[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