[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