litany of inquiry that happens
+many times when the subject is not necessarily what this
+committee is all about.
+ I'm beginning to see a trend of a litmus test kind of
+approach to our budget hearings. We're beginning to hear
+questions which are pretty much a test of your budget. Whether
+that's a good trend or not, I don't know. But I am seeing it in
+all of the committees that I sit on.
+ I understand, as does every member of this committee, the
+Chairman and all included, that we cannot sit here and allow
+the public trust to be broken. We cannot sit here and not be
+surely careful that public funds are monitored, as they were
+appropriated from our public purse.
+ So it's our duty to watch that. However, I feel that we
+could, in this Congress, spend a little bit more time on other
+matters, after perhaps a review of the kinds of things I just
+mentioned at as a litmus test. That's my opinion, in that the
+other congressional committees I sit on are askingthe same
+questions as we're asking in this committee.
+ I'm not sure that on this committee we should be asking the
+same questions that the Special Counsel is duplicating. I'm not
+sure that we should be asking the same questions that the
+Justice Department or the FBI are asking.
+ But I am sure that through our round of questioning that we
+will ask questions that we can get information that pretty much
+applies to our purview in this committee. And as a result of
+it, being new to the committee, I can understand really your
+budget and your appropriations request a little bit better.
+
+ audits by gao
+
+ I also need to bring up the point that we talked about the
+lack of an audit. But in the 104th Congress, is it true that
+the GAO's funding was cut by 25 percent? Is that correct?
+ Mr. Carlstrom. I'm not aware of that.
+ Mrs. Meek. The GAO's funding was cut, as I understand it,
+by 25 percent.
+ Ms. Meyers. We wouldn't have any knowledge of GAO's
+appropriations.
+ Mrs. Meek. I think so. Well that would have a bearing on
+how well you could do audits, how often you could do them, is
+that correct?
+ Mr. Carlstrom. We're not in the business of conducting the
+audit. I really can't respond to that.
+ Mrs. Meek. You were asked questions here this morning
+regarding audits. You were able to answer them in terms of when
+they were made.
+ Mr. Carlstrom. I indicated that the GAO schedules their own
+audits, and it includes all of the various Government
+functions, and they chose to audit the Executive Residence
+appropriations and expenditures for fiscal year 1991, which was
+done in 1993. Beyond that, I cannot respond to what the GAO
+audits and how they proceed with their audits.
+ Mrs. Meek. All right. Because you cannot request that kind
+of thing from the GAO? You cannot request audits? Is that
+correct? Can you?
+ Mr. Carlstrom. No.
+ Mrs. Meek. Can you request of GAO----
+ Mr. Carlstrom. No, I can't request a GAO audit.
+ Mrs. Meek. That's what I'm trying to get at. My question
+is, was it a practice under previous administrations, like the
+Reagan or the Bush administrations to have the Federal
+government reimbursed for the cost of political meals and
+coffee held in the White House? Was that a practice?
+ Mr. Carlstrom. All administrations are treated the same.
+ Mrs. Meek. All right. Did the procedures for this
+reimbursement change when President Clinton took office?
+ Mr. Carlstrom. No, it did not.
+ Mrs. Meek. So it's been pretty much the same kind of
+procedure?
+ Mr. Carlstrom. Yes, it has.
+ Mrs. Meek. Thank you very much.
+ Mr. Carlstrom. You're welcome.
+ Mr. Kolbe. Mr. Price.
+ Mr. Price. Thank you, Mr. Chairman.
+
+ political versus non-political events
+
+ Along these same lines, I wonder if you could clarify for a
+moment--the process of determining whether an event is
+political or non-political. Are the criteria for that clear? I
+see the material you have provided us here, but I wonder if you
+could just elaborate a bit as to exactly who makes that
+determination, how clear the criteria are, and if, in your
+opinion, they are sufficiently clear.
+ Mr. Carlstrom. Let me start at the end. I cannot say that
+they are sufficiently clear, or whether they are appropriate
+criteria. I do know this, that the Chief Usher follows the lead
+of the Social Secretary's Office, as the Social Secretary, as
+it relates to establishment of whether an event is political or
+non-political, and that we have--I'll end there before I get
+myself in trouble.
+ But we have a system in place whereby we receive, and the
+GAO auditors looked at this also. It's a rather simple sheet,
+but it's a Residence Event Task Sheet, and down at the bottom
+it indicates whether it's reimbursable or not, and by that as
+to whether or not it's determined to be a political or non-
+political event. And we could submit that for you as well. That
+is the system that's in place.
+ Mr. Price. Alright. It would be helpful if you could submit
+that for the record.
+ [The information follows:]
+
+[Page 42--The official Committee record contains additional material here.]
+
+ Payment for events
+
+ Mr. Price. And then in your response to the next question,
+as to who actually paid for these political events, you cite
+the national political parties, the re-elect committees,
+inaugural committees, or an entity of the national political
+parties. That is an exhaustive list, right?
+ Mr. Carlstrom. That's the list that is provided here
+somewhere, and we'll be adding to it per Congressman Hoyer's
+request.
+ Mr. Price. That's true for the events in 1992 and 1993, and
+then under both administrations.
+ Mr. Carlstrom. That is correct, sir.
+ Mr. Price. Now, in the case of non-political events, are
+political entities in any case reimbursing for events that are
+not designated political?
+ Mr. Carlstrom. Could you repeat that, please?
+ Mr. Price. The reimbursable events that are designated non-
+political--are the political entities listed under question six
+in any cases reimbursing for those events?
+ Mr. Carlstrom. Again, on the break out on these, I am not
+sure on the break out. Perhaps, Marilyn, you could respond to
+that?
+ Ms. Meyers. What we had been asked for, and what we
+submitted was simply a total cost. We can provide a full
+listing of the non-political and the political, as we did for
+the political events, for the record if that would be what
+thecommittee would wish. But what we were asked for was just the total
+cost, and that is what we provided.
+ Like I say, we can certainly give you a full non-political
+list. I would like to make one thing clear that I said further
+in reference to Chairman Kolbe's response. On this list, this
+is just political events. It does not include those checks and
+so forth that are sent from the President. This is just events,
+it does not include the President's reimbursements.
+ And we can provide that as a monthly total, as long as we
+don't get into, you know----
+ Mr. Kolbe. If the gentleman could just yield, to clarify.
+So the non-political, non-Federal funds, non-political does not
+include the reimbursements by the President?
+ [The information follows:]
+
+[Pages 44 - 65--The official Committee record contains additional material here.]
+
+ Ms. Meyers. That is correct. Yes, sir. I misspoke.
+ Mr. Kolbe. So then I think it is all the more important to
+give us a breakdown so that we know--not just a breakdown of
+the Federal versus the non-Federal, but within the non-
+Federal--the political and non-political events.
+ Mr. Carlstrom. Again, as it responds to the Executive
+Residence, and that's what these figures all relate to, even
+though it's not so titled on the top.
+ Ms. Meyers. It is just events. That's what this particular
+sheet captures.
+ Mr. Kolbe. And this list is just the political.
+ Ms. Meyers. And that is just the political events?
+ Mr. Kolbe. Thank you, Mr. Price.
+ Mr. Price. So what you're going to furnish us is the
+comparable breakdown of non-political events.
+ Ms. Meyers. Yes, sir.
+ Mr. Price. To make sure I understand what you just said,
+these are not events for which the President personally
+reimbursed the Executive Residence?
+ Ms. Meyers. No, sir.
+ Mr. Price. But you will tell us who did provide the
+reimbursement.
+ Ms. Meyers. Yes, sir.
+ Mr. Price. That would be helpful, and I would like to have
+that information over the full period of both administrations.
+
+ conversion of pennsylvania avenue
+
+ Just quickly, one further matter, having to do with
+conversion of Pennsylvania Avenue. As part of the White House
+security review, which was discussed earlier this year in our
+hearings with the Secret Service, it was determined that
+traffic shouldn't be permitted on Pennsylvania Avenue in front
+of the White House.
+ The Park Service, as I understand it, is responsible for
+converting that street into a mall and park setting. No
+information is included about these plans, or their funding in
+this proposed budget. I wonder if you could just give us a
+brief update, either here orally or for the record, on the
+status of those efforts, and what kind of preliminary design
+plans or cost estimates you have.
+ Mr. Carlstrom. I could do that, but Jim McDaniel has been
+intimately involved in the conversion of Pennsylvania Avenue,
+as well as the planning efforts. So I'm sure that Mr. McDaniel
+will respond here, unless you want us to put it in the record,
+it's your choice.
+ Mr. Price. Oral response would be fine.
+ Mr. McDaniel. In May of 1995, Mr. Price, the Treasury
+Department took action to restrict public vehicular traffic on
+a two block section of Pennsylvania Avenue in front of the
+White House.
+ Following that Treasury Department action, the National
+Park Service was asked to put in place some interim
+beautification measures to make the area look a little better,
+work a little better, and then to undertake the planning
+process that would eventually convert that two block section of
+Pennsylvania Avenue into a pedestrian area or a park area.
+ The interim measures are just about complete. If you look
+at the site right now, you will see at 15th Street and at 17th
+Street a series of planters with flowers and shrubs, a guard
+booth at each end which replaces the police vehicle that was
+used by the Secret Service to control access, and a mechanical
+vehicle barrier at each end.
+ All of these interim measures are temporary. They are
+removable. In fact, they were removed in January for the
+Inaugural Parade. This will provide sort of a little bit of an
+improvement pending a longer range planning process.
+ Because this is such an important part of our Nation's
+capital, and because Americans across the country are
+interested in what happens there, the National Park Service
+wanted to be careful and take a very deliberate approach to
+planning any changes in the future.
+ So we started with a large public involvement process. We
+solicited ideas from across the country. We got more than 800
+submissions. Everything from children doing crayon drawings of
+what they thought the area should look like, to formal
+blueprints from architectural firms.
+ All of this material was put together into what we called
+an Ideas Fair, and it was made available to the public. We also
+invited 13 of the country's best designers, architects,
+landscape architects, sculptors and so forth, to spend a week
+in Washington.
+ All of this was paid for with private donations. At the end
+of this week, having reacted to all of the public input, they
+produced about 20 designs of their own.
+ All of that went back out to the public, and is now at the
+point where we have a preferred alternative, and four other
+alternatives.
+ At this point in the process, our work is on hold, until
+the Treasury Department completes their environmental
+compliance. Once that is completed, we can pick up on our
+planning again and make a decision on the final design.
+ Mr. Price. At that point there presumably would be a budget
+request?
+ Mr. McDaniel. Yes, although such a project may lend itself
+to donated funds, or to some combination of public and private
+funding. We don't have that pinned down yet.
+ Mr. Price. That has not yet been determined?
+ Mr. McDaniel. Yes, sir.
+ Mr. Price. So this process is basically not reflected in
+the budget before us?
+ Mr. McDaniel. That is correct. That process is aNational
+Park Service initiative, and is not a part of the Executive Residence
+budget.
+ Mr. Price. Thank you. Thank you, Mr. Chairman.
+ Mr. Kolbe. Mr. Istook.
+ Mr. Istook. Thank you, Mr. Chairman. I appreciate your
+being here and the information you're sharing.
+
+ reimbursements
+
+ If I understand correctly, there are three categories of
+reimbursements. There are those that you consider to come from
+the President's account. There are those that have been
+designated political events, and there are those that have been
+designated non-political events?
+ Mr. Carlstrom. Correct.
+ Mr. Istook. You provided us, of course, over the seven year
+period with the total breakdown of political and non-political.
+Can you tell us, since you don't have that with us, is there
+any pattern of which you are already aware regarding the
+Presidential reimbursement account? Has that been fairly
+consistent in the quantity and the size of the reimbursements
+from 1992 to date?
+ Mr. Carlstrom. I have no way of knowing that, sir.
+ Mr. Istook. So that's just something we'll have to look at.
+I do notice, of course, on the pattern of the political
+reimbursements we had in 1992 $261,000, 1993, $216,000, a major
+drop in the transition time of 1993 to $43,000, and then a huge
+jump to $523,000, $595,000 and $592,000 for 1994, 1995 and
+1996.
+ Does this reflect a major increase in the number of events,
+or a major increase in the scale of the events that were held
+in 1994 and 1995 and 1996 compared to those of prior years?
+ Mr. Carlstrom. As far as the number and scale, I can't
+answer that. Marilyn, do you know?
+ Ms. Meyers. No, I don't know.
+ Mr. Carlstrom. I haven't looked at it from that
+perspective, but we certainly could.
+ Ms. Meyers. We can look at it.
+ Mr. Istook. I would appreciate that information.
+ [The information follows:]
+
+ Escalation in Costs
+
+ The escalation in costs is due to the increased activity of
+events, inflation, style, and scale of the events. From
+previous documents, the increased level of activities can be
+seen. Inflation, although low, is a factor. The style and
+character of events has changed. The number of people invited
+to events has also increased dramatically.
+
+ Mr. Istook. Now, on the non-political events, the change is
+far more dramatic. In 1992 it shows $87,000 reimbursed for what
+is labeled non-political events; 1993, $67,000. I'm sorry,
+that's the Bush portion of 1993. That's right. It's broken up
+there.
+ But then the Clinton portion of 1993, $400,000; 1994,
+$457,000; 1995, $529,000; 1996, $454,000, a huge increase.
+Again, is that a reflection, can you tell of a major increase
+in what has been designated as non-political events, or a major
+increase in the scale, the number of people attending
+particular events?
+ Ms. Meyers. Since we don't have a listing of the non-
+political events, I wouldn't be able to answer that at this
+point, but we will give you that listing, and I think it would
+become evident at that point.
+ Mr. Istook. Okay.
+ [Clerk's note.--That information is included in Appendix
+B.]
+ Mr. Istook. I notice in the document provided to us, as far
+as making a determination whether something is going to be
+labeled a political or non-political event, the information
+provided says the White House Social Secretary provides the
+Chief Usher with a decision to make.
+ Could you please describe that process, and especially if
+anybody makes any review of it, and how it is passed along to
+you, by who, whether something is going to be labeled by the
+White House as political or non-political?
+ Mr. Carlstrom. We responded to that a little earlier, and
+basically it goes to the Social Secretary's Office, and the
+Executive Office, and there is a Residence Event Task Sheet,
+that we said we would make available for the record.
+ [Clerk's note.--The witness later changed this to read
+``comes from.'']
+ And within that context, it goes through a lot of different
+things--type of event, group, et cetera, all the things you
+might need to support it.
+ At the bottom there is an indication as to whether it's
+reimbursable or non-reimbursable, which would indicate if it
+was non-political or political event, or whether it was one
+that was a part of the normal functioning of the ceremonial
+events that occur at the White House.
+ So we will make that available for the record.
+ [The information follows:]
+
+[Page 70--The official Committee record contains additional material here.]
+
+ Mr. Istook. With your particular job, and obligations, why
+does it make a difference to keep a separate designation of
+whether something is labeled as political or non-political when
+in any case it is supposed to be reimbursed?
+ Mr. Carlstrom. In actuality, we've always used--what have
+we used? Reimbursable. We didn't differentiate between a non-
+political and political. That's something that came out of the
+questions that you all provided to us.
+ Mr. Istook. But it is something that is separately
+designated by the White House on the forms? It's their choice
+of the political or non-political?
+ Ms. Meyers. No. Their only interest is as to whether it is
+a reimbursable or non-reimbursable event.
+ Mr. Istook. What is the reason----
+ Mr. Kolbe. Would the gentleman yield? Who broke that out
+then, between political and non-political?
+ Mr. Istook. That's what I'm trying to get to.
+ Ms. Meyers. The Administrative Officer at the Executive
+Residence went back through all the files and gleaned that
+information from these forms.
+ Mr. Istook. So that was done especially for the purposes of
+this hearing.
+ Ms. Meyers. For the purposes of this hearing.
+ Mr. Istook. It's not a meaningful distinction as far as
+your record keeping.
+ Ms. Meyers. As far as the Executive Residence cares, no
+sir.
+ Mr. Istook. I suppose the only difference it might make is
+for public relations and spin purposes politically how events
+are described by the White House? But it doesn't make any
+difference to you?
+ Mr. Carlstrom. Not for our bookkeeping.
+ Mr. Istook. So that means that the increase in the spending
+on events, which could be an increase in the number, it could
+be an increase in the size and the scale of events, is even
+more dramatic if you combine those together, even without the
+third category of presidential reimbursements.
+ Mr. Carlstrom. If you add the political and non-political
+columns, yes.
+ Mr. Istook. Certainly. And along with the information of
+what were the so-called non-political events, you will provide
+to us the itemized information on who provided the
+reimbursement to you, and if there's any indication that there
+was more than one level, for example, one group or groups may
+provide reimbursement to some entity, and then that entity in
+turn writes an overall check to you. If you have any
+information about multiple layers, if you could please provide
+that as to all of these events.
+ [Clerk's note.--That information is included in Appendix
+B.]
+
+ presidential reimbursement
+
+ Mr. Istook. The Presidential reimbursement, is that in
+every case just an account transfer, or is it an actual check
+written by the President, or is it transferring between
+official accounts?
+ Mr. Carlstrom. I'll let Marilyn respond to that.
+ Ms. Meyers. It is an actual check. The President is
+provided with a listing monthly of everything that was consumed
+by his family and his guests. He provides a personal check and
+it is then deposited.
+ Mr. Istook. Could you please provide us with the
+information as to from what accounts those funds are being
+made? We recognize that there have been questions raised about
+who is paying for different things, and I think it would be
+important to know, as far as the reimbursements that are
+denominated presidential, to be sure that these actually came
+from an account of William Jefferson Clinton, for example, as
+opposed to a reimbursement that might have come from some other
+entity or person or some other account.
+ Ms. Meyers. Yes, sir.
+ [The information follows:]
+
+ Reimbursement by the First Family
+
+ All payments for food, beverage and personal items, have
+been received from the account of the First Family.
+
+ Mr. Hoyer. Would the gentleman yield? I want to say to the
+gentleman that I understand his concern that in fact the
+President reimbursed things. But are we asking for copies of
+personal checks of the President--Ms. Meyers said she's going
+to provide those--is that what we're seeking?
+ Mr. Istook. I'm asking for the information as to what
+account it came from. Certainly any check that is received by
+an official Government account is going to be of public record,
+and I'm not pursuing anything that involves any reimbursement
+by anyone other than to a public account.
+
+ timing of payments
+
+ The dates of the reimbursements, if I might note some
+different examples, there is the event held January 20th, 1993,
+as a reimbursable political event related to the Inaugural. But
+the reimbursement in that case, $15,000, is not shown as being
+paid until 26 months later, in March of 1995.
+ And before I focus on that specific one, I notice there are
+several delayed reimbursements. For example, in October of
+1993, DNC Trustees reception, $50,000, not paid until August of
+1994. In December of 1993, Christmas receptions at the White
+House. $231,000, but not paid until March of 1995. Again,
+something like 15 months before the taxpayers are repaid almost
+a quarter million dollars for political Christmas receptions at
+the White House.
+ There are, of course, a number of these. Can you explain to
+us why the major delays in so many of these reimbursements, and
+were there communications going on behind the scenes between
+some persons or entities saying, please get these back bills
+paid?
+ Mr. Carlstrom. Yes, I can elaborate. You pick out some fine
+examples that appear to be lengthy, and indeed they are. But if
+you add all of the events up--we did a little analysis--it
+usually, over the years, comes out to be about a 90 to 120 day
+delay.
+ Mr. Istook. When you say a 90 to 120 delay, when you say
+that's the average, are you weighting that by the number of
+events or the scale of events? It's a big difference between
+whether you have that delay on a reimbursement such as some we
+have here for less than $100, and a reimbursement for some of
+these that we have that involve a quarter of a million dollars.
+ Mr. Carlstrom. From the time that they're billed until we
+actually process it and add the money into our accounts.
+ Mr. Istook. So when you say a typical delay, that doesn't
+necessarily distinguish a typical delay on a small
+reimbursement versus a typical delay on a significant one?
+ Mr. Carlstrom. I don't know. We certainly didn't make any
+differentiation as far as I know, and there are a number of
+factors that enter in. A lot of the larger events andothers are
+sometimes contracted out to vendors, and it takes a while to receive
+some of the bills.
+ We sometimes ask through our process for two or three
+submittals of a bill before we can process it and then
+establish the reimbursable to our account, and so we experience
+some of those same frustrations.
+ And to answer the last part of your question, I have no
+idea what transpires in the interim between the various
+entities involved.
+ Mr. Istook. Let me ask this: as to any event that involved
+a reimbursement in excess of $10,000--let's just pick that as a
+threshold for my purposes, if you could break that out and tell
+us when you actually billed, and to whom you sent the billing,
+and then we could compare that with the time of reimbursement.
+Because I recognize the difference between when the event is
+held and when you may send a billing out for that event.
+ And if there were any written memos, internally, or
+correspondence exchanged relating to concerns over past due
+items, we would appreciate your providing those also.
+ Mr. Carlstrom. We can certainly give you the indication on
+the billings, the number of times we requested them. Whether
+it's in the form of a memo or not, I have no idea.
+ [The information follows:]
+
+[Pages 74 - 75--The official Committee record contains additional material here.]
+
+ Mr. Istook. And finally, on this designation of political
+versus non-political, you say that's from the Social Secretary
+of the White House? Who is that? Is that in the President's
+Office? First Lady's Office?
+ Mr. Carlstrom. The White House Office.
+ Mr. Istook. I'm asking for the person's name.
+ Mr. McDaniel. The White House Social Secretary is Ann
+Stock.
+ Mr. Istook. Okay. And I think if I understood correctly,
+you already provided documents that have the information, any
+documents that show the White House's designation of political
+or non-political, I presume, is on this form which you already
+said you would be providing. If there are any other documents
+that do so, or discuss that designation, I would appreciate
+receiving it.
+ Ms. Meyers. Okay.
+ Mr. Carlstrom. I'm not aware of any, sir.
+ Mr. Istook. Thank you, Mr. Chairman.
+ Mr. Kolbe. Mr. Aderholt.
+ Mr. Aderholt. Thank you, Mr. Chairman. I thank you for
+coming before this subcommittee this morning, and certainly the
+Executive Mansion has been the subject of unwanted attention
+lately. But of course a lot of the things that we're talking
+about have occurred during the time you have overseen the
+Executive Mansion.
+
+ location of coffees
+
+ Regarding the coffees, where did these coffees physically
+take place?
+ Mr. Carlstrom. Mr. McDaniel is much more familiar with
+where they might have taken place. There are any one of a
+number of different places.
+ Mr. McDaniel. Those that are addressed in this budget took
+place in the residence.
+ Mr. Aderholt. Was it various different rooms?
+ Mr. McDaniel. Various.
+ Mr. Kolbe. Would the gentleman yield? Just to be clear, not
+EOB?
+ Mr. McDaniel. That's correct. This budget does not involve
+any activities in the EOB.
+
+ 1997 reimbursable events
+
+ Mr. Aderholt. As Congressman Istook was asking about the
+time the reimbursements were coming through, I understand there
+have not been any events in fiscal year 1997, but have all
+costs associated with these events prior to that time been
+reimbursed?
+ Mr. Carlstrom. Yes. There were several pending, but they
+all have been reimbursed, and there have been a couple of
+events in 1997 that we'll add to the list.
+ Ms. Meyers. They had not been billed as of the date of this
+letter at this point.
+ Mr. Aderholt. So they may have actually taken place, but
+not reported.
+ Ms. Meyers. That is correct.
+ Mr. Carlstrom. Correct.
+ Mr. Aderholt. That's all I have.
+
+ receipt of reimbursable payment
+
+ Mr. Kolbe. Let me just follow up on a couple of questions
+Mr. Istook was asking there, just so we are clear. You said an
+average of 90 to 120 days. I don't know how long, but just
+looking at that one page he was focusing on, I see only one or
+two that are within 90 days, where the bill was paid.
+ He mentioned the one there, Christmas, December 1993, paid
+15 months later, $231,000. Where does the money, before it is
+reimbursed, who is footing the bill for this? What account?
+ Ms. Meyers. The Executive Residence pays those bills until
+they are reimbursed.
+ Mr. Kolbe. So the Executive Residence pays the vendors and
+then gets reimbursed?
+ Ms. Meyers. That is correct.
+ Mr. Kolbe. Well, I think there is a substantial amount of
+money here that is involved, and I would sure like to get my
+bills put off for paying for 15 months, especially $231,000.
+You go right down the list--DNC reception, February 1994, paid
+August 1994; six months later. New Hampshire group reception,
+February 1994, paid August 1994. There are a couple that are
+paid a little more--there's a couple of big ones here. Let's
+see, DNC business leaders forum, June 1994, paid April 1994.
+Ten months later.
+ I would like you to, as Mr. Istook asked, to add another
+column in here, date billed, so we can compare the date billed
+next to the date paid.
+ Ms. Meyers. Okay.
+ [Clerk's note.--That information is included in Appendix
+A.]
+ Mr. Kolbe. Because I think it may be that the Democratic
+National Committee or whoever--and by the way, since you are
+going to break out the other non-political events and give us
+those, the reimbursements on those, do the same with that, if
+you would, please.
+ Ms. Meyers. Okay.
+ [Clerk's note.--That information is included in Appendix
+B.]
+ Mr. Kolbe. But it may be that there is no fault here for
+anybody not paying their bills. It may be that there's an
+incredible lapse in the preparation of the bills and getting
+those bills out.
+ Who actually sends the bills out? Does your office send
+them out?
+
+ billing procedures
+
+ Ms. Meyers. No, sir. The Executive Residence does.
+ Mr. Kolbe. So the Executive Residence presumably would wait
+until everything--all the bills are paid, everything is
+compiled on that, and then send it out?
+ Ms. Meyers. That is correct. A bill for collection is put
+together and sent.
+ Mr. Kolbe. Do you know if there are any procedures to
+follow up for nonpayment of bills?
+ Ms. Meyers. No, sir, I do not.
+ Mr. Kolbe. I presume that would be the White House
+Residence Office that would be able to tell us that, who
+decided not to show up today and answer some of these
+questions. Well, I'd like to find that answer, what procedures
+they have for follow up on these bills.
+ Ms. Meyers. Yes, sir.
+ [The information follows:]
+
+[Pages 79 - 80--The official Committee record contains additional material here.]
+
+ Mr. Kolbe. I presume that these--that everything eventually
+gets paid. There is nothing--would an event that is still un-
+reimbursed be left off of this list?
+ Mr. Carlstrom. Not to my knowledge.
+ Mr. Kolbe. I would like you to confirm that, another issue
+that we could resolve if they were here.
+ Mr. Carlstrom. We will do that.
+ [Clerk's note.--That information is included in Appendix A
+and Appendix B.]
+
+ political versus non-political
+
+ Mr. Kolbe. Let me go back now to the issue of how we
+determine these things, whether they were political or non-
+political. The procedures are what you are giving us and
+putting in the record, is that correct?
+ Mr. Carlstrom. That is correct.
+ Mr. Kolbe. The White House Social Secretary is the one that
+makes the determination based on whether--after looking over
+what it is, as to whether--for example, I was at the state
+dinner the other night for President Frei, that would be a
+State Department reimbursement, is that correct?
+ Mr. Carlstrom. That is correct.
+
+ form used to designate reimbursable events
+
+ Mr. Kolbe. But she would look at that, and say this is a
+State Department reimbursement. Do they make that determination
+before the event takes place, so it is clear who is going to
+get billed for this thing?
+ Mr. Carlstrom. Well, if you look at the form, they would
+have the information prior to it.
+ Mr. Kolbe. So the form is filled out prior to the event.
+ Mr. Carlstrom. As near as I can determine, yes, sir.
+ Mr. Kolbe. And it includes the organization that is going
+to be held responsible for it?
+ Mr. Carlstrom. It has a designation for group, yes, sir.
+ Mr. Kolbe. Nobody, however, has audited in the last six
+years, nobody has audited as to whether or not these procedures
+are being followed, is that correct? Since 1991?
+ Mr. Carlstrom. Right. The last audit we had was for fiscal
+year 1991.
+ Mr. Kolbe. You have absolutely no knowledge as to whether
+the procedures of the White House are being followed, or
+whether or not these things are being billed appropriately or
+not?
+ Mr. Carlstrom. I personally don't have that knowledge, but
+historically we have continued to follow the same procedure for
+20 years.
+ Mr. Kolbe. Wait, wait, wait. You don't question the form
+that you get from the White House office there, is that
+correct?
+ Mr. Carlstrom. This form----
+ Mr. Kolbe. You don't look at it and say, no, sorry, this is
+not a----
+ Mr. Carlstrom. No.
+ Mr. Kolbe [continuing]. A Federal reimbursement. This is a
+political reimbursement.
+ Mr. Carlstrom. I have no involvement with that
+determination.
+ Mr. Kolbe. So I mean, how can you say that historically
+there's no problem?
+ Mr. Carlstrom. If you want me to rephrase the statement, up
+until the time of 1991, and the last audit of 1993, there were
+no problems in following that procedure. If there hadbeen any
+problems since that time, I am not aware of them.
+ Mr. Kolbe. Nor is GAO aware of it, because they haven't
+audited it.
+ Mr. Carlstrom. It's their prerogative.
+ Mr. Kolbe. I guess. Is it normal for the Park Service to
+ask, would it be normal for you to ask the GAO to get down here
+and do an audit?
+ Mr. Carlstrom. No, it would not. But if such an audit were
+deemed appropriate, we would welcome that audit. When the
+audits occur, back in 1993, they come over to our budget
+office, and of course look to see that we're following the
+procedures that we have responsibility for, as well as the
+overall procedures that are followed in making the
+determinations that you are alluding to.
+
+ reimbursements to NPS
+
+ Mr. Kolbe. During the fiscal year 1994 appropriations cycle
+you submitted testimony reflecting that President Bush had
+$97,000 in reimbursements to the Park Service for political
+events, but the document you submitted to us shows in 1992, the
+same year I guess that was in question that we were asking
+about, was $261,000 in reimbursement. What accounts for this
+discrepancy? Were those things that had not been billed or paid
+at that point?
+ Mr. Carlstrom. Unless you have some suggestion, Marilyn. We
+can look at it again. I have not taken these figures apart.
+ Mr. Kolbe. I'm sorry?
+ Mr. Carlstrom. We can provide an answer to the question you
+asked, but I have no way of knowing. I can't answer your
+question.
+ Mr. Kolbe. I think we would like to know why we've had----
+ Mr. Carlstrom. Certainly.
+ Mr. Kolbe. You testified apparently in the 1994
+appropriations, your testimony then said $97,000, but this says
+$261,000. That's a huge difference. And I would like to know
+the answer about that.
+ Mr. Carlstrom. Certainly, we will take a look at it,
+compare those answers.
+ [The information follows:]
+
+ Reimbursements to the National Park Service
+
+ Previous documents presented to the Committee were
+responding to requests for expenditures in relation to
+reimbursable events, the Executive Residence reimbursable
+program also includes reimbursements for items other than
+events, such as: Utilities shared by the Executive Residence,
+General Services Administration, National Park Service, and the
+Military Office. The electrical service for the Executive
+Resident at the White House is paid by this budget and then the
+Executive Residence seeks reimbursement for that portion of the
+electrical service that is attributable to the GSA and the
+Military. The same is true for water and sewer service, except
+the NPS shares in this cost. Also, occasionally an outside
+entity will reimburse the Executive Residence budget for work
+done in the Executive Residence, e.g., redecoration or
+restoration work done on historic and/or Fine Arts Collection
+pieces.
+
+ costs of overnight stays
+
+ Mr. Kolbe. Let me, if I might go back here for a moment to
+the issue of whether or not there is any added expenses. Mr.
+Hoyer said that when he has guests in, his mortgage payment
+doesn't go up, and I quite agree. My mortgage payment doesn't
+go up.
+ But I can tell you, when I have guests in, I spend more
+money, and it isn't just food. My heating bill goes up. It
+does, indeed go up. There are more people around, more rooms
+have to be heated.
+ You've got 938 guests. That's not overnight stays. That's
+one of the questions I want to ask. I just learned today that
+this is not the number of overnight stays. One night, one
+person stays. Is that correct? That's different guests that
+have stayed. Some might have come back multiple times and be
+listed only once. Is that correct, Mr. McDaniel?
+ Mr. McDaniel. I don't know the answer to that question.
+ Mr. Kolbe. I presume that it's the White House office that
+would be able to answer this question, if they would show up
+and answer our questions here, which they declined to do. I
+notice their senior legislative advisor is here, but they can't
+send the people who can answer questions here.
+ Mr. McDaniel. You had asked a question, or made a statement
+about the heating and cooling. I just wanted to make a
+distinction between the White House and my house or your house.
+And that is because it's also a museum, the heating, the
+temperature and humidity controls and so forth are geared to
+the protection of the artifacts as well as comfort of the
+occupants.
+ Mr. Kolbe. Throughout the house, not just--there's no
+separate heating controls for the upstairs bedrooms and things
+like that?
+ Mr. McDaniel. That's right.
+
+ new laundry facility
+
+ Mr. Kolbe. Well, there's still some other things that seems
+to me that cost a little money. You've got in here a request
+for $200,000 for a laundry. That's a big laundry. I mean, I
+could buy a lot of laundry machines for $200,000. I could get a
+great Maytag for that, for $200,000.
+ Mr. Carlstrom. You're referring to the $200,000 increase--
+--
+ Mr. Kolbe. For the White House laundry. Are you telling me
+that there is no added expense of having 938 different guests--
+and we don't know how many nights that is, and I want that
+information, as to how many, one person one night actual. And
+please go back and compare it to 1992, so whatever, the four
+years before that, so we have something to compare it to. But
+what we have right now is just a list of the number of
+different people that stayed in there, not the number of nights
+that there were people in the White House.
+ [The information follows:]
+
+ Overnight Stays
+
+ The Executive residence does not keep costs on individual
+overnight stays. The First Family pays their bill on a monthly
+basis for themselves and their personal guests.
+
+ costs of overnight stays
+
+ Mr. Kolbe. But you are telling me that there is no added
+cost--there's no added cost for doing laundry, is that correct?
+ Mr. Carlstrom. I wouldn't say that there is no added cost
+for doing laundry. The domestic staff is made up of about 36
+different individuals. They work on two different shifts, and
+they are taking care of the Executive Residence, which think of
+it in terms of the building itself is the center portion, which
+is roughly in the neighborhood of 130 plus or minus rooms.
+ Their duties consist of cleaning. They consist of caring
+for it as a museum quality sort of way, for the historic
+structure that it is. It includes preparation of food. It
+includes greeting and welcoming visitors to the facility, and
+the other things that a domestic staff would do.
+ So on a regular rotation of two shifts, those duties are
+performed regardless, and there would really be no additional
+costs associated with it.
+ Mr. Kolbe. Well----
+ Mr. Carlstrom. If the bedroom needs cleaning, the bedroom
+would be cleaned.
+ Mr. Kolbe. It's not true to say there are no additional
+costs. There are additional costs.
+ Mr. Carlstrom. If it doesn't need cleaning, something else
+is done to maintain the house at large. The house at large is
+maintained with that domestic staff of 36.
+ Mr. Kolbe. You really think you could put up 938 guests in
+your house over four years and incur no additional costs
+besides food?
+ Mr. Carlstrom. This is the normal rotation that occurs. And
+it's occurred throughout the years.
+ Mr. Kolbe. It is not correct to say that there are no
+additional costs. I want to ask about overtime salaries. And,
+by the way, the thing you submitted to us, I just hope my
+cleaning lady at home doesn't see what the overtime pay is for
+these people.
+
+ questions from committee
+
+ Last Thursday when you met with the staff, Republican and
+Democratic staff of the committee, for preparation for this,
+there were several questions that were asked, one of which was
+the overtime cost for domestic staff. The question was written
+down, and was repeated by the budget officer in front of all of
+the staff.
+ And then our clerk, the subcommittee's clerk was asked to
+initial not only this question, but all the questions asked by
+the staff--something we have never had done before, and I would
+like you first of all to tell me what the purpose of having
+that done, why you felt it was necessary to have the clerk
+initial these questions.
+ Mr. Carlstrom. First of all, I wasn't there on that
+occasion. I was ill on that day, but maybe it can be elaborated
+a little bit from your standpoint, Marilyn?
+ Ms. Meyers. Yes. Normally when the Executive Residence
+answers questions, they are usually answering them in response
+to testimony such as we are doing today. Because there was no
+testimony, and no way of going back and trying to get the sense
+of what the committee was after, they asked me if I would
+please take down the questions and have them, or the staffers
+take down the questions, and agree that these were the
+questions that we wanted answered at this point, which is what
+we did.
+ And then I forwarded them to the Executive Residence when I
+returned to my office.
+ Mr. Kolbe. And who is they?
+ Ms. Meyers. The Executive Residence.
+ Mr. Kolbe. Asked these to be initialed?
+ Ms. Meyers. Asked for these to be initialed, yes, sir.
+ Mr. Kolbe. Executive Residence. That is the chief
+administrative officer that we're going to be hearing from next
+asked that these be initialed?
+ Ms. Meyers. Yes, sir.
+ Mr. Kolbe. Now, let me just make it clear that it is a
+normal process that we have a pre-hearing session with every
+agency to go over, so that we can be clear about the kinds of
+questions, and lots of additional testimony and questions come
+up from the minority and majority staffers, and no one has ever
+said before, initial this list before I take it down and
+provide answers to it.
+ I just want to make that clear. What went on last Thursday
+was a normal process of having a review prior to the hearing.
+What was asked for was not a normal process.
+
+ overtime costs
+
+ But I want to come back to the--but what we got back, of
+course, was not what we asked for. We asked for the overtime
+costs. What we got back was a list of the overtime pay. So it
+was initialed, overtime rates. We didn't get the information we
+asked for. It was written down and initialed, and we didn't get
+it.
+ Mr. Carlstrom. Typically, as I alluded to earlier, there
+would be no overtime rate associated with any of the events,
+except those that are exceptional in character, like the
+Inaugural events, or the Christmas celebrations.
+ And in those cases, overtime is applied. But typically
+because of the shifts that occur, there are no overtime rates,
+except for the larger events, and we didn't provide you with
+those. We gave you the rates.
+ Mr. Kolbe. You do know how much has been spent on paying
+overtime pay, is that correct?
+ Ms. Meyers. That can be put together yes. It will take us a
+couple of days but it is not something that is kept by the
+Executive Residence.
+ Mr. Kolbe. That is what we asked for. And it was veryclear.
+That is specifically what we asked for.
+ Well, looking here at--from the information the Executive
+Residence provided on personnel costs--all right, full time
+employees. My staff tells me that overtime is under other
+personnel, and that's a 38 percent increase from 1992 to 1996.
+ Reimbursables, it's 119 percent increase.
+ Mr. Carlstrom. We have not made that analysis. We do have--
+I could look at the Executive Residence and the cost coding,
+and from that you can discern some of the other personnel
+compensation, which would include overtime. That information is
+here but we have not put it together.
+ And as Marilyn indicated, we can do that.
+ Ms. Meyers. We can.
+ [The information follows:]
+
+ Overtime Costs for Domestic Staff
+
+ Overtime for Executive Residence domestic staff for FY 1992
+was $388,472.
+ Overtime for Executive Residence domestic staff for FY 1993
+was $396,497.
+ Overtime for Executive Residence domestic staff for FY 1994
+was $542,529.
+ Overtime for Executive Residence domestic staff for FY 1995
+was $594,529
+ Overtime for Executive Residence domestic staff for FY 1996
+was $278,978.
+ Overtime for Executive Residence domestic staff for FY 1997
+est $543,271.
+ Overtime for Executive Residence domestic staff for FY 1998
+est $550,000.
+
+ Mr. Kolbe. The analysis is just exactly where we took this
+information from. That's from your information.
+ What is the average overtime cost for full time employees
+within the Executive Residence? Not rate, but what is the
+average amount that they get paid, overtime costs?
+ Mr. Carlstrom. I have no idea.
+ Mr. Kolbe. I presume it's one more thing that perhaps the
+White House Office could answer.
+ Ms. Meyers. Chairman Kolbe, excuse me. It's the Chief
+Usher. The White House Office is a different entity. We don't
+want to get them mixed up.
+ Mr. Kolbe. The Chief Usher. That's exactly who we asked to
+be here to be able to answer some of these questions, and they
+didn't show up here today.
+ Mr. Carlstrom. Mr. Chairman, we will take back the
+questions that you are providing to the Executive Residence.
+ Mr. Kolbe. We have some very specific questions that we're
+going to ask on that area. I have a couple of more things, but
+I have certainly overstayed my time. Mr. Hoyer.
+ Mr. Hoyer. Thank you, Mr. Chairman.
+ The budget of the United States is, I guess, somewhere in
+the neighborhood of $1.7 trillion. I'm not going to pursue too
+vigorously how much the President--not the President, but the
+White House, spent on its laundry.
+ But I have been on this committee, since 1983, and I don't
+remember any committee trying to question what the White House
+spends on its laundry. But we perhaps are in a new era.
+
+ christmas events
+
+ In looking at your list, you talk about the pattern, in
+December of 1991 there was a Christmas event, President Bush,
+$154,000. Reimbursed six months after the event. Now, that
+event--because I've been to it a couple of times--is a
+bipartisan, non-political event. Am I correct?
+ Mr. Carlstrom. I haven't been there. But I guess that's
+true, yes, Mr. Congressman.
+ Mr. Hoyer. Who is ultimately expected to pay for the
+Christmas event for the White House? I don't know the answer to
+that question.
+ Ms. Meyers. I'm afraid I don't either. I would have to
+follow through on that. I do not know.
+ Mr. Hoyer. I'd be interested in that.
+ Mr. Carlstrom. We'll check on it.
+ [The information follows:]
+
+ Christmas Events
+
+ The traditional Christmas events have been paid by the
+national political committees. Special events during December
+are paid for by the sponsoring entity, i.e., visits of foreign
+heads of state; Kennedy Center Honors. Additionally, the
+Executive Residence budget absorbs the cost of the annual
+Christmas Congressional Ball and the decoration of the
+Residence for the holiday tours.
+
+ Mr. Hoyer. Because everybody in the world goes. It's packed
+and it has nothing to do with politics, and everything to do
+with Christmas and good cheer and good spirit, and
+bipartisanship.
+ Mr. Kolbe. If the gentleman would yield. As you know, there
+are several, actually, of those Christmas events. I presume
+they're being paid by different ones. There's one for the
+diplomatic corps which I presume the State Department pays for.
+It would be interesting to know who pays for the one for
+members of Congress and Cabinet members.
+ Mr. Carlstrom. We'll check it out.
+ [The information follows:]
+
+ Christmas Events
+
+ The traditional Christmas events have been paid by the
+national political committees. Special events during December
+are paid for by the sponsoring entity, i.e., visits of foreign
+heads of state; Kennedy Center Honors. Additionally, the
+Executive Residence budget absorbs the cost of the annual
+Christmas Congressional Ball and the decoration of the
+Residence for the holiday tours.
+
+ Mr. Hoyer. Thank you. February 11, 1992--I have referred to
+this previously--Bush-Quayle Republican State Chairmen
+reception. Paid five months later. Republican Senators
+Reception, March 26, 1992, paid 13 months later.
+ April 3rd, 1992, Republican Congressional Wives Tea.
+Democratic wives were apparently not invited. Reimbursed nine
+months later.
+ Now, I reference that only to reiterate a point, that the
+pattern and the character of events, have not changed even
+though the amount of events may have changed. I would again
+make the point, that this President does more than all the rest
+of us. He just does a lot of things.
+ At some point in time, if you can't answer it now, I would
+like your analysis as to whether the character or type of
+events has changed. Not the numbers. We know that. Because it
+seems to me, if it's wrong once, as I said before, it's wrong
+ten times. And if it's wrong ten times, it is wrong once.
+ We're not going to quibble about if you do it once or twice
+or three times, you're okay, but if you do it four or five or
+six times, you're not okay. That is a silly argument that the
+American public knows defies common sense and is not justified.
+ Now, with respect to the Executive Residence bills, I want
+to say respectfully, Mr. Chairman, I just have one thermostat
+in my house. I probably don't have as big a house as you do.
+ Mr. Kolbe. You do.
+ Mr. Hoyer. I bet I don't. It's 1,700 square feet, so we all
+understand how big my house is.
+ Mr. Kolbe. About mine.
+ Mr. Hoyer. So it's about the same. I've got one thermostat,
+Mr. Chairman. My kids are all adults now, but it used to go up
+and down all the time when they were living there. Now it's
+pretty stable. At night it's about 65, and during the day it's
+about 70.
+ And if I have guests over, I don't ask them, do you want it
+on 71, 72? My point, Mr. Chairman, with all due respect is that
+my heat bill doesn't change one iota, and I want to tell you
+something further.
+ If I put two extra sheets in the washing machine, it
+doesn't make a bit of difference. I put a whole capful of Wisk
+in there, whether I put in four sheets or two sheets. I put a
+whole capful of Wisk. And I put in socks, underwear and all
+that other stuff, too. It doesn't cost me any more.
+ Not only that, but if I told the guests at my house, you
+owe me an extra $2.75, or I'm going to pay an extra $2.75,
+they'd look at me and think I'm crazy. Mr. Chairman, I think
+this is not an argument worthy of this committee.
+ I want to talk about the Chief Usher because I think this
+is an important point. If the Chief Usher keeps the accounts,
+and is responsible for the accounts, then in my opinion the
+Chief Usher needs to be accountable to this committee for the
+purposes of responding to this committee on the expenditure of
+public funds.
+ I am prepared to defend on the political arguments where I
+believe the President is correct and where I think this
+committee is nitpicking and partisan. But when we perform our
+public functions as to the expenditure of funds, appropriated
+from the taxpayers of the United States from their taxes and by
+this subcommittee to the full committee and the Congress of the
+United States, then I will say respectfully that the person who
+knows how those accounts are being handled is the appropriate
+person to testify before this committee.
+
+ roof replacement
+
+ Mr. Chairman, I have one additional question--as soon as I
+can find it--which deals with this particular account. The roof
+replacement. Mundane. That's really what you do. To make sure
+the White House is nice and clean and accessible and safe and a
+residence of which the American public can be very proud, and
+which is the symbol of freedom and justice and liberty
+throughout the world.
+ What's the status of the roof replacement?
+ Mr. Carlstrom. Currently the final design is about
+90percent complete. We hope to award a contract in, I believe, June--
+late May or early June, with the completion date of five months from
+that time.
+ The roof includes the solarium, the major portion of the
+roof itself, the central portion of the Executive Residence,
+and also the North Portico roof. And that total cost is $2.2
+million.
+ Mr. Hoyer. When will it be complete?
+ Mr. Carlstrom. Five months from--say in the fall.
+ Mr. Hoyer. I know you've been pursuing that for some time.
+ Mr. Carlstrom. Yes, we have. And we just had the design
+reviewed not long ago with our people in the Denver Service
+Center. It's coming along very well.
+
+ use of the residence
+
+ Mr. Hoyer. Mr. McDaniel, one question for you. You said all
+of the events which were listed in the residence, the coffees,
+the 103 or 108, whatever they were, were held in the
+residential portion of the White House, where the President
+lives?
+ Mr. McDaniel. All of the coffees--I'm not sure that all of
+the coffees were held in the residence. I said they were in
+various places. The ones that were in the residence were held
+in various places within the residence.
+ There are several rooms. The White House, as you probably
+know, has a ground floor and a first floor, with several public
+rooms. And those are usually the rooms that are used for
+entertaining and events, as well as used for the public tour.
+ And so on the ground floor you have rooms like the Map Room
+and the Diplomatic Reception Room, and on the first floor you
+have the Red, Green and Blue Rooms, and so forth.
+ Mr. Hoyer. I understand that. So the White House, unlike
+our houses, because (A) it's a museum, (B) it is a public
+building, and (C) it is the residence.
+ You'll like the point I'm going to make. The square footage
+of the White House is all three. Each square foot is part of
+the residence, part of the museum, and part of the public
+building.
+ So it is hard to segregate out that this square foot is
+residence, and this square foot is museum and this square foot
+is Government office. Correct?
+ Mr. McDaniel. It was built as a single house by President
+Washington.
+ Mr. Hoyer. And by law the President of the United States
+lives there, presides there. And so unlike you and me, when we
+invite somebody over to our house, when the President invites
+someone to his house, he's also inviting them to a public
+building and a museum.
+ I have no further questions, Mr. Chairman.
+ Mr. Kolbe. Thank you, Mr. Hoyer. Mrs. Meek.
+ Mrs. Meek. No further questions, Mr. Chairman.
+ Mr. Kolbe. Mr. Price.
+ Mr. Price. No further questions. Thank you.
+ Mr. Kolbe. I will have some other questions to submit for
+the record. I would just like to say one thing, to my friend--
+and I do call him my friend--Mr. Hoyer, I would just note that
+in the fiscal year 1993 hearings, that this committee asked
+questions about the swimming pool, about the bowling alley,
+about the movie theater, tennis courts, cars, the presidential
+boxes at the Kennedy Center, who gives those out, the florist,
+telephone services.
+ I don't think asking about the laundry on, $200,000
+appropriation, questioning on the necessity for that is not
+legitimate. I think it is.
+ Mr. Hoyer. Would the Chairman yield?
+ Mr. Kolbe. Absolutely.
+ Mr. Hoyer. I appreciate the Chairman's comments, and I
+think he is correct, and I was making a point. But overstated
+it. I think you are correct, and I stand corrected on that.
+ Clearly the Chairman is correct, that it is within the
+purview of this committee, to review if somebody spent an
+inordinately large amount on laundry. My point, Mr. Chairman,
+was, regarding laundry at the White House, is that it is a very
+large home, frequented by thousands of people daily, and
+obviously has a lot of laundry. I don't know whether you know
+how much Wisk costs.
+ I'm amazed. When you buy household cleaning products at the
+grocery store, you better have, if you buy two or three or
+four, you better have a $20 bill in your pocket.
+ Mr. Kolbe. That's why I go to Price Club, get my big boxes.
+ Mr. Hoyer. Well, I'll tell you. I go to McKay's, who is a
+great leader in my District, and sometimes votes for me, I
+hope. I want him to know that I go to McKay's. But the fact of
+the matter is that the White House is a very large home,
+frequented by thousands of people.
+ How many people come to the White House--I say thousands.
+Maybe it's millions. How many people come to the White House?
+
+ visitation at the white house
+
+ Mr. Carlstrom. Annually, visitors who proceed through it?
+ Mr. Hoyer. Yes.
+ Mr. Carlstrom. Jim, correct me. 1.2 million?
+ Mr. Hoyer. 1.2 million people. At $200,000. I'm not going
+to do the math, but it's about, what 20 cents a person?
+ Mr. Carlstrom. I might just say--I know you're in a hurry,
+but just to elaborate. Let me just talk about that $200,000
+increase if I might for a minute. It's part of what is the
+greater improvement of the electrical and utility systems
+within the White House.
+ This is the existing facility. You can see, it's very
+crowded. And what we intend to do is move the existing vault--
+we can show you a picture of that--where the transformers are
+located. There is a new vault being constructed as a part of
+that utility improvement project.
+ And this laundry facility would be moved into a much better
+habitat than what it currently occupies, and some of this space
+would be used for storage, which is a critical need within the
+White House.
+ So that's the intent of the $200,000.
+ Mr. Kolbe. And I also realize that you're doing laundry
+after events there, linens, and table cloths and so forth. I
+realize there is a tremendous load on that laundry. I'm not
+saying it's not necessary. I just thought it was an interesting
+question.
+ I think we're finished and I don't think we have any
+further questions. Thank you very much for your testimony.
+ We do have several specific questions for the record. Mr.
+Kolbe. And we will reserve the right to call you back if we
+don't get the answers we think we need to the questions that
+have been asked in this hearing, and will be asked of for the
+record.
+ Mr. Carlstrom. It will be our pleasure to do that, Mr.
+Chairman. Thank you.
+ Mr. Kolbe. Next, we have the Office of Administration of
+the White House. And we will pause briefly so Ms. Posey can
+come forward.
+ [Questions and answers submitted for the record and budget
+justifications follow:]
+
+[Pages 92 - 156--The official Committee record contains additional material here.]
+
+ Tuesday, March 11, 1997.
+
+ EXECUTIVE OFFICE OF THE PRESIDENT, OFFICE OF THE ADMINISTRATION
+
+ WITNESSES
+
+ADA POSEY, ACTING DIRECTOR
+JURG HOCHULI, ASSOCIATE DIRECTOR OF THE FINANCIAL MANAGEMENT DIVISION
+
+ Opening Remarks by Chairman Kolbe
+
+ Mr. Kolbe. Thank you very much, Ms. Posey for being here.
+Let me just begin with a statement, this hearing was scheduled
+with you, when? On January the 21st, I believe, the letter of
+invitation went out, so I think you knew when this was going to
+be done.
+ We sent that letter, and this has always been the case, we
+asked for testimony to be submitted one week in advance. When I
+saw you in my office last week, I asked you to please be sure
+you have it to us by the close of business. That's for a
+legitimate reason, so that we can review it so we can ask the
+kinds of questions this subcommittee needs to be able to ask.
+ Your opening statement has just now been put in front of
+me, just delivered this morning, is that correct?
+ Ms. Posey. Yes, sir.
+ Mr. Kolbe. Well, I want to have a chance to read it, so we
+will stand in recess for a few minutes to give us a chance to
+read it, and we will come back and ask you some questions then.
+ I have to tell you, I'm at a loss to understand why you
+couldn't have this testimony to us any earlier. Can you tell
+me?
+ Ms. Posey. Yes, sir. We had been asked for an amount of
+information on February 28th, March 3rd and March 4th. The
+people who were responsible for helping us put that information
+together are the same people who were actually helping me put
+together that opening statement as well.
+ We certainly apologize for the lateness of the testimony.
+We also wanted to respond thoroughly to questions about the
+testimony in 1994, for FY 1995, and we wanted to make sure that
+our statement reflected our concern and your appropriate
+concern in correction of the testimony.
+ So I do apologize for that.
+ Mr. Kolbe. Well, I'll come back after I read it, and
+perhaps ask you another couple of questions. We'll stand in
+recess for a few minutes while we have a chance to look at it.
+ [Recess.]
+ Mr. Kolbe. The subcommittee will come to order once again.
+Ms. Posey, we're prepared to have you give your opening
+statement. Obviously the full statement can be placed in the
+record. If you would like to summarize it here, I've been able
+to see a couple of areas that I want to ask some questions
+about. But if you would like to go through it, you may.
+
+ Opening Statement by Ms. Posey
+
+ Ms. Posey. I will do that. Good morning again, Mr.
+Chairman, and members of the subcommittee. I am pleased to
+appear before you this morning in support of nine Executive
+Office of the President accounts. With me today is Jurg
+Hochuli, the Associate Director of the Financial Management
+Division.
+ This is my first appearance before this subcommittee. I was
+recently named to the position of Acting Director for the
+Office of Administration after the retirement last month of my
+predecessor, Frank Reeder. Prior to being named Acting
+Director, I was the Deputy Director of the Office of
+Administration, and before that, the Associate Director for
+General Services.
+ As the daughter of a psychiatrist who served this
+Government as a Korean War veteran, and is now in his 35th year
+as an employee of the Veterans Health Administration, and the
+granddaughter of two World War II veterans, I am grateful to
+have the opportunity to appear before you today.
+ Before I came to the Office of Administration in 1993, I
+pursued a business career, focusing on administrative
+management in private sector financial institutions. Throughout
+my nearly 20-year working career, I have been responsible for
+managing operations, training, and methodology for continually
+improving product and service delivery.
+ I am honored to appear before you today, and I look forward
+to a fruitful and productive relationship with you and the
+members of the subcommittee and staff.
+ Before I turn to the budgets on whose behalf I am
+testifying, I would like to take a moment to address
+thequestions surrounding the accuracy of testimony before this
+committee in 1994. We have also provided the committee with a written
+response to questions.
+ As we wrote in the letter to the Chairman on February 28th,
+one of my predecessors testified in March of 1994 that to the
+best of her knowledge, she was not aware of any DNC or other
+similarly paid volunteers working in the White House Office.
+There is no evidence to suggest that she knew otherwise.
+ However, because of inadequate coordination and sharing of
+information between offices at the White House and the Office
+of Administration, her testimony relating to paid volunteers
+was not reviewed by staff who knew of the existence of DNC paid
+volunteers.
+ As you are aware, in mid-1995, the inaccuracy of the
+testimony was discovered by the present Assistant to the
+President for Management and Administration. She brought it to
+the attention of senior White House officials, and was
+instructed to get the testimony corrected. As we have
+previously stated, she deeply regrets that she did not follow
+through on that directive and correct the testimony at that
+time.
+ To ensure that this does not happen again, we have put in
+place new procedures to ensure proper vetting of White House
+testimony. We will use the existing Staff Secretary process to
+circulate written testimony and questions for the record to all
+senior White House staff. We believe that if such a process had
+been in place in 1994, the inaccuracy in her testimony would
+have been caught and corrected at that time.
+ Again, Mr. Chairman, and members of the subcommittee, this
+should not have happened. I am here to give you my personal
+assurances that the statements I make to this committee will be
+properly reviewed for accuracy.
+ The Executive Office of the President is committed to the
+President's and Congress' goal of balancing the Federal budget.
+The budgets I represent today are lean. Operating within these
+austere budgets has been challenging. There are only two
+significant components contained in these budgets requiring
+additional funding over the current services level requested
+for the EOP.
+ The first involves a Congressionally mandated transfer of
+funding from the White House Communications Agency, a Defense
+Department component, to the White House Office. The second is
+a comprehensive plan to renew and strengthen the EOP's
+information management infrastructure.
+ Let me turn now to the issue of staff levels in the
+Executive Office of the President. As you know, the President
+in 1993 reduced the size of the Executive Office of the
+President by 25 percent, effective in October of 1993. As we
+said at the time, the baseline for that cut was based on actual
+bodies on board in the Bush administration. Because we wanted
+to make sure our figures were accurate and complete, we
+included not only EOP employees, but also detailees, assignees,
+Presidential Management Interns, and all other categories of
+Other Government Employees that were tracked by the Bush
+administration. That 25 percent reduced level was maintained
+for four years.
+ Today the Executive Office of the President faces new
+policy needs, particularly the staff requested by General
+McCaffrey to implement the President's aggressive drug control
+strategy, to which the Congress agreed last year in the Omnibus
+Appropriations Bill. It will also be necessary to add staff in
+the Counsel's Office to respond to the requests for information
+from Congressional and other bodies. Thus, it is no longer
+possible to maintain the 1993 staffing level. However, we are
+committed to maintaining reduced staffing levels in accordance
+with the 12 percent reduction mandated throughout the Federal
+Government by the administration's reinvention initiatives. Our
+fiscal year 1998 target of 1,185 staff--employees and OGEs--
+actually represents a reduction of 15 percent from the Bush
+administration baseline.
+ It is imperative that all of us in the Federal Government
+stay the course toward a balanced budget. The EOP has
+contributed to this effort, consistently presenting budget
+requests during the last four years that have grown at less
+than the rate of inflation.
+ The EOP will continue to maximize its resources, and
+implement cost savings measures. Yet it is also imperative that
+the Executive Office of the President be adequately funded to
+provide the quality of support deserving our Chief Executive.
+It is crucial that the EOP maintain the existing infrastructure
+and plan for future investments in personnel and information
+technology, now and into the 21st century.
+ That concludes my abbreviated remarks, and I would be happy
+to answer any of your questions.
+ [The information follows:]
+
+[Pages 161 - 167--The official Committee record contains additional material here.]
+
+ correction of prior testimony
+
+ Mr. Kolbe. Thank you very much. Let me begin by asking a
+couple of questions on this issue of the inaccurate testimony.
+ I appreciate your statement that you apologize, that you
+regret it, apologize that it happened. I must say I just think
+that there is a bit of a pattern here that we see over and over
+again: nothing wrong was done, but we won't do it again. That
+seems to be what we keep hearing with everything with regard to
+down there.
+ I just wonder why somebody that is on the White House staff
+in the kind of position that you have would have a directive
+from somebody--I'm not sure whether it was the Counsel's
+Office--to correct the testimony and think it so insignificant
+that they just didn't bother to follow through with it.
+ Could you enlighten me as to why this kind of thing is not
+considered important enough to follow through, given testimony
+that you may not have been knowing at the time. I'm questioning
+whether or not somebody who is in that office administering the
+White House would not know about volunteers working in the
+White House.
+ But they may not have known about it at the time, but then
+finds out it is incorrect, and doesn't correct it for more than
+two years.
+ Ms. Posey. Mr. Chairman, the omission of correcting
+thetestimony, again, was an oversight that we deeply regret. It was a
+mistake. It was not corrected. It should have been. The lesson learned
+for us is that we needed stronger controls in place to make sure that
+those things that we had set in place were actually done. They were not
+done.
+ There are no excuses other than the fact that we did not
+correct the record as we should have.
+ Mr. Kolbe. You'll excuse me if I have some doubts about
+whether the procedures really are in place or not to assure
+that this doesn't happen again. I think it is interesting that
+it was conveniently not corrected until after the election, and
+then we find that we've got somebody correcting them. Two years
+later you make the correction.
+
+ staffing levels--full-time equivalents (ftes)
+
+ But I want to talk about the staffing levels, or I want to
+ask questions about the staffing, which goes very much to the
+heart of this whole issue there.
+ And I understand this subcommittee has been over this issue
+in the past, but I am new to it, and I have not had a chance to
+ask about some of the differences of opinion, though must say
+in one of the other subcommittees I serve on, we've had some
+discussion of this as it relates to other elements that come
+under the White House Office, or the White House account as a
+whole.
+ But it appears to me--let me just ask this question to
+begin with. Using a standard definition of a full-time
+employee, how many employees were on board within the Executive
+Office of the President at the end of the Bush administration
+and the beginning of the Clinton administration, and how many
+are on board today?
+ Ms. Posey. At the end of the Bush administration----
+ Mr. Kolbe. Full-time employees, now. We're not talking
+detailees.
+ Ms. Posey. We're talking about FTEs. There were 1,086, as
+of November 7th, 1992, on board.
+ Mr. Kolbe. And how many are there--well, yes. What is your
+target, your 1998 target?
+ Ms. Posey. Our 1998 target for FTE is 1,015.
+ Mr. Kolbe. That's a reduction of 71, or about seven
+percent. Is that correct?
+ Ms. Posey. Yes, that is correct.
+ Mr. Kolbe. This administration made a big thing about a 25
+percent reduction in the White House staff. It's apparent, as
+you look at it, that virtually all of the cuts came from the
+Office of National Drug Policy and the detailees who go back to
+other offices.
+ And now you've told us that you won't be able to sustain
+that reduction, is that correct?
+ Ms. Posey. Yes, sir. That level of 25 percent reduced
+staffing, was maintained for four years. As I mentioned in my
+opening statement, the need to implement an aggressive drug
+control strategy necessitated an increase in staff.
+ Mr. Kolbe. We'll save the question for General McCaffrey as
+to why this administration decided drugs were so unimportant in
+1993 and 1994 that we reduced the numbers there from 136 in
+1992 to 27 in 1994, the first full year. But would you not
+agree, that's really where the major reductions in staff took
+place?
+ Ms. Posey. Sir, I cannot tell you that I am familiar with
+the actual numbers of decrease in ONDCP at the time. But I
+would say that one of the things that we did do was to decrease
+those numbers, yes.
+ Mr. Kolbe. Let me correct my numbers. I won't wait two
+years to correct it. It went from 115 to 25, on board
+personnel, in the Office of National Drug Policy.
+ Ms. Posey. Yes.
+
+ staffing levels--detailees
+
+ Mr. Kolbe. I asked you about full-time-employees. How many
+detailees were on board within the Executive Office of the
+President at the end of the Bush administration?
+ Ms. Posey. At the end, there were 308.
+ Mr. Kolbe. And how many are on board today?
+ Ms. Posey. There are 234 as of February 25th, 1997.
+ Mr. Kolbe. And your number for 1998, your target for 1998
+is what?
+ Ms. Posey. 170.
+
+ staffing levels--personnel ceiling in eop
+
+ Mr. Kolbe. Well, during the last--during the 1996 cycle of
+appropriations Patsy Thomasson testified before this committee
+that the Executive Office of the President established a
+personnel ceiling of 1,034 for the Executive Office. The
+President has added 110 people, detailees and full time
+employees of the drug czar's office last year.
+ And since that is a part of EOP, the Executive Office, this
+is going to cause you to exceed the personnel ceiling, is it
+not? So my question is what is the current personnel ceiling.
+ Ms. Posey. The current personnel ceiling for ONDCP, sir? Or
+for the entire EOP?
+ Mr. Kolbe. Total. I think your total is 1,034.
+ Ms. Posey. Our current, now, will be 1,185, our projected
+for 1998. Right now it is----
+ Mr. Kolbe. 1,185?
+ Ms. Posey. 1,185 is the number targeted, for total on
+board.
+ Mr. Kolbe. Okay. So you're over by 140--141 over the
+ceiling, is that correct?
+ Ms. Posey. Yes. If you are looking at the same chart I am--
+--
+ Mr. Kolbe. So that is your self-imposed ceiling, so that is
+no longer an operable number, is that correct?
+ Ms. Posey. Yes, sir. That's what we believe.
+ Mr. Kolbe. All right. I'll have some more questions. Mr.
+Hoyer.
+
+ staffing levels--increase for ondcp
+
+ Mr. Hoyer. Thank you, Mr. Chairman. Ms. Posey, let me make
+sure that I understand. We met, as you pointed out, for four
+years, the 25 percent reduction in those offices included
+within the Executive Office of the President by President
+Clinton.
+ And the comparable President Bush figures were 25 percent
+at least above our personnel.
+ Ms. Posey. Yes, sir. The Bush baseline was 1,394 that we
+started with.
+ Mr. Hoyer. I understand that. Now, with respect to your
+testimony that the Chairman refers to, the 1,044 ceiling, as a
+result of the request of General McCaffrey we're now increasing
+the ONDCP. And what will the ONDCP component be?
+ Ms. Posey. The ONDCP component will be 109.
+ Mr. Hochuli. There was an initial increase in 1994, where
+we added 15 additional slots to ONDCP. There was an additional
+increase that we testified to bringing the 1,044 number to
+1,072. Included in that was 15 for ONDCP, and now we're adding
+109 to that.
+ Mr. Hoyer. 109 additional?
+ Ms. Posey. That's correct.
+ Mr. Hoyer. So it's not 109 total? What will the ONDCP
+complement be if your budget is approved as submitted?
+ Ms. Posey. It will be 124 FTEs.
+ Mr. Hoyer. In looking at the Office of National Drug
+Control Policy, we budgeted for 37 in fiscal year 1994, that's
+when the President submitted 25, and we added to that. Senator
+Deconcini was the real leader in doing that. Which brought you
+to an on board personnel of 37, correct?
+ Ms. Posey. That's correct.
+ Mr. Hoyer. 40 in the next year.
+ Ms. Posey. Yes.
+ Mr. Hoyer. 45 the following year.
+ Ms. Posey. Yes, sir.
+ Mr. Hoyer. Now, you're not adding 109 to the 45.
+ Ms. Posey. No.
+ Mr. Hoyer. So your total, analogous figure, will be 124.
+ Ms. Posey. Yes.
+ Mr. Hoyer. So we're going from 45 to 124.
+ Ms. Posey. Yes, sir.
+
+ volunteers in the white house
+
+ Mr. Hoyer. Now, Ms. Posey, with respect to the mistake that
+was made, your information is that Ms. Thomasson had no
+knowledge of the volunteers being on board.
+ Ms. Posey. That is my statement, yes.
+ Mr. Hoyer. Notwithstanding that, am I correct that even if
+the volunteers paid by the DNC had been counted in the number
+that the White House would have made its 25 percent reduction?
+ Ms. Posey. That is correct.
+ Mr. Hoyer. Furthermore, am I correct that Ronald Reagan in
+1987 sought an opinion of the Attorney General as to the
+appropriateness--legality, if you will--of having volunteers
+paid by, in that case, the RNC working in the White House. Is
+that correct?
+ Ms. Posey. That is correct.
+ Mr. Hoyer. It's my further understanding that the opinion
+that the Attorney General gave in 1987 to then-President Reagan
+was that there was no legal problem with that, is that correct?
+ Ms. Posey. That is correct.
+ Mr. Hoyer. Can you think of any reason why Ms. Thomasson,
+knowing (A) that the target for the ceiling of employees would
+have been met, even adding those volunteers, and (B) knowing
+that it was legal to do this, would have misled the committee
+on this issue? Can you think of any reason?
+ Ms. Posey. I can't think of any reason, sir.
+ Mr. Hoyer. I can't think of any reason either, other than
+the truth was she didn't know. Now, you have said, and we all
+know the White House messed up.
+ Ms. Posey. Yes, we did.
+ Mr. Hoyer. Once they found it out they should have told us.
+ Ms. Posey. Yes, we should have.
+ Mr. Hoyer. Okay. There seems no reason that I can discern
+for dissembling on this issue or concealing it from the
+committee or the American public?
+ Ms. Posey. Absolutely not.
+ Mr. Hoyer. I have no further questions at this time.
+ Mr. Kolbe. Mrs. Meek.
+ Mrs. Meek. I have no questions at this time, Mr. Chairman.
+ Mr. Kolbe. Mr. Price.
+
+ white house communications agency (whca) transfer
+
+ Mr. Price. Thank you, Mr. Chairman. I would like to briefly
+ask Ms. Posey to clarify the matter of this transfer of funds
+from DOD. As I understand it, that $9.8 million transfer from
+the DOD budget to your budget was mandated by the DOD
+authorization of last year.
+ We're not talking about any net increase in the Federal
+budget, is that correct?
+ Ms. Posey. No net increase. Zero net increase.
+ Mr. Price. And where does the $9.8 million figure come
+from? Can you tell us how that figure was arrived at? Does it
+represent any change in these operations?
+ Ms. Posey. No. That figure was derived by the Department of
+Defense itself, along with OMB. And the figure is actually
+fiscal year 1996 actuals. So that's the figure, $9.8 million.
+ Mr. Price. So it's based on fiscal year 1996 actual
+expenditures?
+ Ms. Posey. Yes, sir.
+ Mr. Price. What is the rationale for what is in and what is
+out of the Defense budget in this area? Could you explain that?
+ Ms. Posey. The DOD IG suggested that the traditional non-
+telecommunications functions that WHCA, a component of DOD,
+performed really should be funded by the White House. They are
+traditional long-standing functions, of audio/visual services,
+stenographic, photographic services, and also news wire
+services.
+ Mr. Price. Are these services that have traditionally been
+performed over several administrations? Did this administration
+add any new duties?
+ Ms. Posey. No, sir. There are no functions added by this
+administration. And this, in fact, has been a practice for
+decades. The reason why these services are provided is for the
+historical record of the Presidency.
+ Mr. Price. And then what functions would remain under DOD
+funding?
+ Ms. Posey. There would be telecommunications functions that
+would remain.
+ Mr. Price. Basic telecommunications?
+ Ms. Posey. The DOD IG actually indicated that because,
+again, these functions fell outside of the telecommunications
+function, that WHCA was, in their opinion, best suited to
+provide these historical services, that they should continue
+providing those services, but funding should be through the
+White House.
+ Mr. Price. You're stressing the historic record for the
+archives. But we're also talking here about audio/visual, news
+wire, stenographic, photographic services----
+ Ms. Posey. Yes.
+ Mr. Price [continuing]. Which have to do with keeping the
+principals informed of our current issues as well as preserving
+the historical record.
+ Ms. Posey. Right. And also, when we talk about audio/
+visual, we talk about the lights, the sound, the microphones,
+those types of things that we even use in the Congressional
+function to maintain records of what is happening within this
+branch of Government as well.
+ Mr. Price. To what extent do you regard this division of
+labor as settled? Are there other possible sources to provide
+these services? Or is the White House Office the best provider,
+do you think?
+ Ms. Posey. Sir, the provider of the services will continue
+to be WHCA. We will utilize WHCA on a reimbursablebasis. We
+will have the funds, if approved, to actually pay for the services that
+will continue to be provided by WHCA, the same exact services.
+ But it is not only in the interest of the taxpayer for us
+to very, very carefully scrutinize these costs that would be
+coming in, it's also in the interest of the White House to make
+sure that the fiscal year 1996 actual costs, which this amount
+is based on, really come in play.
+ In fact, we hope that after a period of time, we will be
+able to gather enough information over the course of several
+years perhaps, maybe two or three, to determine whether or not
+that figure could go down. It could go up.
+ Equipment costs money. There are inflationary factors that
+are considered, but certainly it is in our best interest to
+make sure that that $9.8 million, if approved, being
+transferred over to the White House Office is carefully
+monitored.
+ Mr. Price. As far you're concerned, the transfer out of the
+DOD budget is warranted, and WHCA is in all likelihood the best
+provider of these services?
+ Ms. Posey. Yes, sir.
+ Mr. Price. Alright, thank you. Thank you, Mr. Chairman.
+
+ paid volunteers in previous administrations
+
+ Mr. Kolbe. On the issue of volunteers, you said that, in
+answer to a question from Mr. Hoyer, that you understood that
+the procedure of using paid volunteers was the same in the
+previous administration or administrations, in the Bush and the
+Reagan administrations, is that correct?
+ Ms. Posey. It is my understanding that the Reagan
+administration sought an opinion by the Department of Justice,
+and in 1987, the Department of Justice agreed with the Reagan
+administration that it was perfectly legal to have volunteers
+at the White House being paid by political parties.
+ Mr. Kolbe. If you have, from your historical records, if
+you have evidence of the use of the paid volunteers, would you
+please submit that to us, from previous administrations.
+ Ms. Posey. We have actually provided a copy of information,
+a chart of the use of paid volunteers within this
+administration. I would be happy to----
+ Mr. Kolbe. You made the comment that it was done in
+previous administrations. I would like you to----
+ Ms. Posey. I will be happy to take that for the record,
+sir.
+ Mr. Kolbe. I would like to have it.
+ [The information follows:]
+
+ The Reagan Administration sought and received a legal
+opinion from the Department of Justice in 1982 that it was
+permissible for the White House to employ volunteers paid by
+outside sources. In 1987, the Reagan Administration sought and
+received an opinion from the Department of Justice that it was
+further permissible to employ volunteers paid by political
+organizations such as the Republican National Committee.
+ The records of the Reagan and other prior Administrations
+have been removed for archiving in their respective
+presidential libraries. The Subcommittee may be able to obtain
+such information for the Reagan, Bush, or other presidential
+libraries.
+
+ 1982 memorandum on white house use of volunteers
+
+ Mr. Kolbe. Let me just offer for you an excerpt from a
+memorandum from the counsel to the President, President Reagan,
+in February of 1982. It is a long memorandum, and the topic is
+White House use of volunteers.
+ He says, ``We offer one general observation. Volunteers
+should not be paid by political organizations that were
+established to pursue national political objectives, such as
+the Republican National Committee or the National League of
+Cities. Payments by these groups would invariably violate the
+spirit, if not the letter of the rule, against gifts by
+organizations which have, or seek to establish a business or
+financial relationship with the White House.''
+ The memorandum goes on to say, ``More importantly, we feel
+that these groups should not pay the salary of a White House
+office employee because it would create the appearance of
+impropriety. It could always be charged that the employee, or
+at least a superior, who might be grateful for the financial
+assistance to White House operations, gave preferential
+treatment to a person because of political considerations, or
+lacked complete independence or impartiality.''
+ ``This could, in the words of the standards of conduct,
+affect, adversely, the confidence of the public in the
+integrity of the Government. We recognize that employees of the
+White House office are expected to be political in the broad
+sense of actively supporting the President's policies and
+activities. The standards of conduct attempt to ensure,
+however, that employees will at least be independent from the
+financial pressure of outside partisan organizations.''
+ We will place the full memorandum in the record.
+ [The information follows:]
+
+[Pages 175 - 184--The official Committee record contains additional material here.]
+
+ Mr. Kolbe. Is there a similar memorandum on the use of paid
+volunteers in the current administration, that has emanated
+from the counsel's office?
+ Ms. Posey. What I would like to do is step back, Mr.
+Chairman. I appreciate your reading the 1982 opinion. It is my
+understanding that that opinion was explicitly reversed in
+1987. So if I understand your question----
+ Mr. Kolbe. I do not believe you will find the 1987 opinion
+did that at all. It doesn't address any of those issues. So I
+think that is an absolutely inaccurate statement on your part.
+I think you should read them before you--I would like to know,
+and have you submit for the record any current White House
+memorandum that exists with regard to the use of paid
+volunteers in the White House.
+ In other words, I would like to know what the current
+policy of the White House is.
+ Ms. Posey. I will do that, sir.
+ [The information follows:]
+
+ In accordance with guidance provided by the Office of Legal
+Counsel at the Department of Justice in 1982 and 1987, and
+subject to appropriate conflict of interest reviews, the White
+House will continue to accept services from individuals who are
+receiving money from a non-federal source in connection with
+the work they perform here. This will include participants in
+the government-wide Intergovernmental Personnel Act (IPA)
+program which follows Office of Personnel Management
+regulations. This program is designed to provide employees of
+non-profit organizations, educational institutions, and state,
+local and tribal governments with the opportunity to serve in
+federal agencies on a reimbursable or non-reimbursable basis.
+ Although permitted under the Department of Justice
+guidance, the White House will no longer employ individuals who
+are paid by the Democratic National Committee or other partisan
+political organizations.
+ Copies of the 1982 and 1987 Department of Justice guidance
+have previously been provided to the Subcommittee. Other
+memoranda stating current White House policy do not exist.
+
+ 1987 Memorandum on White House Use of Volunteers
+
+ Ms. Meek. Mr. Chairman, would you yield?
+ Mr. Kolbe. I yield. Mrs. Meek.
+ Mrs. Meek. In reading the 1987 memorandum from Alan Paul,
+associate counsel to the President, in the last statement, it
+does give some credence to what the witness has just mentioned.
+The statement reads, thusly.
+ ``Accordingly, we see no basis for a determination by this
+office, that persons being paid by national political
+organizations should necessarily be precluded from being
+assigned to perform governmental duties in a White House
+office. We believe that the general advice given in the 1982
+OLC memorandum, that a determination with respect to the
+employment of volunteers in the pay of private organizations is
+best made under the applicable standards of conduct on a case
+by case basis, in the White House office itself, applies in
+such cases to the same extent as it applies in any other
+case.''
+ Mr. Kolbe. Thank you, Mrs. Meek.
+ Mrs. Meek. Does not that sort of clarify----
+ Mr. Kolbe. No, Mrs. Meek, it does not. Both of the opinions
+concluded that it was legal. The question was whether it was
+proper, or improper, and the conclusion was that it was the
+sense of propriety, that I think was the issue here.
+ After all, a lawyer does not just give--and that is what we
+have seen so much of. It seems we always have this repetition
+down there at the White House.
+ We did not do anything that was illegal. We are not going
+to do it anymore; but it was not illegal.
+ There is never any kind of sense of the propriety of it.
+Lawyers are also counselors to the President, and that is what
+Mr. Fielding was doing. He was counseling them, that the sense
+of impropriety, the appearance of impropriety, that they ought
+not to use that. And I would just say if I found that kind of a
+memorandum in my file when I came in as White House counsel or
+White House Office of Administration, it would certainly raise
+some questions with me, and I would certainly ask for some
+guidance about it, or whether or not this was the work of some
+idiot that had written that memorandum. I do not think that it
+was.
+
+ Current policy on White House use of Volunteers
+
+ But that is why I am asking you to give me documentation of
+what the current written policy, if there has been any kind of
+memorandums from the Office of the Counsel, or anybody else in
+the White House with regard to paid volunteerism, what the
+current standard practice is with regard to employing those
+people, using them in the White House as a paid volunteer.
+ I would like to know what the written procedures are for
+that.
+ The basic question, to me, however, to get back to the
+issue--the fundamental underlying question--we strip away all
+this, the volunteers and everything else, and I know there are
+going to be some more questions on that.
+
+ Twenty-five percent staff reduction
+
+ The bottom line is President Clinton made quite a point of
+saying there was going to be a 25 percent reduction in the
+staffing of the White House. And he maintained that commitment
+all the way through the--it was a fiction--but he maintained
+that commitment all the way through the 1996 election.
+ You are now saying it is not an operative commitment?
+ Ms. Posey. I am saying today, the office faces new policy
+needs.
+ Mr. Kolbe. You do not have a 25 percent, nor do you intend
+to have a 25 percent reduction in personnel?
+ Ms. Posey. We are not able to maintain that level.
+ Mr. Kolbe. You do not have nor are you intending to meet a
+25 percent reduction. That is what I am trying to say. That it
+is no longer an operable policy.
+ I want to go, if I might--and this will be my final area,
+so I will just get it out of the way, and then we will let
+others ask questions here.
+
+ Five-Year Automation Plan
+
+ Just to the issue, because it has been raised, again,
+today, in the newspaper, on the issue of the database.
+ You make a point, in here, in your testimony, of talking
+about the need for the capital investment plan. You have talked
+about the need for establishment. The cornerstone is the
+establishment of an EOP, an Executive Office of the President
+Information Systems architecture.
+ Questions have been raised by this subcommittee before, and
+we have asked for you to provide us with that architecture.
+ I do not believe that we still, to this date, have that. Is
+that correct?
+ Ms. Posey. That is correct, sir.
+ Mr. Kolbe. Why would you expect us to unfence this money
+without giving us that architecture?
+ Ms. Posey. My predecessor, Frank Reeder, when he began his
+tenure, came into the Office of Administration and found a five
+year plan at the time, that he was not satisfied with. When he
+testified to you, to this subcommittee last year, he indicated
+that he would provide to this committee a five year plan.
+ Mr. Reeder followed through with that commitment on
+September 24. We met with subcommittee staff and the
+subcommittee staff actually gave us some good ideas, and
+prompted us to take a step back and look at what we had
+provided.
+ Mr. Reeder then engaged our users, engaged the Office of
+Information Regulatory Affairs, to look at what we had
+developed. Our advisers and the information that was provided,
+and appreciated by us, by subcommittee staff, led us to the
+understanding that what we needed to incorporate in this five-
+year plan that we talked about actually was the very first step
+of problem solving, and that very first step is analyzing what
+your users' needs are in the context of the designing
+architecture.
+ That was the first step that needed to be taken before we
+could talk about what long-term needs we would have. We have to
+identify what we have right now. We have to collect data about
+what our users' needs are, and then we need to detail what we
+have currently in our infrastructure, taking into consideration
+industry standards, taking into consideration what is going on
+out there in technology, and then come up with something that
+makes sense.
+ Mr. Kolbe. Ms. Posey, you said that was the first step.
+Past tense. So that has been done? That is done?
+ Ms. Posey. That has not been done.
+ Mr. Kolbe. Oh, okay.
+ Ms. Posey. That has not been done. Excuse me.
+ Mr. Kolbe. That is the first step. That is going to be the
+first step.
+ Ms. Posey. Yes; yes.
+ Mr. Kolbe. So you would acknowledge that you have not yet
+done that for us?
+ Ms. Posey. I would acknowledge that. Yes, sir.
+ Mr. Kolbe. Do you have a timetable for this, because I
+think it is extremely important the White House have the
+information system that it needs.
+ Ms. Posey. And it is extremely important for us to go
+through a deliberative process of planning, of engaging outside
+sources to assist us in identifying what architecture exists
+right now, and what it should look like in the future. That is
+the critical step and that actually is a lot of work. The
+reason why, I would suggest to you, Mr. Chairman, that a five-
+year plan has been so difficult, at least since last year, and
+that is what I can speak to--is that it has never been done in
+the history of the EOP.
+ [Clerk's note.--The Witness later changed this to ``Office
+of Administration''.]
+ No one has ever sat down and identified what the
+architecture of the EOP should be. We have 12 different, as you
+know, disparate agencies within the EOP who have a different
+set of needs. It is a difficult task and it takes a lot of
+resources.
+ Mr. Kolbe. Yes. I agree. This subcommittee has had to deal
+with this issue with the IRS, as you may know, and I will give
+you exactly the same answer that we gave to the IRS, and that
+is, you bring us an architectural plan, one that makes sense,
+and that we can all agree on, and we will give you the funds
+for this. That is a commitment that I will make, that we are
+not going to try to keep those funds from you. We are not
+shortchanging those funds. It is important that you have this.
+Bring us the architectural plan, and certainly, your system, as
+complicated as it may be--and I would agree, it is sort of
+beyond my ken to deal with it--but your system, as complicated
+as it may be, cannot possibly be more complicated than the IRS,
+tracking a 100 million plus returns every year, and what they
+have to go through.
+ So bring us an architectural plan and we will fund it. I
+would just make one other comment, and that is, part of that
+had better be something that is in writing, that assures us, in
+that architectural plan, that we are not going to see the kind
+of thing that we see here in the paper today, where a White
+House aide says they proposed using a taxpayer funded database
+to maintain information on potential supporters.
+ We are going to have to see something that makes it very
+clear that that is fenced off, secured, made absolutely clear
+that that kind of use of a system to track political supporters
+is not going to be funded with taxpayer dollars.
+ Ms. Posey. I understand your concern, sir. I would suggest,
+respectfully, that we could not provide you a five-year plan or
+architecture until we go through the steps as outlined in the
+Capital Investment Plan. Those are critical to making sure that
+we, you, do not approve investment funds before we know what we
+really need.
+ Mr. Kolbe. I understand. I am just saying add one thing to
+that step, that capital investment process, and that is--
+because this would not normally be in an agency's process--but
+we need to know how you are going to assure that this is not
+misused, as was apparently suggested by at least one White
+House official.
+ Ms. Posey. I appreciate your concern.
+ Mr. Kolbe. I am going to call on Mr. Hoyer for his second
+round, and then we will go to the two that came in and have not
+had a chance for a first round here.
+ Mr. Hoyer.
+ Mr. Hoyer. Mr. Chairman, I will yield until they have the
+opportunity to participate in the first round.
+ Mr. Kolbe. Mr. Istook.
+
+ Past Testimony on White House Volunteers
+
+ Mr. Istook. Thank you, Mr. Hoyer. I appreciate that.
+ Ms. Posey, let me be clear: you have been in your current
+position as Acting Director for how long, now?
+ Ms. Posey. Since February 3rd, sir, and I have been----
+ Mr. Istook. Just over a month.
+ Ms. Posey. Been in the Office of Administration for four
+years, almost.
+ Mr. Istook. Okay. But in the particular position only a
+month. Let me say, first, that my major complaints are
+certainly not with you. My complaints are with those who want
+you or someone else to catch the flak while they isolate
+themselves from accountability to Congress, and to the
+taxpayers, for what they have been doing with taxpayers' money,
+and the deceits which they had practiced upon this particular
+committee.
+ You know, of course, that Patsy Thomasson was asked,
+directly, over two years ago--she was asked, directly, if there
+were volunteers being paid by the Democratic National Committee
+at the White House.
+ Not only did she respond, no, but I expressly asked her if
+she would be the person at the White House who would have the
+knowledge, that she was not guessing, that she actually knew
+that what she was stating was true, or was not true, or if she
+did not, she would tell us she did not know and she would find
+out.
+ Instead, she represented that she was the one who would
+have the knowledge, and she said no, and then it takes until
+this year to get an apology letter saying, ``Whoops, we did not
+tell the truth to you.''
+ But I am disturbed, because your testimony has gone beyond
+acknowledging the problems of someone else, and has volunteered
+a statement about Ms. Thomasson, that there is no evidence that
+she knew otherwise, from what she testified in March of 1994. I
+would certainly invite you, and anyone else, to read the
+transcript, and find that she was questioned directly on
+whether she would be the person in the White House who would
+have that knowledge, if it were so, and she expressly answered
+that she would be.
+ And yet I find that your testimony is perpetuating the
+pattern of trying to say that despite how clear evidence is,
+nothing is going wrong, and Ms. Posey, I do not know how this
+subcommittee can get the information we need when the White
+House sends over people who either do not know, or who, as
+yourself, through no fault of your own, are brand new in your
+position, and could not be expected to know the history of
+things such as this database, and what has happened elsewhere.
+ And Mr. Chairman, I would certainly hope that at the proper
+time we will ask persons from the White House who have
+knowledge, and have authority, to come before this
+subcommittee, and to answer to these things.
+
+ White House Office Database (WHODB)
+
+ Can you tell me, Ms. Posey, the so-called WHO database, is
+that currently in operation today, and is it intended to
+continue throughout the term of this President?
+ Ms. Posey. WHODB, as it is called in the White House
+complex, is intended to continue operation. WHODB was--the
+genesis of it was that there were over two dozen different
+databases----
+ Mr. Istook. I understand the genesis, and I do not need the
+history. I just wanted to know whether it is intended to
+continue.
+ Ms. Posey. Yes, sir.
+ Mr. Istook. I notice, in one of the documents that has now
+come to public light, being November 1st, 1994, a memorandum
+from Marsha Scott to Erskine Bowles and Harold Ickes and
+others, that it is stated that one of four goals of WHODB is--
+and I am quoting from it, four: ``By working the early
+supporters, identify by March 1st, 1995, all those folks we
+will be working with in 1996.''
+ In other words, not looking at, historically, who the
+President felt a need to keep up with, but looking ahead to
+1996, to those persons who would be of assistance to his
+reelection.
+
+ policy on the use of whodb
+
+ Now, my question is, what is being done, if anything, right
+now, to prevent this database from being used for anybody's
+election efforts in 1998, or in the year 2000, or any other
+time, since we know that it has been designed for use for
+campaign purposes?
+ What has been done to prevent it from being used for
+someone seeking an office in 1998 or in the year 2000?
+ Ms. Posey. Mr. Istook, I cannot speak to the memo that you
+refer to, but I can speak to the policy that WHODB is to be
+utilized for official purposes only.
+ Mr. Istook. So there has been no policy change in these
+last several months, despite what has come to light about
+WHODB? There has been no policy change? You are still under the
+same policy under which you have been conducting yourselves
+throughout?
+ Ms. Posey. Again, I think, based on what you read, Mr.
+Istook, it sounds like that might be information as to what
+WHODB could have been at the time. WHODB----
+ Mr. Istook. That is listed under a goal. That is named by
+Ms. Marsha Scott as one of the four goals of WHODB.
+ Ms. Posey. I understand.
+ Mr. Istook. Not potential use. But one of the very reasons
+for its existence.
+ Ms. Posey. I understand. WHODB did not go into operation
+until August of 1995, and at the time it did go into operation,
+it was expressly clear, and expressly the purpose of WHODB to
+be used for official purposes only.
+ Mr. Istook. Do you believe that Marsha Scott lied to
+herself in the memo that she wrote to others, as well as
+herself, saying that one of the goals of WHODB was working with
+early supporters to identify those that they would be working
+with in 1996?
+ Ms. Posey. Mr. Istook, I could not speak to that. I just--I
+could not----
+ Mr. Istook. You just told me what you thought were the
+goals, and the goals did not include that, and what you just
+said contradicts the White House memorandum here.
+ It is kind of like some other contradictions we are finding
+between White House statements and other agencies.
+ Has anything been done within the White House to take new
+steps to assure that this database will not be utilized by
+anyone for any campaign purposes, whether it be in 1997, 1998,
+1999, the year 2000, or any other future time?
+ Ms. Posey. Yes, sir. The policies and guidelines we are----
+ Mr. Istook. I am not talking about the original policy and
+guidelines. I am talking about anything that has been done in
+the last six months, that is a change.
+ Ms. Posey. There has not been a policy change since WHODB
+has been operational, in August of 1995, and when it went
+operational it was only used, and will continue to only be used
+for official purposes within the White House.
+ [Clerk's note.--The witness later added: ``In Spring 1996,
+as a result of an interim review, certain changes were made to
+WHODB, including restrictions on the level of access.'']
+ Mr. Istook. Who would it take to make such a change in the
+White House?, because I recognize that you are not the person
+in charge of that. Who would have to step forward and say that
+we are going to do something differently about how we are
+handling this database?
+ Ms. Posey. If I understand you correctly, sir, you are
+suggesting that a change has taken place.
+ Mr. Istook. No. I am saying who would have to take action
+to make a change.
+ Ms. Posey. The action has been taken, when it was
+operational in 1995.
+ Mr. Istook. Well, that is not a change. You see, that is
+not what I asked you. I asked you if anything has been done
+that is different from when it was first established.
+
+ whodb costs
+
+ Can you tell me how much the taxpayers are now spending on
+a monthly, or annual basis, to maintain, or perform any
+services on this WHODB, including internal costs of personnel,
+even if their salaries are being paid by someone else, as well
+as costs to any vendor?
+ Ms. Posey. I do not have that specific information, Mr.
+Istook, and the reason why is that our Information Systems and
+Technology group does not track staff time like we would in a
+law firm, for example. They provide services to offices within
+the EOP as a matter of their function and mission, and that is
+the mission of this one component of the Office of
+Administration. So I would not have that information.
+
+ whodb vendor documentation
+
+ Mr. Istook. Could you please identify for us all vendors
+who have played a role in providing goods or equipment or
+services for WHODB, and copies of all the invoices or purchase
+orders, or proposals, or correspondence exchanged between the
+White House or its extensions and those vendors.
+ Ms. Posey. I will be happy to take that for the record.
+ [Clerk's note.--Due to the volume of information provided,
+these documents are being maintained in the Subcommittee's
+official files.]
+ Mr. Istook. And from what account are payments to such
+vendors, or any other payments related to WHODB? From what
+accounts are those payments made?
+ Ms. Posey. I will take that for the record as well.
+ [The information follows:]
+
+ The White House Office and the Office of Administration
+paid for the expenses of the White House Office database.
+
+ selection of acting director as witness
+
+ Mr. Istook. All right. I appreciate that, and Ms. Posey, I
+do want to emphasize, you are the person that is on the spot
+here. I recognize you have not been involved in things that
+have gone on, historically here, but it is very distressing to
+me, that rather than have someone come before us who does have
+knowledge of what has gone before, who must be held accountable
+for misrepresentations made to us, the White House has chosen
+to put you on the spot.
+ And I want you to know that I recognize the difficulty of
+that, and I regret that they chose to put you in that
+situation.
+ Ms. Posey. Mr. Istook, on a personal note, I have to share
+with you that I have been, as you well know, in the Office of
+Administration for four years.
+ The reason why I am acting in this position is because, of
+course, Frank Reeder, my predecessor, retired, and I am acting
+because that is my choice, to act. It is a natural progression
+for one to ascend to the top of the organization, as it were.
+It is traditional for the Office of Administration director to
+testify on behalf of EOP accounts, and I certainly understand
+where you are coming from in your remarks.
+ But I have to let you know that I am a part of this
+decision, personally, to be up here, myself. It is a job I am
+testing as well, and this is quite a test, and again, I
+appreciate your concerns.
+
+ whodb data fields
+
+ Mr. Istook. A final thing that I would like to ask at this
+time, and, you know, others may come for the record, I would
+like to make sure that I have got a printout of the different
+fields that are kept within, whether it be the main database or
+associated databases, because I recognize that something like
+this, technically, we may refer to them as databases, but it is
+a whole set of databases that are interrelated and
+interconnected.
+ And I would certainly like to have a printout of the
+different fields, and a description of what the fields
+represent for the original and all associated databases.
+ Ms. Posey. Certainly. I will take that for the record.
+ [Clerk's note.--Due to the volume of information provided,
+these documents are being maintained in the Subcommittee's
+official files.]
+ Ms. Posey. Also, I would suggest, I believe that that
+information may have already been provided to Mr. McIntosh's
+committee.
+ Mr. Istook. It is possible we have that and I just have not
+seen it.
+ Ms. Posey. Okay. Certainly.
+ Mr. Istook. Thank you.
+ Mr. Kolbe. Mr. Aderholt.
+ Mr. Aderholt. Thank you, Mr. Chairman.
+
+ phone use for campaign purposes
+
+ Ms. Posey, thank you for coming and testifying before the
+subcommittee today. Of course one of the responsibilities that
+this subcommittee is charged with is the oversight of your
+office, and the American people, and the people of my State of
+Alabama who I represent, do have a right to know about the
+possibility of the White House becoming politicized, and no
+longer effectively watching out for the interest of the
+American people.
+ Your office provides the administrative support for the
+center of where the business of our Nation is done, and in the
+words of the President himself, it should be strictly off
+limits to partisan political activity.
+ I understand there have been reports that there are phones
+that have been installed by the DNC for political use inside
+the White House complex. Where, exactly, have the phones been
+installed?
+ Ms. Posey. It is my understanding--you are correct--that
+phones were provided for the campaign, for people to use for
+political purposes of the campaign. I do not know exactly where
+those phones and equipment were located, but I certainly can
+take that for the record.
+ Mr. Aderholt. Okay.
+ [The information follows:]
+
+ See answer to Question #72 for location of phone lines.
+There were no phone lines paid for by the DNC. All phone lines
+were paid for by Clinton-Gore '96.
+
+ Mr. Aderholt. Do you know how many were installed?
+ Ms. Posey. No. I do not know that, sir.
+ Mr. Aderholt. Other than the President and the Vice
+President, what about access? Do you know anything about who
+would have access to the phones, or is that something you would
+have to check on?
+ Ms. Posey. Certainly the people who worked in the White
+House office, who may have been engaged in political activity,
+would have known where this equipment is, and again, I will
+certainly provide that information to you, by taking that
+question for the record.
+ [The information follows:]
+
+ Anyone working within the White House who had a need to use
+a political phone or fax would have access to the lines that
+were installed in the various offices.
+
+ Mr. Aderholt. And were any official funds used to install
+or maintain the phones?
+ Ms. Posey. No, sir. It is not my understanding that that--
+the campaign phones and equipment----
+ Mr. Aderholt. Were paid----
+ Ms. Posey [continuing]. Were paid by official Government
+funds. No.
+
+ Staffing Levels--Paid Volunteers
+
+ Mr. Aderholt. The White House, the Office of the Vice
+President, and the Office of Policy Development, employed at
+least 23 DNC paid personnel, and at least 18 different people
+paid by other outside organizations.
+ Why would all these people be needed, particularly when the
+President was trying to make good on a campaign promise to cut
+White House staff by 25 percent, which, incidentally, the White
+House did not count toward employment totals?
+ Ms. Posey. Sir, even if we had--you are referring to the
+Office of Policy Development, OPD, is that----
+ Mr. Aderholt. Yes.
+ Ms. Posey. Okay. Again, if we had had detailees which
+counted in our body count, within that office, it would have
+fallen in our target, so that I am not sure that I understand
+your question.
+ Mr. Aderholt. Well, you asked me about OPD. Regarding the
+White House, the Office of the White House, the Vice President,
+and the OPD together, it is my understanding that at least 23
+DNC paid personnel and at least 18 different people were paid
+by other outside organizations.
+ Ms. Posey. Yes.
+ Mr. Aderholt. The first question, why would all these
+people be needed, particularly when the President was trying to
+make good on campaign promises to cut White House staff by 25
+percent.
+ Ms. Posey. Let me share with you, again, that I think--I
+might have mentioned, before, that even with those----
+ Mr. Aderholt. And I came in late, so you may have. So I
+apologize.
+ Ms. Posey. Okay. With the total number that you are
+speaking of, if we had absorbed that number within the actual
+body count, we still would have fallen below the target level.
+ [Clerk's note.--The witness later added: ``except for one
+year, where we would have been over by one.'']
+ Mr. Aderholt. Okay.
+ Ms. Posey. There is information that I have provided to the
+committee about what individuals were actually doing within the
+various offices, who were those paid volunteers, who were both
+paid by DNC and other outside sources, through a program that
+is actually regulated through OPM, the Intergovernmental
+Personnel Act, where folks are paid through universities, and
+other nonprofit organizations for their expertise. That is a
+program that is utilized across the Government.
+ So that information, definitely, we have provided to you,
+and I would refer that to you as well.
+ Mr. Aderholt. Let me ask one more question.
+
+ Advance Work of DNC--Paid Volunteers
+
+ Many of the DNC-paid White House personnel conducted what
+has been called advance work. Are you familiar with that?
+ Ms. Posey. Yes.
+ Mr. Aderholt. Okay. What exactly is advance work and why
+could not Federal employees do that same thing?
+ Ms. Posey. I can share with you that advance work is
+something that is done by folks in preparation for a visit by
+one of our principals to an area outside, or even anywhere
+within Washington, D.C., or outside of Washington, D.C. The
+practice of using volunteers, paid and nonpaid, has existed
+within this White House since 1993.
+ As you know, we have stopped the practice of enlisting or
+having DNC-paid volunteers work within the White House. We have
+absorbed those folks.
+ It is a function--advance--that has been provided, not only
+for this administration but all Presidents, as I understand, in
+recent history.
+
+ Volunteers With Blue Passes
+
+ Mr. Aderholt. Did any of the DNC-paid employees have the
+blue passes which enable them to the West Wing of the White
+House?
+ Ms. Posey. Let me refer to the chart that I provided.
+ Mr. Kolbe. Will the gentleman yield for just one moment?
+ You just said that you have provided. To whom did you
+provide that?
+ Ms. Posey. This memo was directed to Mr. Wolf and Mr.
+Istook yesterday.
+ Mr. Kolbe. It was not given to the committee. Go ahead.
+ Mr. Aderholt. I do not think all the committee members
+received that.
+ Ms. Posey. Okay. I apologize for that. Actually, there were
+a number of individuals who did have--several individuals who
+did have White House passes. They varied between the IPAs as we
+call them.
+ Mr. Aderholt. And explain exactly what IPA is.
+ Ms. Posey. Let me give you an example of some of the people
+on this list. There was a volunteer who came from Georgetown
+Women's Law and Public Policy group, and their responsibility
+was as a policy analyst, under a senior policy analyst within
+the White House.
+ Again, that is one of those programs that is Government-
+wide, where we use the expertise of folks from non-profit
+organizations, and their organizations pay their salary. So
+there is a variety of these types of folks.
+ Mr. Aderholt. So their salary is paid by an outside
+organization as opposed to the DNC?
+ Ms. Posey. Yes, sir.
+ Mr. Aderholt. What about the DNC-paid employees?
+ Of course I have not got access to your chart there, but
+does it talk about anybody having blue passes to the West Wing?
+ Ms. Posey. Yes, it does include all of the detail.
+ Mr. Aderholt. All right. I am sure we will get access to
+those at some point.
+ Mr. Chairman, that is all I have got right now. I may
+submit some for the record.
+ Mr. Kolbe. Mr. Hoyer.
+
+ White House Blue Passes
+
+ Mr. Hoyer. Just to follow up on the blue passes, blue
+passes allow you to go where?
+ Ms. Posey. Excuse me, sir?
+ Mr. Hoyer. The blue passes that were referred to earlier
+allow you to go where?
+ Ms. Posey. It allows you to go to the East and West Wing of
+the White House as well as the rest of the EOP complex, the Old
+Executive Office building, and the New Executive Office
+Building.
+ Mr. Hoyer. And of course Mr. Wolf was very concerned that
+people whose jobs entailed going to those particular places did
+in fact have the appropriate pass.
+ Ms. Posey. Yes, sir.
+ Mr. Hoyer. The White House pursued that relatively tardily,
+but nevertheless did make sure everybody had the proper pass.
+ Ms. Posey. Yes.
+ Mr. Hoyer. To give them access to those places where they
+needed to go to perform their functions.
+ Ms. Posey. Yes.
+ Mr. Hoyer. And so am I correct, that the list that you have
+provided us does in fact reflect that the passes given to
+people were appropriate for the responsibilities and duties
+they were carrying out?
+ Ms. Posey. Yes, sir.
+ Mr. Hoyer. There is nothing unusual about the blue pass
+other than it allows you to get to certain places where you are
+working?
+ Ms. Posey. Right, and those who have a blue pass, picture
+pass, must go through our routine FBI investigation check, so
+we definitely follow the procedures we have in place to make
+sure that people have appropriate clearance going to those
+places in the EOP.
+ Mr. Hoyer. All right. And to your knowledge that was
+followed here?
+ Ms. Posey. Yes, sir.
+ Mr. Hoyer. Ms. Posey, I asked to your knowledge, because
+you obviously did not personally do this.
+ Ms. Posey. No, I did not.
+ Mr. Hoyer. I do want to get into the Patsy Thomasson
+situation, again, where----
+ Ms. Posey. I appreciate that, sir, and, again, as I said in
+my opening statement----
+ Mr. Hoyer. This is the information that has been provided
+to you----
+ Ms. Posey. That is the information, sir.
+ Mr. Hoyer [continuing]. And consistent with that
+information, your assumption is that all of those were vetted,
+appropriately.
+ Ms. Posey. I appreciate that, sir. Yes.
+
+ Twenty-five Percent Staff Reduction
+
+ Mr. Hoyer. Now, I want to reiterate, because regarding the
+so-called campaign pledge, the Chairman, and frankly, the
+Republican Party, have taken the position since 1993, that the
+President did not meet his objectives.
+ We have repeated, at each juncture, and have pointed out
+clearly that whatever the wisdom of that comment may have been,
+that in fact the objective was met.
+ You are now indicating that four years after that objective
+was set, and notwithstanding the fact that you have met it for
+four years, the White House may not be able to continue meeting
+it because of additional responsibilities it wants to place on
+ONDCP?
+ Ms. Posey. Yes, sir.
+ Mr. Hoyer. Ms. Posey, I do not know whether you watched the
+House Oversight Committee's hearings, lately, but the
+committees of Congress, led by the Republican leadership in
+each case, are all asking for increases in their budgets,
+except for the House Oversight Committee. Very substantial
+increases in a number of cases. So that they only lasted for
+two years. We doubled that.
+
+ WHODB--White House Policy
+
+ I think the budget is relatively straightforward. I think
+we need to come to grips, Ms. Posey, with the database and the
+architecture.
+ This committee, as the Chairman has correctly pointed out,
+unrelated to any political issues about the use of the
+database--but let me ask a question, because Mr. Istook, who is
+a good attorney, asked the question about seven times, seven
+different ways, about the policy having changed.
+ Now, you never said the policy had changed, nor did you
+ever say the Scott memorandum was implemented.
+ Ms. Posey. That is correct, sir.
+ Mr. Hoyer. But Mr. Istook said it seven times, I did not
+count them all, but it was multiple times. And an attorney does
+that so the jury may, at some point in time, think that the
+witness said that, rather than the attorney. I used to use that
+all the time. That is how I know it is a good tactic.
+ Let me ask you something. Was the Scott memorandum ever
+White House policy?
+ Ms. Posey. No, it was not, sir. To my understanding it was
+not, and of course, again, as I mentioned to Mr. Istook, the
+database went into effect----
+ Mr. Hoyer. August of 1995.
+ Ms. Posey. August of 1995. And when it did, it was strictly
+to be used, and it is used for official purposes only.
+ Mr. Hoyer. And that is the policy of the White House?
+ Ms. Posey. That is the policy of the White House.
+ Mr. Hoyer. And it has been the policy of the White House?
+ Ms. Posey. Yes, sir.
+ Mr. Hoyer. Notwithstanding the fact that Ms. Scott, in her
+memorandum, said it could be used in other ways?
+ Ms. Posey. Yes, sir.
+ Mr. Hoyer. You are not familiar with any of the computer
+lists kept on Capitol Hill, are you?
+ Ms. Posey. No, I am not, sir.
+ Mr. Hoyer. Well, none of the 435 Members of Congress would
+ever refer to them and try to use them to their political
+advantage. Simon Pure people that we all are.
+ Thank you, Ms. Posey. I appreciate it very much.
+ Ms. Posey. Thank you.
+ Mr. Kolbe. Just a couple follow-ups here.
+
+ Number of DNC Volunteers at the White House
+
+ In your letter to the committee on February 28th--well, Mr.
+Cunningham, the counsel's letter--he said, ``Unbeknownst to Ms.
+Thomasson, there were approximately 11 individuals working at
+the White House who were paid by the DNC.''
+ Can you tell me why we have to be approximate and wecannot
+count?
+ Ms. Posey. Sir, I really--I cannot speak to that. I do know
+that the information that we have provided, actually on March
+10th, yesterday. The letter acknowledges that, there is
+probably more information that we would have to retrieve
+through archives, through materials that are in other places,
+and certainly, we would not want to speak to an exact number
+without reviewing all of the information.
+ The only thing that I would say is that we would not want
+to, as I would not want to, misspeak, or provide information
+that was not precise or concise, without having the benefit of
+the time to look at all of the information requested.
+ Mr. Hoyer. Mr. Chairman, would you yield for a second.
+ Mr. Kolbe. Of course.
+ Mr. Hoyer. Mr. Chairman, the list I am looking at, I have
+counted, has 23.
+ Mr. Kolbe. Well, his letter says at--I assume he is talking
+about at that moment, at the time of that testimony, that there
+were approximately 11.
+ Mr. Hoyer. That is the difference.
+ Mr. Kolbe. That is the difference.
+ Mr. Hoyer. Thank you.
+
+ Annual Report to Congress on White House Staffing
+
+ Mr. Kolbe. Following up on that point, though, the
+Independent Counsel Reauthorization Act of 1994 requires you to
+submit to Congress a list of all the names, positions, titles,
+and annual rates, pay for each individual employed by the White
+House office or detailed to the White House office.
+ To your knowledge, does that list, when you provide that,
+has that included the names of employees paid by outside
+groups, and if not, why not?
+ Ms. Posey. To my knowledge, that July 1st report actually
+indicates--I really need to check on that. I do not want to
+misspeak, sir.
+ Mr. Kolbe. You do not know whether it was included or not.
+ Ms. Posey. I do not want to give you an incorrect answer.
+ [The information follows:]
+
+ The reports submitted on July 1 of each year to Congress
+pursuant to Section 6 of the Independent Counsel
+Reauthorization Act of 1994 list employees and detailees, as
+required by the terms of the statute.
+ Employees are defined as individuals on the payroll of the
+White House Office. Detailees are defined as individuals from
+other Federal agencies who are temporarily assigned to a job at
+the White House Office different from their normal duties at
+their employing Federal agency. The White House has never
+understood the Independent Counsel Reauthorization Act of 1994
+to require a listing of volunteers, including the hundreds of
+volunteers who assist in Correspondence and at special
+activities such as the December holiday festivities and the
+Easter Egg Roll. Please also see response to Question #68,
+below.
+
+ Applicability of Ethics Rules
+
+ Mr. Kolbe. Is it your understanding that these people are
+treated as Federal employees for purposes of ethics rules and
+requirements?
+ Ms. Posey. All employees who are at the White House, those
+who engage in activity at the White House, are required to
+attend mandatory ethics training. They get ethics training and
+a confidentiality form----
+ Mr. Kolbe. So ethics rule apply, conflict of interest rules
+apply?
+ Ms. Posey. Yes.
+ Mr. Kolbe. Hatch Act, other regulations affecting Federal
+employees apply to them?
+ Ms. Posey. All those rules that apply to White House
+employees would apply to those.
+ Mr. Kolbe. Right. To those being paid by others.
+ Well, staff has reviewed that June 1995 report, and there
+is no listing in any of those, and since you treat them as
+Federal employees in every other way, I am just wondering why
+you would choose not to include them on your list of employees
+detailed. I mean, you have detailees who are not coming out of
+your account either.
+ Ms. Posey. Yes. Okay. Let me make sure that I correct
+something. The Hatch Act may or may not apply to these folks
+that you are speaking of. This report does contain paid
+employees and detailees. It does not include volunteers,
+including the--actually, the hundreds who work in the White
+House as a longstanding practice--college folks, retirees,
+helping with Easter Egg rolls, Christmas holidays, and
+Correspondence. It does not include those people.
+ Mr. Kolbe. It would not apply to somebody who is on as a
+photographic assistant and whose source of salary is the Los
+Alamos National Lab? The Hatch Act would not apply?
+ Ms. Posey. That person, as I understand it----
+ Mr. Hoyer. Mr. Chairman, I hate to sound like a lawyer, but
+it requires a legal conclusion of the witness, that she may or
+may not know. I will tell you my own view--not that you want to
+hear that--is that a Federal employee detailed to the White
+House, by virtue of that detail, does not exempt them from the
+provisions of the Hatch Act that do in fact apply.
+ Mr. Kolbe. Does or does not?
+ Mr. Hoyer. Does not. Off the top of my head, I would think
+that you cannot get around the proscriptions of the Hatch Act
+by simply detailing either to the White House or to the
+Congress, and I think they still apply.
+ Mr. Kolbe. That was certainly my understanding. But you
+might want to----
+ Ms. Posey. My understanding is that it is based on which
+appropriations apply, that that particular detailee is--if they
+are from Department of State----
+ Mr. Kolbe. Well if somebody is DNC, I do not think the
+Hatch Act would apply.
+ Ms. Posey. No.
+ Mr. Kolbe. That is why I was asking. You said the Hatch Act
+does not apply to any of these people.
+ Ms. Posey. Okay; okay.
+ Mr. Kolbe. I was asking about that. I do not know how it
+would apply to somebody who is paid by something--there, the
+Los Alamos, is a national lab. Actually, I do not know why that
+is not a detailee as opposed to a volunteer. But in any event,
+I guess I thought Los Alamos National Lab was Federal. But
+others like--I do not know what the Children's Defense Fund,
+and others, would be. But that is a minor point.
+ It appears, though, that the issue that I was talking
+about, not whether the Hatch Act applied--but these people who
+are covered by other White House rules, in any event--whatever
+that is--do not appear on that report, which suggests that we
+really were not getting an accurate report on the people who
+were employed at the White House. If detailees are included, I
+do not know why volunteers who are paid from another source
+would not be included in that report.
+ Mr. Hoyer. Mr. Chairman, could I follow up on that.
+ Mr. Kolbe. Yes.
+
+ Individuals under the intergovernmental personnel act (ipas)
+
+ Mr. Hoyer. Explain to me on this list, so I understand it
+better, why the Los Alamos National Lab, which is a Federal
+facility--I presume these folks are in fact Federal employees--
+why they are not detailees as opposed to volunteers. Are they
+on leave, or----
+ Ms. Posey. That is the specific program, if I look,
+exactly--I am looking for the Los Alamos. It is an IPA.
+ Mr. Hoyer. What is that?
+ Ms. Posey. That is the Intergovernmental Personnel Act.
+Actually, that is the acronym, and under that program----
+ Mr. Hoyer. It sounds like a detailee to me.
+ Ms. Posey. Under that program volunteers can be paid
+through other sources, the source for which they came from, to
+provide expertise to Federal Government agencies.
+ Mr. Kolbe. Mr. Hoyer, do you have any other questions?
+ Mr. Hoyer. I would just observe under the IPA, obviously,
+Congress gets folks like this who are in fact paid by the
+sending agency, not by us.
+ Mr. Kolbe. Right.
+ Mr. Hoyer. But, you know, maybe it is a distinction without
+a difference. Counsel obviously has the distinction, which may
+make a difference. But in terms of why they are listed under
+volunteers----
+ Ms. Posey. His distinction that he just shared with me,
+that most national labs like that are actually funded through
+universities.
+ Mr. Hoyer. Los Alamos, then, is a grantee agency. They are
+not Federal employees?
+ Mr. Hochuli. They may not be. We can check.
+ Ms. Posey. I can check on that for you.
+ Mr. Kolbe. It is really not that critical.
+ Mr. Hoyer. However, that may not be critical--but I am
+somewhat concerned here, Mr. Chairman. I note that one of the
+volunteers here is being paid by the Nixon Center for Peace and
+Freedom. That bears careful scrutiny.
+ Mr. Kolbe. At least he is working on international trade.
+ Mr. Hoyer. It is a bipartisan volunteer group, apparently.
+
+ Closing Remarks
+
+ Mr. Kolbe. Ms. Posey, thank you for coming. I have to tell
+you, quite candidly, and frankly, I am a little concerned with
+the number of times here, today, in your testimony, I heard,
+``It is not my understanding,'' or ``It is my understanding,''
+``I will take that for the record,'' or ``I cannot speak to
+that.''
+ It does not appear to me that we really got a lot of the
+answers that we need to have, and I hope that in the future we
+will be able to have people here who can answer the questions
+we have.
+ Mr. Wolf has a whole series of questions, since he could
+not get away from his subcommittee, which we will submit for
+the record, and I think there will be some others from other
+Members of the committee.
+ If there are no further questions or anything else further,
+this subcommittee stands adjourned.
+ [Questions and answers submitted for the record and budget
+justifications follow and, due to an error in production, are
+not in order of Committee Seniority.]
+
+[Pages 202 - 400--The official Committee record contains additional material here.]
+
+ Tuesday, March 11, 1997.
+
+ OFFICE OF MANAGEMENT AND BUDGET
+
+ WITNESS
+
+FRANKLIN RAINES, DIRECTOR
+
+ Opening Remarks
+
+ Mr. Kolbe. The subcommittee will come to order, and,
+Director Raines, we are very pleased to have you here today,
+pleased to have you before our subcommittee. I think this is
+the first time you have appeared before the subcommittee, but
+you are certainly not a stranger to us.
+ Legend has it that you were very instrumental in
+negotiating the final touches to the 1997 Omnibus Appropriation
+Bill in the 104th Congress. I am not sure if you want to take
+the parentage of that legislation.
+ I am optimistic and confident that we are going to have an
+appropriation bill not only from this subcommittee but from all
+the subcommittees, well before the closing hours of the first
+session of this Congress so that we don't have to go through
+that. I hope that is not wishful thinking on my part.
+ I have been pleased to learn of some of the initiatives
+that you have advanced since you came on board last year. In
+particular, given this subcommittee's history of concerns about
+technology investments, I was very interested to read your
+directive of October 25th of last year setting out clear
+guidelines for the purchase and use of Federal technology.
+ Having said that, I am not as happy about the request that
+this subcommittee has for the IRS's Tax Systems Modernization
+Program. As you know, IRS is requesting another $500 million
+this year, but they are not in the position to give us any
+program specifics or plans on how they want to spend that
+money, I would be curious to hear your thoughts about their
+efforts and some of the reasons why you think we should go
+ahead, why you have included it in your budget proposal, and
+why you think we should go ahead and spend $500 million on this
+investment right now, absent any concrete plans as to how IRS
+is going to use it.
+ I look forward to your testimony and a couple of questions
+that I have. Let me turn to my friend and colleague, Steny
+Hoyer, for some comments.
+ Mr. Hoyer. I thank the chairman.
+ It is interesting that we have a very distinguished leader,
+and I want to say at the outset that I, for one, am very
+pleased that he would undertake the responsibility as director
+of OMB. It is a back-breaking job.
+ I don't know your salary and your prior position, but it
+was a geometric, substantial reduction in salary. The fact that
+Mr. Raines' considerable talents, both in the private sector
+and in the public sector, have been demonstrated time and time
+again, demonstrate that the President chose very well, and the
+American public will be advantaged by Mr. Raines' service. I am
+pleased to welcome you to the committee.
+ I will be asking you some questions as we develop this
+budget, but it always is ironic to me, Mr. Raines, that you
+oversee the implementation of the operating budget of $600
+billion or thereabouts. By operating, I mean the discretionary
+budget of $600 billion or thereabouts. A lot of it is
+passthrough.
+ We just had the White House budget in front of us this
+morning. There were at least three cameras here, all kinds of
+reporters. I am pleased to see some young people here at least
+because this gentleman, young people, is in charge of the
+office which oversees the proper application of monies, the
+creation of budgets, and the setting of priorities in our
+Government.
+ It is a testimony to the media's interest in minutia, which
+nevertheless is sexy and headline-grabbing and controversial,
+which has, in the final analysis, little impact, and the
+difficulty of dealing with the large issues of Government and
+its management doing more with less, balancing the budget, and
+applying the public's resources that we have no cameras and no
+reporters here. Do we have any reporters here. I don't want to
+malign the press if they are not AWOL, but they are AWOL.
+ This is not a new phenomenon. I have been at this business
+since 1966 in an elected capacity. So it is not a new
+phenomenon, but it always, I think, is ironic. We areglad to
+have you here.
+ Mr. Kolbe. Thank you, Mr. Hoyer.
+ Director Raines, we would be happy to take your statement
+at this time. Let me just remind you, since it is your first
+time here, though you probably know this, that your full
+statement will be placed in the record, and we would be happy
+to have you summarize it if you would, so that we can direct
+some questions to you.
+
+ Opening Statement
+
+ Mr. Raines. Thank you, Mr. Chairman, and thank you, Mr.
+Hoyer.
+ It is a pleasure for me to be here today to talk about the
+budget for the Office of Management and Budget. With your
+approval, I would like to formally submit my written statement,
+do a brief oral summary, and then answer any questions that you
+might have.
+ Mr. Chairman, if I have one message for you today, it is
+this: OMB is doing more than it ever has, is continuing to
+perform at a very high professional level, and is doing it with
+less resources and fewer staff.
+ On one hand, the workload has exploded in recent years, due
+to the year-round, all-consuming nature of the budget process,
+as well as a host of new laws and reporting requirements
+designed to make our Government work better. With these new
+laws, the President and Congress have taken significant steps
+to ensure that the Federal Government and its programs operate
+as efficiently and effectively as possible.
+ On the other hand, OMB is operating with fewer people and a
+very constrained budget. At OMB's request, Congress has held
+the agency's budget essentially flat since fiscal 1993, when it
+totaled $56 million. Also, since 1993, OMB has cut the number
+of funded full-time equivalent positions by 55--from 573 in
+1993 to 518 proposed in 1998--or nearly 10 percent. Over those
+six years, OMB has cut its administrative costs by $1.4
+million, or 21 percent. OMB is now at its smallest size since
+1966.
+ We are proud of the work we do. We feel strongly that we
+are providing high-quality work, both in support of the
+President, as well as in response to the many legal
+requirements that we face.
+ At the same time, I want to make clear today that the work
+will continue to increase at OMB. Even as we reduce the size of
+the Federal Government as a percentage of the economy, Federal
+programs are becoming more complex. The legal requirements that
+Congress has imposed will add even more to our workload in
+fiscal 1998.
+ To ensure that OMB continues to provide the high-quality
+work that the President and Congress have come to expect, the
+President requests, $57,240,000 in 1998, 3 percent more than
+the enacted level in 1997. The 1998 budget also provides for
+the same number of full-time equivalents as in 1997.
+ The last two Congresses added numerous new or broadened
+responsibilities for OMB, requiring the institution to perform
+at even higher levels of production.
+ OMB is on the cutting edge of major changes in Government.
+Congress has asked OMB to manage and oversee numerous new
+initiatives. We are playing a leading role in balancing the
+budget, improving Government performance, auditing Government
+programs, and managing information technology.
+ I would just like to mention a few of these new
+requirements, not because we look upon them as burdens, but
+because they define an agenda of reform for the Government that
+Congress has laid out in the last three years.
+ Under the Government Performance and Results Act of 1993,
+we have devoted considerable resources to setting overall
+Government policy and coordinating the development of strategic
+plans by the agencies. We also have reviewed the results of the
+pilot projects that GPRA authorized.
+ Beginning in 1998, OMB will face a new set of major GPRA-
+related tasks, such as preparing the initial Government-wide
+performance plans, and reviewing and approving the initial set
+of agency annual performance plans.
+ Under the Unfunded Mandates Reform Act of 1995, OMB must
+issue guidelines to agencies, monitor agency compliance with
+the Act, and publish an annual report, on agency compliance.
+ Under the Paperwork Reduction Act of 1995, OMB must
+annually review and approve, or disapprove, over 3,000 proposed
+agency collections of information to ensure that agencies are
+complying with the Act and promulgate guidance and track
+compliance.
+ Under the Information Technology Management Reform Act of
+1996, OMB must: examine agency capital investment proposals for
+information technology; oversee the establishment and evaluate
+the performance of agency chief information officers; and as
+oversee multi-agency and Government-wide procurement programs
+for information technology.
+ Under the Regulatory Flexibility Act Amendments, OMB must
+work with the Small Business Administration, the Environmental
+Protection Agency, and the Occupational Safety and Health
+Administration to review proposed rules and hear from
+representatives of small business.
+ Under the Congressional Review of Agency Rulemaking Act,
+OMB must determine whether a rule is major--that is, whether it
+will have an effect on the economy of at least $100 million.
+ Under the National Technology Transfer Advancement Act of
+1995, OMB must regularly consult with, and advise, the agencies
+as to how the Act applies to their programs.
+ Under the Single Audit Amendment Act of 1996, OMB must
+provide guidance to implement the Act, which includes
+revisingthe single audit circular and annually updating the compliance
+supplement designed to help auditors perform audits under the Act.
+ Under the Federal Financial Management Improvement Act of
+1996, OMB will have to revise several OMB documents and work
+with agency staff as we try to move toward getting all Federal
+agencies audited.
+ Under the Government Management and Reform Act of 1994, OMB
+will have to revise its bulletin on the audit of Federal
+financial statements.
+ Finally, under the Federal Workforce Restructuring Act of
+1994, OMB must continually monitor agencies on whether they are
+meeting their declining annual targets for staffing levels and
+manage the voluntary separation incentive payment, or buyout,
+program.
+ Mr. Chairman, OMB is a proud institution that has performed
+well over the years. I can tell you with great confidence that
+our 500 employees want to continue serving at the highest
+possible level.
+ At a time of tight resources, we have sought to ensure that
+we are working as efficiently as possible. Our proposed budget
+request will allow us to meet the new or broadened workload
+requirements of the laws that I have discussed, in addition to
+our many existing functions, with the same number of FTE as in
+1997.
+ Mr. Chairman, that concludes my statement. I would be happy
+to answer any questions.
+ [Mr. Raines prepared statement follows:]
+
+[Pages 405 - 411--The official Committee record contains additional material here.]
+
+ Tax Systems Modernization
+
+ Mr. Kolbe. Thank you very much, Mr. Director.
+ Let me start by asking a couple of questions on specific
+budget items. Would you go back to that issue of the IRS and
+their technology investment, their TSM system, Tax Systems
+Modernization?
+ They have got it in their budget. You have apparently
+approved it, reviewed it, given it your blessing, and yet, by
+IRS's own admission, they don't have any architecture. By their
+own admission, they don't have any plan. By their own
+admission, they have completely failed in the better than $4
+billion we have spent to date.
+ What is the rationale for the 1998 request? Why do you
+think we should go ahead and spend $500 million on a plan we
+don't even have at this point?
+ Mr. Raines. Well----
+ Mr. Kolbe. If I might just finish, it just seems, reading
+your own memorandum to executive departments and agency heads,
+which by the way is an excellent memorandum--I mean, you cover
+specific things--that ``investments in major information
+systems proposed for funding in the President's budget
+should,'' and then you list a whole series of things they
+should do. I think looking at it, it is safe to say that TSM
+doesn't achieve those since they don't have any plan at all.
+That is a big chunk, $500 million.
+ Mr. Raines. Well, Mr. Chairman, we agree that the Tax
+System Modernization Program has not been successful. Indeed,
+we have worked with the Treasury Department to revamp that
+program and move them to where they can comply with the
+requirements of that memorandum. And it is our expectation
+that, during fiscal year 1997, they will have met the
+requirements of the memorandum and, therefore, be in a position
+to move forward on improving the management of the system,
+enabling the agency to improve its productivity and the level
+of service they provide to taxpayers.
+ It is our proposal to make available the funds on the
+condition that they have met the requirements of the memorandum
+and we would be unwilling to apportion funds for expenditures
+until we have made a determination that they have, indeed, met
+the conditions.
+ The problem that we have in information technology, and
+indeed, it is one of the reasons that we run into trouble with
+these big projects, is that the appropriation cycle is one that
+if you are working during this year to have a plan to
+implement, you can't get any funds for it until two years from
+now. If you need to finish the plan this year, you can't
+propose it until the next President's budget, and the funds
+won't get appropriated until the next fall, and then the money
+might be available.
+ What we are asking the committee to do with regard to the
+IRS is to provide appropriations that will be spent over a
+number of years, not just the next two years, but over a number
+of years, where we would be implementing our full funding
+approach, and funds would only be available to the IRS to spend
+as they meet the milestones as set forth in the memorandum.
+ We believe that this approach will provide not only the
+funds necessary to make the investments, but also the controls
+necessary to ensure that we don't launch into a major program
+without an architecture, without incremental improvement, and
+without being able to demonstrate immediate benefits from each
+increment as it is implemented.
+ Mr. Kolbe. In a sense, you are really saying you want us to
+put this money up, a billion dollars, $500 million now and $500
+million next year. You want us to put it up on the basis of
+faith.
+ Mr. Raines. Not faith, unless you are saying faith in the
+fact that OMB is committed to ensuring that these technology
+projects will have to meet tough standards before they can go
+forward.
+ I mean, this is a commitment that we have been applying
+throughout the Government, not just at the IRS. Indeed, if you
+go from agency to agency, I think you will find that most of
+the large monolithic technology development projects have been
+subject to substantial revision in this budget, and that
+theyhave been subject to substantial scrutiny. Many of them don't meet
+the requirements of the memorandum and, we have said to those agencies
+that they may not go forward in committing funds until they meet the
+standards of the memorandum because we believe that that is the way you
+will manage risk and actually achieve the goals of the projects.
+ Mr. Kolbe. Well, considering this subcommittee, I think,
+feels it has been burned a bit in the past on the IRS, you, I
+presume, wouldn't have any objections if we put our own little
+fences and parameters around the appropriation before we
+actually allow it to be spent. This way, we can have some
+assurance that the money is going to be spent correctly.
+ Let me make it clear that TSM needs to be done, and we need
+to get a system in place that will work. I made the commitment
+to IRS which I will repeat to you. I said bring us the
+architecture for TSM and satisfy us that we have got something
+that is going to work, and we will support you. We will go all
+the way with you, at least I will and I know Mr. Hoyer will,
+and I think this subcommittee will do so, but I would presume
+you are not going to do it on faith. You are going to insist
+that they meet these requirements.
+ I assume you don't have any objection if we also put some
+guidelines, some markers down about making sure that IRS is
+going to be able to meet the proper expenditure of the funds.
+ Mr. Raines. We would be happy to work with the
+subcommittee----
+ Mr. Kolbe. I would like to do that.
+ Mr. Raines [continuing]. On integrating our approaches, so
+that we have the same requirements and the same measures. We
+can then work together in ensuring that they are being met.
+ I think the most important thing for the agency is that
+they have very clear standards as to what is expected of them
+and that they have an understanding of when they meet these
+requirements, that they will, in fact, have the resources
+available. So we would be happy to work with the subcommittee
+to see if we can come up with a way to do that.
+
+ funding for the federal election commission
+
+ Mr. Kolbe. Thank you. That is what I wanted to hear you
+say, and my staff, our staff will work with you and with IRS on
+that, so that we have something that we are all jointly agreed
+upon.
+ Just one other budget question before I go to Mr. Hoyer,
+and I will come back with a couple of other questions.
+ The FEC has submitted a supplemental request of $1.7
+million and eight FTEs. They have also got a revised budget
+request for FY 1998. Can you tell me what OMB's position on the
+FY 1997 supplemental and the FY 1998 amended request is? This
+is a concurrent agency submission, so the requirements don't
+have to be approved by you. I would like to know if OMB and the
+administration supports the additional resources that are
+requested in the supplemental and the revised request.
+ Mr. Raines. Well, we have that request now under review,
+and we have not yet completed the review. But we understand the
+basis of their request and are looking at it in our normal way.
+We will get back to you as quickly as possible with our
+recommendation, but it is currently within OMB and being
+reviewed.
+ Mr. Kolbe. Can you give me some idea as to when you might
+expect to have that review done?
+ Mr. Raines. I can't exactly, but we will get back to the
+committee and give you a better idea of when we think we will
+be able to come out with it.
+ Mr. Kolbe. Obviously, FEC is uncertain themselves because I
+noticed in their transmittal letter, they say while not
+supporting a formal request increase, the FEC request, it is
+not clear whether OMB would support or oppose or remain silent
+on any congressional effort to provide additional funding.
+ Mr. Raines. We will get back to you with an estimate of
+time.
+ Mr. Kolbe. I hope you do it in a timely enough fashion that
+we can have the benefit of your thinking on it before----
+ Mr. Raines. Sure.
+ Mr. Kolbe [continuing]. The subcommittee acts on an
+appropriation bill for them.
+ I will have a couple more questions.
+ Mr. Hoyer.
+
+ New Mandates for the Office of Management and Budget
+
+ Mr. Hoyer. Thank you very much, Mr. Chairman.
+ Mr. Director, I note you mentioned 11 statutes which have
+been passed recently, nine of which were passed in the 104th
+Congress and two passed in the Congress prior to that, in the
+103rd Congress, nine passed in the 104th, giving to your agency
+additional responsibilities to monitor some area of
+performance, whether it is the application of resources,
+paperwork reduction, whatever it might be. Yet, your agency
+remains at 518 people, down from 522 in 1996, and down, I
+believe, for over 600 at some point in time in the not-too-
+distant past.
+ I don't know that figure. I only have the last two years in
+front of me.
+ Let me ask you, realizing that you are relatively new to
+this position, with a workforce of some 1.9 million people or
+thereabouts, and a discretionary or, operating budget, as I
+will refer to it, of some $600-$700 billion, give me your
+analysis as to whether or not the expectations of your ability
+to carry out the functions of the 11 new responsibilities,
+designed to make Government more efficient, more cost
+effective, doing more with less, saving dollars, eliminating
+fraud and waste, can be effectively carried out with what is a
+relatively very small arm of the Government.
+ Mr. Raines. Yes. Well, you are right that we are small.
+Indeed, when I was last in OMB during the Carter
+Administration, 1977, there were 715 staff members, compared to
+518 authorized today.
+ We now have a circumstance where the average OMB examiner
+is examining $10 billion of programs in current dollars, up
+from $4 billion per examiner, 30 years ago. In nominal dollars,
+it is even a bigger difference.
+ Again, since I was last at OMB, and certainly in the last
+four years, there has been an increased attention on Government
+performance, which has been shared by two Administrations and
+several Congresses. This is a major challenge. I believe we can
+do a credible job with the resources we are requesting, but we
+can only do that if we at OMB do what we are asking the rest of
+the Government to do, which is to reinvent ourselves, work
+smarter, use technology to assist our work, and use the best in
+management techniques.
+ My major concern is that we don't simply try to meet these
+challenges by working our people longer and longer hours. OMB
+has a history of being a place with a career staff, and we are
+primarily career, is expected to work night and day throughout
+the year,particularly during budget season.
+ As a manager, I don't believe we should be pushing that any
+further than we have because of the effect it has no morale and
+turnover and on families. So what I will be looking at this
+year is to see can we, in fact, meet these requirements and
+have a humane working environment for our people. Our people
+will do the work as long as it is necessary to do what is asked
+of them, but I want to try to make sure that we don't ask the
+impossible.
+ So our request would keep us at last year's level, based on
+our belief that we can manage smarter. But if it becomes
+apparent that what we are really doing is requiring our people
+to give up all other aspects of their lives, then I would like
+to reserve the right to come back to the committee to ask for
+additional resources so that these dedicated employees are not
+asked to sacrifice at such a high level in order to serve their
+Government.
+
+ OMB Budget proposal
+
+ Mr. Hoyer. Well, I think we ought to keep focused on that
+because this agency is small, but critical, and if it can't do
+its jobs, if your analysts are overwhelmed, we are not going to
+get the kind of advice and counsel that we need.
+ When I served in State government, we had a budget at that
+point in time of about $4 billion, and we had 100-plus fiscal
+analysts overseeing for the legislature, and although I don't
+think there is a direct correlation, with every billion, you
+need more people, but I have always been worried about how well
+the OMB can do its job. It is a controversial agency, as any
+management agency is.
+ Your increase is 3 percent. How much of that is salaries?
+ Mr. Raines. I can give you a----
+ Mr. Hoyer. I am looking here to find it myself.
+ Mr. Raines. We have 78 percent of our total, almost 79
+percent of our total budget----
+ Mr. Hoyer. It is salaries.
+ Mr. Raines [continuing]. Is salaries, and virtually all of
+that increase is for salaries or rent.
+ Mr. Hoyer. I notice this big rent payment to GSA. It is
+very important for this committee. Keep on paying that bill.
+ I wanted to ask you the question that you and I have
+discussed in my office. In light of the fact that the salary
+component is a very large component of that, it gives a sort of
+skewed view as to whether or not your agency is increasing your
+budget of 78.7 percent salary, in any event----
+ Mr. Raines. Yes. In fact, I have got the exact----
+ Mr. Hoyer. What I want is the increase in the salary.
+ Mr. Raines. Yes. I have the exact numbers for you. Of the
+increase that we are looking for, of approximately a little
+less than $1.7 million, $1.5 million is for the pay increase
+and $166,000 is for everything else--printing, communications,
+travel, rent, information systems. So almost all of it is
+simply for us to meet the pay increase.
+ In past years, we absorbed the pay increases by laying off
+staff or reducing the number of staff members that we had, and
+we just contributed to the decline in our numbers.
+
+ paying for federal employee cost of living adjustments
+
+ Mr. Hoyer. Mr. Director, as you know, I think the
+appropriate way to fund the pay raises would be to enter a line
+item as we do with FEHBP for a cumulative government-wide
+number. The increase in salaries gives a skewed view of whether
+or not, in fact, an agency is growing or remaining the same
+size or stagnating or decreasing because the COLA adjustment,
+as we refer to it, implies that the agency has received an
+increase, when what is happening is the cost-of-living
+adjustment is being made so that salaries can remain somewhat
+comparable.
+ I wish you would comment on the idea of having a line item.
+Every point is, I guess, about a billion dollars, somewhere in
+that neighborhood which could be included in our budget as
+simply a line item for salary adjustments.
+ Mr. Raines. Well, the point you make, I think, is an
+important one. I think we define one extreme, which is an
+agency with zero grants and other operating programs, and then
+you can go to agencies that are primarily administering grants.
+So if you look at the budget of one of those agencies, it
+doesn't tell you much about whether it's growing because for
+the operating agencies, law enforcement agencies or others, any
+increase might simply be paying for a pay increase.
+ The difficulties that we have had in this--and this is
+something that I hope we can continue the conversation on--the
+difficulty we have had here is that at the same time we are
+providing pay increases, we are also requiring agencies to
+reduce their size and improve their efficiencies.
+ Now, the traditional way of enforcing that has been for
+agencies to absorb pay increases, which we hope will be paid
+for by greater efficiencies in their operations. But there is a
+criticism that could be made that, in the agencies where the
+efficiencies already have been made, expecting the same rate of
+efficiency increase might be unfair. The efficiencies may
+require more than one year to occur, and if you require them to
+be absorbed in one year, that may be distorting.
+ I don't have an answer to it, but I think you put your
+finger on the issue that we need to deal with directly, which
+is that we have to make decisions about how we want to pay
+Federal employees in a way that does not get confused with our
+views as to whether Government programs or grants should be
+increasing or decreasing.
+ If we don't want to have as many employees, we simply ought
+to decide that, rather than do it indirectly by requiring
+employees to contribute to the operations of Government by
+having inadequate pay or by forcing their agencies to take
+actions that may not make sense in the long run, but are
+necessary to meet short-term budget needs.
+ Mr. Hoyer. Thank you, Mr. Director.
+ Absorption is an indirect program cut, inevitably. It is
+politically easier to do for both the administration and for
+the Congress because it is, on the one hand, saying to our
+employees we will give you a raise and, on the other hand, not
+paying for the raise, and then putting managers to the test of
+either not filling vacancies or perhaps being understaffed,
+RIF-ing or cutting programs. Those are the only three
+opportunities they have to raise funds.
+ Let me ask you something about the COLA.
+ Mr. Raines. Could I comment on just one thing there?
+ Mr. Hoyer. Yes.
+ Mr. Raines. We are expecting substantial improvements in
+productivity and efficiency from agencies. That is one of the
+reasons that we want to work with them on information
+technology, because we believe it canimprove productivity. So
+that is the other way, but sometimes those things can't be done
+overnight, and they require reorganizing how work is done.
+ I would like to have with agencies is a relationship where
+I can sit down with them and say, ``If you meet these
+parameters for improved efficiencies, then the savings can be
+reinvested in your agency in the following ways.''
+ Now, that is not typical in Government. But it is typical
+in the business world. You will sit down with a head of a
+division and say, ``Here are your goals and, if you meet them,
+you can reinvest this much in the business and this much, we
+are going to take. ``That is a way in which we can give the
+agencies incentives to be more productive while, at the same
+time, helping to meet their needs in terms of pay and other
+mandatory costs.
+ Mr. Hoyer. Mr. Director, following up on that, this
+committee included language, after Frank Wolf and I really had
+talked about how do we give to agencies an incentive to save
+and to up productivity, because if in increasing productivity
+the only result is a cut in budget, the manager has little real
+incentive because you don't have the profit and, therefore, he
+is looking at what he can do or what she can do.
+ We said in our bill, and it was not Appropriations
+Committee-wide, but it was in our bill a number of years, that
+50 percent of the savings could be, in effect, used by the
+agency for those items it believed to be important.
+ I don't know whether you have had an opportunity to look at
+whether that has worked at all as an incentive, and I am not
+sure myself, but for the record, perhaps you could maybe
+comment on that.
+ Mr. Raines. Sure. Let me get back to you on that.
+ Mr. Hoyer. Mr. Chairman, I have other questions, but I know
+I have gone over my time.
+ Mr. Kolbe. Mr. Price.
+ Mr. Price. Thank you, Mr. Chairman. I would like to add my
+welcome to the director.
+ Mr. Raines. Thank you.
+
+ federal government procurement of phone services
+
+ Mr. Price. I appreciate your appearing before our budget
+group not too long ago, and I am glad to see you here today to
+present your testimony.
+ I want to ask you about a fairly specific matter and would
+appreciate your response. Let me just take a second to outline
+the situation as I understand it concerning the post-FTS 2000
+contract.
+ The current contract that provides long-distance voice and
+data communication services to the Federal Government, the so-
+called FTS 2000, as I understand it, was awarded to AT&T and
+Spring in 1988, and this contract is set to expire in December
+of 1998.
+ In preparation for the expiration of FTS 2000, GSA
+developed a three-part plan for subsequent Federal procurement
+of telecommunications services.
+ This post-FTS 2000 strategy called for separate
+procurements for long-distance, metropolitan area local service
+and combined local and long-distance service in areas where
+traditional local and long-distance providers have infiltrated
+each other's markets.
+ Now, as I understand it, this strategy was a result of
+several years of study and had broad industry support. In fact,
+in the GSA's report to Congress on the proposal, GSA stated,
+and I am quoting, the strategy we have developed is the optimal
+approach to address a climate of profound change in competitive
+telecommunications markets.
+ Subsequently, however, GSA announced a change in this
+strategy which basically permits the long-distance providers
+who are awarded portions of the contract to have the option of
+also providing local service in those areas.
+ I know Senator Stevens wrote you in January to express his
+concerns about the initial strategy, and I would like you to
+elaborate on OMB's role in revising the strategy, and on the
+logic behind these revisions. It is all somewhat confusing, and
+I would appreciate any light you could shed on it.
+ Mr. Raines. Sure. As you know, the FTS system is one of the
+major procurement successes of the Federal Government in the
+last decade. It has permitted the Federal Government to have
+some of the lowest telecommunication costs of any user in the
+country, and it has done so consistently in a period of
+incredible change in telecommunications. Our traditional
+approaches would have locked us into a price long ago that we
+would still be paying now, even though the market price had
+dropped substantially. But the process that they put in place
+has permitted us to benefit from continued price drops.
+ The effort in post-FTS 2000 has been to continue the
+Federal Government's efforts to have the best in
+telecommunications capabilities, while using private market
+forces to both define what those services may be and to have
+competition, as well as continued negotiation, to keep the cost
+down.
+ As we speak, that marketplace is changing rapidly. As you
+mentioned, Mr. Price, in your introduction, in those
+communities that have had integrated local and long-distance
+service, it has always been anticipated that they could provide
+end-to-end service.
+ In a number of areas, long-distance companies are seeking
+to provide local service, and local companies are seeking to
+provide long-distance service. I don't know how quickly all of
+that is going to unveil.
+ What we are seeking to achieve is to allow the marketplace
+to make offers to us as to what they believe is the best
+package of services for us to consider for the post-FTS 2000
+era. So what we have done here is to give an option to the
+bidders that they can bid for local service, they can bid for
+long distance, or they can bid for end-to-end. GSA will then
+evaluate what is the best deal, for the Government and pick
+that best deal not by our defining exactly what we think the
+private carriers should be offering, but by letting them be
+creative in offering what they think is the best package.
+ Mr. Price. Now, the initial plan, as I understand it,
+called for separate procurements for long-distance and for
+metropolitan area local service and then for combined local and
+long-distance service in some areas. Am I correct in assuming
+that this strategy of separate procurements did not necessarily
+assume that each carrier would offer end-to-end service----
+ Mr. Raines. That is right.
+ Mr. Price [continuing]. Or would be able to offer end-to-
+end service?
+ Mr. Raines. That strategy did not have the assumption in it
+that there would be bidders who would want to make an offer of
+end-to-end service. That is why GSA has made this modification
+as the marketplace continues to change and vendors are offering
+a package of services that we nevercontemplated.
+ We want to be sure that we can look at all of the
+variations in service and make the best deal for the
+Government.
+ Mr. Price. Yes, but as the marketplace is evolving and as
+carriers are developing new capacities, what are you assuming
+here?
+ I don't understand the reason for the change from this
+separate procurement strategy to a strategy that seems to
+assume that the bidders are prepared to offer end-to-end
+service. In other words, it seems to, in effect, be eliminating
+those carriers that are not yet prepared to offer such service,
+or am I misunderstanding the nature of the change?
+ Mr. Raines. No. We are not assuming which package of
+proposals will be the best proposal. It is entirely possible
+that the best proposal for the Government will be to pick one
+local package and a separate long-distance package.
+ There is nothing inherent in an end-to-end proposal that
+means it will be the best proposal. It is simply a way to
+package services and to try to make them attractive if you can,
+in fact, have the economies. For example, if you are now a
+long-distance carrier and you don't provide local service, you
+may find that it is too expensive to offer end-to-end because
+you don't have the local lines, or if you lease the lines from
+the local carrier, it is too expensive. So it may or may not
+prove out that that will be a very desirable alternative.
+ We simply want to give the bidders an opportunity to put
+together the best package that they can and to encourage as
+much competition as we can because we found, in the FTS 2000
+process, that having continuous competition and being open to
+innovation has yielded the Government a terrific deal over the
+years.
+ Mr. Price. So a carrier who either was not prepared to
+offer the full range of service or who did not--deem it
+beneficial to do so still would be free to bid for a
+substantial piece of the business?
+ Mr. Raines. Absolutely. This is an option for bidding. It
+is not a requirement that you bid end-to-end, and again, I
+don't know whether that will be the best thing to do. I think
+some carriers may find that giving us their best price for the
+thing they do best is going to put them in the best negotiating
+position for the procurement.
+ Mr. Price. Alright. Just one further question, Mr.
+Chairman. I know my time has expired.
+ If you would just clarify one more time exactly what the
+significance of the change is, that is what I am not quite
+understanding.
+ Mr. Raines. Before, we were saying give us a bid for long
+distance or give us a bid for the local coverage. What we
+didn't say was that you can also give us an end-to-end bid
+because, nationwide, there is no longer a single end-to-end
+carrier. AT&T used to be that carrier.
+ Mr. Price. Yes.
+ Mr. Raines. In some areas, there are end-to-end carriers.
+For example, Sprint and GTE merged, and I think they can
+provide end-to-end in their service areas. But there is no
+national end-to-end carrier.
+ We are saying that if someone wants to make a proposal that
+is end-to-end, we will look at that proposal and evaluate it
+against other proposals.
+ Mr. Price. But that does not foreclose the bidders or you
+from making the decision to stick to that original model.
+ Mr. Raines. You are exactly right. It does not foreclose
+that.
+ Mr. Price. Alright. Thank you.
+ Thank you, Mr. Chairman.
+
+ constitutional amendment to balance the budget
+
+ Mr. Kolbe. Let me, if I might--and I am going to have some
+questions for the record, which will include some on this
+telecommunications contract, but let me, if I might, turn to
+another issue, and this is a broader policy. This is a broader
+policy issue, but I think one that is very important. I would
+just like to get some clarification. These are the kinds that I
+would have asked had I still been on the Budget Committee, but
+after taking this over, I am no longer there to ask these
+questions.
+ The President has said that he does not support a balanced
+budget amendment that does not include taking the Social
+Security trust fund off budget. That is correct, is it not?
+ Mr. Raines. No. The President doesn't support any balanced
+budget amendment.
+ Mr. Kolbe. So it doesn't make any difference whether it
+takes Social Security off budget. I thought he had said that he
+agreed with those concerns about Social Security being on the
+budget.
+ Mr. Raines. He agreed that was one of the problems with a
+balanced budget amendment, but his fundamental concern is that
+we should not put in the Constitution any fiscal policy that
+will bind us and keep us from making adjustments made necessary
+by changes in the economy or other changes.
+ Mr. Kolbe. Why does he, why do you see--why does the
+administration see this Social Security issue as a problem for
+the budget?
+ Mr. Raines. Well, Social Security and all of the trust
+funds create a problem in this regard. The amendment, as
+debated in the Senate, essentially put the Government on a
+cash-flow basis. You could only spend during the year the same
+amount that you brought in. So for a year in which you had a
+recession and revenues declined and expenditures went up due to
+the automatic stabilizers, you would have a shortfall. You
+would be spending more than you were bringing in, which would
+violate the amendment.
+ If that happened, the Treasury Secretary or the OMB
+Director would be required to decide what not to spend, which
+bills don't get paid. Since Social Security gets paid out every
+month and some programs would have already spent their money
+earlier in the year, Social Security would be a prime target
+for a reduction in order to meet a shortfall that would almost
+always show up at the very end of the year.
+ It was our view that it would be particularly unfair in the
+trust funds because the fund payers are paying in on the
+assumption that that money will be there to be paid out when
+necessary.
+ The same problem exists in unemployment insurance, another
+trust fund. People are paying in with the expectation that, if
+there is a recession, money will be paid out. Under the
+constitutional amendment, they will have paid in, but when a
+recession comes along we would have to tell them, ``Sorry, we
+can't pay it out because that would cause an imbalance in
+thebudget''. We believe that would be unfair to those people in
+businesses who have paid into the unemployment insurance trust fund.
+ So this amendment was a very effective amendment in terms
+of imposing a cash-flow requirement, but imposing a cash-flow
+requirement on a Government this complex causes myriad problems
+such as those.
+ Mr. Kolbe. But the President's budget request for FY 1998
+does include the so-called surplus, the Social Security
+surplus, the excess of revenues over the expenditures within
+that fund. It does include that in its budget calculations. Is
+that not correct?
+ Mr. Raines. Yes. We show it both ways. We show it with the
+Social Security funds and without.
+ Mr. Kolbe. Well, if you think that the trust fund poses a
+particular problem for a balanced budget amendment and would
+think, if you are ever going to do a balanced budget amendment,
+it should not include those trust funds, would you submit a new
+budget that does not include the Social Security trust fund in
+it and, therefore, does not include the surplus calculations?
+ Mr. Raines. We don't believe the trust funds cause a
+problem for a balanced budget, and we believe in a unified
+budget. So we think that you ought to include in your
+calculations all of the income and spending of the Federal
+Government.
+ We believe it causes a special problem for a balanced
+budget amendment. With a balanced budget, we would be balancing
+to avoid increasing the structural budget deficit. We don't
+propose to balance a budget in the middle of a recession. We
+would not chase a recession down and make cuts and cuts and
+cuts to try to balance a budget if a recession occurred. With a
+balanced budget amendment, you would be required to do that, so
+that----
+ Mr. Kolbe. Congress, through a vote, could decide not to do
+so.
+ Mr. Raines. Only a 60-percent vote----
+ Mr. Kolbe. Yes, right.
+ Mr. Raines [continuing]. And getting a 60-percent vote
+would be very difficult.
+ Mr. Kolbe. It is tough.
+ Mr. Raines. So there is a distinction in the----
+ Mr. Kolbe. And as to the Senate, they have to do it on
+virtually everything.
+ Mr. Raines. There is a distinction in policy. Our view of
+balancing the budget is not that you balance the budget under
+all economic conditions. We think that is the problem that
+caused the exacerbation of the depression.
+ We believe that we need to get rid of the structural budget
+deficit that has been plaguing us for the last two decades, so
+that, in high employment times, you are in balance or have
+surpluses, and in recessions, you acknowledge that you will
+have deficits. But over time, you want to ensure that you have
+balance.
+ Mr. Kolbe. Well, I disagree with you on the balanced budget
+amendment, but I am not here to argue that. I am just trying to
+get some understanding of the Social Security trust fund and
+its role that it would play in all of this.
+ You said that you showed it both ways, on and off, with and
+without. You did not show a balanced budget in seven years,
+though, or in five years, after taking the Social Security
+calculation out of it, did you?
+ Mr. Raines. No, we did not.
+ Mr. Kolbe. Okay. So you do advocate a unified budget from
+the standpoint of how you do budget calculations.
+ Mr. Raines. Yes.
+ Mr. Kolbe. You just would not include the trust funds in
+any balanced budget amendments. So they wouldn't be covered by
+a balanced budget.
+ Mr. Raines. No. What----
+ Mr. Kolbe. But you would still have them in a unified
+budget even if you did that?
+ Mr. Raines. We believe they should be in a unified budget.
+Our objection to the balanced budget amendment was in how the
+amendment would work in practice, not in how a budget should be
+adopted.
+ Without a balanced budget amendment, if a recession
+happens, we still make the Social Security payments. We don't
+look and say, ``well, gee, we are in recession, should we make
+them or not.'' If you have got highway trust fund payments, we
+make those. If there are unemployment insurance payments, we
+make those, without looking to see how the budget balance
+changed.
+ Under a balanced budget amendment, we would have to look
+and see can we make these payments. That is the big change.
+ I mean, I hand it to the authors of the amendment. They
+wrote an effective amendment. It would have the effect of
+keeping the Government from spending one dollar more than it
+brought in. But that is the problem. There are occasions when
+national policy requires us to spend more than we bring in, in
+an individual year, and the classic example is a recession.
+ Mr. Kolbe. Again, I am not going to argue that, but I don't
+agree with you on that. I am still puzzling about the trust
+funds.
+ The same argument, then, would apply to the Medicare trust
+fund?
+ Mr. Raines. Yes.
+ Mr. Kolbe. And the highway trust fund?
+ Mr. Raines. Yes.
+ Mr. Kolbe. And the aviation trust fund?
+ Mr. Raines. Yes, sir.
+ Mr. Kolbe. Any trust fund?
+ Mr. Raines. Any trust fund.
+ Mr. Kolbe. Any trust fund. They should all be excluded from
+any kind of effort to balance the budget.
+ Mr. Raines. No. Balancing the budget, we believe they
+should be included. For a balanced budget amendment that is
+based on cash flow, we believe you have to worry a lot about
+the trust fund, because the people who paid into those trust
+funds will think they got a pretty raw deal if the money is not
+available.
+ The balanced budget amendment is not like any balanced
+budget amendment I have seen at the State level. I have never
+seen a cash-flow balanced budget amendment before. I have seen
+balanced budget amendments at the State level that require the
+governor to propose a balanced budget. I have seen ones that
+require the legislature to adopt a balanced budget. But I have
+never seen one that says that you cannot spend a penny more
+than you bring in during the year. I have never seen one that
+looks like that, and there is a practical reason. It would be
+very hard to enforce, and if you enforced it, it would have
+results that people would view as very peculiar.
+ Mr. Kolbe. I think that is exactly the effect of all
+theState balanced budget requirements. They don't have debt financing.
+They may have some very short-term mechanisms.
+ Mr. Raines. I don't know of any State that, for example,
+would limit the spending from its highway trust fund based on
+the fact that the rest of the budget had a problem. I don't
+know of any State that has such a requirement. The classic in
+the States is the highway trust fund.
+ In some States, the highway trust fund itself is in the
+Constitution, but I don't know of any State that would say it
+can't spend highway money because of a recession. Indeed, in
+most States, they spend more highway money because they are
+having a recession, but the effect of this balanced budget
+amendment would be that we would have to stop or reduce
+spending any time we had a recession and revenue was expected
+to decline.
+ So this is an unusual balanced budget amendment that has
+been proposed.
+ Mr. Kolbe. All right. I beg to differ with you on that, but
+we will argue that another time.
+ Mr. Hoyer.
+
+ Differences Between OMB and CBO Estimating the Deficit
+
+ Mr. Hoyer. Thank you.
+ As you know, Mr. Director, the chairman and I agree on the
+balanced budget amendment, and I like your argument, but I have
+only been here since 1981, and it was during the time of
+economic boom, good morning in America, America is back,
+employment is up, more jobs being created, 20 million, the
+Reagan administration said, that we quadrupled the debt.
+ My problem is that I believe the atmosphere in which we do
+Government has changed; that supplicants for Government
+revenues are incredibly more powerful than they used to be.
+ There are large numbers who are crying out for additional
+revenues annually. It is very difficult for politicians to tell
+large numbers of people ``no.''
+ Now, the public doesn't understand that until it happens to
+them, and if they are a businessman, they try to produce the
+product themselves. If they are a dad or mom, they try to
+please dad or mom or the kids or whatever.
+ So, if it had been in a recession that we incurred a lot of
+debt, I would agree with your argument. It was, however, in
+boom times, theoretically, where we quadrupled the debt, not
+just increased it. We quadrupled it, and the President who said
+he was for a balanced budget, effectively, said debt didn't
+matter.
+ I believe debt does matter. I think it ultimately was a
+damper on the economy. It kept real interest rates high.
+Nominal interest rates in the late 1970's were high and so
+everybody thought they were higher, but in the 1980's, as you
+know, real interest rates were higher than they were in the
+1970's, the difference between inflation and the cost of buying
+money.
+ In any event, we will get to that in an argument at some
+point in time. I have had it with Mr. Rubin and Mr. Panetta and
+yourself. We are not going to resolve it here.
+ Let me talk about something else. CBO and OMB differ by $69
+billion, I guess. That is on the outlook of a deficit in 2002.
+Can you comment on that, particularly with reference to OMB
+being on the money, so to speak, as opposed to CBO who has had
+a greater deviation over the last few years in terms of its
+estimates?
+ Mr. Raines. Well, over the years, OMB and CBO have sort of
+traded positions as to who has been the most accurate. In the
+earliest years, I think OMB was more accurate. During the
+middle years, CBO was more accurate. In the last four years,
+OMB has been more accurate, if you measure accuracy by
+estimating the actual deficit.
+ Mr. Hoyer. Now, OMB came into effect under the Budget Act
+of 1974?
+ Mr. Raines. CBO.
+ Mr. Hoyer. CBO.
+ Mr. Raines. CBO was created as a result of that Act, and it
+took them a while because they were created out of nothing. So
+it took them a while to build their professional staff, but
+what has happened in the last four years is that we have been
+more accurate in estimating the deficit.
+ Now, I say that with a little humility. We were more
+accurate, but we were wrong, on average, by $49 billion a year.
+The deficit went down $49 billion a year more than we
+estimated. So both we and CBO were conservative, and the
+economy performed better than either of us expected.
+ With regard to 2002, the Director of CBO has testified that
+she believes her estimates are reasonable estimates over that
+period, and she believes that OMB's estimates are reasonable
+estimates. So neither of us is saying that the other one is
+somehow off the mark, unreasonable, or outside the range of
+professional competence. We are both within the range of
+reasonable over a five-year period.
+ The $69 billion has to be compared to what will then be a
+$10-trillion economy and a $1.9-trillion Federal budget, and we
+had seen larger movements in deficit estimates in the last four
+years than the difference we are arguing about four or five
+years from now.
+ So we are quite comfortable with our estimates. We believe
+that, as has been the case for the last four years, our
+estimates will prove to be on the mark and that you can rely on
+them in putting together a budget.
+ Mr. Hoyer. If one assumes, Mr. Director, that the estimates
+are targets which will inevitably be wrong, no matter who makes
+them, simply because predicting the performance within a
+quarter of a point, one year or five years out, is impossible,
+what would you think of the idea of having, a board of revenue
+estimates?
+ I played with this idea in 1982 and 1983. Maryland has one
+where, in effect, you would create no new staff. You would have
+the director of the Federal Reserve, director of CBO, and the
+director of OMB as a board of revenue estimates that would
+agree upon estimates based upon their own staff work. Every one
+of you does this work, so you wouldn't have any new
+bureaucracy. The board could agree upon a revenue estimate that
+the President and the Congress would then use as a guide.
+ Now, in Maryland, for instance, while the governor is not
+technically or constitutionally bound by it, there is a great
+political suasion to follow the board of revenue estimates. He
+could modify it, but he rarely does that.
+ What would you think about such an idea? Would that be
+helpful?
+ Mr. Raines. Let me not comment directly on that particular
+proposal because there are some issues. For example, the
+chairman of the Fed would have to make some interest rate
+estimates, which might be difficult for the Fed
+institutionally.
+ But on your general point, I endorse the idea of coming up
+with one set of economic assumptions, which could then be
+turned into one set of revenue estimates. Indeed, in my
+confirmation hearings, I testified that I thought that OMB
+andCBO ought to try to find a way to get together and come up with a
+joint estimate. I think it is distracting to add to the complexity of
+balancing a budget, disputes among experts about things that are going
+to happen five years from now.
+ To give you an example, in the past most of these debates
+between OMB and CBO have been on the pricing of policy
+changes--that is, this program will cost this much or that
+much. Now, almost all of the difference is in economic
+assumptions. If you look at our two streams of assumptions,
+there are very tiny differences between us. On some matters
+that have the biggest dollar impact, the differences are on
+matters that most people do not even know are matters are
+debate.
+ So it strikes me that we would be of greater service to the
+elected officials if we could come up with a joint way of
+coming up with these estimates on the economy, as opposed to
+adding to the problems of elected officials by having you
+arbitrate between analysts who are each trying to do their best
+and who are both well within the range of the likely outcome.
+
+ measuring pay comparability for federal employees
+
+ Mr. Hoyer. I will pursue that with you, because I think it
+would useful if we could agree on a common set of figures that
+everybody used, knowing full well that they are going to be in
+error in some respect because that is inevitable.
+ My last question, Mr. Chairman, on this round--and I have
+probably transgressed upon my time--OMB and the Administration
+in a bipartisan way over time have agreed that the BLS
+estimation of worker comparability pay in the private sector
+may not be a proper model. You are working on coming up with a
+new way to determine that. Can you tell me the status of that.
+ Mr. Raines. We have been talking with OPM, as well as the
+employee representatives, on how we can come to an agreed-upon
+way of ensuring that pay decisions are reflective of the policy
+that Congress has adopted, which is comparability with the
+private sector. I think the current method does not have the
+level of confidence to direct policy, as I think Congress
+intended when it passed the act.
+ I cannot give you a progress report at this point, but I
+want to assure you that this is one of the issues that is high
+on our agenda--to see if we can come to a resolution and make a
+recommendation on how to proceed. As I mentioned earlier, I am
+not comfortable with arbitrary determinations that do not have
+any relationship to anything in our determinations of Federal
+pay. I think we need to look upon Federal pay--and I might say
+for career as well as elected officials--in a way that makes
+economic sense and reflects how the American people think pay
+ought to be determined. I do not have a solution, but it is one
+of the issues that is high on our agenda.
+ Mr. Hoyer. I would hope we could accomplish that in the
+short term because we have talked about it since I have been
+here. Don Devine clearly believed that the system was wrong and
+I, frankly, am not too interested in what the system is as long
+as it gets to a figure that is generally agreed upon as
+accurate enough on which to act. Right now apparently we do not
+have that, so I would hope that we could get that as soon as
+possible.
+ Thank you, Mr. Chairman.
+ Mr. Kolbe. Mr. Price.
+
+ capital budgeting
+
+ Mr. Price. Mr. Director, I appreciate the opportunity we
+have to explore some of budget issues with you. I would like to
+return to the line of questioning that was being pursued
+earlier with respect to the balanced budget amendment and the
+rather unique character of the main contender among those
+amendments, the cash flow version of the balanced budget
+amendment.
+ Presumably, one major difference between that proposal and
+what goes on in most States and most businesses is that States
+and businesses have borrowing authority and separate capital
+budgets.
+ I wonder if you think capital budgeting or a capital
+budgeting system makes sense for the Federal Government? If so,
+does the capital budgeting version of the balanced budget
+amendment come any closer in your estimation to being
+acceptable than those that operate on a purely cash flow basis?
+ Mr. Raines. On your general point, I think an improved
+capital budgeting system does make sense. Indeed, we have been
+working on issuing guidance on capital planning that would
+include not only structures and other infrastructure
+investments, but things like information systems. We do not do
+a very good job of capital planning and capital budgeting.
+ With regards to the constitutional amendment, the President
+has just created a commission to look at that very issue. He
+has asked them to look at whether a capital budget can improve
+Government operations, and how that budget might relate to
+fiscal policy overall. I do not want to prejudge the
+conclusion, but I think that we have much to learn in that
+area.
+ Now I do not know that if we did adopt a capital budget,
+that it would have the effect that I think some would like,
+which is to open up more room for non-capital spending. That is
+because you have to figure out how you are going to deal with
+depreciation. Most States do not deal with depreciation, and
+most cities do not deal with depreciation, but all businesses
+do.
+ One school of thought says that, if we did have a capital
+budget in the Federal Government and it took account of
+depreciation, the amount you would withdraw from the budget
+because of the capital expenditures would be replaced by a like
+amount of depreciation. So it would not have a net effect on
+the budget. But it might be a good thing to do in any event.
+Even if it does not result in a significant budgetary impact,
+it may be a better way to plan. It may make us think harder
+about engaging in some of our capital investments.
+ We have proposed in this budget, for example, a full
+funding concept to ensure that when a project is proposed, the
+full cost is reflected, not just the incremental cost of that
+year. Now that is one form of capital budget reform, to be sure
+that you know the full cost of a project. In most States, for
+example, you cannot pursue a project until you either have or
+have borrowed the full amount. You cannot start a project and
+then hope to borrow or get the funds later. So that aspect of
+capital budgeting ought to be there as well.
+ So we are open to looking at capital budgeting and its
+impact. We do not prejudge that it will have any dramatic
+effect on the budget, on the overall allocation of funds as
+between capital and operating expenditures. But I think it
+certainly can improve the way we plan for, and spend money on,
+capital projects.
+ Mr. Price. Do you have objections to a balanced
+budgetamendment that goes beyond a basic cash flow character, though?
+That is the question I am trying to frame. You made very clear your
+objections to the rigidities of a cash flow budget. To what extent
+would a capital budgeting framework alleviate those concerns, or are
+there other problems?
+ Mr. Raines. As I said, we are opposed to all forms of a
+balanced budget amendment that we have seen. The reason is
+simply that we do not think you should put into the
+Constitution either an economic policy or an accounting method.
+So capital budgeting may be the appropriate thing to do from a
+budget accounting standpoint, but I do not think we ought to
+put it in the Constitution for all time as the appropriate
+accounting.
+ For example, we have only been using the unified budget
+since the late 1960s. It is not a concept that we have had for
+all time. It was something that we decided in the late 1960s
+was the best way to count. It is not beyond belief that, 10
+years from now, people will say, ``No, that is not quite right;
+we ought to do it slightly differently.'' So we do not believe
+you should put into the Constitution either economic policy or
+accounting policy because we do not think that any of us really
+can see the future well enough to foresee all of the
+difficulties that may cause in an economy as complex as ours.
+ Mr. Price. Just one last question on the debate surrounding
+this balanced budget amendment. Some have derided the raising
+of the Social Security issue as a kind of red herring, as a
+diversionary tactic. But, when you take into account the extent
+to which the trust fund surplus is currently masking the true
+extent of the deficit and about the trust fund outlays that are
+going to be required down the road when the Social Security
+obligations greatly exceed the revenue that is being taken in,
+I wonder if that is a fair assessment.
+ What would be the effect, or can you project the likely
+effect, of a balanced budget amendment upon the country, on
+meeting trust fund obligations when the time comes to pay the
+baby-boomers' retirement and all those IOUs accumulated in the
+trust fund have to be converted and paid out to beneficiaries?
+ Mr. Raines. If you had a balanced budget amendment in
+effect that included the unified budget, what you would find is
+that you would either have to raise taxes or reduce spending in
+the non-trust fund part of the budget in order to stay within
+balance. But that is going to be true if you have got a
+balanced budget policy, with the amendment or not: We are going
+to have to make those kinds of choices when the trust fund is
+negative.
+ All a balanced budget amendment would do, I think, is to
+make the road to getting there more complex. It would give you
+this bumpy road on the way there, if you had a recession, and
+if you had other things that you did not expect. But the issue
+is going to be before Congress and the Executive in any event.
+In our balanced budget approach, we have to accomodate the fact
+that these trust funds' needs go up and down, and that they are
+not permanently in surplus.
+ The clearest example of that is the aviation trust fund.
+For years, it was stable or growing. But since the tax has been
+allowed to expire twice, the fund has been a contributor to the
+deficit. And Social Security will become a contributor to the
+deficit starting, I think, in about 2012. It will have gone
+negative completely in 2019. So trust funds are not always
+positive. They can be negative in the unified budget, and you
+have got to take countervailing action elsewhere in the budget
+to deal with that.
+ Mr. Price. When you speak of making it more complex you
+are, I assume, among other things, speaking about the
+requirement that an absolute cash flow balance be achieved each
+and every year, for example.
+ Mr. Raines. Yes.
+ Mr. Price. Fluctuations among different years would not be
+permitted.
+ Mr. Raines. That is right. Even worse is the impact of
+regional recessions. And most of our recessions have been
+regional. One area of the country is in very bad shape, other
+areas might be slightly off, and some areas are doing quite
+well. It often happens in the Midwest when the two coasts are
+doing very well. In the last few years, most of the country has
+done well, except for the Northeast and California. When the
+oil belt was having difficulty, the rest of the country was
+doing quite well.
+ If you are in one of those regional areas and you have a
+deep recession, and you have a balanced budget amendment, how
+are you going to get 60 percent of the vote it is only
+affecting four, five, or six States? You would not be able to
+get your extended UI payments, even though you have paid into
+the fund. You would be there and if you are the one who is
+going to throw the budget into deficit, you would not be able
+to get them. And you would have to round up 60 percent of the
+vote. And if California is not involved, imagine getting 60
+percent of the vote in the House. Imagine getting 60 percent if
+California is doing just fine, but some other part of the
+country is in recession.
+ With issues like that, I think we would suddenly be
+worrying about intraregional disputes, on top of our problem of
+balancing the budget. So I think the balanced budget amendment
+complicates things as opposed to simplifying them.
+ Mr. Price. Thank you.
+ Thank you, Mr. Chairman.
+ Mr. Kolbe. Mrs. Northup, I hope the creek has gone down in
+your district a bit, and we are happy to have you here.
+ Mrs. Northup. I came by boat, Mr. Chairman.
+ Mr. Kolbe. Please, go ahead.
+
+ reasons for new mandatory funding
+
+ Mrs. Northup. Thank you. Mr. Director, I would like to ask
+you a couple of questions. One is, I am new up here and the
+distinction between mandatory and discretionary funding is not
+totally clear to me. But I did notice that there are a lot of
+programs in the subcommittees that I am on that are now under
+mandatory categories that struck me that they would have, in
+the past, been under discretionary. Can you explain to me why
+that is true?
+ Mr. Raines. I think the simple reason for an expansion in
+the mandatory side is that it is not subject to annual
+appropriations. Any sponsor who can figure out a way to have an
+automatic appropriation, as opposed to an annual one, strives
+to do so. It is harder under the rules now to do that, but I
+think that is the major reason.
+ But given the operating nature of some programs, it is
+better to not have them subject to intense fluctuations from
+year to year. For example, if you are assisting in a financing
+that is going to be multiyear, it would be hard to take that
+assistance and use it if it was subject to an
+annualappropriation. So if you have got various guarantees in a
+program, it is desirable to have it on the mandatory side. So there are
+programmatic reasons for it, and there are legislative reasons for it.
+ Mrs. Northup. And political?
+ Mr. Raines. I am sure politics has some role in it.
+ Mrs. Northup. So if you put it in mandatory instead of
+discretionary, basically what we are saying is that it will
+make it hard for future Congresses, say when this President is
+no longer President, to affect the continuation of those
+programs?
+ Mr. Raines. I do not think it is a matter of it being
+harder for Congress. Any time you get a majority you can change
+that status, and you need a majority for appropriations. I
+think it means that the competition for the program is
+governmentwide, as opposed to being only among the appropriated
+categories.
+ Mrs. Northup. I am sorry, I am a little confused. I was
+thinking that maybe if it were mandatory that it could be
+passed by the authorizing committee and then not come through
+the Appropriations Committee.
+ Mr. Raines. That is right, but all it takes is a majority
+of each house to change mandatory programs. The difference is,
+are you comparing the change against the whole budget,
+mandatory and appropriated, or are you only looking at the
+appropriated side?
+ Mrs. Northup. Let us say in a time where maybe we realize
+we are downsizing, like just in case the budget does not
+balance in the year 2001. If we have put all these programs
+into mandatory, is it not true that downsizing at that point
+could be very difficult for us? Except that if you want to----
+ Mr. Raines. I do not know. For example, in the President's
+budget, we have significant savings in some of the most popular
+mandatory programs. The President has proposed, in fact, $121
+billion of savings in mandatory programs as part of his plan.
+So if you are willing to take on balancing the budget, it is
+not out of bounds to deal with the mandatory side. We are
+asking Congress to make $34 billion of changes in tax
+preferences, which some would say is even tougher to change
+than mandatory programs. So it is a question of political will,
+not a question of technique.
+ Mrs. Northup. Except that if the Appropriations Committee
+is the body that has to take the pie and divide it up, what you
+essentially have done is take it out of their reach; is that
+not right?
+ Mr. Raines. No. The only entity that deals with the whole
+pie under the current structure is the Budget Committee. That
+committee looks at taxes, mandatory spending, and discretionary
+spending. The Appropriations Committee has a portion of that
+responsibility. But that is a function of how Congress chose to
+organize itself, it is not a function of the budget. Congress
+has chosen to organize itself by dividing up the responsibility
+in that way.
+ On the Executive side, we do not make distinctions among
+mandatory, discretionary, and tax portions. We looked at all of
+them when we put together the President's budget.
+ Mrs. Northup. Except that historically some things fell
+into mandatory--I mean, if you do not categorize them then why,
+for the first time, is there sort of a different type of
+program that is being put in mandatory instead of in
+discretionary?
+ Mr. Raines. I do not think there is anything novel in what
+we have proposed. In that regard, there is nothing novel in our
+proposal.
+ Mrs. Northup. Are there any programs that are currently in
+discretionary that have been moved into mandatory?
+ Mr. Raines. In our budget?
+ Mrs. Northup. Yes.
+ Mr. Raines. I do not believe so. No, I do not believe so.
+ Mrs. Northup. So they are just new programs that are now--
+like America Reads and programs like that that are now in
+mandatory instead of discretionary?
+ Mr. Raines. Every time you create a new program, you have
+to decide, whether you are going to use a discretionary
+methodology, a mandatory methodology, or the tax system. For
+example, we have made education proposals in this budget. Some
+of them are in the tax code, some of them are mandatory
+programs, and some are discretionary programs, depending on the
+program design technique we used.
+ Mrs. Northup. Thank you, Mr. Chairman.
+
+ Resolving Differences on Deficit Estimates
+
+ Mr. Kolbe. Let me just, if I might, go back very quickly. I
+am just going to ask one other question. But I just wanted to
+make one point on what was said earlier about whether you use
+OMB or CBO. I quite agree with you that both of them are close.
+They are both within range. I think it is absolutely accurate,
+and June O'Neill has testified to the same, that both of them
+are within range of reasonable estimates. Yours is as well. And
+you have hit it more on the mark the last four years.
+ But I think the point is, when we do our budget process, if
+we are going to be singing from the same sheet, we have to be
+working from the same figures. Whichever one you use, you have
+to agree to use one. Do you not think that it is not a good
+idea to just simply flip back and forth year by year from one
+to the other just depending on which one looks more favorable?
+ Mr. Raines. I think we ought to use one.
+ Mr. Kolbe. The President did say a few years ago, you will
+recall, that he agreed to use the CBO figures.
+ Mr. Raines. And we have presented our current budget using
+both OMB and CBO figures. So we have both of those versions
+sitting on the Hill today, and CBO has said that our version
+using their numbers is balanced. In fact, I have a copy of a
+letter from June O'Neill in which she says that our budget is
+balanced using CBO numbers.
+ Mr. Kolbe. I just wanted to be clear because we keep
+going--I will have to take a look at that, but the suggestion
+is we should go back and forth and pick and choose. We did have
+an agreement----
+ Mr. Raines. I am sort of with Mr. Hoyer on that. I would
+like to have one, but I think we ought to get our best minds
+together and come up with one set. I agree with you----
+ Mr. Kolbe. The best minds are going to differ.
+ Mr. Raines. Not if you have them in the same room. They
+have got to come out together. The Administration is not
+monolithic either. When we put together our estimates OMB, CEA,
+and Treasury have to get together in one room and we have got
+to say all right----
+ Mr. Kolbe. In the end, somebody calls the shot and decides
+which one it is going to be.
+ Mr. Raines. Actually, it is more of a group effort.
+Wereally do reach an agreement as a group, as to what we think is the
+most reasonable path. And I think we could do that in another group.
+But I agree with you, it would be far better to have one set of numbers
+so that we are not debating against which baseline or against which
+economic estimates we are trying to make changes.
+
+ Will Government Computers Be Ready For The Year 2000?
+
+ Mr. Kolbe. Let me change courses here. Just one very quick
+question and I will submit a few others for the record. On the
+year 2000 software conversion, are the Government's computer
+systems, going to be ready by January 1, 2000?
+ Mr. Raines. We have been working with the agencies to
+ensure that they have done proper assessments and have
+developed plans for making the necessary changes.
+ Mr. Kolbe. I noticed that, an awful lot of agencies are
+going to have implementation in either November or December of
+1999. So it is really close to it.
+ Mr. Raines. I share that concern. We have tried to get the
+agencies to focus on getting these assessments done as quickly
+as possible and to begin to make the changes as quickly as
+possible. We are asking them to focus first on programs that
+are date sensitive. Not every computer application uses the
+date for its calculations. It may date a transaction, but the
+date is not crucial to a calculation. So those programs are
+less critical.
+ But where programs are date sensitive, agencies need to
+move very aggressively.
+ Mr. Kolbe. That feeds in, if I might, to the other
+question, the second question that I had. I take it those that
+are date sensitive, would be the ones that are most vulnerable
+to a failure and most critical to get the conversion done
+correctly?
+ Mr. Raines. Absolutely.
+ Mr. Kolbe. If you would, for the record, supply the
+committee with agencies that you believe to be the most
+sensitive so that this committee can pay special attention to
+them in terms of the allocation of resources. I think it would
+be extremely helpful for us to know where you think the
+greatest dangers lie, the agencies with the biggest problem if
+we do not make this conversion, if we do not get it done in
+time.
+ Mr. Raines. I would be happy to supply that.
+ Mr. Kolbe. You are tasked with the monitoring the progress
+that agencies are making in their computer systems, making them
+compliant for the year 2000. What mechanisms do you have in
+place, to address agencies that you see clearly falling behind?
+ Mr. Raines. Where we see an agency clearly falling behind,
+we will use all of our authority with regard to information
+systems and require them to direct their attention to solving
+this problem in their critical systems. We simply cannot afford
+to have them fail. So, if necessary, we will take steps, as we
+have in some agencies, to establish special management
+structures to ensure that senior management is focused on the
+issue. We will ensure that, in using their funds, they put
+their highest priority on the solving of this year 2000
+problem. And, if necessary, we will get involved directly in
+their planning process to ensure that they make progress.
+ So we believe that Congress has given us a number of tools
+necessary to concentrate the attention of agencies on solving
+this problem.
+ Mr. Kolbe. I know you have submitted a report to us but it
+just occurs to me that maybe we should ask you, and maybe we
+will consider this in language in the bill or the report, to
+give us maybe twice a year just a fairly simple update on where
+agencies are, because I think it is important. We have to play
+a role in this, and I think it is important that we work
+together to make sure that we are supporting you in terms of
+making sure the resources are being allocated for those
+agencies who may not be meeting the timetable. So we might ask
+you to give us a periodic update over these next three years on
+this issue.
+ Mr. Raines. Sure. I would only ask that the committee work
+with us on the language, so you are asking for the same kind of
+report that we will need for management purposes. But we would
+be happy to work with you on it.
+ Mr. Kolbe. Mr. Hoyer.
+
+ Controlling Mandatory Spending
+
+ Mr. Hoyer. Thank you, Mr. Chairman. I am sorry Mrs. Northup
+left. The question she raised, not necessarily the specific
+question, concerned the Administration proposing certain
+programs. Obviously, the Administration cannot make spending
+mandatory. That has to be an act of Congress, so that the
+Congress has to pass that in order for spending to be in the
+mandatory category.
+ But the question she raises, speaks to something that ought
+to be of great concern to every member of the Appropriations
+Committee, and in my opinion, to every American. What we do by
+incurring large deficits, and what we do by at any given time
+deciding that an expenditure is so important that we are going
+to make it mandatory, is that we put an incredible squeeze on
+the increasingly small discretionary pot that remains to this
+committee and to the people of the United States to decide from
+year to year what their priorities ought to be.
+ I have repeated this so many times you probably do not need
+it on the record again. I think what Ms. Northup was referring
+to is absolutely correct. That every time we make a program
+mandatory, it has an impact. We know that the mandatory budget
+has now just outstripped the discretionary budget where it is,
+I suppose, now 60 percent of the budget, with another 15
+percent being debt and about 36 percent, discretionary; about
+17 defense, 17 discretionary, 1 international relations.
+ That is something that ought to concern all of us. One of
+the reasons that I am for a balanced budget amendment is I do
+not think you get a handle on mandatory spending, on
+entitlement spending, unless you have to because the political
+pressure is so great.
+ I will make an example. Veterans are my friends. I love the
+veterans; everybody loves the veterans. We are going to reduce
+employees by 272,000 people. Sonny Montgomery, one of the most
+conservative members of the House joined with almost every
+conservative balanced budget, budget-cutting Republican, in
+voting to say that we are going to cut 272,000, federal
+positions but do not cut anybody out of the Veterans
+Administration. Do you recall that vote? You were not in
+Government at that point in time.
+ It was one of the phoniest votes we have. I was oneof, I do
+not know, 100 who voted against it. I spoke against it. My veterans did
+not get real mad at me, but I am sure they were not real pleased. If
+they had other reasons to be mad at me, they would have added that on.
+ But that is an example of the pressures that are brought on
+members of Congress who, after all, want to respond to
+consumers. We are not any different than any other person. We
+sell policy--in the best sense. I do not mean in any sort of
+venal sense of quid pro quo. But in terms of, this is what we
+are for. You vote for me because that is good for the country.
+ Absent a balanced budget amendment, my experience in the
+1980s was that it was almost impossible to say no. And it is
+still impossible. That veterans vote is a perfect example,
+though the Senate did not pass the bill, as I recall. Does
+anybody know?
+ Mr. Raines. Yes.
+ Mr. Hoyer. Did it pass the Senate, too?
+ Mr. Raines. Yes.
+ Mr. Hoyer. Is it law now?
+ Mr. Raines. That was part of the crime reduction trust
+fund.
+ Mr. Hoyer. That is right, we did that. Now what that did,
+of course, Mr. Chairman--you do not have to be much of a genius
+or a pencil pusher or a green eye shade guy to know, that if
+you exempt an agency with how many people?
+ Mr. Raines. About 260,000, I think.
+ Mr. Hoyer. It is bigger than that, particularly when you
+add the medical staff. The medical I would have probably gone
+along with, but they did everything across the board. If you
+exempt 200,000 or 10 percent of the employees and you still
+have to get to 272,000 reduction, it does not take a genius to
+tell you that the pressure on the other agencies is greater.
+ So the point that Ms. Northup raises is an important one. I
+have voted to make programs mandatory, mainly for political
+reasons, because if you do not vote to make it mandatory, you
+are not for it. Gutless wonder that I am from time to time. It
+always annoys me.
+ Mr. Kolbe. We all do it.
+ Mr. Hoyer. We all do it. But we have to come to grips with
+saying, this is the pie. I do not know that cash basis on an
+annual basis is the answer. I happen to be for capital
+budgeting. The Federal budget is about 8, 9, 10 percent capital
+expenditures when you include defense and domestic. But we are
+reducing that, of course, because defense is reducing its
+capital expenditures.
+ But having said that, if that is the pie and I have to go
+back to the 56,000 Federal employees I represent it is tough to
+tell them no. But I am prepared to tell them, you get zero if
+Social Security gets zero. I am not prepared to tell them, you
+get zero and Social Security gets 2.6 percent. That is not
+fair. They know it.
+ But the only way to get there is have a pie that is
+confined, that is finite, in my opinion. That is why I have
+decided that the balanced budget amendment is the only way to
+do it in a 270 million person society. I noticed that America
+is the third largest country in the world, which surprised me.
+I do not know why I did not think we were that big, but now
+Russia is down to 150 million with its split-up. We need to
+come to grips with choosing, making choices as opposed to
+simply adding on, which is what we did in the 1980s.
+ President Reagan got his priorities. The Democratic
+Congress got their priorities. We added on and we added $3.8
+trillion, $4 trillion, to the debt. That is not a question. It
+is an observation. I do have a question, but you might want to
+respond to that rambling----
+ Mr. Raines. The only thing I would say, Congressman, is
+that we have had a number of procedural efforts to deal with
+this problem. The Congressional Budget Act that set up the
+Budget Committees and the Congressional Budget Office was a
+procedural attempt to do the same thing. How do we----
+ Mr. Hoyer. Can I interrupt just one second so you can
+comment on it, because it relates to your comment to Ms.
+Northup? All of those procedures could be changed by 50 percent
+plus one. That is the difference from my perspective to the
+constitutional amendment. But go ahead.
+ Mr. Raines. But it has been interesting; it has been
+amazingly durable. The Congress has, in fact, stuck with the
+procedures, but it has not gotten the result it wanted. And I
+think the same thing would happen with a constitutional
+amendment.
+ The way I think you balance the budget is by doing what you
+did in 1993. In 1993, the Congress and the President just
+simply decided to change. So even though Congress took a lot of
+tough votes in the 1980s, the votes mainly kept the deficit
+from going out of control. In 1993, Congress took a tough vote
+and the deficits went down. And they have been going down
+without reliance on the procedures, because the Budget Act
+procedures have not worked very well in this period, and
+without a constitutional amendment.
+ We have brought the deficit down 63 percent. We think
+Congress can take the votes this year to do the rest of the
+job. Everyone will try to figure out how not to be seen in the
+act. But we are ready to stand with the Congress in making
+those tough decisions. The President has put out the list of
+what he believes the tough decisions should be, and people can
+rightly criticize his approach and propose their own.
+ But we are prepared to sit down and actually work towards
+making the cuts that will make the difference. In coming up
+with our plan, we very consciously looked at the tax code; at
+the mandatories, including entitlements; and at discretionary.
+We have not been limited by any conceptions of one being
+sacrosanct and the others not. We have been criticized for it.
+ We have been criticized in the tax area. Some say that if
+you look in the tax code and find areas where you can save
+money, that is a tax increase. So we took that hit because we
+believe the tax code should not be off limits. We have been
+criticized in Medicare. In particular, some ask why we are
+proposing more savings than we proposed last year. So we took
+that hit. In discretionary, we are being criticized for why we
+are not spending more on certain programs. And we took that
+hit.
+ Anyone who wants to balance a budget is going to have to
+take those hits. But we think the right way to do it, and only
+way to do it, is ultimately to vote. These constitutional
+amendments in the States do not make legislatures vote the way
+they do. They vote the way they do because, if they have
+imbalanced budgets, they get voted out of office. Ultimately,
+the electorate enforces the balanced budget requirement.
+ If the electorate enforces that nationally, as I think it
+has been doing over the last four years, in saying a balanced
+budget is one of its top issues, then we will get a balanced
+budget. If the electorate does not want a balanced budget, we
+will not have one, no matter what the Constitution says. So
+ultimately, I think we have to convince the American people
+that this is the right policy, and then we have to work
+together to make it happen.
+ Mr. Hoyer. I wish I were as sanguine as you are about 50
+percent plus one deciding that, yes, we want a balanced budget.
+I have a grandchild and my view has changed on how much debt we
+have put on her head. I know the Republicans talk a lot about
+that. They are right. What we have done to the succeeding
+generation in terms of debt is not right. This generation did
+not pay its bill.
+ Mr. Raines. I agree with you.
+ Mr. Hoyer. And we ought to pay our bills.
+ Mr. Raines. Not only did we not pay our bills, but we
+diverted money that could have been used for investment to
+create new wealth, into current consumption. It was the wrong
+thing to do, and we need to change that.
+ Mr. Hoyer. Mr. Chairman, again, you have been very tolerant
+with my time and I appreciate it. But I think it has been an
+interesting discussion.
+ It is a shame that this discussion, which is really the
+guts of what our country is going to be about in the years
+ahead, as I said at the beginning, gets relatively little
+attention. It does get a lot of attention around the country,
+but not on a day to day basis. And some of the smaller issues
+which are sort of temporarily what I call the grocery store
+tabloid interest, get a lot more interest while these issues
+which are really the big issues of our time do not get as much
+attention as they ought to.
+ Thank you, Mr. Chairman.
+ Mr. Kolbe. Mr. Hoyer, I quite agree that these are issues
+that are of great significance for all of us and deserve the
+kind of attention that we have given them and that you in
+particular have given them.
+ We will have some other questions for the record. We will
+submit those to you. Director Raines, thank you very much. This
+subcommittee stands adjourned.
+ [Questions and answers submitted for the record and budget
+justifications follow:]
+
+
+[Pages 438 - 490--The official Committee record contains additional material here.]
+
+
+ Wednesday, March 19, 1997.
+
+ OFFICE OF NATIONAL DRUG CONTROL POLICY
+
+ WITNESS
+
+GENERAL BARRY R. McCAFFREY, DIRECTOR
+
+ Mr. Kolbe. The meeting of the Subcommittee on Treasury,
+Postal Service and General Government will come to order.
+ We welcome here this afternoon General Barry McCaffrey, who
+is the director of the Office of National Drug Control Policy.
+ Welcome, General.
+ It is difficult to speak about the problem of drugs in our
+country without using some fairly emotional and some dramatic,
+perhaps even explosive language sometimes, and I think that is
+understandable. Americans are becoming all too familiar with
+the tyranny of the drug menace in our country, the violence
+that it engenders, the power that it has to corrupt law
+enforcement institutions and individuals, and our political
+institutions as well, perhaps most of all the destruction that
+drugs wreaks upon our children and our families.
+ Whether we resort to metaphors of warfare or those of
+disease, drug abuse and the criminal enterprises that exploit
+it place a huge strain on our national resources, and it
+promises to exact even more costs from our society in the
+future.
+ If any emotion, I think, unites Americans, if there is
+anything that there is virtually unanimous view about, it is
+the desire to eliminate this scourge.
+ General McCaffrey, a year ago, you came before the
+subcommittee and requested our support to rebuild your office,
+the Office of National Drug Control Policy. You received that
+support, and now ONDCP is approaching the size it was prior to
+the cuts it experienced in the first 4 years of the Clinton
+administration.
+ I think now what we hope we will hear today is what you
+have done with the money to rebuild the agency, how far you
+have come, progress that has been made.
+ Federal anti-drug efforts are spread all over this
+Government. I serve on another subcommittee covering a Justice
+Department that includes a lot of the efforts, and I have seen
+the proliferation and the division of agencies within that one
+subcommittee, but then you add this subcommittee, and I think
+there are 9 of the 13 Appropriation subcommittees that have
+some of the war on drug funding within their jurisdiction. That
+is what we have ONDCP for. It is to provide the leadership that
+is needed to focus policy development, to coordinate the
+efforts of individual agencies.
+ ONDCP must also provide a central point for accountability
+and be able to give the Nation a candid reality check about the
+size and the nature of the drug problem in America.
+ Your written statement says that there is some good news.
+However, I must say that other developments this year are cause
+for some considerable dismay. After decades of efforts and
+hundreds of billions of dollars in direct and indirect costs of
+fighting drugs, a flow of drugs into and around this country
+continues strong. The levels consumed by Americans remain high.
+ Two States, including my own State of Arizona, have voted
+to allow medicinal use of marijuana, or in my State's case,
+other drugs, despite opposition from the Federal Government and
+from all responsible medical authorities.
+ The leading counter-drug officer in Mexico who had received
+strong endorsement from our Government, including yourself,
+General McCaffrey, was arrested for being in the pocket of one
+of Mexico's most notorious criminal families.
+ Worst of all, recent surveys show that our children and
+adolescents have greater experience of and much greater
+acceptance of drugs.
+ General, your 1997 strategy calls for a 10-year plan. It is
+a problem that has been with us for decades, and we all
+recognize that defeating it is going to take time and
+perseverance. It is not enough, though, that we simply be
+patient. We also have to be confident that we are making some
+progress in this battle.
+ We need to see some real reductions in the level of
+prevalence of drug abuse and use among citizens to score
+significant victories against drug crime.
+ The administration's new strategy calls for a new priority
+to be placed on demand-side policies, but I don't think that is
+anything that is new. Three years ago, the President also
+emphasized demand control, while he sought a new international
+supply approach that through a controlled shift away from the
+interdiction in the so-called transit zones, the Caribbean, the
+Pacific oceans, within Mexico, to focus more on source
+countries.
+ The committee is going to be looking very hard at the
+strategy to see whether the President's counter-drug budget--
+and the President's counter-drug budget, to see if it supports
+the kind of activities that we need, ones that result in
+visible, measurable success.
+ I don't think any of us can be very sanguine about this,
+whether we have the success that we really need, whether our
+strategy goes far enough, and certainly, I don't pretend to
+have all the answers to this. We are just not making the kind
+of progress, though, that I think we so desperately need to
+show for the funding, the numbers of people that we commit in
+our society to this effort.
+ So I look forward to the testimony we are going to hear
+today. I think this is probably as important a hearing as any
+we will have in the course of this year.
+ Before we turn to General McCaffrey for his remarks, let me
+ask my distinguished ranking member, Mr. Hoyer, if you would
+like to make some remarks.
+ Mr. Hoyer. Just briefly. I apologize for being late. I want
+to welcome General McCaffrey to the hearing. General McCaffrey
+has been on board for, I guess, about a year and has been given
+one of the more important jobs that confronts the
+administration and our country. He was chosen because of an
+extraordinary background and ability, and my own opinion, Mr.
+Chairman, is that he has undertaken this task very wisely, in a
+measured, committed, and thoughtful way.
+ He and I have had discussions about making sure that the
+American public perceives our drug operation to be operational;
+that is, to be effective in confronting both the flow of drugs
+into our country, as well as the use and abuse of the drugs in
+our country.
+ He has observed that this is a multi-faceted effort, law
+enforcement obviously being an important component, but
+education and rehabilitation being also very important
+components.
+ The budget, as you will note, for people actually within
+his office is a very small component of the overall budget, as
+it should be, but at the same time, it is being expanded, I
+think properly so, and I look forward to his testimony. I look
+forward to working with him, and I look forward, Mr. Chairman,
+to this committee ensuring that we fully utilize the talents of
+General McCaffrey, who had tremendous success in his previous
+career as a distinguished military officer and the most
+decorated warrior in America. I hope that we will fully utilize
+his talents and give him the resources to accomplish the
+objectives that the Congress and the public expects and wants.
+ So, General, I welcome you here and look forward to your
+testimony and look forward to working with you.
+ Mr. Kolbe. Thank you very much, Mr. Hoyer.
+ Let me turn to General McCaffrey. I would remind you,
+General, that, of course, your full statement will be placed in
+the record. It is quite lengthy, and I assume you are going to
+summarize it for us, so we can get on with some questions, but
+please proceed. I think you have some other materials you are
+going to share with us as well.
+ Mr. Hoyer. Mr. Chairman, if you will yield just one second?
+ Mr. Kolbe. Yes.
+ Mr. Hoyer. General, I am scheduled to be before the Rules
+Committee at 2:30. So, when I leave here, it will be because
+the Rules Committee has scheduled me for testimony before them
+on a bill that is coming up tomorrow, and I apologize for
+having to leave. I will try to get back.
+ Mr. Kolbe. I will take your questions first when he
+finishes his statement here.
+ General McCaffrey.
+
+ Introduction
+
+ General McCaffrey. Well, thanks, Mr. Chairman, for the
+opportunity to come over here and lay out some of our thinking
+and, perhaps more importantly, listen to your own views and
+respond to your own questions.
+ Let me thank you for your leadership on the drug issue and
+not this year or last year, but over your career of public
+service.
+ Also, Mr. Hoyer has been a tutor of mine, and Congressman
+Wolf and others. I have benefitted enormously from the support
+of our Appropriations chairman, Bob Livingston, and also Dave
+Obey. There are a bunch of folks in the House who have helped
+educate me over the last year, and let me, if I may, just
+publicly say for the record, that Denny Hastert, Rob Portman,
+Charlie Rangel, Ben Gilman, Maxine Waters and others were
+really the heart and soul of the strategy we wrote, and I would
+expect not only congressional oversight, but continuing
+involvement because I am going to listen very carefully to your
+viewpoints.
+ I brought some people here today not to testify, but to
+listen carefully to the nature of the exchange. Dr. Hoover
+Adger is our new deputy director, and with your permission, I
+will just make sure you know who he is. He is a distinguished
+professor of pediatrics at Johns Hopkins University and has a
+subspecialty in adolescent addiction. He is very widely
+published, and we are really honored that he will join us this
+year and add a lot of depth to our own efforts.
+ We also have Jim Copple who represents some 4,000 community
+coalitions; with us is Tito Coleman, their vice president for
+Strategic Planning here. I want to publicly say how much I
+appreciate their support.
+ Kathleen Sheehan from NASADAD, the National Association of
+State Alcohol and Drug Abuse Directors--whom you know,
+represents some 50 national organizations that have been very
+instrumental in our work, and Kathleen is here to listen in.
+ Judge Jeff Tauber, president of the National Association of
+Drug Court Professionals, has been enormously important to one
+of the most promising lines of development, I would argue, in
+the whole area of prevention and treatment.
+ Finally, a couple of weekends ago, I had a tremendous
+session with the International Association of Chiefs of Police,
+and Roy Kine is here representing them. There are some nine law
+enforcement organizations who have regular meetings with us,
+and I have been enormously appreciative of their guidance and
+counsel.
+ Mr. Chairman, I have submitted for the record a document
+that we put a tremendous amount of effort into and tried to
+force ourselves in some organized way to address your concerns
+and your needs for information not only on our ONDCP programs,
+which are a reasonably modest proportion of this entire $16
+billion effort. As you already commented, this request covers
+some9 of the 13 major appropriation bills. So, with your
+permission, I will continue to use this committee in some ways for an
+overview of our whole effort, as well as responding directly on my
+portion of it.
+ There are two final documents that were provided to your
+staff, who have been enormously helpful to us, which are in
+their possession. One is the Strategy. We worked on this for 8
+months intensively. This reflects 4,000 separate inputs. I have
+read every one of them. A lot of them have been extremely
+useful.
+
+ National Drug Control Strategy
+
+ We have five goals. We have 32 objectives. We now have 28
+working groups in government trying to do performance measures
+of effectiveness, so that I can come down here and present to
+your committee not only a budget request for the upcoming year,
+but try and explain to you in some algorithm what I have
+accomplished with the money you have put against this effort.
+The 1998 budget and other documents required by law are in the
+second volume of the National Drug Strategy.
+ Finally, as you are aware, we now have a classified annex
+to the National Drug Strategy, in which we have tried to
+provide the agency, the Department of Defense, and law
+enforcement sensitive guidance on how to support, in
+particular, goals four and five of this National Drug Strategy.
+So those are the documents I would advance.
+ Let me also respond to your own view and open this session
+with a very short 4-minute video. It has a powerful impact on
+me every time I see it. May I offer that for your
+consideration?
+ Mr. Kolbe. Hold on one moment. We have started a vote here.
+Let me think how we might proceed.
+ Mr. Hoyer. I want to see this and then we can break.
+ Mr. Kolbe. But you won't be able to come back. I was going
+to say, do you want to try to get a couple quick questions?
+ Mr. Hoyer. Well, I think the Rules Committee is going to be
+delayed as well. So I may be able to get back. I will ask
+Chairman Solomon when I get there.
+ Mr. Kolbe. Okay. All right. We will have time to see this,
+and then we will break.
+ General McCaffrey. Okay.
+ Mr. Kolbe. I have a fear that I am--I am fearful that we
+are going to be interrupted several times this afternoon on our
+votes.
+ General McCaffrey. All right, Mr. Chairman.
+ Go ahead, please.
+ [Video played.]
+ General McCaffrey. This is part of the package of the
+people led by Jim Burke, the Partnership for a Drug-Free
+America. They are based up in New York and have really done a
+marvelous job over the last several years.
+ Mr. Kolbe, did you have some other things you want to----
+ General McCaffrey. Well, I did, but with your permission, I
+will just wait.
+ Mr. Kolbe. We will wait.
+ General McCaffrey. I have a series of charts that will
+summarize.
+ Mr. Kolbe. We will finish your statement when we come back,
+then we will go vote, and we will return.
+ General McCaffrey. All right, Mr. Chairman.
+ Mr. Kolbe. Thank you. We apologize for this interruption.
+ General McCaffrey. No, not at all.
+ Mr. Kolbe. This is what Congress is all about, also,
+voting.
+ General McCaffrey. All right.
+ Mr. Kolbe. Thank you.
+ [Recess.]
+ Mr. Kolbe. We will resume our discussion of our opening
+statement.
+ Let me just for the benefit of everybody here tell you the
+schedule. We have two more votes, unfortunately with only 10
+minutes of debate separating them. So we will have two more
+interruptions. Then, the next amendment has an hour debate. So
+we will have some time, but we will only have two more quick
+interruptions here, but we will in between get as much in as we
+can possibly here. So please proceed, General McCaffrey.
+ General McCaffrey. Thanks, Mr. Chairman.
+ Let me, if I can, very briefly summarize the remaining
+opening comments by walking you through some charts we put
+together that we think capture the big components of our
+strategy and our appropriations process.
+ The first one, I won't again go through, except to
+reiterate that at the end of the day, these goals must have
+performance measures tied to them, and although it is my
+judgment based on a lot of the really ground-breaking work that
+John Carnevale who works for me has done, and others throughout
+the government. It may well be a 3-year process to end up with
+performance measures that we are confident respond to what
+monies you gave me.
+ By the end of this summer, I will have the first cut done,
+and I will try and start sharing that information immediately
+with the Congress, so you can take part in the subsequent
+development of this process, but that is the strategy. There is
+only one priority. It is the 68 million American children. But
+each component of those other four goals merits a serious
+effort nationally.
+
+ Drug Use Trends
+
+ Again, the good news has to be in the 15-year context of
+drug abuse in America. Clearly, drug abuse is down by roughly
+half. Cocaine use is down by 75 percent. I will go on to show
+other figures.
+ There is some reason to believe that as you look at the
+kind of work that is done up at Yale University by Dr. Musto
+and others, as you look back over 100 years of drug abuse, when
+America gets organized and gets sick of it, we can drive drug
+abuse down. I think that is the lesson, and that is the only
+good news on the horizon. We have been on track for 15 years.
+It has had results, and now we have got some new problems we
+have got to face.
+ Here is the problem right here. The problem is, even though
+adult use of all drugs tends to be drastically down or stable,
+that young people are using drugs in ever-increasing numbers. I
+think the worst statistics are among the eighth-graders because
+they are on the front end of the most sensitive developmental
+period of their adolescent years, and if you look at eighth-
+grade use, it is up almost 300 percent.
+ Now, again, to put it in context, 80 percent of American
+kids have never touched an illegal drug, but the problem is, if
+you look at high school seniors, half of them have used an
+illegal drug, and probably some 20 percent are regularly using
+illegal drugs. So, if we take that population and extrapolate
+the expected rates of addiction, we have got a problem of
+enormous dimension blooming on the horizon, and it is going to
+get worse before it gets better.
+ This is half as bad now as it was in 1979, and we saw what
+happened in the '70s when we tolerated these levels of drug
+abuse among our young people.
+
+ criminal justice system
+
+ The other problem, an obvious one, is the $17 billion spent
+a year on the prison system. This is simply atrocious. There
+are 1.6 million Americans behind bars, and as I listen to the
+law enforcement people in this country, it is going to get
+worse. We think it is going up 25 percent between now and the
+turn of the century. This gigantic increase in the Federal
+prison system, now we are pushing 100,000 people, is up 160
+percent. We have got 600,000 in the local system, and then
+almost a million, a little over 900,000 in the State system, a
+gulag in America, and of that total, we can argue about the
+numbers.
+ We say two-thirds of the Federal prisoners are there for
+drug-related reasons, 22 percent of the State prisoners, and
+the majority of the local ones. Now, I think most serious
+police officers--like the International Association of Chiefs
+of Police--say over half the people behind bars have a drug or
+alcohol problem, and it is a gigantic drain on our resources.
+This 1998 budget, which I submitted to you, 53 percent of it is
+law enforcement and prisons. It is a huge right-off-the-front
+bill that we have to pay if we are going to protect America.
+But if we want to drive that population down, we have got to
+look at other approaches.
+ The other aspect, even though drug abuse is down in America
+by 50 percent, and even though cocaine new initiates have
+plunged, if you look at who is using drugs, we allege cocaine
+users are still consuming probably 240 metric tons. There is
+also an increased use of methamphetamines and marijuana and new
+drugs arriving on the scene, PCP, et cetera.
+ So, less people are using drugs, yes, but they are sicker,
+they are more desperate, they are more dangerous than ever, and
+hospital emergency room admission rates have gone up, not down
+with this smaller population.
+ [The information follows:]
+
+[Page 498--The official Committee record contains additional material here.]
+
+ drug seizures
+
+ General McCaffrey. This chart, Mr. Chairman, can be used
+for mischief, but I put it up there because I think it is
+another aspect of the drug problem we are going to have to
+study and respond to. What it tells you is if you pick one of
+these drugs, cocaine, which is probably the easiest one
+intellectually for us to go after over the years--if you go
+from 1990 (actually the sixth day is the first day that shows
+any dramatic change) but if you look over that period of time,
+the total tonnage of cocaine available for consumption
+somewhere in the world has stayed about the same.
+ We try this strategy; we try another. We gain cooperation;
+we lose it. Essentially, we produce 800 metric tons a year.
+ Now, this year, thank God, for the first time there has
+been a substantial drop in coca production in Peru. It is down
+18 percent. It may be more important than the 18 percent
+because the new plantings are significantly reduced. But having
+said that, the production is about stable and the non-U.S. and
+U.S. seizures over time tends to be sort of in the same ball
+park. We take a third of it away from the international
+criminals, and the U.S. gets about a third of that total every
+year.
+ This year, it [Clerk's note.--``it'' refers to seizures] is
+up again because of good police work, particularly in Miami and
+New York, but it is up to 107 metric tons. It is always sort of
+100 metric tons, and the total for international law
+enforcement, 300 metric tons.
+
+ budget overview
+
+ Mr. Chairman, here is the overview of the budget, $16
+billion. We went to OMB and presented a case with the
+departments of the government and got an additional $818
+million, a 5.4-percent increase. It was a great statement by
+the Administration of where our priorities are. That $818
+million went to fund existing programs and new initiatives, and
+here are some of the big ones. Certainly the Safe and Drug Free
+Schools Program has been enormously important to us. We are
+also persuaded that we must get new tools to use against drug
+addiction in America, so this incredible national treasure, the
+National Institute of Drug Abuse, NIDA, NIH, is a significant
+research program. We believe that law enforcement, local law
+enforcement, can make a difference. We know we have got to have
+the INS border patrol funded at a reasonable level to meet the
+challenge to America. There are 500 new border patrol officers
+as an example. We have got a major increase in source country
+operations in that budget. We have $175 million for an
+initiative I will discuss in more detail to focus on kids and
+parents over news media tools. And then, finally, this drug
+court that has made such a difference--we put substantial money
+into that.
+ Mr. Chairman, here is the ONDCP programs line, and I
+divided it from biggest to smallest. $175 million, and again, I
+will talk about this in greater detail, for our National Anti-
+Drug Media Campaign. Thanks to congressional support, to
+include this committee, there are now some 15 HIDTAs, and you
+gave us $140 million in the 1997 budget. We started up five new
+ones. We increased the funding. You gave me about $60 million
+[Clerk's note.--Agency later amended this to $14.2 million] in
+discretionary funds, and we have tried to fund these
+empowerment HIDTAs more, and we have done some very creative
+things that I think you will be pleased with. But that program,
+when we are 2 years into the Empowerment HIDTAs, and these new
+HIDTAs are on their feet and they have the infrastructure
+needed, I think there will be room for more money in that
+program. [Clerk's note.--The agency later moved the word
+``when'' before the phrase ``these new HIDTAs'' to clarify that
+the HIDTAs have been in place for two years.]
+ Our 124 full-time employees and 30 detailees--we are almost
+there. We are up to 93 hires, and we have 20 of our 30
+detailees. So we very deliberately hired some of the best young
+men and women in America, and we are pretty proud of whowe got.
+ I will explain in a little greater detail what we are doing
+at the Center for Counter-Drug Technology, a $17 million
+program, some pretty good work going on in several areas, to
+include demand reduction and finally, a million dollars, not
+much, for some very good data collection systems that are
+important to the drug issue in some very fundamental ways.
+ The National Media Campaign--and I welcome congressional
+oversight and involvement as we develop this concept further--
+this is the first look at it. Our view is to go to all of the
+adolescents of America and get to them four times a week, 90
+percent of the target audience, with a prime-time approach in
+either TV, radio or print. We are convinced by history of the
+issue, watching Partnership for a Drug Free America data and
+the Ad Council that this will work.
+ We are also persuaded that we have a problem that is just
+exploding in front of our eyes, and it is going to take us a
+couple of years to turn those numbers and 5 years of determined
+effort. And we think this will help.
+ That really completes the overview, Mr. Chairman. Perhaps I
+will just stop here and be prepared to respond to your own
+interest and questions.
+ [The information follows:]
+
+[Pages 501 - 556--The official Committee record contains additional
+material here.]
+
+ Mr. Kolbe. All right. We are going to see if we can't keep
+this hearing going. Mrs. Northup is going to go vote and come
+back, and she can be asking questions. I will ask questions for
+a few minutes here, and we will stop when we have to here.
+ Thank you for the overview there. Let me focus since it is
+your really new, major new strategy that you have unveiled here
+this year as your publicity and your public ad campaigns. I
+want to focus a bit on some of that.
+ Actually, before I get to that, let me ask a question in
+your statement here. I find the statement, as I read it, a
+little puzzling because your first page of America's Drug Abuse
+Profile begins on an optimistic note, and ``During a sense of
+optimism . . .,'' as the first line, ``. . . there are
+encouraging signs that our drug control efforts are
+succeeding.''
+ For example, under ``drug control efforts are succeeding,''
+you say the first bullet, 1995 marked the first time in the
+past 5 years that drug-related emergency department episodes
+did not rise significantly.
+ The next page, record-high drug-related medical
+emergencies. In 1995, there were record-high, 531,800 drug-
+related hospital emergency episodes, slightly more than 1994's
+518,000. This seems to be kind of a jarring disconnect in the
+statements that follow the first couple of optimistic
+paragraphs.
+ General McCaffrey. First of all, it needs to be written
+better, then, and I appreciate the chance to try and correct
+that.
+
+ drug use
+
+ Generally speaking, what you have is dramatic drop in drug
+abuse in America, astonishing, 15 years of progress, and an
+even more astonishing drop in the rate of cocaine abuse.
+ However, if you believe 1.4 million Americans are addicted
+to cocaine--that is roughly the figure--and 600,000 heroin
+addicts, they are consuming astonishingly high levels of drugs.
+So the manifestations of that drug abuse have gotten worse, not
+better.
+ They are coming into hospitals. If you are an emergency
+room doctor, you are seeing a lot of this. It started to level
+off, though 1994 and 1995, there wasn't a continued rise, but
+if you will look over time, it is still a huge cost on the
+health care system. People are sick from drug abuse.
+ Mr. Kolbe. So using that one little fact or figure, you are
+saying that the fact that they haven't gone up that much means
+there is some room for optimism. It is a little hard to be
+optimistic about the fact that we have reached an all-time high
+in medical room emergencies.
+ General McCaffrey. Yes. Well, I agree. I think the $30-
+billion-a-year cost to the health system, again, if that figure
+is accurate, drug addiction in America is a gigantic penalty on
+the system.
+ Mr. Kolbe. Similarly, you just mentioned here about how
+there has been a dramatic reduction in drug use, and yet, page
+4, drug use among youth is skyrocketing, the most alarming drug
+trend is the increasing use of illegal drugs, tobacco and
+alcohol among our youth. As you point out in the next sentence,
+children using substances increase the chance of acquiring
+lifelong dependency problems. So, I mean, we have every reason
+to be very alarmed and concerned, don't we, with this rather
+dramatic increase in drug use by youth?
+ General McCaffrey. Without question. More than alarmed
+because these are the seeds of future problems that will be
+significant.
+ Again, I think the notion is adult use of drugs is stable
+or declining. If you take a 15-year look, it is way down, but
+if you look at our children, it is headed back up and it is
+half as bad as it was in the 1970's. So that is the principal
+cause for alarm, increased use of gateway drug behavior by
+young people. It signals a real problem down the line.
+ Mr. Kolbe. Let me turn to the ad campaign. You are
+proposing to spend $175 million a year from the special
+forfeiture fund. First of all, on the forfeiture fund,
+lastyear, I think we appropriated--how much did we appropriate last
+year? $25 million from the forfeiture fund, or 112, total, to ONDCP?
+
+ special forfeiture fund
+
+ General McCaffrey. In the 1997 budget, it was $112.9
+million.
+ Mr. Kolbe. From the forfeiture budget?
+ General McCaffrey. From the SFF fund, $60 million was for
+my discretionary use and $42 million to Customs, $10 million to
+other Federal agencies for meth reduction.
+ Mr. Kolbe. Well, that 112 is the total amount out of the
+forfeiture fund, is it not?
+ General McCaffrey. Exactly, right.
+ Mr. Kolbe. Or, are there others, Justice and others, that
+are separate from that?
+ General McCaffrey. This was the ONDCP budget.
+ Mr. Kolbe. That is the ONDCP.
+ General McCaffrey. Yes.
+ Mr. Kolbe. I don't understand how that forfeiture fund
+works. I need to do some more work in that area to understand.
+Every subcommittee can appropriate money from that fund?
+ General McCaffrey. Well, I think Justice and Treasury have
+separate forfeiture funds.
+ Mr. Kolbe. Oh, they are separate funds.
+ General McCaffrey. Yes.
+ Mr. Kolbe. Separate sources of funds going into it of
+forfeitures?
+ General McCaffrey. Well, it all comes out of forfeiture
+money, but it has to be appropriated.
+ Mr. Kolbe. You mean if it is Customs that seizes it, it
+goes to the Customs forfeiture fund?
+ General McCaffrey. No. It goes into a pot, and then
+Congress has to appropriate that money back to somebody to
+spend, and then you hold us accountable for spending it.
+ Mr. Kolbe. You just said there were two separate funds.
+ General McCaffrey. For Treasury and Justice and another for
+ONDCP.
+ Mr. Kolbe. Is the money only going in the two separate
+funds or just coming out?
+ General McCaffrey. No, it is going to different departments
+of government.
+ Mr. Kolbe. As it comes out, we appropriate it out of the
+fund.
+ General McCaffrey. Exactly.
+ Mr. Kolbe. This is confusing.
+ The point is, I guess, the question I want to get at in
+about the remaining 2 minutes before I am going to have to
+leave here, this is a big amount. What is going to happen to
+all the other things? Last year, as you said, you had $60
+million discretionary. You had $42 million, I think, that was
+for P-3's, is that right, and for other aircraft?
+ General McCaffrey. Yes.
+ Mr. Kolbe. You have $25 million for transit zone efforts.
+What is going to happen to those programs? If we are going to
+spend everything that we have available to us in the forfeiture
+fund on the ad campaign, what is that going to do to the other
+kinds of things that we have used that fund for in the past,
+the interdiction?
+ General McCaffrey. I am not sure I can give you an adequate
+answer.
+ Last year, the forfeiture money was dominated by this $250
+million supplemental request, a good bit of which went into
+nonrecurring costs of equipment from Customs, Defense, et
+cetera.
+ Now, how we pay for the $175 million. I am not sure that
+that--is that necessarily keyed to the forfeiture fund?
+ Mr. Kolbe. Yes.
+ Mr. Carnevale. It is out of our own forfeiture fund. It has
+come out of the general fund.
+ General McCaffrey. Dr. John Carnevale, the Office of
+National Drug Control Policy.
+ Mr. Kolbe. But it all comes out of the forfeiture fund,
+correct? Dr. Carnevale?
+ Mr. Carnevale. It comes out of our own forfeiture fund. The
+money would be appropriated from the general fund into our
+account. It wouldn't come from forfeitures from the Justice
+Department or the Treasury Department.
+ Mr. Kolbe. I am more confused than ever.
+ General McCaffrey. It has to be appropriated one way or the
+other.
+ Mr. Kolbe. The source of funds is from forfeitures, am I
+correct?
+ General McCaffrey. Yes.
+ Mr. Carnevale. If I may, the way the account was originally
+structured, we were supposed to get--from surplus monies in
+Treasury and Justice forfeiture funds--proceeds that would then
+come to our account for appropriation. But in the past few
+years, Treasury and Justice, they had none, didn't get very
+much in terms of surplus. So we have been seeking
+appropriations out of the general fund from Congress.
+ Mr. Kolbe. All right. We are going to stand in recess. When
+Mrs. Northup returns, she will begin the questioning on her
+time. So we can just keep going as fast as we can.
+ We will stand in recess.
+ [Recess.]
+ Mrs. Northup [presiding]. I will bring this meeting back to
+order and ask your indulgence, Mr. Director, in case I repeat
+or ask you to repeat. It is hard to get a continuation here.
+The chairman asked me to go and begin again.
+ I would just like to ask you to repeat, if it is
+repetitive. Obviously, the drug war includes decreasing the
+demand, decreasing the supply. You are working on both of those
+efforts. Is that right?
+ General McCaffrey. Yes, indeed.
+
+ interdiction
+
+ Mrs. Northup. The information I have looked at, it looks as
+though we are decreasing the amount of money or have decreased
+since 1992 the amount of money we are spending on interdiction.
+Can you explain to me, is that correct, and can you explain to
+me the thinking on that?
+ General McCaffrey. Yes. Getting at the truth of this one
+has been a real challenge to me. I went back and researched it.
+I believe I got the answer on the history of all of this.
+ To go to the bottom line, today, there is less money in
+interdiction than there was in 1991. It reached a high of about
+$2 billion-plus. It reached a low of $1.1 billion, a couple of
+budgets ago. It started back up, and now we have got it up to
+about $1.6 billion-plus.
+ There are explanations for it, a few of which actually fall
+under the ``controlled shift'' of the Clinton administration.
+Some of the explanation is the Bush-Reagan era did an
+enormously successful effort against drug interdiction in the
+Caribbean. A lot of it was high-dollar items. We have two of
+the three ROTHRs, Relocatable Over-the-Horizon-Radars, now in
+place and operating. A tremendousamount of Naval assets were
+thrown against the problem, Aegis cruisers, for interdiction in
+Caribbean space. It succeeded. It actually drove down drug smuggling
+through the Caribbean into Florida from Colombia and pushed it, like a
+balloon you squeeze on, into Mexico, and now increasingly into the
+eastern Pacific.
+ The request we have on the table for the 1998 budget, $1.61
+billion, if I remember it, if you strip out the non-recurring
+cost from last year, it represents an increase in the year-to-
+year cost of some 9 percent. So it actually went up from $1.47
+billion to $1.6 billion from the 1997 to 1998 budget. So we
+think we have got it up. I believe it is about where we need it
+for this year.
+ The next budget we turn in, 1999 and beyond, in my
+judgment, we ought to put more resources into source country
+operations, particularly against Peru, and so, even though this
+year we only went from $25 to $40 million for Peru, there ought
+to be significant increases in the 1999 budget.
+ Mrs. Northup. What was your request to OMB for
+interdiction.
+ General McCaffrey. I believe we got what we asked for, and
+we got what DOD asked for. There were some debates on that.
+ I am going to have some subsequent discussions because I am
+concerned about the DOD component, not the total line so much
+as I am concerned about what many have argued is inadequate
+funding for National Guard initiatives. So I think it deserves
+some continued analysis to make sure we are supporting the
+Guard adequately in the 1998 budget.
+ Mrs. Northup. Would you go back and check your papers for
+me and just confirm that you were fully funded for
+interdiction, what you requested for interdiction?
+ General McCaffrey. I will, indeed.
+ [The information follows:]
+
+ In FY 1997, the President requested $1.437 billion for drug
+interdiction activities; $1.639 billion was enacted. For the
+National Guard Bureau in FY 1997, the President requested $179
+million for drug enforcement activities; $229 million was
+appropriated.
+
+ Mrs. Northup. You have also been given the responsibility
+of evaluating the effectiveness of the drug treatment and
+prevention programs. Can you tell me if you have found--you are
+obviously adding the New Media Initiative, and since the youth
+use of drugs has gone up so significantly, can you tell me
+which programs you all have found to be ineffective?
+
+ demand reduction programs
+
+ General McCaffrey. I think one of the principal weaknesses
+that we face in this arena is adequate data to justify
+expenditures of money on drug education, prevention, and
+treatment programs. There is a lot of data out there, but it is
+not in a form that is commonly accepted, and I think it has
+caused us to lack adequate credibility.
+ Now, having said all that, I would also suggest to you that
+there are problems in the way we funded drug treatment and
+prevention problems. There is a tremendous amount of this money
+in Health and Human Services and the SAMHSA account that is
+under the rubric of knowledge and development areas.
+ So, as I remember, it is upwards of $600 million. So you
+have got what looks like research when, in fact, a lot of it is
+taking existing research and trying to apply it to drug
+treatment. I don't think our answers are adequate.
+ Now, having said that, it is our own view, it is generally
+the data, I would suggest. We have got 3.6 million addicted
+Americans. We probably have about half the treatment capacity
+we need in the country. That is where my personal assessment is
+right now, and when it gets to this giant prison population of
+1.6 million Americans behind bars, the most persuasive evidence
+I have seen indicates that we have got about 7 percent of the
+treatment capacity we need for those we have locked up. So we
+have been spending an average of 22,600 bucks a year to keep
+them in jail, but we haven't put the resources against those
+who are addicted to alcohol and illegal drugs to make sure that
+when they go back to the street they don't immediately go back
+to addictive behavior.
+ Mrs. Northup. Well, when it comes to treatment, of course,
+prevention is the first and most effective thing.
+ General McCaffrey. Absolutely.
+ Mrs. Northup. Treatment depends, to some degree, on how
+actively seeking the person is of treatment.
+ General McCaffrey. Absolutely.
+ Mrs. Northup. If you are required to go and it is not your
+choice and you don't believe that receiving the treatment is
+the most important, then any kind of treatment we have isn't
+very effective.
+ So are there people asking for treatment and not having it
+be available right now?
+ General McCaffrey. Oh, yes, without question, but let me
+offer a thought now for you to consider. There is a
+considerable body of evidence that says coerced treatment can
+be enormously successful, even though I think underlying that
+assumption is, if you look at the heroin population, many would
+argue there are a third of them, of the 600,000, that wouldn't
+benefit from treatment. They are in a stage of addiction where
+they are hopeless. Another third may respond to something like
+Methadone, but a third of them or more may respond to
+treatment.
+ Those who are incarcerated are a population that if you do
+in-prison treatment, if you do the drug-court system, if you do
+break the cycle, the evidence seems to be there that you can
+reduce the consequences of drug abuse enormously.
+ Mrs. Northup. I think my time is up. The chairman has
+returned, and I have another committee meeting. I am going to
+submit some questions and hope that you will answer them and
+return them to us.
+ I will tell you that it concerns me that we aren't doing
+more in the area of interdiction. Obviously, the question of
+decertifying Mexico is a question that concerns all of us, but
+to just say what we need is more rehabilitation, I don't think
+over the last couple of years, we have found that that is
+effective in lessening the use and decreasing drugs that our
+children have access to by itself. That concerns me.
+ General McCaffrey. I share your concern.
+ Mrs. Northup. Mr. Chairman?
+ Mr. Kolbe [presiding]. Mrs. Meek.
+ Mrs. Meek. Thank you, Mr. Chairman.
+ I want to welcome General McCaffrey, and I also want to
+compliment you. I read all the materials you sent to us. I have
+been in Government a long time. I have been trying to fight the
+drug war for a very long time. This is the first time I have
+seen the methodology used that you are using to fight this.
+ You have sort of, I would say, put together all of the
+forces that have been working collectively all these years. You
+put them together with this strategy. I think that is good.
+ I also like the scholarly way in which you are being an
+educator and in which your plan is laid out. It is very clear
+and understandable, very easy to understand.
+ I have a few questions. I used to have an old teacher who
+said that anything that exists in any amount can be measured,
+and it appears that you have been able to do that here and I
+commend you on that.
+ I have two concerns, General. One is, I was reading an
+article in the Washington Post, which I am sure many of the
+members have read, in terms of the times for public service
+announcements, to the ad monies you plan to spend, and I think
+in the President's budget, he feels as if you are going to get
+PSAs to complement that. Is that correct?
+ General McCaffrey. Indeed, it is.
+ Mrs. Meek. This article and several others aren't so sure
+that might happen. I know that happens in my community that you
+ask for PSAs and you never hear your ad very much, but I like
+the beginning of your picture today. I have seen that in my
+community. It is very unpleasant, and it has some implications
+for the educational community and for the parents as well.
+ The little girl's parents had never told her anything about
+drugs. So I like the way that you have gone about this. I am
+sure it is research-based, and it is going to really help, I
+think.
+ I have some problems which I have had, and I mentioned it
+to the chairman the first day. He told me to wait for you. One
+of my main problems is the trafficking of drugs in the inner-
+city communities, that has been a problem of mine for some
+time. We are trying everything to try to end that, to stem that
+flow of drugs in the inner-city community, and I always say
+this, being an old grandmother, that those drugs didn't come in
+there by the stork. The stork didn't bring them in there, but
+they are in there and they are decimating those inner-city
+communities.
+ I think it is time we targeted those areas more. I have
+told the director of HUD today that most of it is done in the
+housing projects, and around there, it is just a cesspool.
+ I will tell you, General, in the last 2 months, I have been
+to four funerals of children. Now, as a mother, I am tired of
+looking at the faces of dead children, and they are dead
+because the people come to their community to buy their drugs,
+and there is a war going on right inside those communities, and
+it is probably the only job. I mean, it is a jobless area, so
+that is a job, and it is very difficult for me to try to turn
+around a young black male with a $4-an-hour or $5-an-hour job
+when they can make all kinds of money selling drugs, and they
+can do it right in their community, but it has to be brought
+there.
+ I hope that you and members of your staff and my
+chairperson will help me with this. I know that we have good
+law enforcement. We could do better, but we do have it. I am
+very interested in--what do you call it, that acronym?
+ General McCaffrey. HIDTA.
+ Mrs. Meek. HIDTA. I am very interested in that. I am going
+to be talking to my HIDTA director because I would like to see
+them come out more. I would like to know more about them. It
+may be my fault, but it is a well-kept secret in the inner city
+what they are doing. So I think that in itself would be a
+useful measure to be able to let people know, look, we have
+some protection out here and this is going to happen, and this
+happens.
+ So that was my question to you about the imagery of the
+ads. Do you think that is going to be a useful way to spend
+your money, or could you use that someplace else? That is my
+first question.
+ My second one, I will wait.
+
+ inner city problems
+
+ General McCaffrey. Your comments, it seems to me, are
+around money. One of the unusual observations you can make
+about drug abuse in America, the wholesale organizations tend
+to be a lot of international criminals. I don't know if our
+young American lads aren't astute enough to do it or we found
+other things to do, but an awful lot of the international crime
+tends to be Dominican, Mexican, Colombian, Nigerian, Russians,
+et cetera, but that is at one end of it.
+ If you go to the other end of it and your 16-year-old
+daughter bought drugs from somebody, a friend, they bought it
+from somebody of the same race in their school, that is where
+drugs sales are going on in America.
+ Now, having said all that, if you go out here in a quasi-
+legalized, open-air drug market here in Washington, D.C., New
+York, San Diego or anywhere in this country, you tend to see at
+9 o'clock at night to 2 o'clock in the morning, suburban
+America buying drugs from young black males on the street.
+ Mrs. Meek. That is where they get it.
+ General McCaffrey. So, when we bust the retail sale end of
+that--you know, 4 years ago, I drove around New York City all
+night with an undercover narcotics unit, watching a nightmare
+in front of me. And as you watch drug sales--an orthopedic
+surgeon, a Catholic priest, school girls in their pigtails and
+with dad's car--and they are buying crack. We have got a
+problem, and part of it is to understand that it is not only a
+crime, it is not only a social problem, it is also a law
+enforcement challenge to break up an illegal economic
+enterprise.
+ Some cities are doing that pretty well, to include New York
+City and Miami. They are doing extremely well.
+ Mrs. Meek. I think you are doing a good job.
+ General McCaffrey. San Diego is doing well. So we want to
+have the HIDTA money that focuses on wrecking these criminal
+illegal enterprises.
+ Mrs. Meek. Excuse me, General, but you didn't ask for any
+more money in your budget request?
+ General McCaffrey. Exactly. In the next year's account, I
+think we ought to go up, but we ought to give the new HIDTAs,
+in particular, probably a couple of years to get their
+infrastructure in place before we increase the funding. We
+ought to be able to demonstrate achievements.
+ Now, I also think down the line, if we can demonstrate
+performance-measured effectiveness, we are making a difference,
+HIDTA is an area for growth fund.
+
+ media campaign
+
+ The second thing you asked me was about public service
+announcements. This is going to be a big challenge. There are a
+bunch of people that know what they are talking about. If there
+is one thing that America does well, it is advertising, the
+most creative industry in America.
+ We saw it make a difference before. Right now, we have got
+a dramatic drop in the amount of programming. It came down 30
+percent, according to the Partnership for Drug Free America and
+the Ad Council, in the last few years.
+ Even worse, even though Jim Burke and associates say it
+spends $240 million in pro bono advertising, if you and I were
+buying it, we wouldn't pay that much money because it is in the
+wrong news media at the wrong time.
+ So the $175 million, we do believe that if we work with the
+industry, we will get a commensurate amount of pro bono
+advertising, and we do think then we will have the ability to
+target it in the right radio, print, and TV markets. We can go
+out to regional information and marketing areas. We can get it
+targeted on the ethnic age group that we want. We can focus on
+kids primarily between probably 12 and 16 and their parents,
+and we think it will make a difference.
+ Mrs. Meek. You are coordinating, and I want to bring one
+aspect up. The WTO, either today or yesterday, decided on this
+trade problem with the banana industry. If you remember the
+European Union and the Latin American countries, we get the
+feeling that this banana policy is going to hurt us,
+particularly in the drugs coming in to south Florida.
+ I made a tour of those banana-producing countries in the
+Caribbean, and they are saying they feel, and I am beginning to
+feel the same thing, General, if they don't have a banana
+product, and that is all they have down there in St. Lucia--you
+can't say Jamaica, while Jamaica has others--but I am beginning
+to feel I wish you and your people would watch that because I
+feel that if that banana business goes out altogether, they are
+going to turn to drugs. Well, they are in a direct route to do
+it, and I worry about that. Would you please keep that World
+Trade Organization consideration in your coordination and look
+at trade in terms of the drugs coming into Miami? I think
+without bananas, drugs and immigration will be our next
+problem.
+ Coming from Miami, I have had just all kinds of problems in
+terms of drugs and in terms of trade. You might not think that
+the two are interlinked, but they are. So, if you would look
+into that, I would appreciate it. That might become a new trend
+in drugs coming into our community.
+ I am very, very much upset with people who keep talking
+about demand because demand is there, but also, if you can't
+get it, then you will have to do something else to satiate that
+demand.
+ You didn't mention crack cocaine in your figures. When you
+said cocaine, did you mean crack cocaine?
+ General McCaffrey. Both forms, powder and crack.
+ Mrs. Meek. Okay, because that is a major problem in most of
+the inner cities, and it is still as high. I don't know whether
+it is being counted as well, but it is something that I really
+wish you could help me with in terms of the drug-trafficking
+and the drug-selling and buying in the inner-city areas.
+
+ caribbean
+
+ General McCaffrey. Yes. I think your comments are on the
+money. The President will be down in the Caribbean this spring.
+We will have a Caribbean conference. We are doing preliminary
+work on it right now, and I think you are entirely correct.
+There is obviously a relationship between the Caribbean
+domestic economy and their willingness to be rolled over by
+this avalanche of drugs that is not moving to the Caribbean,
+and it is not just us. It is heading to Europe too, a
+tremendous amount.
+ Mr. Kolbe. Thank you, Mrs. Meek. If you have more
+questions, we will catch you on the next round.
+ Mrs. Meek. All right.
+ Mr. Kolbe. Mr. Price.
+ Mr. Price. Thank you, Mr. Chairman.
+
+ overview of drug problem
+
+ General, welcome. I appreciate your being here today.
+ I realize, hearing the exchange between you and Mrs. Meek,
+just how fortunate in many ways we are in my district in North
+Carolina. The Research Triangle area is a relatively affluent
+area, known for low unemployment, good schools, and great
+college basketball.
+ We are not totally free of this scourge though. The
+evidence of teen drug use may not be as overt as it is in some
+urban districts, like Mrs. Meek's, but is a significant
+problem. In fact, one of our county DAs undertook a major sting
+operation at the beginning of the 1995-1996 school year that
+resulted in 84 arrests and nearly 100-percent convictions.
+ Of course, we are part of a national problem. The most
+recent HHS survey, which was announced last December, found
+that teenage drug use, particularly marijuana use, is on the
+rise. You said, at that point, these findings should be ``a
+wake-up call for America.''
+ You have recently issued this strategy document, the
+National Drug Control Strategy--it was released last month--and
+thatis what I would like to ask you to reflect on here today.
+ I think it is a good document, and it has some worthy
+objectives outlined in it, a lot of which focus on not just
+teenagers, but also on their parents: educating parents and
+other caregivers; supporting parents, another objective states,
+and adult mentors in encouraging youth to engage in healthy
+lifestyles; and so forth.
+ Then you come to your major initiatives, a lot of which
+deal with teenage drug use: the media campaign, and the Safe
+and Drug-Free Schools, Youth Treatment, and Youth Prevention
+Initiatives.
+ There doesn't seem to be a particular focus on parents. I
+think when we talk about involving parents in the schools or in
+drug prevention and deterrence, often there is a kind of
+vagueness to those discussions. We all know that everybody who
+has ever dealt with this situation realizes the importance of
+parental involvement. We often aren't so sure, though, how to
+do that concretely and how to do that specifically.
+ So I wondered if you could comment on that. You have
+identified the need to involve parents and mentors, and yet,
+these initiatives don't seem to have any very specific
+programmatic ways of doing that. I wonder where your internal
+discussions have led you on that and what we can expect from
+you and your agency in that regard.
+
+ Priorities
+
+ General McCaffrey. I think one of the things I should
+comment on is the difficulty of developing a strategy if we do
+it one budget year at a time.
+ We get into an awful lot of debate in which one group will
+say how outraged are you that you are spending 55 percent of
+the budget on law enforcement and prisons and wouldn't it be
+better if we were spending more money on drug prevention, and
+the number on that one is a little over $3 a head per child in
+America. Now, when you get into that kind of a debate, that is
+all well and good, but there is a tremendous crime problem on
+the streets, and we have to back up law enforcement, period.
+Because we think if drugs aren't socially wrong, if they are
+not against the law, if we don't support the police, we simply
+won't make any headway in prevention, education, and treatment.
+ Having said all that, the worst way to work on this problem
+is to wait until an adolescent is addicted. Some of the numbers
+we used are it costs 2 million bucks to society if you get a
+teenager addicted. So you have got to go back to drug
+prevention, and there are some programs.
+ This is the first year we have also given this committee
+our national drug control budget in terms of goals, and when
+you look at the money: $1.763 billion, plus 11 percent, is to
+reduce youth drug use.
+ Now, having said that, it is still the smallest of all
+categories except [Clerk's note.--Agency later inserted
+``efforts aimed at''] air, land, and sea borders, but what I
+would argue is, if we are effective at this, Mr. Chairman, over
+the years, we will drop this giant prison population and we
+will start seeing enormous accrued savings.
+ Now, there are ways to get at youth drug use. Certainly one
+big item is the Safe and Drug Free Schools [Clerk's note.--
+Agency later added ``and Community Programs''], and it has had
+spotty performance in the past. That is why the performance
+measures have to be done to show specifically to this committee
+how that program is paying off.
+ There are a series of other programs, not only the $175
+million, which is going to talk directly to children and their
+parents. We know by the time you have hit the twelfth grade,
+you have had 12,000 hours of formal instruction. You have
+watched 15,000 hours of television. In our society today, we
+have single-parent families, dual-income families,
+dysfunctional families, and if you talk to law enforcement, you
+will find that they say that crime, violence, teenage sex, and
+drugs goes on between 3:00 p.m. and 7:00 p.m. and on weekends
+during the summer. So they come from the safest place in
+America, their schools, and they are out and now, except for
+the television set and other adolescents, we haven't given them
+an option.
+ So those programs specifically go after supporting
+community coalitions, sports programs, boys and girls clubs, a
+whole array of programs that target that problem, and I think
+we can give you in some detail some of the programmatic ways
+that we think you can go about that.
+ Mr. Price. I just wonder, in devising those school-based
+programs, if there wouldn't be some specific ways of engaging
+and involving the parents by working through the PTA
+organizations or other parent groups, neighborhood
+associations, or whatever is available to us.
+ General McCaffrey. Absolutely.
+ Mr. Price. I would like, for example, in my district to
+think about a district-wide or county-wide parents summit or
+parents conference or forum on drug use. I would love to invite
+you to come in and be part of such an effort.
+ There are many things, of course, that we need to
+undertake, but I think, given what we know about the importance
+of parental involvement and parental education, I just want to
+see that a much more specific and focused aspect of these
+programs.
+ General McCaffrey. I agree.
+ You are aware, I know, anybody on the Eastern Seaboard is,
+of the work of the National Families in Action, this tremendous
+organization, PRIDE, and Mr. Buddy Gleason and Jim Copple's
+Community Anti-Drug Coalitions. Some of these are giant
+organizations, 25 million people involved in the DARE program.
+ You go to PRIDE's annual convention. It is 10,000 children
+and parents involved. So there are some really well-organized
+and growing parent-youngster organizations out there that
+deserve our support.
+ Mr. Price. Well, I would like to stay in touch with you
+about this aspect of the program, in particular, and also about
+what we have underway locally because we would enlist your help
+with that.
+
+ Scope of Problem
+
+ General McCaffrey. May I make one other comment,
+Congressman, on your statement, though? An interesting
+dimension to this problem is that drug abuse in America, by and
+large, is not a function of poor people or necessarily even
+urban areas.
+ Some of these statistics show white teenagers use
+cigarettes and cocaine products more than black teenagers. You
+go into the most affluent schools in our country, and marijuana
+is there, and they are sniffing glue and kerosene, cans of
+Readi-Whip.
+ Right down in your neighborhood, in Atlanta, the biggest--
+it was an astonishing visit for me, the biggest drug treatment
+program in the country, one of the most successful for impaired
+health professionals is in Atlanta. Anesthesiologists--and the
+Chairman and I were talking about this--have perhaps as high as
+a 10-percent lifelong addiction rate to alcohol or legal drugs
+or illegal drugs. So there is really nowhere you are safe in
+America from drugs.
+ If you go to rural Idaho, you are going to find
+methamphetamines, which is used almost overwhelmingly by young
+white females and males.
+ Mr. Price. Absolutely. We had a 4-year-old child shot as a
+byproduct of a drug deal in our district only last week. We
+have the full range. As I said, these suburban high schools
+showed alarming levels of drug sale and use.
+ General McCaffrey. Absolutely.
+ Mr. Kolbe. Mr. Price, we will resume when we come back. We
+have got 5 minutes remaining in the vote. This would be the
+last interruption for an hour. So, hopefully, we can carry it
+on when we come back here.
+ General McCaffrey. Yes, Mr. Chairman.
+ Mr. Price. Thank you.
+ Mr. Kolbe. Thank you.
+ [Recess.]
+ Mr. Kolbe. We will resume our discussion. I think we have a
+little while this time. Out next vote should be in about an
+hour.
+
+ Media Campaign
+
+ General, let me come back to the ad campaign. I have a few
+more questions on that. How did you arrive at the $175million
+times 5 years? You expect to double that with private dollars. How did
+you arrive at the $175 million a year as an amount?
+ General McCaffrey. Well, there has been an enormous amount
+of work done, obviously, on the advertising initiative, in
+general, but more particularly, focused on by the Partnership
+for A Drug Free America. So we have leaned very heavily on
+their work and also that of the Advertising Council of America,
+which as you know handles most of the other pro bono ads, for
+television in particular.
+ The $175 million basically we got through two separate
+ways. In 1991, when this movement of anti-drug attitudes was
+still moving in the right direction, that really coincided with
+this Partnership for Drug-Free America's peak of generated
+public service announcements. At that time, they estimated that
+half of their pro bono advertising was in the high impact
+spots.
+ In addition, during those years, PDFA asked an ad agency to
+plan a high impact media plan for any drug messages, and the
+central concept was get to 90 percent of the target audience
+with four ad exposures a week in prime-time slots.
+ Then, below that, we broke down the analysis and said, if
+you do that, you have got to do it through regional media
+markets, and you have got to do it not just through television,
+although I think that is going to be the principal tool, but
+also through billboard advertising, print, and radio.
+ So, out of that, we said that the current value of anti-
+drug PSAs, is $265 million, but it is dropping drastically and
+it is in the wrong times. So we think that of that $265
+million, for example, right now only some 11 million bucks
+worth of it is in prime time, which is why most of us don't
+think we are seeing any of these ads when I put them up there.
+ So the $175 million central construct: use all media
+approaches, hit the target audience, 90 percent of them, 4
+times a week in prime time.
+ Mr. Kolbe. Let me hear that again. The idea is to reach
+what percent of the television audience?
+ General McCaffrey. Ninety percent of the target audience.
+ Mr. Kolbe. What is the target audience?
+ General McCaffrey. The target audience is--and again, this
+deserves further development, but the target audience is
+adolescents and their parents.
+ [The information follows:]
+
+ Although we will target the entire group of American youth
+between the ages of 9-17, we will focus particularly on ages 11
+through 13. Current research indicates this is the age at which
+youth are most likely to be influenced, with long lasting
+effect. We plan to educate American youth as to the
+consequences of drug abuse, with specific messages targeted at
+the preteen, early teen, and late teen age groups. Messages
+will also be developed to reach young adults, as well as
+parents and other youth mentors, who can reinforce the idea
+that drugs do you no good.
+
+ Mr. Kolbe. Adolescents and their parents.
+ General McCaffrey. And their parents.
+ Mr. Kolbe. Do we know how many millions of Americans we are
+talking about here, roughly?
+ General McCaffrey. I probably had better give you a better
+estimate for the record. The general figure we use is you have
+got 68 million in the general target frame, 18 down to 12. The
+ones at the front end of the equation----
+ [The information follows:]
+
+ As mentioned earlier, the campaign will be targeted
+particularly to ages 11 through 13. The Census Bureau indicates
+that there are 19.126 million persons in the 10 through 14 age
+group.
+
+ Mr. Kolbe. By adolescents, you are talking about the 12-to-
+18 age group?
+ General McCaffrey. No, 12-to-18 probably is only half that.
+It is 39 million, age 10 and below. I sort of have to subtract
+that from the group that are--and 68 million in the total age
+group, but I think the target audience we have in our study is
+9 to 17, and I will have to give you a precise number.
+ Mr. Kolbe. The age group of 9 to 17?
+ General McCaffrey. Nine to 17 is the principal target.
+ Mr. Kolbe. Plus, their parents?
+ General McCaffrey. And plus parents.
+ Mr. Kolbe. Have you refined it enough to tell me if it is
+going to be mostly television advertising?
+ General McCaffrey. We do have figures that lead up to the
+$175 million. I don't have them on the top of my head, although
+I have some backup data, but primarily, I think this will be a
+television approach, but it will also have radio and print
+media, and in the inner cities, for example, billboard ads.
+ Mr. Kolbe. You anticipate spending $175 million a year, and
+you would anticipate coming back in the next 4 subsequent years
+for another similar amount? So we are talking about $875
+million?
+ General McCaffrey. Exactly, and to develop in addition to
+that 175 a pro bono-related $175 million in matching efforts.
+ Mr. Kolbe. So more than $1.7 billion over the next 5 years
+that would be spent on this.
+ General McCaffrey. Yes.
+ Mr. Kolbe. How much has the Federal Government spent in the
+last 4 years or 3 or 4 years? Can you tell me have we spent
+anything at all in advertising?
+ General McCaffrey. None. About the only thing we do it on
+is military recruiting, and as an accident of history, I was
+involved in that.
+ Mr. Kolbe. The only thing you spend money on is
+advertising?
+
+ federal advertising campaign
+
+ General McCaffrey. Federal advertising dollars, essentially
+with military recruiting, and we went to the volunteer Army. It
+was a very similar, an analogous situation.
+ You got what you say is a lot of pro bono money. If you go
+into the market and buy some, you had better keep it up. You
+can't just throw some dollars or you will dry up your pro bono
+or the most useful pieces of it. But we went into that market,
+competed for several years and actually got a target audience
+of young people to respond to our message. So we have seen this
+kind of thing work before, to include in drugs.
+ Mr. Kolbe. I think in your figures, you have said that the
+Partnership for Drug-Free America spent about $265 million in
+1996, but not in the right areas?
+ General McCaffrey. Well, they are not really stating it.
+They are stating that the value----
+ Mr. Kolbe. Value.
+ General McCaffrey [continuing]. Of the product they got was
+about $265 million, yes.
+ Mr. Kolbe. Do they put up any cash at all for this?
+ General McCaffrey. No.
+ Mr. Kolbe. It is all done on a public service announcement
+basis?
+ General McCaffrey. Yes. They have gotten free advertising
+creative work out of the ad agency to do these PSAs you saw for
+free, and then they put them out to news media and get them on
+the air as best they can.
+ Mr. Kolbe. Well, is the $175 million you are talking about
+supposed to be in addition to this, or this is going to be
+using what has now been spent or been used or the value of what
+has now been going in for the Partnership for Drug-Free America
+and using that as the private sector involvement in this?
+
+ proposed media campaign
+
+ General McCaffrey. The model we put on the table, we
+started preliminary discussions. We had a group of them in, Ad
+Council, PDFA, organizations that are anti-drug in nature, and
+had a rich discussion over the last several weeks, but we put a
+model on the table, and essentially, what we told them was the
+$175 million of federally appropriated monies probably ought to
+come through ONDCP. We ought to compete an ad agency or a news
+media distribution firm, and we would then accept from
+Partnership for Drug-Free America or others recommendations for
+the message. Then we would place through this ad agency, who
+would have a contract that says either achieve results or we
+will find somebody else. So that federally appropriated money,
+controlled by a government agency, is spent through an
+advertising agency. The pro bono effort, we think, ought to
+continue to be organized by the Ad Council and the Partnership
+for Drug-Free America, who would also be involved in the
+creative message we are putting out in the paid media, but they
+would see what we are achieving and then match the pro bono
+activity with their own work.
+ Mr. Kolbe. But their match, you have said that we are not
+getting very good effect for the----
+ General McCaffrey. Right.
+ Mr. Kolbe [continuing]. Value that we are getting because,
+understandably, television stations don't put it on at the
+right time or we are not getting it when we need it.
+ General McCaffrey. And it is getting worse.
+ Mr. Kolbe. And it is getting worse.
+ General McCaffrey. The economics of that business are
+changing drastically.
+ Mr. Kolbe. Do you have any confidence that this somehow,
+because you are in there with $175 million--we are going to get
+better use of those private sector dollars?
+ General McCaffrey. Well, the achievement of the target
+goal, four per week, 90 percent of the target audience, is
+based on the 175.
+ Mr. Kolbe. On your 175.
+ General McCaffrey. So the other piece of it. Can we sustain
+$265 million or $175 million? And how effectively can we
+continue to organize this? I would argue it is going to get
+better than it is now, the pro bono component to it, because it
+will be matched to a high impact paid campaign, if we believe
+our own figures.
+ Right now we only have $11 million on prime time. That
+would go up dramatically to $175 million of prime-time impact.
+ Mr. Kolbe. Just by way of comparison, can you tell me what
+the cigarette industry spends, for example, on advertising?
+ General McCaffrey. We are not in the ball park.
+ Mr. Kolbe. Do you have any idea? Or the beer industry, what
+it spends?
+ General McCaffrey. The beer industry is running around $6
+billion a year. The cigarettes are running around $2 billion a
+year.
+ Mr. Kolbe. General, this is just a drop in the bucket.
+ General McCaffrey. Well, it is a drop in the bucket, but
+our own studies, our historical experience is that this drop in
+the budget will be a sea change in the nature of the message.
+ Now, it is about similar to major individual corporation ad
+campaign. So it is not an insignificant campaign, and the body
+of experience among those who do it is: it ought to work.
+ Somebody just passed me a figure. When we started the
+volunteer Army, we were doing $50 million a year with NW Ayer,
+and it just knocked people's socks off. [Clerk's note.--The
+agency later added that NW Ayer is an advertising firm.]
+ Mr. Kolbe. But you didn't really have counter-advertising,
+in a sense?
+ General McCaffrey. Well, it is a different conceptual
+organization, but we went after a youth market. We tried to get
+attitudes to change, and it worked.
+ Mr. Kolbe. All right. Well, I have more questions, but let
+me call on Mrs. Meek again.
+ Mrs. Meek. Thank you.
+ First of all, General, I recognize that ``be all that you
+can be'' really did work. It did have quite a bit of impact on
+the American public.
+
+ alcohol and tobacco
+
+ I have a question again regarding the ad campaign. Why do
+you want to spend your Federal monies on tobacco, alcohol, and
+illegal drugs? Why not just specify and focus on illegal drugs,
+since that is a major problem? I know there are other campaigns
+going on around about alcohol and going on around teenagers and
+alcohol and tobacco, but you could just use that money to focus
+on drugs.
+ In our culture, there are young children who are provided
+alcohol when they get to be 13 or above, in some of our
+culture. So I am not saying don't try to stop them from
+alcohol, but I think they might get a mixed message if you
+combine all three of them because alcohol is legal for adults,
+but illegal for minors. The drugs are illegal for everyone. So
+that is the question I ask, why are you spending your money
+there?
+ General McCaffrey. Well, you make a very persuasive case.
+There is a pretty short handout that I gave the members of the
+committee, and again, we will be delighted to provide follow-up
+and continuing development of this idea between now and next 1
+October, but I think you are entirely correct. We are not going
+to spend that $175 million on alcohol and tobacco. It is off
+the table, I think for a lot of reasons, one of which you very
+effectively outlined. The other is, for practical matters, Mr.
+Chairman, I need to keep my attention on illegal drug behavior,
+which clearly includes tobacco and alcohol for adolescents, but
+we are going to focus that money on marijuana, heroin,
+methamphetamines, the other forms of drug abuse that are
+addicting our youngsters and their parents.
+ Mrs. Meek. If I may go a little bit further with that, in
+1990, the State of California ran an 18-month advertising
+campaign, General, and it was to discourage people from
+smoking.
+ General McCaffrey. Yes.
+ Mrs. Meek. Have you done any impact studies? They spent
+about $29 million on that campaign. Have you and your staff
+evaluated the effectiveness of that California ad program in
+terms of reducing smoking, and could you provide us with some
+of the studies about the effectiveness of this California
+campaign? Because you rely on it, as I understand in reading
+your materials, for your proposed Federal campaign.
+ Now, you have proposed a fund for this campaign of $175
+million, and you are asking for $62 million in new money. Is
+that correct?
+
+ funding request for media campaign
+
+ General McCaffrey. There were a series of questions there,
+and I had a conversation trying to resolve this special
+forfeiture fund issue going on behind me.
+ It is $175 million of appropriated monies. It actually
+doesn't have anything to do with special forfeiture fund,even
+though--and I almost hate to get in this--it gets funneled
+through a line item called special forfeiture line item in
+ONDCP. But this is all appropriated monies, $175 million. It is
+a new initiative. [Clerk's note.--Agency later amended
+``special forfeiture fund'' to read ``the special asset
+forfeiture fund''.]
+ Mrs. Meek. But aren't you cutting $113 million of the money
+that you already have?
+ General McCaffrey. No.
+ Mrs. Meek. You are not doing that?
+ General McCaffrey. We don't spend any money on news media
+for demand reduction in the government. This is a new
+initiative.
+ Mrs. Meek. So you are not cutting any of your programs to
+pay for it?
+ General McCaffrey. Absolutely not.
+ Mrs. Meek. Thank you.
+ General McCaffrey. This budget reflects an increase of $818
+million. Most of it went to law enforcement, a 35-percent
+increase, a bunch of it to other initiatives, and this is one
+of them, but you also had a notion in there, Madam
+Congresswoman, that I think is very important.
+ You talked about smoking campaigns.
+ Mrs. Meek. Yes.
+ General McCaffrey. There are two miracles that have
+happened in the last 25 years in this country. One of them is
+smoking in America got cut by 50 percent in one generation.
+That has happened almost nowhere in the world with any social
+problem. California is still spending, as I remember, $24
+million a year in that State alone on cigarette reduction
+campaigns. It is a huge state, but if we took that on a
+national model, it is a giant amount of money.
+ We have gotten to the point where smoking, except among our
+children, is nearly socially unacceptable in this country,
+large parts of it. So we know it can work, but we have got data
+that indicates what happens with a given saturation of the
+market against drug abuse. We have got some very specific data
+from 1991 that says it can work.
+ Mrs. Meek. All right. Thank you, General.
+ Mr. Kolbe. General, let me return to the--and first, let me
+just note that my staff was apparently doing the same
+discussion during the break here. The forfeiture fund is simply
+in name only. There is no relationship between the actual
+forfeitures and the amount that comes out of the so-called
+forfeiture fund which isn't appropriate.
+ General McCaffrey. For us, right.
+ Mr. Kolbe. Or for anybody, as I understand it. It all goes
+into the general revenue fund, and it is not actually
+segregated. Forfeitures are not actually segregated. So we
+appropriate money out of that amount there. It is out of
+thegeneral revenue funds.
+
+ performance measures
+
+ Let me come back to how well we are doing and performance
+measures. I think you said in your testimony that you expected
+it may take as long as 3 years to develop performance measures.
+Is that right?
+ General McCaffrey. We ought to have a model done. I am
+getting my first briefing a week from now. We have had 20-some-
+odd working groups in the government studying this for some 8
+months. The first attempt I saw was unacceptable. We started a
+new firm to work, helping us. Now we have got different working
+groups around the government. My guess is, by the fall, I will
+be showing you and others in Congress, here is what we think
+will work. We will try and implement them in next year's
+budget. My own judgment, from reading the history of this kind
+of approach, is it may take us a couple or 3 years to learn
+from using these.
+ First of all, are we measuring the right thing? That will
+be the first problem. We may find out you can easily measure
+something, but it is not indicative of the purpose we are
+trying to achieve.
+ My guess is we will grow with this for 3 years or so, and
+at the end of that time, we will know when you give us some
+money, we put it in this program, it did not achieve its
+result, we need to cut back on funding. And if this program
+worked, then we ought to fund more of it. That would be, I
+think, our objective, which we have never had before. This is
+ground-breaking work in the U.S. Government. This has not been
+done.
+ Mr. Kolbe. Are you saying to me they have never had any
+kind of objectives or performance measures at all before in any
+of our drug efforts before?
+ General McCaffrey. Well, I think there have been, but I
+wouldn't want to classify them as performance-related, where
+you can say ``put X-million into the Safe and Drug Free Schools
+and you should expect Y output.'' I don't think it is in there,
+nor with treatment, nor with--even the way--to be honest, the
+way I am required by law to report money back to you. I report
+it back more as a process expenditure than a goal achievement,
+and then I wrap them all up by law under two categories, supply
+and demand, and that is what we tell you every year. I think we
+deserve better. As a manager, I think we----
+ Mr. Kolbe. Just so I understand, your idea is to have
+performance measures that are much more finite, much more
+specific than that program by program for each of the things
+that you are going to be doing?
+ General McCaffrey. I think the 32 objectives----
+ Mr. Kolbe. You mentioned, for example, each of the 32
+objectives.
+ General McCaffrey. The 32 objectives should have
+performance goals and measures, tied to that objective.
+ Mr. Kolbe. Well, taking your biggest single thing this
+year, the $175 million for the advertising campaign, do you
+worry about us going down a path of spending that kind of money
+without any performance measures for it, even in the first
+year?
+ General McCaffrey. No. I think we can have performance
+measures for it.
+ Mr. Kolbe. Before we actually launch it?
+ General McCaffrey. Sure. This is a 1998 budget. There ought
+to be performance measures on the table for 32 objectives by
+the 1998 budget. This one will be the easiest one.
+ Let me, if I may, though, suggest, this is not the biggest
+initiative. The big initiatives are still, hands down, in the
+Department of Justice: law enforcement and prisons. It dwarfs
+anything we are talking about, and if you do it by goal, hands
+down, the biggest single goal we are working on is still a goal
+to reduce drug-related crimes and violence, and that is 35
+percent of the total budget.
+ If I rank-ordered them all, although this is a new creative
+idea, it is still $175 million out of a $16-billion effort.
+ Mr. Kolbe. So you would not have any objection if we were
+to--if we go ahead with the appropriation, take again the $175
+million for the media campaign, or anything else that comes
+under your direct purview, if we were to say: ``subject to the
+committee's approval of the performance standards that will be
+used to measure it,'' something along those lines? I would like
+to have some assurance that we don't go down this path and next
+year come back and say, well, now we will have some performance
+standards, but based on that, we are going to change the whole
+program.
+ Mrs. Meek. Mr. Chairman, would you yield?
+ Mr. Kolbe. Yes.
+ Mrs. Meek. Can we as a committee get that kind of finite
+measures and base our appropriation on those finite measures
+when we normally don't use that kind of yardstick for our
+appropriations?
+ Mr. Kolbe. Well, performance standards are now required,
+and we can at least say, if we are going to appropriate the
+money, that we could say subject to approval of the performance
+measures, however finite and specific they may be, by him. But,
+it seems to me, it is not unreasonable to say that we are going
+to see some kind of performance measures for what we are going
+to start spending this coming year.
+ General McCaffrey. Well, of course, we have got $16
+billion. I would say that we will try and have them on the
+table for the 1998 budget. I do believe it is a 3-year process.
+I think we are going to have to learn from what we do.
+ There is an easy one at hand for the $175-million campaign.
+The question is, a year from now, are we going to agree it is
+the right one?
+ Dr. Lloyd Johnson, University of Michigan, Survey Research
+Center, has data from 1968 on, and it is about perceived risk
+attitudes. It is the same thing I had up on that chart.
+ My guess is, as we start this process, what we are trying
+to do is spend money with an advertising approach to get
+results, to change attitudes, and that it is perceived risk
+attitudes that we are after with the youthful population.
+ Mr. Kolbe. This is interesting because that is different
+than a performance outcome which would be a reduction in the
+number of teenagers using drugs.
+ General McCaffrey. Well, this would also be an outcome.
+Now, there would be a dependent variable beyond that, and our
+guess would be, if you believe the history of the data I have
+briefed, it looks like there is a 2-year lag between change and
+basic attitude toward drugs, then perceived risk, and then drug
+use, probably a 2-year time frame.
+ Mr. Kolbe. You mentioned the fact that the first cut that
+you had gotten wasn't satisfactory and you had gone back. Would
+you just describe for us in just a little bit more detail the
+process you are using to design theseperformance standards?
+ General McCaffrey. Dr. John Carnevale has been chairing
+this effort for us, and he has spread it throughout the
+interagency process.
+ Mr. Kolbe. If you would like to have him describe it, that
+is fine.
+ General McCaffrey. Yes, I would certainly welcome that.
+ John, would you like to add your own viewpoints directly to
+the Committee?
+
+ interagency process on performance measures
+
+ Mr. Carnevale. Mr. Chairman, what we have done is we have
+set up approximately 30 working groups working within the
+Federal agencies, centered around the 5 goals and 32 objectives
+in the National Drug Control Strategy, and we have been working
+with the Vice President's National Performance Review group. We
+met with GAO. We have met with OMB to get some parameters about
+how best to approach the problem.
+ We have established a process now with working group
+chairmen being instructed to keep the system simple, to develop
+measures in terms of outcomes. They have been instructed to
+think about a 10-year strategy, which means: What is the vision
+for America that you would like to have 10 years from now? In
+other words, what is the end state? So we are introducing
+concepts like this, which is pretty new to the Federal agency
+thinking.
+ We are trying to get them to think about outcomes as
+opposed to outputs, and that alone is causing a lot of agony in
+the whole process. But they are now, I think, coming around to
+this kind of thinking.
+ We are trying to keep them away from the notion of process
+measures, and sometimes a process measure, as a good example,
+is arrest.
+ Often in the past, agencies will use a measure like arrest
+to represent outcomes or end states. In fact, it is just part
+of their process to achieve an outcome or an end state. So that
+is why it has taken so long, I think, to get them to come
+around.
+ The commitment from the agencies is by the summer, we will
+have for the director's approval (to present to him for
+approval) a whole set of measures, performance measures and
+targets, with a 10-year view, with annual targets linked to a
+budget process that we then can present to the Congress. But
+then the process centers around linking this formally to the
+budget process as part of the effort to develop the 5-year
+budget. It will be then linking the performance measurement
+system to that.
+ General McCaffrey. That is when we are going to have
+something going, it seems to me, that will grind away at the
+problem.
+ John has done some brilliant work. This summer, we will
+take a major step forward. We will implement it in the start of
+the fiscal year, 1 October.
+ Our judgment is, looking at the history of these, 2 or 3
+years to fully implement it, but not just for the new
+initiatives, also for other outcomes.
+ New York City is another very useful laboratory. This
+fellow, Howard Safir, and the Mayor and the law enforcement
+community and the HIDTA have been very involved in this. As
+they moved into their Northern Manhattan Initiative, they
+didn't measure arrests. They didn't measure cocaine kilograms
+seized. They measured changes in quality of life using measures
+like street crime, and so they said it doesn't count if you
+busted a lot of criminals and have taken a lot of drugs away.
+Single mothers think they can go out in the streets, and that
+is the kind of outcome-based performance that has had some
+rather dramatic improvements in the quality of life in New
+York.
+ Mr. Kolbe. All right. I have got just a couple more
+questions.
+ Mrs. Meek.
+ Mrs. Meek. No. I just want to say to the General that my
+daughter worked for law enforcement in New York under the
+system you just mentioned, and it worked. They had some very
+good research-based outcomes that they expected and they
+received it, and the drop of the crime rate.
+ My concern is that if there is some good reason, as you
+have proven, to use advertising to help, knowing that other
+models have worked, I would like to impress on the chairman
+that we give it a chance and give you the opportunity to try
+this and not have your funding contingent upon some outcome
+measures which are--right now, you are not really able to say
+that, but you are able--if you could begin the program you are
+going from--what is it? From process to product, or is it the
+other way around? Whichever way you are going, you can't get
+there until you have the funding. So I am hoping that the
+chairman will have some consideration relative to giving you
+the amount of funds or appropriating the amount of money you
+ask for to give it a try. I don't think you can be
+irresponsible.
+ General McCaffrey. Yes. I think there is a tremendous
+assurance on our part that many of these initiatives are going
+to help. No single one of them is going to change the nature of
+drug abuse in America, but the impact of all of them together
+has worked in the past, and we should expect it to work in the
+future.
+ Mrs. Meek. That is it, Mr. Chairman, for me.
+ Mr. Kolbe. Thank you.
+
+ interdiction budget
+
+ General, taking the total $16 billion, roughly, that we
+spend on drug interdiction, your amount in the goal four of the
+drug interdiction part is down by about 3.5 percent this year.
+I think part of that, you said earlier, has to do with the
+nonrecurring programs that have been cut, some of the hardware
+and stuff that is being bought. I think that is correct.
+ Nonetheless, we have a substantial increase in the demand
+reduction programs. Is it correct to say that this shift in
+spending reflects the administration's priorities that we
+really can't do that much with interdiction, that we really can
+only deal with the demand side? I am not sure whether I agree
+or not with that, but I am just wondering whether that reflects
+your view or not.
+ General McCaffrey. No, it sure doesn't.
+ This was an attempt to strip away some of the numbers. This
+is the period of recent history, 1995 through the 1998 budget
+that we turned in, Mr. Chairman. There was, thanks to the
+support of Congress, a bubble of money we got in a supplemental
+process. Actually, it didn't turn into a supplemental. It was
+infused. We asked for a $250 million supplemental. [Clerk's
+note.--Agency later added ``to be reprogrammed from DOD.''] We
+got a funding increase. A lot of it was wrapped up, some $138
+million, in equipment acquisitions, two P-3's, as an example.
+It was almost 100 million bucks, one for Customs and one for
+Defense.
+ If you take those non-recurring costs, interdiction
+actually has gone up. It is now $1.61 billion, and it is a
+pretty good program, although I would welcome continuing
+evaluation.
+ I think the following year, the 1999 budget, we ought to go
+after a big idea for coca reduction in Peru. Now, within that
+$1.6 billion, though, last year, the 1997 budget, you gave us
+some very serious money, a 25-percent increase in the Southwest
+Border Initiative. You gave us 1,500 more people in Federal law
+enforcement to put against this effort. You gave us 11 X-ray
+technology moveable machines to start putting against our 38
+ports of entry. You gave us some serious money on research and
+development. There is a question in my mind, as we look at the
+problems of 94 million Mexicans struggling against corruption
+and the violence of drugs, that on our side of the border, we
+have to do a serious effort to build law enforcement
+institutions adequate to protect America's land and sea
+frontiers. We have got to do the same thing with the Coast
+Guard, and you have given us some very significant support for
+the Coast Guard.
+ So this budget continues to ask for serious money to build
+the Southwest Border, to do the Caribbean Initiative, to
+continue programs. There are some increases in Peru, in
+particular, up to $40 million. We ought to do interdiction. We
+are doing extremely well in the airbridge, Peru into Colombia.
+Now General Wes Clark has got to extend it, and he has got this
+underway into riverine and coastal traffic. We have got to get
+Navy/Coast Guard presence in the Eastern Pacific. That is in
+that budget. We are going to put radar out into what
+essentially has been a hole. We have got to get ROTHR on the
+ground in Puerto Rico. I hope we don't screw it up because we
+need that third ROTHR.
+ So interdiction absolutely must be a component of the
+national drug strategy.
+ Mr. Kolbe. General, doesn't every year's budget, though,
+have nonrecurring costs? I mean, isn't there hardware in every
+budget? I mean, is that an accurate reflection? Is that the
+only one budget that should show some items as nonrecurring?
+ General McCaffrey. That was just the initiative that I
+launched the day I was sworn in. I went after a $250-million
+increase in monies, the majority of which went to interdiction,
+and the majority of that went to a one-time equipment
+acquisition cost.
+ Mr. Kolbe. But there is nothing in the 1998 budget, like
+another P-3 or anything, that would come under that category
+that is in nonrecurring cost there?
+ General McCaffrey. No, although I think I would welcome
+your own views on the adequacy of that $1.61 billion. Again, I
+am going to have to go back and satisfy myself that we can find
+the money to support the National Guard effort. That is going
+to have to be a continuing discussion, but I think what we do
+have to recognize is there is a different problem we are facing
+today than the easier massive airborne threat of the early
+1990's, against which our earlier years of efforts succeeded
+rather brilliantly.
+
+ southwest border
+
+ Mr. Kolbe. General, of our agencies on the drug
+interdiction front line, it seems to me--well, everybody, I
+guess, thinks they are the front line. Certainly, Customs is
+very much on the front line when it comes to our border
+interdiction, but Customs comes under Treasury and it comes
+under this subcommittee, and historically, we have never given
+as much attention to law enforcement that comes under Treasury
+as we have that which comes under Justice, and that seems to be
+in the budget request, we are seeing from the President this
+year. It seems to be the same thing, a very large increase,
+very large, 17 percent, I believe it is, for Immigration
+Service overall, and only about a 3 to 5 percent increase in
+Customs.
+ Are we keeping our priorities right here in terms of drug
+interdiction efforts?
+ General McCaffrey. Well, of course, the Border Patrol--we
+have got 2,000 miles with essentially undefended border, except
+for Southern California.
+ Mr. Kolbe. Right.
+ General McCaffrey. So a big piece of that was an increase
+in the Department of Justice, DEA, Border Patrol, FBI.
+ Mr. Kolbe. That is border patrol, and that is primarily
+illegal immigration, though they certainly play a role in the
+drugs.
+ General McCaffrey. Absolutely.
+ Mr. Kolbe. But, as they measure it themselves, what their
+drug part of it is, it is not a large increase that we are
+making there. And we are not making nearly as much of an
+increase in the Customs side.
+ General McCaffrey. Yes. Well, let me promise you to look at
+it, but the numbers, 5.3-percent increase over FY 1997, it goes
+up in about the same proportion that we increased the whole
+budget, which went up 5.4 percent.
+ We got a $32.4-million increase in their monies. The
+biggest payoff----
+ Mr. Kolbe. ``Their'' meaning Customs?
+ General McCaffrey. Customs, right.
+ The biggest payoff down the line, I would argue, is we have
+simply got to give them the technology required to read license
+plates and put them into a database, to read names of people
+who have been previously arrested. We have got to do non-
+intrusive detection capability.
+ Let me give you one example. I just went to the Port of
+Seattle, which I don't think I mentioned when I made my office
+call on you yesterday. I talked to these incredibly dedicated
+law enforcement professionals in Customs who have worked for a
+decade at this inspection site, which is the product of
+intelligence analysis: what cargo do you send to this spot to
+go through the drug dogs and a primitive X-ray machine.
+Essentially, they have never gotten any drugs in 10 years at
+that site.
+ So, I mean, we have simply got to do better, and that means
+invest in better intelligence and invest in better technology,
+and I think last year's budget did a good piece of work. This
+continues it. The Land Border Passenger Processing Initiative,
+they are pretty proud of, and there are 119 more cargo
+inspectors at high-risk ports of entry. There are another
+almost 6 million bucks to house P-3's down in Corpus Christi,
+but the most important is $15 million to do non-intrusive X-ray
+equipment. That is the way we are going to deter drug-smuggling
+over the border, and I think down the line, we are going to
+have to have something that works on 9 million cargo containers
+a year.
+ Mr. Kolbe. I agree. Thirty-eight percent of Customs' budget
+is for drug interdiction, directly for drug interdiction, and
+they are getting a lot smaller increase than INS, which has a
+very small amount of its budget directly for drug interdiction.
+So I think you should, along with OMB and people in the
+administration, take a good hard look at that issue.
+ I have some other questions regarding some staffing, a
+couple of other issues, the CTAC and the P-3's that I will
+submit for the record for you.
+ Mrs. Meek, do you have anything further?
+ Mrs. Meek. I have no further questions.
+ Mr. Kolbe. If not, General McCaffrey, we thank you very
+much for coming today, to this hearing for our subcommittee.
+ General McCaffrey. Yes. Thanks, Mr. Chairman.
+ Mr. Kolbe. The subcommittee stands adjourned.
+ [Questions and answers submitted for the record and budget
+justifications follow:]
+
+[Pages 581 - 645--The official Committee record contains additional material here.]
+
+
+
+
+ W I T N E S S E S
+
+ ----------
+ Page
+Carlstrom, T.R................................................... 1
+Hochuli, Jurg.................................................... 157
+McCaffrey, Gen. B.R.............................................. 491
+McDaniel, J. I................................................... 1
+Meyers, M. J..................................................... 1
+Posey, Ada....................................................... 157
+Raines, Franklin................................................. 401
+
+ (i)
+
+
+
+
+ I N D E X
+
+ ----------
+ Page
+Executive Residence at the White House:
+ 1997 Reimbursable Events..................................... 76
+ Audits by GAO................................................ 40
+ Billing Procedures........................................... 15
+ Billing Procedures........................................... 77
+ Budget Justification......................................... 148
+ Christmas Events............................................. 86
+ Comments of Mr. Hoyer........................................ 3
+ Conversion of Pennsylvania Avenue............................ 66
+ Cost of Overnight Stays......................................83, 84
+ Costs of Political and Non-Political Events.................. 12
+ Form Used to Designate Reimbursable Events................... 81
+ GAO Audits................................................... 19
+ Increase in Budget Authority................................. 21
+ Location of Coffees.......................................... 76
+ New Laundry Facility......................................... 83
+ Opening Comments from Chairman Kolbe......................... 1
+ Overtime Costs............................................... 85
+ Payment for Events........................................... 43
+ Political Versus Non-Political............................... 81
+ Political Versus Non-Political Events........................ 41
+ Prepared Statement of Mr. Carlstrom.......................... 7
+ Presidential Reimbursement................................... 71
+ Questions from Committee..................................... 84
+ Questions Submitted by Congressman Forbes.................... 102
+ Questions Submitted by Congresswoman Northup................. 104
+ Questions Submitted by the Committee......................... 92
+ Receipt of Reimbursable Payment.............................. 77
+ Reimbursable Political Events................................ 20
+ Reimbursement by President................................... 13
+ Reimbursement of Food by President........................... 21
+ Reimbursement to NPS......................................... 82
+ Reimbursements............................................... 67
+ Roof Replacement............................................. 88
+ Statement of Witness......................................... 5
+ Timing of Payments........................................... 72
+ Use of Residence............................................. 89
+ Visitation at the White House................................ 90
+Executive Office of the President, Office of the Administration:
+ 1982 Memorandum on White House Use of Volunteers............. 173
+ 1987 Memorandum on White House Use of Volunteers............. 185
+ Advance Work of DNC--Paid Volunteers......................... 194
+ Annual Report to Congress on White House Staffing............ 198
+
+
+ Applicability of Ethics Rules................................ 199
+ Budget Justification......................................... 290
+ Closing Remarks of Mr. Kolbe................................. 201
+ Correction of Prior Testimony................................ 168
+ Current Policy on White House Use of Volunteers.............. 186
+ Five-Year Automation Plan.................................... 186
+ Individuals Under the Intergovernmental Personnel Act (IPAS). 200
+ Number of DNC Volunteers at the White House.................. 197
+ Opening Remarks by Chairman Kolbe............................ 157
+ Opening Statement by Ms. Posey............................... 158
+ Paid Volunteers in Previous Administrations.................. 173
+ Past Testimony on White House Volunteers..................... 189
+ Phone Use for Campaign Purposes.............................. 193
+ Policy on the Use of WHODB................................... 190
+ Prepared Statement of Ms. Posey.............................. 163
+ Questions Submitted by Congressman Forbes.................... 202
+ Questions Submitted by Congressman Frank Wolf................ 229
+ Questions Submitted by Congresswoman Northup................. 205
+ Questions Submitted by the Committee......................... 207
+ Selection of Acting Director As Witness...................... 192
+ Staffing Levels--Detailees................................... 169
+ Staffing Levels--Full Time Equivalents (FTE)................. 168
+ Staffing Levels--Paid Volunteers............................. 193
+ Staffing Levels--Personnel Ceiling in EOP.................... 169
+ Staffing Levels--Increase for ONDCP.......................... 170
+ Twenty-Five Percent Staff Reduction........................186, 196
+ Volunteers in the White House................................ 171
+ Volunteers with Blue Passes.................................. 195
+ White House Blue Passes...................................... 195
+ White House Communications Agency (WHCA) Transfer............ 171
+ White House Office Database (WHODB).......................... 189
+ WHODB--White House Policy.................................... 197
+ WHODB Costs.................................................. 191
+ WHODB Data Fields............................................ 192
+ WHODB Vendor Documentation................................... 191
+Office of Management and Budget:
+ Budget Justification......................................... 460
+ Capital Budgeting............................................ 427
+ Constitutional Amendment to Balance the Budget............... 420
+ Controlling Mandatory Spending............................... 433
+ Differences between OMB and CBO Estimating the Deficit....... 424
+ Federal Government Procurement of Phone Services............. 418
+ Funding for the Federal Election Commission.................. 413
+ Measuring Pay Comparability for Federal Employees............ 426
+ New Mandates for the Office of Management and Budget......... 414
+ OMB Budget Proposal.......................................... 415
+ Opening Remarks of Chairman Kolbe............................ 401
+ Opening Statement of Mr. Raines.............................. 402
+ Paying for Federal Employee Cost of Living Adjustments....... 416
+ Prepared Statement of Mr. Raines............................. 406
+ Questions Submitted by Congressman Forbes.................... 453
+ Questions Submitted by Congressman Hoyer..................... 451
+ Questions Submitted by Congresswoman Northup................. 456
+ Questions Submitted by the Committee......................... 438
+
+
+ Reasons for New Mandatory Funding............................ 430
+ Revolving Differences on Deficit Estimates................... 431
+ Tax System Modernization..................................... 412
+ Will Government Computers be Ready for the Year 2000?........ 432
+Office of National Drug Control Policy:
+ Alcohol and Tobacco.......................................... 572
+ Budget Justification......................................... 624
+ Budget Overview.............................................. 499
+ Caribbean.................................................... 565
+ Criminal Justice System...................................... 496
+ Demand Reduction Programs.................................... 561
+ Drug Seizures................................................ 499
+ Drug Use Trends.............................................. 496
+ Drug Use..................................................... 557
+ Federal Advertising Campaign................................. 570
+ Funding Request for Media Campaign........................... 573
+ Inner City Problems.......................................... 563
+ Interagency Process on Performance Measures.................. 576
+ Interdiction Budget.......................................... 578
+ Interdiction................................................. 560
+ Introduction of General McCaffrey............................ 493
+ Media Campaign............................................... 564
+ Media Campaign............................................... 568
+ National Drug Control Strategy............................... 494
+ Opening Statement of Chairman Kolbe.......................... 491
+ Overview of Drug Problem..................................... 565
+ Performance Measures......................................... 574
+ Prepared Statement of General McCaffrey...................... 501
+ Priorities................................................... 566
+ Proposed Media Campaign...................................... 571
+ Questions Submitted by the Committee......................... 581
+ Questions Submitted by Congressman Forbes.................... 607
+ Questions Submitted by Congresswoman Northup................. 612
+ Scope of Problem............................................. 568
+ Southwest Border............................................. 579
+ Special Forfeiture Fund...................................... 558
+