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Thursday, March 12, 1998.






Opening Comments From Chairman Kolbe

    Mr. KOLBE. The hearing of the Treasury, Postal Service, and General Government will come to order. This morning we have two parts of the White House and the Executive Residence before us.

    Before we begin our hearing this morning on the Executive Residence, I have a brief statement that I want to make. I will then make an additional statement regarding the witnesses that we have before us.

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    I certainly had no intention of coming out with both barrels loaded, maybe one of them, figuratively speaking, but certainly not both of them. Yesterday, during the White House daily press briefing, this subcommittee was issued a direct challenge; one that cannot be ignored and I take very seriously.

    When questioned about our hearing today, the President's spokesman said, ''Well maybe they will cut our budget.'' He also suggested that, ''it is precisely the Congressional inquiries that generate the need for staff.''

    The President of the United States is not here with us today to answer these questions, but I ask them nonetheless. Is the White House challenging us to cut their budget, cut the budget of the White House?

    Does the White House find questions on the use of taxpayer dollars burdensome to them? Just so there are no ambiguities about the roles and responsibilities of the Appropriations Committee, I want to lay down just a few facts.

    Fact No. 1, The Constitution vests the power of the purse in the Congress of the United States.

    Fact No. 2, House Rules provide that the Committee on Appropriations has jurisdiction over the appropriation of all federal revenues.

    Fact No. 3, The Appropriations Committee is authorized to conduct such studies and examinations on the organization and operation of agencies as it may deem necessary to assist in the determination of matters within its jurisdiction.
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    Fact No. 4, The Treasury, Postal Service, and General Government Subcommittee is assigned jurisdiction of the Executive Office of the President; this includes both the White House Office of General Counsel and the Executive Residence of the White House.

    So, I would say to the President: Mr. President, not only is it the responsibility of this subcommittee to review the operations of the White House to ensure that all federal funds are used only for the purpose for which they were appropriated, it is our obligation to the American taxpayer to do so.

    I would agree with the White House spokesman that this White House has been under an inordinate amount of scrutiny by committees of Congress. I trust that the President's spokesman does not believe that I am part of any right wing conspiracy.

    Let us face it, Congress has been given a lot of material to work with. Yes, there have been a lot of scandals in Administrations before this one. I think it is a fairly accurate statement to say that never have there been so many in a single Administration; from White Water, to Travelgate, to Filegate, the improper fund raising, and on and on.

    In each instance, I think there are a lot more questions than we have ever gotten any answers to. As it relates to this subcommittee, my oversight of White House operations has been thwarted; particularly as it relates to political events in the Executive Residence.

    I have only been Chairman of this subcommittee for a year. I have to tell you, I feel as though I have been engaged in the longest and slowest chess game in my life. Each move has been exquisitely calculated, extraordinarily slow, and aimed at depleting the resources of those on the other side.
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    Quite frankly, I am sick of this game. The subcommittee has a great many questions on the operations of the White House. In the event that our questions are not answered to our satisfaction, I have a simple and single message to send back to the White House.

    Mr. President, the buck quite literally stops here at this subcommittee. With that, we will begin our hearing here with the Executive Residence.

    We are pleased to welcome before us today personnel from the National Park Service. As my colleagues are aware, the National Park Service is testifying on behalf of the operations of the Executive Residence of the White House.

    Unless there have been some significant changes to the way the Executive Residence is run, I am afraid that today the Park Service is not going to be able to answer most of the pertinent questions related to the daily operations of the residence that I will have, just as they were not able to answer them last year.

    That was certainly the case last year and I requested the attendance of the Chief Usher and/or the Administrative Officer, the very competent people who run the Executive Residence.

    Not surprisingly, we have been unable to secure their attendance. This is, indeed, very unfortunate. During the fiscal year 1998 appropriations hearing, the Park Service was unable to answer a very important series of questions related to overtime costs of the domestic staff, the relationship of those costs to certain work loads within the residence, and in particular, overnight guests. That hearing took place just about a year ago this time. In the interim, and as a result of the fact that we were not able to get answers to our questions, we tasked the General Accounting Office to review the operations of the Executive Residence, again, seeking answers to what we think were very simple and straightforward questions about overtime costs and the cost of overnight stays in the Executive Residence. This is not an insignificant question.
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    Since the beginning of this Administration, we have spent $2 million on overtime in the Executive Residence. Last year, the White House revealed they had 938 overnight guests at the Executive Residence, though we still do not now how many different individuals or how many nights total people stayed in the White House.

    We know for a fact that many of those guests stayed on more than one occasion. We also know from memos that we have seen from the White House that many of them were invited as a quid pro quo for political donations.

    From all appearance, many of these overnight stays were part of an aggressive White House fund raising strategy. I will repeat my position on this issue. I respect the President's prerogative to host personal guests in the Executive Residence. It is the home of the President while he serves in that office, in that capacity, as President of the United States. What I do not support is the use of taxpayer dollars to support political activities.

    Just as we ended the practice of federal taxpayers paying for political events in the White House in last year's bill, and established a separate accounting process to support these events, we will end the practice of using federal dollars to support political overnight stays in the Executive Residence, if that is ultimately what we discover has been going on.

    Given the history of stonewalling, and of refusing to answer our questions that has characterized this Administration, it should come as no surprise that the General Accounting Office has been unable to complete their investigation of the Executive Residence.
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    It is a fairly simple, small, and narrow task that they are undertaking. Quite simply, they have not been able to get access to the individuals and the documents they need in order to complete a reliable and comprehensive review of the Executive Residence operations.

    Last November this subcommittee held a hearing on the lack of progress being made on that investigation. On the day of the hearing, the very day of the hearing, the White House faxed a letter to the General Accounting Office saying they were ready and willing to set-up the meetings to provide the information and documentation that was needed.

    Since that time, since last November, two days of meetings at the White House with White House personnel have actually been scheduled for the General Accounting Office; two days of meetings in four months.

    Sadly, other than the list of overnight guests, which were available from a White House press release several months earlier, not one piece of paper has been turned over to the General Accounting Office on this matter. Not one single document has been turned over.

    It is clear that the White House has no intention of cooperating with this subcommittee or the General Accounting Office. I have not made up my mind exactly what steps we will take next as a result of the failure to complete this GAO investigation.

    Much of that will depend on the answers that we get here today. Clearly, something is going on within the Executive Residence as it relates to overtime costs. I have a chart over here that I think paints a very fascinating picture.
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    Last year at this time, the White House told us that they would need $543,000 for domestic staff overtime. That is the fourth line there, the highest red line there. I am sorry. It is the third line from the right. The yellow line; the first yellow line.

    That is what the White House said they would need for overtime in fiscal year 1997, and they would need, correspondingly, $500,000, just about the same amount for fiscal year 1998. You see those two yellow lines there.

    Well, something happened between our hearing a year ago and today. Now, the White House tells us that the actual overtime for domestic staff was $193,000 in fiscal year 1997. That last red line is the last actual amount. You can see the rather dramatic decrease from 1995. So, 1996 was a presidential year. The President was on the road a lot more.

    In 1997, where they projected it would go back up, it has fallen by 64-percent. So, what has happened? This is also the case for overtime in the current fiscal year. The White House is now spending, even though they asked for and we put in the budget $500,000, but they have spent only $200,000 for overtime.

    Either the White House has seriously miscalculated the cost of overtime or certain activities were significantly reduced or shut down. I am not going to beat around the bush about this.

    What I think that happened is in the middle of last year's appropriations cycle, the White House realized that they could not continue to host overnight guests at the same pace that they had been doing.
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    There was simply too much political scrutiny of this. So, it is my guess that the White House has significantly reduced the number of overnight stays, in essence, mid-way through fiscal year 1997.

    As a result of shutting down those activities, overtime costs fell by more than half for fiscal year 1997 and continues to stay at a relatively low level, if you look at what they estimate for this year and what they are asking for next year, which is again at $200,000. I have no way of knowing this for a fact, but it is my guess. We would be able, of course, to make some determination of that if the White House would be cooperative and they have not been.

    So, I hope that our witnesses today will be able to shed some light on this. If they cannot, we will continue to try to ask the White House to help us with that.

    With that in mind, I look forward to the testimony of the Park Service. I am hoping they are going to be able to answer some of these questions.

    In the event that my questions on overtime costs for domestic staff are not answered here today or subsequently before we have a bill ready to go to the Floor, I intend to put everybody on notice, everybody in this room, and everybody that could be listening, or will surely be reading this statement or the testimony that takes place here.

    I will not fund a single penny of overtime for domestic staff in the fiscal year 1999 appropriations bill unless we get some explanation for this. Based on the way the numbers have fluctuated so dramatically, there has obviously been something that has been going on during the last year.
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    Until I know what we are funding and what it is for, I will not include one cent for overtime for the domestic White House staff. With that, I would recognize my colleague, Mr. Hoyer, for opening remarks that he may have before we go to our witnesses.

    Mr. HOYER. I thank the Chairman for yielding.

    I was initially going to welcome Mr. Carlstrom to the committee and congratulate him on his new post and say how much I have appreciated working with him through the years and how competent I think he is and his office is.

    I want to thank you for that. Let me, however, address the comments of the Chairman and place it in context. I served in the Maryland Senate for 12 years, the last four of which I was president of the Maryland Senate.

    I have served in the Congress of the United States since 1981; some 17-plus years. This is therefore close to three decades of public service. Since January of 1995, I have experienced a more partisan focused attack on political enemies than I have ever experienced in my previous service in office.

    I believe there is a conspiracy against this White House, right wing or not. Speaker Gingrich, Majority Leader Armey, Majority Whip DeLay have all sent letters to all of the committee chairs in the last Congress directing them to focus on any matters before their committee within their jurisdiction that might embarrass or call in question opposition.

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    Not just political opposition, such as the White House, but opposition of senior citizens and opposition of the representatives of organized workers in this country. Indeed, they set-up a slush fund to carry out that objective. It was said on the Floor that it would be for unanticipated needs.

    In fact, it has been used continually for the purposes of investigating organizations or individuals perceived by the Majority Leadership as being in opposition to them.

    I have read Mr. McCurry's remarks, Mr. Chairman. I think he is absolutely correct. There is no analogous time in history, including Watergate, when a President was asked for information, bedeviled by more minutia than this President and this White House; not by this committee, but by the Government Oversight Committee, by the Senate Committee headed by Mr. D'Amato that was an absolute abysmal failure and disgrace, and by many others as well.

    This White House and this President, like so many of the opponents of the leadership of this Congress, have been subjected to unprecedented historic attacks. You can tell I am angry about this. I have been on this committee since 1983.

    On it during the Presidency of Ronald Reagan and the Presidency of George Bush. We had disagreements. We were in the Majority. Never, underline never, was the Reagan or Bush White House subjected to the kind of onslaught that this White House has been subjected to.

    Now, when it comes to budgets, never was there a threat by this committee against President Reagan or President Bush with reference to their budget. In fact, consistently, this committee reported out the request of the President of the United States. Why? Because historically since 1789, the Congress of the United States has perceived, correctly that the White House, not the Executive Department, but the White House, elected by the American Public is a co-equal branch of government.
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    Mr. Chairman, I understand the Constitution and the statutory authority of this committee, and the responsibility this committee has to the taxpayers of the United States. We have to answer directly to them.

    The President, of course, has to answer to all of the people of the United States. It has been historically the precept of this committee that because the President, like ourselves, answers directly to the American Public, that we might raise questions, focus on issues of importance, and on expenditures.

    That we would not try to intimidate the President of the United States by undermining his ability to perform his duties. Now, I want to say, because there may be people listening to me who do not know the relationship between the Chairman and myself; I have the highest respect for Chairman Kolbe.

    He is a man of high integrity, ability, and common sense. I will tell you that I believe that this is not an effort of this subcommittee. It is a centralized effort operating through many committees and many subcommittees.

    Unfortunately, the GAO is not here before us on this issue of overtime and visitors to the White House. In 209 years, I suppose it ought to be 208 because this request was made last year, in 208 years, this question was never asked of a President of the United States.

    In fact, there is no legal requirement, as far as I can determine that a President or a White House keep any records, underline any records, of visitors they choose to have to the White House. This is their home. Mr. Kolbe keeps no records that I am entitled to, of visitors to his home and I keep no records of visitors to my home to which the public is entitled.
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    Obviously, it is a unique home. It is an historic home. This hearing, frankly, is about the maintenance, upkeep, and preservation of an historical site; not about politics, not about partisanship, not about this President or any other president.

    This hearing ought to be about how well we are maintaining that historic site so that Americans who revere the site as the center of government, from the Executive standpoint, as they revere the Capitol of the United States as the center of democracy; it is unfortunate, however, that these hearings about the White House itself and about the Executive Office have too often degenerated into partisan opportunities.

    Again, I will reiterate my respect to the Chairman. We have a difference of view on the issue that he has raised and focused on with respect to visitors to the White House. The GAO is not before us, so I cannot ask them any questions.

    They have specifically said they do not believe the cost can be divided out and specifically identified for visitors beyond the general cost of maintaining this historic building. Mr. Chairman, we will continue to have a respectful and close relationship; not just respectful, but a friendly relationship. You are my friend.

    The President of the United States has weighty responsibilities. Mr. McCurry is absolutely correct. No President has been bedeviled the way this President has been, not by this committee, but by many, many, many committees of this Congress.

    Committee-after-committee, redundant committee-after-redundant committee. A House committee, a Senate committee because, in my opinion Mr. Chairman, the Majority, when it was elected in 1994 took out, in effect, to redress all the grievances that had mounted up for that 40 years that they lamented the fact that they were not in the Majority.
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    We are seeing the consequences of those grievances being spewed out. The present incumbent of the White House, unfortunately, is the recipient of much of those grievances and this historic get-even opportunity.

    I regret that these words have been as harsh as they have, Mr. Chairman, not directed at you, but to set before the public and the record, the situation that I believe exists today as it relates to this White House and this President.

    It is time for us to focus on the real issues of the day. This hearing on how well we are doing maintaining the White House, on the Executive Office, how well we are doing on having expenditures properly spent, which is your point, on the objectives of properly running the Executive Office of the President, but not on knit-picking and trying to find ways and means to embarrass and undercut the operations of the Presidency. Thank you.

    Mr. KOLBE. Mr. Price. Do you have an opening statement?

    Mr. PRICE. No.

    Mr. KOLBE. Ms. Meek.

    Ms. MEEK. [No audible response.]

    Mr. KOLBE. Before I call on Mr. Carlstrom, let me just say I would agree with Mr. Hoyer that we will agree to disagree from time-to-time, but we will remain friends. We will have a good relationship as we have had a good working relationship all along.
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    I just want to clarify for the record, however, I think a statement was made and I think is a very serious charge, that this is a centrally directed operation in Congress.

    I have had no discussion, not one word of discussion, with either the Speaker or the Chairman of the Appropriations Committee or their staffs about this hearing today; not one word about it, personally. Mr. Carlstrom.


    Mr. CARLSTROM. Good morning. Mr. Chairman and Members of this Committee, I am pleased to appear before you and present for your consideration the funding requirements for the maintenance and operation of the Executive Residence at the White House for fiscal year 1999.

    The appropriation for this account for fiscal year 1998 is $8.45 million for the operation of the Executive Residence. A separate no-year account for repair and rehabilitation of the Executive Residence was established in fiscal year 1996, with initial funding for the repair of the roof of $2.2 million.

    In fiscal year 1998, $200,000 was appropriated for renovation of an electrical vault for possible relocation of the laundry within the Executive Residence.

    The fiscal year 1999 request is $8.691 million for the operating accounts at the Executive Residence. No funds are being requested for the no-year repair and rehabilitation account for fiscal year 1999.
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    The increase of $646,000 for the operating accounts includes, $375,000 for funding of the projected 3.1-percent COLA pay scheduled in January 1999, for step and merit pay increases, and the annualization of the 1998 COLA pay raise.

    Additionally, $153,000 is requested to fund two FTEs, a computer network engineer to oversee the growing complexity and required modernization of the Executive Residence's computer network, and an accountant technician to track and capture costs associated with official and ceremonial functions of the Presidency, repair and execute prebilling and final billing for reimbursable functions, ensure prompt payment of reimbursable functions, and other new duties as required by Public Law 105–61.

    An increase of $70,000 is requested to fund the costs of preventive cyclic and scheduled maintenance, to include replacement of equipment and materials for the water filtration system that has been in use for ten years, and for the heating, ventilation, and air conditioning systems.

    An increase of $50,000 is requested for computer hardware upgrades and support of new custom-written software used to modernize the accounting functions of the Executive Residence.

    An increase of $29,000 is requested for increases in the cost of official and ceremonial functions of the Presidency which is offset by reductions of $31,000 in overtime costs of the Executive Residence's full-time staff.

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    We are happy to report that the roof repair and restoration has been completed, and that the last punch list items are being taken care of by the contractor. It was a successful project which went smoothly and quickly. We are currently in the last stages of the transfer vault relocation, and at that time the planning will begin for the possible moving of the laundry facility.

    That concludes our budget requests, Mr. Chairman. Myself, Mr. McDaniel, and Ms. Meyers shall be pleased to answer any question you and Members of this Committee may have about the operation of the Executive Residence at the White House.

    [The statement of Mr. Carlstrom follows:]
    "The Official Committee record contains additional material here."


    Mr. KOLBE. Thank you very much, Mr. Carlstrom.

    Let me begin my questions with what I have been trying for a year to get to the bottom of, despite the comments of my friend and colleague, Mr. Hoyer.

    I just think it is a very legitimate question. We are talking about the overtime issue. It is my understanding that there are currently 86 full-time employees within the Executive Residence, and of those about 36 are the domestic staff: butlers, housekeepers, chefs, maids, et cetera.

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    Am I correct to assume that these 36 staff care for the President and the First Family, as well as any other private guests that may be staying in the Executive Residence?

    Mr. CARLSTROM. That is correct.

    Mr. KOLBE. Can you tell me what the other 50 do or, for the record, at least provide a list of the positions and the number of FTEs that are associated with those?

    I assume they are carpenters, electricians, and people like that are the maintenance of the Executive Residence.

    Mr. CARLSTROM. Yes, they are. They are broken down.

    Mr. KOLBE. No security is involved in this.

    Mr. CARLSTROM. No, there is not.

    Mr. KOLBE. Okay. If you would just provide us with a list of those.

    Mr. CARLSTROM. We will.

    Mr. KOLBE. We will appreciate it.

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    Mr. CARLSTROM. Yes, sir.

    [The White House FTE positions referred to follows:]

    "The Official Committee record contains additional material here."


    Mr. KOLBE. Mr. Carlstrom, if you would look at that chart over there that I referred to earlier. Last year you testified that overtime costs for domestic staff during fiscal year 1997 would be and you were very specific, $543,271.

    That is the number that is up there. Yet, your budget justification materials that were submitted last month show the actual overtime paid to employees was $193,600. That is a difference of 64-percent.

    What accounts for this difference? Specifically, what work loads were anticipated in fiscal year 1997 that never took place?

    Mr. CARLSTROM. I cannot respond to that officially. I would suggest that the Executive Residence provide that information for the record. I do not have that information available.

    Mr. KOLBE. Well, we have been trying to get that information. The current estimate for overtime for full-time domestic personnel for 1998 is $200,000. That is, again, a 64-percent decrease from the amount you told us you would need a year ago.
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    Specifically, what work loads and activities were anticipated during fiscal year 1998 that are not now anticipated in the next fiscal year?

    Mr. CARLSTROM. I can only surmise. I have no exact information. Again, the Executive Residence will be asked to provide that information.

    Mr. KOLBE. So, you just take the amount that Executive Residence gives you and plug it in for this, for overtime? You do not have anything to do with the preparation of the number.

    Mr. CARLSTROM. I do not have anything directly to do with the preparation of that number, no.

    Mr. KOLBE. Last year, the White House told us that there were, as I mentioned in my earlier statement, 938 overnight guests in the Executive Residence since the beginning of the Clinton Administration. Can you tell me if this number has changed? Do you get any of that information from the Executive Residence?

    Mr. CARLSTROM. No, sir. I do not have that information.

    Mr. KOLBE. Do you have any idea what the total number is to-date? If 938 was last year, what is the total number as of now of overnight visitors in the residence?

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    Mr. CARLSTROM. I have no idea what the overnight residency occupation is.

    Mr. KOLBE. I am only curious as to how you prepare your budget; if you do not have any information on these things, how are those budget requests prepaid?

    Mr. CARLSTROM. The budget request is based upon the amount of dollars required for the care and maintenance of the facility.

    Mr. KOLBE. But it includes overtime. I mean, it is in your budget.

    Mr. CARLSTROM. The overtime is a component.

    Mr. KOLBE. How did you determine that number, $200,000, to come up with?

    Mr. CARLSTROM. To my recollection, it would be based upon the projection of the kinds of events and occurrences that——

    Mr. KOLBE. Does the White House give you a document?

    Ms. MEYERS. Yes, they do.

    Mr. KOLBE. Well, will you provide that document for the record as to what they give you?
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    Ms. MEYERS. I will request that of the Executive Residence, yes.

    [The information referred to follows:]
    "The Official Committee record contains additional material here."

    Mr. KOLBE. It would seem to me to be a legitimate thing to know how you come up with this figure.

    Ms. MEYERS. It is based on historical precedence, but the problem is——

    Mr. KOLBE. Something is different historically here. That is what I am trying to get to the bottom of.

    Ms. MEYERS. So much of it is determined upon world events, local events. If there is a crisis, for instance, during the Gulf War, everybody, the whole staff, all 86 of them work 24 hours a day.

    If you are having different things happening, it is very hard to estimate from the beginning as to exactly what it is going to be. That is why we kept it down this year rather than taking it way back up as it had been in prior years, but that is provided to me by the Executive Residence Administrative Office.

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    Mr. KOLBE. I am sorry, would you repeat? It was taken down, why?

    Ms. MEYERS. Because it had been leveling off.

    Mr. KOLBE. It certainly was not through 1995 leveling off.

    Ms. MEYERS. Are we speaking of just the domestic staff or are we speaking of——

    Mr. KOLBE. This is the overtime for the domestic staff; just the domestic staff there.

    Ms. MEYERS. Right.

    Mr. KOLBE. Obviously, something has changed. That is what I am trying to get to the bottom of. Maybe you can help. You gave a useful piece of information there that I am surprised to hear that during a crisis, like the Gulf Crisis, all of the maids and everybody works 24-hours a day.

    Ms. MEYERS. They are on-call 24 hours a day.

    Mr. KOLBE. On-call or at work? Is it overtime if they are on-call?

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    Ms. MEYERS. No, it is not.

    Mr. KOLBE. Okay.

    Ms. MEYERS. They all work 40 hours, plus anything over that would obviously be overtime.

    Mr. KOLBE. Right, right. I am not sure I know why somebody that is a maid would be required for extra hours during that time.

    Ms. MEYERS. Well, there are many people walking around the White House and all of that needs to be taken care of.


    Mr. KOLBE. Let me just ask you this. I would like some information from you about what the normal staffing pattern would be on an average when the Executive Residence is occupied by the President and the First Family. For example, are there three 8-hour shifts for personnel, White House Executive Residence personnel?

    Mr. CARLSTROM. I can respond to that, Mr. Congressman.

    The staff members, all of them, work a 40-hour week. That may run through Monday to a Friday, or from a Tuesday to a Sunday, or any combination. This is similar to what we do in the National Park Service when it comes to managing and taking care of our parks.
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    The Executive Residence is staffed seven days a week, day time and into the evening, on regular time. There is one shift of maids and butlers that come on early in the morning to take care of preparation for the 1.1 million visitors that come through the White House every year.

    That is one shift, or an 8-hour shift, if you would want to refer to it that way. The second shift comes on in the afternoon and begins the clean-up, after the visitors have left, and prepares the White House for the functions that are to occur either for the First Family and/or for special events in the evening hours. Those are the two shifts that occur which relate to a daily function.

    It is staffed seven days a week for 24-hours by the operating engineers. There are two employees on duty at all times in case there are any problems with the mechanical nature of the heating, ventilation, or other systems in the White House.

    Much of the scheduling depends on the amount of time that the First Family is in the Executive Residence. This Family spends more time at the Executive Residence than has been true in previous Administrations. That could account for some of the increased cost that you see. That is my editorial.

    There are some things that have happened that have already been alluded to in world events in past Administrations. That was during the Bush Administration when the Gulf War was occurring.

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    All members of the staff in all of the different divisions, some of them were on duty for 24-hours a day and were on-call.

    I would just like to emphasize one other thing, that the Executive Residence is first and foremost a home and that is what the budget deals with. How we take care of the White House, its historical character, and its importance to the American people.

    Mr. KOLBE. Well, I have taken more than my time. Let me just say that, first of all, that I would concur with your statement that this President has spent more time in the Executive Residence. He has not used Camp David as much.

    None of that, however, explains this dramatic, more than 50-percent, or 64-percent, almost a two-thirds decrease in the amount of overtime. That is what we are not able to get to the bottom of. I may come back with some other questions on that. Mr. Hoyer.

    Mr. HOYER. Thank you, Mr. Chairman.

    I am constrained to observe that I do not know how much it costs to operate Air Force One, but I would venture to say to fly back and forth to Rancho Mirage in California was at least a $250,000 item every weekend.

    I have no criticism of that at all, but this President does spend a lot of weekends in the White House. I happen to know that and that he does not spend much time at Camp David. He does not have another place. So, this is his home.

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    One flight to California would eat up that overtime, it seems to me. Having said that, Mr. Carlstrom, how long have you been with this office?

    Mr. CARLSTROM. Do you mean the National Park Service?

    Mr. HOYER. Yes, sir.

    Mr. CARLSTROM. I have been with the National Park Service since 1972.

    Mr. HOYER. Since 1972. That was the Nixon Administration.

    Mr. CARLSTROM. Yes. You are giving me a history lesson, yes.


    Mr. HOYER. I want to ask you this question. To your knowledge, to the extent of your knowledge, has the White House budget been treated differently since 1993 than it was from 1972 to 1993?

    Mr. CARLSTROM. You said the National Park Service. I was not associated with the White House specifically at that time.

    Mr. HOYER. That is why I said ''to your knowledge.''

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    Mr. CARLSTROM. No.

    Mr. HOYER. I do not know how long your history goes back, but the point of my question is, has this White House budget been treated any differently than prior White House budgets to your knowledge?

    Mr. CARLSTROM. Jim McDaniel has been around a little longer than I have and dealt with it on a personal basis.

    Mr. HOYER. Fine, then I will ask Mr. McDaniel.

    What I am simply trying to find out, obviously, is whether there is something unusual about how this budget is handled than prior budgets.

    Mr. MCDANIEL. I, too, Mr. Hoyer, have been associated with the National Park Service for many years. I joined in 1967 as a Park Ranger in Lexington and Concord, Massachusetts. In 1971, I became a part of the White House Liaison Operation and have either been supporting the Park Service officials who have testified at this hearing or have been at this hearing since 1971.

    The simple answer to your question, Mr. Hoyer, is yes, there is a difference.

    Mr. HOYER. What is that difference?

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    Mr. MCDANIEL. In the years prior, this hearing and the Senate hearing were much less formal. Certainly, I had not seen before that time any media coverage of the hearings.

    Mr. HOYER. Never?

    Mr. MCDANIEL. Never.

    Mr. HOYER. The Appropriations Committee did not have a press arm prior to 1995, I think. Go ahead, Mr. McDaniel.

    Mr. MCDANIEL. The tone of the hearing was much more conversational; much less formal. There was more presentation. I can remember several times when the Members themselves and their staff actually came to the White House, climbed the scaffolding to look at the exterior restoration work in progress.

    There was a very strong focus on the historic preservation of the White House. So, there was more of, I think, more details into the maintenance and the construction needs and the infrastructure needs of the White House.

    Mr. HOYER. Am I correct, Mr. McDaniel, that is in fact what you focus on? I do not mean you, personally, but the Park Service focuses on the maintenance and preservation of the home of the President, which is also one of America's and the world's most historic sites.

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    Mr. MCDANIEL. Yes. In 1961, during the Kennedy Administration, when a public law was passed that more fully defined the role of the National Park Service at the White House, there was a very strong emphasis on historical preservation and the museum aspects of the White House. That is the reason why we are there.

    Mr. HOYER. I understand. The committees, the Republicans, and Democrats, and Presidents focused on in these hearings the White House itself.

    Mr. MCDANIEL. Yes.

    Mr. HOYER. The building, in other words.

    Mr. MCDANIEL. Yes.

    Mr. HOYER. Thank you. Now, you have been there since 1971. Has the question of overtime of the domestic staff ever come up prior to last year, to your knowledge?

    Mr. MCDANIEL. Not to my knowledge, no.

    Mr. HOYER. Has the issue of whether or not the President had one, or two, or ten visitors to the White House ever come up to your knowledge?

    Mr. MCDANIEL. No, it has not.

    Mr. HOYER. So, since 1971, to your knowledge, this is the first time this issue has been raised by the committee?
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    Mr. MCDANIEL. Yes.

    Mr. HOYER. Now, Mr. Carlstrom, let me ask you something. In a letter to the committee dated March 9th, Mr. Ruff, counsel to the President, said, ''Accordingly, we will be pleased to receive your questions on matters,'' this was to the Chairman, ''about which you have concerns in advance of the hearing to ensure that, to the extent appropriate, National Park Service personnel are prepared to address these questions.''

    Mr. Carlstrom, the question I ask you, do you know whether Mr. Ruff received any questions prior to your appearance here and did you have the opportunity to talk to them about questions that were of interest?

    Mr. CARLSTROM. No, not to my knowledge or Ms. Meyers who handles all of those kinds of correspondence.


    Mr. HOYER. Ms. Meyers, last question. Clearly, the overtime about which I have limited knowledge, at best, other than our discussions here, relates to the particular demands on the White House from time-to-time that can be caused by crisis, domestic or international, or challenges that may not have been anticipated which would require longer hours for staff, and the President, and the White House staff itself. Am I correct? Is that what you are saying?

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    Ms. MEYERS. That is correct.

    Mr. HOYER. So that, the overtime is not necessarily related to visitors that the President might have at the White House, but visitors in his non-official capacity, if you will, as his home, as much as it would be related to the White House resulting from the Office of the President, the official duties of the President of the United States. Is that correct?

    Ms. MEYERS. That is correct.

    Mr. HOYER. Thank you very much, Mr. Chairman. I may have some additional questions.

    Mr. KOLBE. Yes. We will have another round.

    Just one very quick question before I yield to Ms. Meek. In that response, Mr. McDaniel, to something you said about the differences in the hearings. Would you tell me White House or not the preservation and other maintenance needs at the White House have not been met by this subcommittee since 1995?

    Mr. MCDANIEL. Absolutely not, Mr. Chairman.

    Mr. KOLBE. Thank you very much. Ms. Meek.

    Mr. HOYER. Mr. Chairman.
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    Mr. KOLBE. Yes.

    Mr. HOYER. Might I just respond. I certainly did not imply that nor did I mean it and want to make it clear that I think you and I, as your predecessor, both are very concerned about the maintenance and preservation of the White House.

    I did not mean to imply that. What I did mean to imply was that the character of this hearing is an historic precedent. Ms. Meek.


    Ms. MEEK. Mr. Chairman, I do not have any direct questions for the staff at the White House at this point. I do have a concern and that is the focus on the domestic staff of the White House in that when an environment is created that focuses on, I would say, the lower rung, even though I would hate to put it in that category, of any kind of entity, it creates for me a problem.

    In that when we begin to look at the domestic staff and their overtime pay, and question whether or not it is a viable kind of expenditure, I have a strong concern about that. I will be watching this throughout this subcommittee, being sure that there is an essence of fairness throughout the hearing on this particular account.

    At this time, I feel very strangely touched by what I hear here this morning, the discourse, the dialogue, the way it is going. I would hope I would learn more about how the White House operates, how you run that residence.
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    Many of the problems that exist for you are the kinds of things that we as a committee should be concerned about. I feel that last session I sat on this committee for the first time.

    We did get into some of the questions which have been asked again here this morning. I do not think there will ever be any answers for those questions. There is not any instrument that will measure what we purport to measure here this morning.

    So, I will be watching that as a committee Member here. I will have questions as I listen more and more to the dialogue. Thank you, Mr. Chairman.

    Mr. KOLBE. Thank you very much, Ms. Meek. Mr. Price.


    Mr. PRICE. Mr. Director, thank you for being here this morning. You have furnished a listing, as you did last year, of reimbursable official and ceremonial functions in the White House and also reimbursable political events. Presumably, those will be reprinted in the record as they were last year.

    I wonder if you could share your observations with us as to how the list we discussed last year, particularly the rather long turn around time for the reimbursement of some of these events, compares with the record you furnished us this year.

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    Are there any noteworthy trends either in terms of the composition of these lists, the lengths of these lists and/or the turn around time for reimbursement?

    Mr. CARLSTROM. I just saw these lists a week ago, I guess. One thing that impressed me was, I have to admit, last time around there were some two or three-year gaps between events and payments.

    As I look at this list in any category of the reimbursable official and ceremonial functions, or the political functions, or the nonreimbursable official and ceremonial functions, the gap has closed in terms of the payment time. That is my observation.

    Mr. PRICE. Just perusing the list quickly, it would appear on the reimbursable official and ceremonial events, which number, what would you say?

    Mr. CARLSTROM. Fifty.

    Mr. PRICE. Fifty. There are, according to my count, about four in which the reimbursement time was six months or more. So, that would seem to bear out what you are saying, that the reimbursement time has been rather dramatically shortened.

    Mr. CARLSTROM. I counted two this morning, but you are undoubtedly right. That would be about 2-percent, I guess.

    Mr. PRICE. Actually, no. I think you are right. I think a couple of mine come in at less than six months.
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    Mr. CARLSTROM. Down to one-percent.

    Mr. PRICE. What about the length of the list, especially on the political events. That is a much shorter list.

    Mr. CARLSTROM. Well, you are asking me for my observation. The first time I looked at it, I was surprised that there were only five of those events listed.

    Mr. PRICE. Again, the reimbursement times have been dramatically shortened.

    Mr. CARLSTROM. I think dramatically shortened because of the kind of testimony that we gave last year and the Executive Residence has responded by implementing a much better system of accountability.

    Mr. PRICE. Good. Lest we forget what the bottom line in this hearing is, it is a budget request; a budget request for next year for operating accounts at the Executive Residence. I want to focus on the increase you are requesting in those accounts—an increase of $646,000. Is that right?


    Mr. CARLSTROM. That is correct, sir.

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    Mr. PRICE. How does that increase break down?

    Mr. CARLSTROM. I can provide it for the record, since our time has been shortened, or I can go through it item-by-item.

    Mr. PRICE. Well, the bulk is for the 3.1-percent COLA pay raise. Is that correct?

    Mr. CARLSTROM. Yes; the fixed increases.

    Mr. PRICE. All right. And $153,000 for two FTEs.

    Mr. CARLSTROM. That is correct.

    Mr. PRICE. What are those? How are those positions going to be utilized?

    Mr. CARLSTROM. It goes back to the public law that was enacted last year that requires a better accountability system. As we move forward with implementation of that system, it will require an accountant that will track the bills that are provided on a monthly basis.

    It will also provide for a computer technician or a computer engineer, if you will, and provide for a computer system, a new system, that will cost approximately $50,000.

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    I can go through what the current accounting office of one person does and then illustrate to you the additional duties that are going to be performed by that one person, or if you would like, I can provide it for the record.

    Mr. PRICE. Well, I think providing a more detailed account for the record would be helpful.

    Mr. CARLSTROM. Yes, sir.

    [The information referred to follows:]

    The Executive Residence has an Accounting staff of one person. The Accountant in the past has been responsible for capturing all costs associated with Official and Ceremonial Functions of the President, preparation of the detailed file for each function, preparation of bills for reimbursable functions, tracking the payments of reimbursable functions, preparation of all Service by Agreement payment vouchers and assisting the Administrative Officer in budget planning and execution.

    The requirements in the FY98 budget legislation require additional duties to be performed by the Accountant Office. The Executive Residence has had to set up the $25,000 revolving fund for functions sponsored by the National Political Party of the President which must be tracked and coordinated with the National Park Service Finance Office. Estimates for all functions are now provided so that prepayment can be collected as required by the new law coordinated with the Social Office and Administration Officials. The new prepayments tracked and reconciled with the actual costs of the function resulting in a second billing for the issuance of a refund. The new law requires that billing for a function be prepared within 60 days from the billing date. If necessary, the National Park Service must be notified to impose late fees and penalties for late payments. Detailed reports must be maintained on the payment statistics for all reimbursable functions and sent to congress annually. These new tasks along with assisting the Administrative Officer and Accountant with existing job requirements justify the addition of this position.
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    Mr. PRICE. In relation to our previous discussion, though, is it not true that a good portion of these duties will involve the billing for reimbursable functions to ensure prompt and accurate repayment?

    Mr. CARLSTROM. Yes, there will.

    Mr. PRICE. So, there should be some continuation of the rather hopeful trend we have seen already in terms of complete and prompt reimbursement.

    Mr. CARLSTROM. I would definitely anticipate that.

    Mr. PRICE. The bottom line is, this is basically a flat budget request. You are requesting two additional positions, but for the most part this is a continuation of last year's level of funding.

    Mr. CARLSTROM. That is correct, sir.

    Mr. PRICE. Thank you very much. Thank you, Mr. Chairman.

    Mr. KOLBE. Maybe I can try to get a couple of questions in there before we go break here. Mr. McDaniel, how many years have you been appearing before this subcommittee?

    Mr. MCDANIEL. Since 1983.
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    Mr. KOLBE. You made the comment that no one has ever asked about political events. Just to refresh your memory, I think if you go back and look at the record in 1993 or 1994, I do not know which year it was, Ms. Pelosi asked several questions about political events in the White House by the previous Administration.

    Mr. MCDANIEL. I am sure the Chairman is correct, sir.


    Mr. KOLBE. So, it is not an unknown thing for that to happen. Let me leave the domestic staff for the moment, and go over to the political events that were asked about a moment ago here.

    In documents that you have given us, you have showed there were only four reimbursable political events. This is a huge decrease from previous years. For example, in 1995, there were 46 events for a total cost of $585,000. In 1997, there were 73 events; $639,000.

    I know the political events are scheduled by the social secretary, but have they provided you or do you have any explanation for what the tremendous drop in the number of political events in the White House? It looks for all practical purposes like it has virtually been stopped.

    Mr. CARLSTROM. No, I do not. As you say, the social secretary makes determinations. The Executive Residence, responds and provides services necessary to carry them out. I could make some of my own observations, but I do not know whether they are correct, sir; not an election year.
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    Mr. KOLBE. No, that does not quite work because you go back to 1993. It does not jive with that. Let me get to the real issue here. In 1996, there were 73 reimbursable political events; forgetting the domestic staff.

    We are now talking about reimbursable events and overtime costs for that, with the total overtime costs of $123,000. Last year, there were four political events with a total reimbursable time cost of $149,000. Can you tell me, are they broken down that those four events actually cost $149,000?

    Mr. CARLSTROM. I cannot say that it does.

    Mr. KOLBE. In overtime.

    Mr. CARLSTROM. I cannot say that it does, but we can certainly provide for the record what that information would be.

    Mr. HOYER. Mr. Chairman, the lawyer in me is constrained to say that you are posing a question which adopts a premise which may or may not be true, in that the overtime is in fact related to those events as opposed to——

    Mr. KOLBE. No. It is. I mean it specifically is related to those events; reimbursement for those events.

    Mr. HOYER. Do we have such a list? We can ask the Executive Residence to provide it.
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    Mr. KOLBE. That is what is puzzling. I do not understand.

    Mr. CARLSTROM. I do not have it.

    Mr. KOLBE. I do not understand why four are costing actually more than 73. I am not making any charge here. There is no rational explanation for this.

    Mr. CARLSTROM. I do not know the cost of the 73 events. If I added these events up, I could come up with a cost.

    Mr. KOLBE. These are just overtime costs. This is not the total reimbursable cost. This is the overtime cost.

    Mr. CARLSTROM. But as a part of that total cost, then some of it is overtime. I do not know what that percentage is. Nor, do I know what the 73 events were back in, what year was it, 1996?

    Mr. KOLBE. Yes, 1996.

    Mr. CARLSTROM. I do not know what the total of that is and what proportion would be overtime or why. I would assume the type of event probably had something to do with the overtime.

    Mr. KOLBE. Well, again, it would be helpful if we had some information; if the White House would assist us with this.
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    Mr. CARLSTROM. Yes, sir.


    Mr. KOLBE. Something odd is happening here. Again, I am making no allegations or charges here, but something odd has happened. One possible explanation is that these events have been moved off the White House grounds, so they are not reimbursable, but they are being supported by White House staff. That would not normally be the case; would it? The White House staff would be used at a hotel function?

    Mr. CARLSTROM. No, sir.

    Mr. KOLBE. You have no explanation then for why four cost more than 73 cost in overtime.

    Mr. CARLSTROM. I gave you the best observations I can.

    Mr. KOLBE. We have only four minutes. We had better be on our way. We will come back. We will recess. We have two votes; this vote immediately followed by one other. Then we will have a long period of time. So, we will resume as soon as we come back. The committee will stand in recess.


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    Mr. KOLBE. The subcommittee will resume its hearing. My understanding is we have an hour and a half until about the next vote. So, we hope to finish both parts of this hearing so that we will have time this afternoon for the Office of Management and Budget.


    I just have one final question, before we had the recess, on this issue of the reimbursable political expenses. I am wondering if you can tell us about the need. If there are only four reimbursable political events, why is there a need for one full-time additional employee—an accounting technician—to track these events?

    Mr. CARLSTROM. Right.

    Mr. KOLBE. I am wondering what we need that person for.

    Mr. CARLSTROM. Well, it is not just the political events.

    Mr. KOLBE. It is all reimbursable events?

    Mr. CARLSTROM. Yes.

    Mr. KOLBE. I have a question on that. I do not have that number. What is the number? Okay, fiscal year 1997 was 50 of those events. Is that correct? Sorry; the non-political.
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    Mr. CARLSTROM. Reimbursable official and ceremonial functions of the President. I counted them up. That is my count, 50.

    Mr. KOLBE. Well, we can both count the same. So, this individual is needed for both. The fact is that the number of political events dropped so dramatically to only four. So, you have a total of 54 events. That still does not cause the White House or you to question whether or not you need this full-time additional individual for tracking those?

    Mr. CARLSTROM. No. There are so many other duties that this person is responsible for. The accounting office is just one, it does not cause me to question this request. It is something that is needed.

    Mr. KOLBE. Okay. Mr. Hoyer.

    Mr. HOYER. To make the point that the reimbursables, therefore, incorporate not just political events. They are not segregated in that sense. These are all reimbursable events, whether by so-called political, that is to say, partisan organizations as well as the American Legion or the Chamber of Commerce.

    Mr. CARLSTROM. The non-political.

    Mr. MCDANIEL. Yes, sir.

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    Mr. HOYER. Let me ask you a question to tread on the substance that Mr. Price pursued. Tell us, if you will, is the White House physically in good shape?


    Mr. CARLSTROM. Well, we have done a considerable amount of work, going back to the removal of the paint and repainting, repointing all of the brick work. That work was done over the last ten years, Jim.

    Mr. MCDANIEL. Yes.

    Mr. CARLSTROM. Roughly. That did a lot to stabilize the House itself; 132 rooms in the historic section. We have done a lot of work on the sash and windows. We have sealed many of those areas, if not all of them. So that we have improved the tightness of the House, if you will, and improved the condition of the wood around the historic window panes and other window projects.

    We have completed the roof, as I indicated, which was a major event that will prevent further deterioration on the interior of the structure. The heating-ventilation-air-conditioning system is nearing completion after many years.

    It took many years because it was determined some years ago not to move the Family out of the residence. So, we had to work around them, so to speak. We have done a lot of work on the interior, and keeping it as it is, and as it is intended to be a museum, and of museum character and quality.
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    So, the assessment is up-to-date with the work that is ongoing. It is improving. As to whether or not it is in good shape, Jim, I would defer to you on that. There may be other projects that are necessary now. We have shown an interest in establishing a permanent repair/rehab account, if you will, for the White House to ensure that it stays in that condition. So, Jim, you may want to allude on that.

    Mr. MCDANIEL. Mr. Hoyer, I think this committee in the past and the present has made absolutely sure that we focus our energies on making sure that we have a White House that is in good condition for the people of this country to visit and to be proud of as a symbol.

    Between the work of this committee and your colleagues who support the National Park Service, several projects have been completed. We now have actually come to the point where this summer we will be providing to the public a draft plan, a 20-year master plan, for the White House and the parks around the White House to take this powerful symbol of our democratic form of government into the next millennium.

    Mr. HOYER. To reiterate, Mr. McDaniel, the focus of the Park Service has primarily been to look after the physical well being and maintenance of the White House and its grounds. Am I correct?

    Mr. MCDANIEL. Yes, sir.

    Mr. HOYER. I have no further questions, Mr. Chairman.
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    Mr. KOLBE. Ms. Meek.

    Ms. MEEK. No further questions, Mr. Chairman.

    Mr. KOLBE. Mr. Price.

    Mr. PRICE. No further questions, Mr. Chairman.

    Mr. KOLBE. Mr. Istook.

    Mr. ISTOOK. No questions.

    Mr. KOLBE. Mr. Forbes.

    Mr. FORBES. No questions.

    Mr. KOLBE. I have some other questions, but I will submit them for the record.

    I have a few questions dealing with the reimbursable political activities as it relates to the legislation last year requiring the—well, let me just ask at least one of these here.

    Mr. Carlstrom, I was very pleased to hear you say that as the result of these provisions, that accountability has been improved. I think this subcommittee can take some credit for doing that by requiring these pre-payment procedures.
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    The procedure we required is that these be prepaid in advance. We have a deposit on-hand from the political parties in order to cover those. Let me just ask, to your knowledge, has that deposit been received?

    Mr. CARLSTROM. Yes, it has.

    Mr. KOLBE. It has been received, okay. Has any of it been used as a revolving fund yet or has it all been expended? Is there still some in that deposit account?

    Mr. CARLSTROM. I believe it was used once and is in the process of being replaced.

    Mr. KOLBE. Being replaced.

    Ms. MEYERS. It has been replaced.

    Mr. CARLSTROM. It has been replaced.

    Mr. KOLBE. Exactly what we intended it to do. I am delighted to see that. I will have a few other questions for the record on that.

    With that then, we thank you for your participation here today. I want to say in closing, that the frustration that I expressed earlier was certainly not directed to the Park Service, which I think does an extraordinarily competent job.
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    I hope you will realize that, as uncomfortable as it may seem to you today my frustration is directed at the White House personnel who I believe have not been very helpful and very clearly as the GAO has made it clear, has not been terribly helpful in trying to get this information that we have asked them to do.

    It is not directed at you personally. I thank you very much for your participation today. Thank you. With that, we will dismiss this panel. We will go to the next.
    "The Official Committee record contains additional material here."

Thursday, March 12, 1998.





    Mr. KOLBE. Thank you, Ms. Posey. If you all will take your seats please, we would like to get started here. We are behind schedule, obviously. We appreciate your being with us here.

    I am pleased to welcome back Ada Posey to this Subcommittee. Ms. Posey will be testifying on the fiscal year 1999 appropriation request for nine separate accounts that make up the Executive Office of the President that is funded through this Appropriation Subcommittee, excluding the Office of National Drug Control Policy and the various programs funded by ONDCP.
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    The Executive Office of the President is requesting a total of $216.6 million for the coming year, an increase of $16.7 million or 8.4 percent. Almost all of the increase is targeted to the Office of Administration where the President is requesting $40.5 million.

    That is an increase of more than 40 percent. In general, although this is a current services budget, almost all of the funds are targeted to computer modernization; more specifically, the renovation and replacement of computer systems to make them Y2K or year 2000 compliant.

    Ms. Posey, there really is not any ambiguity at all or should not be about how this Subcommittee feels about the computer modernization efforts. We are sticklers and we have been with all of the agencies that come under our jurisdiction for the details. Frankly, we have had the wool pulled over our eyes on a couple of occasions by some of the larger agencies. We are determined that this will not happen again.

    We are also determined, to the extent that we can make a difference, to make sure that every agency of the Federal Government is Y2K compliant.

    In this regard, although I have been extremely frustrated with the foot dragging on developing a modernization blue print for the White House, I have reviewed the information technology architecture that you submitted to the Committee, just a few days ago, February 28th.

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    Quite frankly, I am very pleased with the progress that this shows. I just wish it had not taken so long; two years of fencing off the resources to get your attention on this. Having said that, I also do see some gaps in the architecture.

    In particular, I am concerned about the lack of details on the costs of this endeavor, as well as the mechanism and processes that are in place to assure that the top management is giving this project the attention it needs.

    If there is one lesson we have learned on this Subcommittee, it is that no modernization effort will succeed, no matter how big or small, unless top management is committed to it.

    Over the 1995 to 1997 period, this Subcommittee has given the White House $16.5 million for ADP purchases. That does not include the $3.6 million provided last year.

    This request has jumped to $12.2 million for the coming year. Ms. Posey, you have made progress, but we are not there yet. My concern is that we may not be ready to spend the $12.2 million in the way that ensures that the White House has information technology it needs to meet its fundamental business requirements.

    I say that, not as a technological expert, but as one who has expressed these concerns with other agencies and has gotten more involved in this issue, and certainly have been learning something about it.

    I look forward to hearing your testimony. I certainly promise that I am going to keep an open mind. You have a fair shot at convincing me that the $12.2 million is not going to be wasted.
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    Finally, the recent activities surrounding the Independent Counsel's investigation has given me, and I know other Members of this Subcommittee, serious concern about the way in which the White House Office of General Counsel is being used to provide for the private defense of the President.

    Given that federal funds are available only for the support of the President as he meets his official, ceremonial, and statutory responsibility, I hope, certainly, that this is not the case. But I think many Members of this Subcommittee will look forward to hearing your clarification on this matter.

    Mr. KOLBE. Let me recognize Mr. Hoyer for opening remarks. Mr. Hoyer.

    Mr. HOYER. Well, Thank you, Mr. Chairman. I want to welcome Ms. Posey back to the Committee and her colleagues, Mr. Lindsey, and Ms. Crabtree, and others. She has a difficult job and very much in the spotlight.


    Ms. Posey is testifying in support of nine accounts relating to the operation of the Executive Office with a total request of $112.4 million, which excludes, of course, the Executive Residence.

    This is a budget hearing. I certainly hope that we can review this funding request with objectivity and leave the political discussions to other more appropriate forum.
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    Ms. Posey, as I look down this chart of accounts, it appears that, as the Chairman has pointed out, with the exception of the $12 million for your needed computer modernization expenses, which as the Chairman rightly points out, this committee has been very concerned about not just with respect to the White House, but with respect to all federal agencies, particularly as it relates to the Y2K problem, which is endemic, not only in the public sector, but in the private sector as well your operational increases are about at inflation. I want to say that I think the Administration has done very well in keeping its costs in line within the White House. The impact on the White House of technological changes, obviously, in the area of electronic communications, I am amazed that you are able to keep most of your operational increases beyond that in check.

    I believe that it is absolutely imperative that we give the Executive Office of the President adequate resources to do its job. These appropriations must provide high quality support, maintaining and upgrading a sound infrastructure that meets the needs of the Presidency.

    The President is the Executive of all the people. Once elected, he has the awesome responsibility of presenting the case of the United States to the world, as well as projecting the domestic agenda of the nation. I look forward to your testimony and to any further explanations that you have to give. Thank you, Mr. Chairman.

    Mr. KOLBE. Thank you, Mr. Hoyer. Let me ask any other Members if they have opening statements. Mr. Livingston.

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    Mr. LIVINGSTON. Thank you, Mr. Chairman. If I may, I have to express a concern I have. If I may take this opportunity to do it, I would appreciate it. We are glad to have you.


    We do not wish, Ms. Posey and others, to bear down on the messenger. The fact is you are here and so are we. We have some questions to ask that concern us greatly. There has been a good bit in the press and, in the words of the Washington Times, about the fact that the Counsel's Office in the White House has become the largest and most expensive West Wing legal operation in history.

    It now stands at 34 attorneys, para-legals, and researchers, which is about 10 percent of the total White House salary budget of $24.3 million. I would simply preface my comments with the question that I hope you will address in your opening remarks.

    The question is how do you and the White House define the line between the use of legal services with taxpayers' funds: (a) for official duties of the President and the First Lady, and (b) as distinguished from the personal benefit of the President and the First Lady?

    It is a very serious question. In fact, it is based on allegations in the press that members of the Counsel's Office have operated as a sort of taxpayer-funded private legal service to the President and the First Lady.

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    Highlighted by Council Bernard Nausbaum, when he and former Deputy Council Vincent Foster, spent his time at the White House working on the Clinton taxes and White Water issues, and then subsequently died.

    Mr. Nausbaum refused to allow high ranking Justice Department Officials to participate in going through the papers that Mr. Foster left behind.

    Secondly, that Mr. Nausbaum's signature was on a White House request to the FBI for the private background files of ousted White House Travel Office Director Billy Dale, and on requests for some 900 other confidential FBI files of former Republican White House staffers. That one, I will come back to.

    Next, Counsel Jack Quinn; the Counsel's Office worked to keep damaging documents from Congressional committees investigating Whitewater and the Travel Office scandal. That obviously even went so far as to doctor titles of memos, according to the Washington Times, memos that he was forced to hand over to Congress so as to remove references to Mrs. Clinton's involvement in Travelgate.

    That the Counsel's Office also advised and debriefed Mrs. Clinton on her appearance before the Grand Jury to discuss her law firm billing records that had disappeared and reappeared two years later after being subpoenaed.

    That Counsel, paid for by the U.S. taxpayer, pushed claims of attorney/client privilege, which were rejected by the Eighth Circuit Court of Appeals. That the Counsel's Office, under Charles Ruff, has been deeply involved in Clinton's full court press against Mr. Starr's investigation into the Monica Lewinsky affair and on and on.
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    Likewise, White House tax dollars have not paid the salaries of Mickey Cantor, who is currently the political advisor, along with Harold Icky's and Harry Tomlinson's. They are not paying their salaries, but the White House is providing office space and secretaries to aid them at the behest of the taxpayer. Like, Mr. Sidney Blumenthall, who was recently in the press condemning his treatment as a representative of the press, is a paid employee of the White House, paid for by taxpayer's dollars.

    Presumably using his salary, his tax dollars that he is spending and absorbing, and using for his own sustenance to launch his attack described by James Carville as open on Mr. Starr and his aides.

    Then when you combine the fact that they have got these some 34 lawyers on the payroll, which is unprecedented when it is compared to previous Presidents', to this whole issue of files that were gotten by the White House from the FBI.

    The man in charge of security in the White House, Craig Livingston was presumably perusing those files. We still do not know who hired him.

    When you add that to the fact that the President's private defense team, whether paid for by the taxpayers or otherwise, has been described by the President's friend, Dick Morris, as a rag-tag band of private investigators, or at least he described the people that they hired a rag-tag band of private investigators, to allegedly dig dirt up on the President's opponents.

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    That federal tax dollars went to a group called Investigative Group International, IGI, which is run by a fellow by the name of Terry Lindsey, the founder and chairman, who served as an assistant chief counsel in the Senate Watergate Committee.

    He was criticized last year as co-authoring a proposal to dig up dirt on Senator Don Nichols and his wife. When you consider that the people who have been associated with IGI have been people who have come and gone from the Clinton Administration in one official capacity or another, including Larry Potts, a former FBI official who was in charge of the Ruby Ridge Incident, Ricky Sideman, a person who was currently at the Justice Department in a high-ranking position who was in charge of the efforts to derail the nominations of Robert Bork and Clarence Thomas a few years ago. She is a former IGI senior investigator. Howard Schapiro was the chief counsel to the FBI. Brook Sheer who has served as an aide to Hillary Clinton on the 1992 Campaign and is a former member of IGI.

    Coty Sheer, who is Brook Sheer's twin brother, was at the White House or had back channel connections to the White House. Ann Lazuto, former IGI employee who is now spokesman for the National Security Council.

    You read the accounts that IGI has been instrumental in digging up background information on a potential enemy's list of the Administration. That they are described by Dick Morris as being the White House secret police. Then I have to come to the conclusion that taxpayers dollars have been misused, misappropriated, misspent, and diverted for the purposes of playing politics at the behest of the White House rather than conducting official responsibilities at the behest of the United States taxpayer.

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    We are not talking about small change. If we are talking about the salaries for 34 attorneys, para-legals, and researchers, plus the secretaries, the office space, and all that goes into maintain those people. We are talking about serious money used by this Administration for its own purposes, for its purposes other than that for which the President of the United States was elected to office.

    Ms. Posey, I am concerned about that. I apologize to the Committee for taking the time to describe my concerns, but I share Dick Morris' fear that taxpayers' money is being used to fund an investigation squad to go after enemies of this White House. That has to stop. It has to stop immediately. Thank you, Mr. Chairman.

    Mr. KOLBE. Thank you Mr. Chairman of the Committee. Mr. Hoyer, briefly, then let us get to Ms. Posey.


    Mr. HOYER. Mr. Chairman, I thank you. I respect the Chairman of our Committee's observations. Earlier, I referenced a memorandum, about as to why expenses are incurred. I want to say at the outset that I think it was one of the great mistakes of this Administration to hire Dick Morris for anything. It was a great mistake for the Majority Leader of the United States Senate, Trent Lott, to hire him for anything.

    I would not rely on the representation of Dick Morris if my life depended on it very frankly. My opinion of him could not be much lower than it is. Having said that, I want to reference a memorandum, a memorandum to all House full and subcommittee chairmen.
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    This memorandum is dated April 23, 1996. All of the recipients of this were Republican leaders at the House of Representatives. It is from Bob Walker and Jim Nussle, two close allies of the Speaker and leaders of his.

    On behalf of the House leadership, we have been asked to call all committees for information that you already have on three subjects listed below. We are compiling information for packaging and presentation to the leadership for determining the agenda.

    You are a tremendous source for this project. The source for this project is taxpayer-paid staff of committees of the Congress of the United States. In this case, the Majority staff of the Congress of the United States.

    The subjects are waste, fraud, and abuse in the Clinton Administration, influences of Washington labor union bosses/corruption, and examples of dishonesty or ethical lapses in the Clinton Administration. Please have your staff, I am presuming this is to the committees, and therefore it is taxpayer staff, review pertinent GAO reports, Inspector General reports, or committee investigative materials, or newspaper articles.

    The Washington Times has been cited; a great friend of this Administration as we all know, or departments and agencies within your jurisdiction that expose anecdotes that amplify these areas.

    Send your material to Jenny Thomas, H–226, U.S. Capitol or fax to 6116. We need this information as soon as possible; no later than the close of business April 26th. I would say to the Chairman that I understand his concern. I am sure that he was very concerned about this as well.
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    To think that taxpayers funds would be spent by the House of Representatives to try to get, and I use that term advisedly, the President, the First Lady, and this White House. I am not talking about the Administration or Executive Department of Government. I am talking about this President, this First Lady, and this White House.

    Mr. LIVINGSTON. Would the gentleman yield?

    Mr. HOYER. To you, sir?

    Mr. LIVINGSTON. For just one comment. I appreciate the Gentleman yielding. I would just say that I think the Gentleman has amply pointed out that that is not a very wise memo. In fact, that is probably a pretty dumb memo. It does not negate any of the facts to which I have just alleged.

    Mr. KOLBE. With that, we are going to get on with the hearing here. Ms. Posey, we will call on you for an opening statement and hope that you can keep it as brief as possibly. Obviously, as always, the full statement gets put in the record. I know Members will have many questions here.


    Ms. POSEY. Certainly. I will abbreviate my comments.

    Good morning, Mr. Chairman, again, and Members of this Subcommittee. It is an honor to appear before you once again to present fiscal year 1999 budget requests for the Executive Office of the President and accounts.
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    I want to start by telling you why I am so thankful that I have the opportunity to serve in the EOP, as we call it, and to enable the Executive Office of the President to face the challenges and seize the opportunities presented to us by these ever changing times caused by daily advances in technology associated with the information age.

    Such challenges remind me of my grandmother, Mrs. Ada Barryman who was recently recognized by this Congress in the Congressional Record when the Honorable Louis Stokes acknowledged her as the first African American to be appointed to the Ohio State Housing Board in the 1940s.

    She was born in 1910 in Troy, Alabama. When she was young, her family fled to Ohio to escape the segregation of the south. She resided in Warren, Ohio for 45 years and is credited with founding the Warren Chapter of the NAACP, as well as serving as President of the Warren Urban League Board, and is a Member of the Trumble County Welfare Board.

    Throughout her life, she was faced by the dynamics of this changing country. She sought to make a difference. She sought to challenge segregation. She challenged inequity and the deficiencies of the political system, and she challenged our society.

    As my grandmother lead my family into the industrial age, I now find myself in the position to help lead the EOP into this dynamic information age. The EOP must adapt to this radically changing world and economy.

    The explosion in computer technology, especially the rise of the Internet and e-mail are transforming government and the way it responds to the American people. As the seat of Executive authority, the White House is in a position to use the new information technology to involve the American people in their government in real time in a way that was never possible before.
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    At the same time, the new information technology poses new challenges from the year 2000 problem, to the sheer inundation of the EOP system. The number of hits to our WEB site is increasing exponentially. Before June 1996, we received an average of 15 hits per day. We are now up to an average of 8,787 hits per day. In 1994, the number of records captured by our automated records management system, we call ARMS, was 1.7 million. In 1997, it was 4.1 million. We estimate that by the year 2000, we can expect to be managing 30 million records.

    While we have witnessed these exponential increases, our information technology infrastructure has not been able to keep up with the ever decreasing demands of change, in order to provide the EOP with the tools necessary to most effectively represent the American public.

    I now present you with the EOP's budget for fiscal year 1999, since the most significant increase is related to the EOP's 12.2 million Capital Investment Plan, which is critical toward taking the EOP into the next century.

    I will address this first. In order to understand where we are going, however, it is necessary to understand where we were, where we have been, and where we are now. In the year just 365 days since I last testified before you, the Office of Administration has engaged in a methodical plan to revitalize its information technology, a plan begun by my predecessor, Frank Reader, when he formed the EOP's Information Technology Advisory Board in 1995.

    Mr. KOLBE. Let me just interrupt you for a moment. You have a 12-page statement. So far, you have gone through all of it. We all have that in front of us. Could you summarize the few points?
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    Ms. POSEY. I certainly do not plan to read all 12 of the pages, sir.

    Mr. KOLBE. Okay.

    Ms. POSEY. Let me say that, again, with the rapid advancement of information technology in the past 20 years, spanning several administrations, EOP agencies were independently constructing custom, redundant, inconsistent, incompatible, and inaccessible systems.

    I am pleased to report that we have provided to you, first in July of 1997, our information Technology Architecture Plan, a document that built on the five-year plan originally submitted in 1996 by my predecessor.

    Logicon, which are outside consultants, indicated that we believe the EOP is caught in a double bind. It has too many legacy systems that cannot be shut down without a functional replacement. It does not have the budget to maintain the status quo in the face of escalating maintenance support costs while attempting to accomplish strategic improvements.

    I will be glad to respond to any of your questions. I believe that the information technology submission that we have for you is the most important part of our budget submission today. I will be glad to answer any other questions that you may have and hope that my entire statement be placed in the record.

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    Mr. KOLBE. Trust me, the entire statement will be in the record.

    Ms. POSEY. Thank you.

    Mr. KOLBE. Thank you.

    Ms. POSEY. And I did not read all 12 pages.

    [The statement of Ms. Posey follows:]
    "The Official Committee record contains additional material here."

    Mr. KOLBE. You certainly did not.

    Ms. POSEY. Okay.


    Mr. KOLBE. And I appreciate you summarizing the important parts of that. I would quite agree that the information technology is at the heart of the issues with you. It may not be at the heart of the political issues we are going to discuss today, but I can tell you that the vast majority of my questions have to do with that.

    However, because we are going to have a lot of interest in the issues of the White House Counsel, I am going to ask my first and only set of questions on that, just to try to establish the ground work for some other questions which may come up here.
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    I hope just so that everybody is dealing from the same data base here. Let me say also, since we have a very full number of people here, we will strictly adhere to the five-minute rule.

    In the testimony before the Subcommittee in 1995, your predecessor indicated that no White House staff, specifically talking about the attorneys and the Counsel's Office, as it related to the Whitewater investigation, were acting as lawyers for the President and First Lady, ''where there is no official nexus.'' The question is, is there an official nexus between the current investigation by the Special Prosecutor, Mr. Starr, Judge Starr, in the matters relating to Monica Lewinsky and others as it relates to the President's constitutional ceremonial or statutory responsibilities? If so, can you define that nexus for us?

    Ms. POSEY. Sir, I would love to be able to provide to you a legal answer to that question. I am not an attorney.

    Mr. KOLBE. Neither am I.

    Ms. POSEY. I will attempt to answer that question from my perspective as a manager. The Counsel's Office devotes their time to addressing the legislative, Constitutional, and policy agenda of the President.

    In addition to that, they perform daily counseling responsibilities for the White House. In addition, the Counsel's Office is obligated to ensure compliance with numerous requests for documents and information from various investigative entities, including Congressional committees.
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    In 1997 alone, there were 600 document requests, through those document requests from the Burton and also the Senate committee. Almost a quarter of a million pieces of paper were submitted. Now, in addition, there are Independent Counsel Offices, the Justice Department, private litigators, et cetera. Since 1995, the Counsel has had a team of up to six attorneys and three para-legals devoted to responding to requests from investigative entities.

    The other attorneys and the staff in the office handle the routine matters of the Counsel's Office. Clearly, there is federal business done when there are Congressional requests for information. That information is then provided to Congressional and other investigative bodies. This is official business. This is the business that is taken care of by the White House Counsel's staff.

    Mr. KOLBE. Thank you very much, Ms. Posey for your answer. It was totally non-responsive to my question which, of course, had to do with something that is not a question of the Congressional committees at this point; the nexus between the matter of the President's deposition to the jury in a case in Arkansas and the Monica Lewinsky case.

    What I was asking was the nexus between that and the official statutory responsibilities that would involve the White House Counsel's Office. Let me ask you, since funds are only to be used for official expenses in the White House Office, are there procedures to enforce this requirement? Specifically, is there an outline of those procedures?

    Ms. POSEY. I can assure you, Mr. Chairman, that all activities that are taking place in the White House Counsel's Office, and all offices of the White House, are activities that are to be funded and appropriate by appropriated funds.
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    Mr. KOLBE. So, they are official activities.

    Ms. POSEY. They are official activities. With regard to specific procedures, I do not have them at my finger tips. I would be glad to take that question for the record.

    Mr. KOLBE. Yes, I would like you to.

    Ms. POSEY. If you would like me to.

    Mr. KOLBE. I am running out of time. Can you tell me, how are work loads tracked in the Office of the Counsel? Most law firms have billable hours. Do you know if they keep track of their billing time or their time that they spend in some similar kind of fashion?

    Ms. POSEY. I do know generally, Mr. Chairman, that there are assignments that are given by Charles Ruff and also the Deputy Counsel. I do not believe that there is a tracking system as a law firm that is billable. Certainly, there are assignments given by the managers of that area.

    Mr. KOLBE. In fiscal year 1994, the operating budget was $1.9 million for the Office of General Counsel. What is it in fiscal year 1998 and what is the request for fiscal year 1999?

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    Ms. POSEY. Specifically for the White House Counsel's staff, sir, I do not have the specifics on that right here with me. With regard to the White House Office, the White House Office is provided with 400 FTEs, authorized FTEs, as you well know.

    Mr. KOLBE. We got the $1.9 million from, I guess, your predecessor a couple of years ago. When you are compiling this budget, you do not have it down by various component offices in the White House?

    Ms. POSEY. I do not have the specifics now, sir. I can provide that to you.

    Mr. KOLBE. Yes, I think that would be a rather important part of a budget request. I think we would like to have you provide that.

    Mr. KOLBE. My time is up. Mr. Hoyer.

    Mr. Livingston, I will go to Mr. Hoyer and recognize you immediately after. Is that satisfactory?

    Mr. LIVINGSTON. Yes.

    Mr. KOLBE. Mr. Hoyer.

    Mr. HOYER. I would be glad to yield to Mr. Livingston.

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    Mr. LIVINGSTON. I just have really one question. I have a few for the record that I would like to submit, Mr. Chairman.

    Mr. KOLBE. The questions will be submitted.

    Mr. LIVINGSTON. The one question I have, Ms. Posey, if you could please, would you differentiate for me the use of legal services in the White House Counsel's Office with taxpayer funds, first, for official duties of the President and the First Lady when those are for personal benefit of the President and the First Lady?

    Would you tell me how your office goes about defining the differences between those services?

    Ms. POSEY. Mr. Livingston, I would answer by saying to you that all business that is conducted in the White House Counsel's Office is in furtherance of official business, official duties.

    Mr. LIVINGSTON. All $2.5 million worth and all 34 Counsel were all exclusively for the President's and the First Lady's official business. Is that right?

    Ms. POSEY. Yes, sir.

    Mr. LIVINGSTON. Thirty-four attorneys, para-legals, and researcher, all for the official duties.

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    Ms. POSEY. Yes.

    Mr. LIVINGSTON. You then would categorize the barring of law enforcement personnel from Vince Foster's records, the keeping of damaging documents from Congressional Committees in the White Water and the Travel Office scandal from the committees, the review of Rose Law Firm billing records which disappeared for two years despite their subpoena, the exercise of attorney/client privilege which was rejected by the Eighth Circuit Court of Appeals, and such things as the investigation of enemies of the Administration at the behest of that private group known as IGI, you would determine that these were all incidents of official business. Is that correct?

    Ms. POSEY. I would say that all business performed, all business conducted by the White House Counsel's Office is for official business.

    Mr. LIVINGSTON. Thank you very much. Thank you, Mr. Chairman.

    Mr. KOLBE. Mr. Hoyer.

    Mr. HOYER. Ms. Posey, with respect to the Counsel's Office, I do not know whether you have made a study, but do you know whether there is any historical precedence for the level of inquiries made from the Congress of the United States, including Whitewater counsel which may or may not be related to official business, quite obviously, and may or may not seek official documents quite obviously? Do you know whether there is any historical precedence for the level of inquiries made to this White House?

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    Ms. POSEY. I believe that this is unprecedented.

    Mr. HOYER. Let me ask you something. The Office of Administration, which you head, does not have within it the Counsel's Office; does it?

    Ms. POSEY. No, it does not.

    Mr. HOYER. The Counsel's Office is within the White House Office.

    Ms. POSEY. Yes, it is.

    Mr. HOYER. So that from a managerial standpoint, you do not manage the Office of Counsel.

    Ms. POSEY. No, I do not.

    Mr. HOYER. In fact, the determinations that are made by the Office Counsel as it relates to what appropriately the Office should deal with are in fact made by the Counsel in that office. Am I correct?

    Ms. POSEY. Yes. You are correct, sir.

    Mr. HOYER. Am I also correct, from what I understand your testimony to be that you are saying that representations made to you is that in fact there are no actions being taken by the Counsel's Office or services rendered that are not in fact related to the official duties and position of the President of the United States?
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    Ms. POSEY. That is correct, sir.

    Mr. HOYER. Now, I would observe, and this is not a question, Ms. Posey, that some of the questions that you were asked, of course, adopt premises that have been alleged by newspapers, which we found to be incorrect in the past.

    I just got through a case, Loretta Sanchez, in which the basis for the proceedings were based upon newspaper reports. Specifically, the individuals on the Majority side said the newspapers said there must be something there. Thirteen and 14 months' of investigation incurred thereafter, and the District Attorney for Orange County had a Grand Jury investigate everything.

    In fact, the Grand Jury found that there was no reasonable probability that a crime had been committed or that X, Y, or Z had committed a crime. It is very difficult to determine that at the outset, obviously. So, the newspaper reports are not fact. They are reports.


    Now, having said that, let me move on to what I believe to be the substance of this hearing. That is if we do not fund the $12.2 million that you have asked for with respect to the technology computerization, what will be the result?

    Ms. POSEY. The result will be that the Executive Office of the President's computing capabilities will be shut down.
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    Mr. HOYER. The consequences of that would be?

    Ms. POSEY. I believe the consequences are untenable. I believe that the staff would have to resort to typewriters. I believe that we would not be able to respond to the American people in the way that they would expect of the Executive Office of the President.

    Mr. HOYER. Would information be lost as well that you would be unable to retrieve?

    Ms. POSEY. We would have paper records, probably, piling as high as this building and every other building in Washington, DC and beyond.

    Mr. HOYER. So that from your perspective, the $12.2 million in fact carries out what the Committee's objectives were as it relates to the ability of the White House to have an up-to-date working information management system?

    Ms. POSEY. Yes. The Committee required us, as the Chairman mentioned before, to take a hard look at what we were doing and how we were doing it. To comply with the Clinger-Cohen Act. To comply with Government Performance and Results Act. To do the right things to put together a modernization plan that makes sense, that was prudent, that was reasonable, that took care of our Y2K problem. We have done that.

    I believe very strongly in our plan. I believe it does not provide for whiz-bang technology. It provides for a cornerstone, a frame work. That is what our information technology architecture provides. That is the direction that we are leading to.
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    Mr. HOYER. Because my time is limited, let me go to the last subject I would like to deal with in this round. The White House Office accounts includes funding now to reimburse the White House Communications Agency for non-telecommuting support services which was previously paid by the Defense Department.

    How is this working? Has it become more difficult to track costs? What management controls have been instituted to track costs? What is the new bill payment procedure between the White House and the WHCA?

    Ms. POSEY. We have developed a memorandum of understanding, IAGs, Inter Agency Agreements for personnel and audio visual services. Let me say that the reimbursement does not generate a need for us to invent a whole new process of mechanisms for approving activities.

    Certainly given the limited latitude that we have in our budget, as opposed to the Department of Defense, it behooved us to come up with some very strong internal controls to manage those costs.

    The White House Communications Agency bills monthly to the White House Office as opposed to quarterly. There are trending and tracking reports. There is the development of standard operating procedures.

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    As a former auditor, an internal auditor, those are probably the most sound controls that you can put in place to track expenses. It behooves us to do that. We do not have the flexibility. Actually, it is not more difficult. It is more consuming, I would say, but we do it because it is the right thing to do.

    Mr. HOYER. Thank you. Thank you, Mr. Chairman.

    Mr. KOLBE. Ms. Meek.


    Ms. MEEK. Thank you, Mr. Chairman. Welcome, Ms. Posey.

    I have been reading your testimony. I notice that you are experiencing some system failures and some other things you have described here which certainly will inhibit your capacity to serve the President to the best of your ability.

    Certainly that is noted. However, my question is you endured a level of hardship imposed through the fencing of your funds from which you are still recovering. Would you elaborate on that statement and tell me what kind of problems you are having? Tell me how the funds were fenced or what that process is like?

    Ms. POSEY. Let me just say that the fencing of the funds was significant for us. What we essentially had to do is cannibalize equipment that we used for development projects in preparation for our Y2K assessment to fix and repair operational equipment that was in place.
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    It had been deployed for operations, this equipment that we cannibalized, over the years. As a result, as I have said before, we had to suspend projects underway, which addressed our short term strategies such as advancing our Lotus Notes E-mail System, such as our migration project from moving from a main frame environment to a client server environment.

    This put us behind. It certainly had an impact to our customers. It certainly had an impact on the morale of my staff. At the same time, it did provide a wake-up notice to all of the heads of the agencies in the EOP that we needed a strong management structure to manage information technology in the EOP.

    That is why we created the ITMT, the Information Technology Management Team. That team addresses and provides advice and counsel to me in terms of corporate decisions that are made with regard to information technology.

    So, I think that the fencing, of course, had an effect on us in both ways; a lot of hardship. We are still living with it. We have done a lot in the last 365 days. I think that we will get through and over that particular period when our funds were fenced.


    Ms. MEEK. Thank you. You mentioned something about you have too many legacy systems that cannot be shut down. What solutions have you worked out in terms of this year's budget application that you submitted to this committee?

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    You have delineated quite a few problems that you have had, one, because of fencing, others because of break downs, et cetera. In your budget presentation, what have you asked for, Ms. Posey, that will help to alleviate these problems?

    Ms. POSEY. Thank you for the question. Today, I brought along with me Laura Crabtree who is our senior technical advisor to our ITMT. In terms of a person who knows how to break down technical information into a lay person's terms for all of us here and for me, I would like to defer that question to her and she will be glad to answer how those things have been affected. Laura.

    Ms. MEEK. Thank you.

    Ms. CRABTREE. I appreciate the question, thank you.

    We have had a tremendous challenge, as you are aware, at the EOP to get our information systems and our technology architecture into a standard spaced environment, and to position ourselves in such a way that we can respond to the Government Performance Results Act and the criteria cited in ITMRA (Information Technology Management Reform Act).

    While doing this and moving toward our Y2K evolution, we have had the additional challenge of working in such an environment where we have legacy systems, and applications and technology, that has exceeded its life cycle.

    In the budget that has been submitted before you, there are some key project areas that allow us to set the foundation in place in order to move forward into the next out years of taking advantage of our technology.
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    We are moving towards basically a new focus. We have shifted the paradigm into user based processes and analysis. We are now moving the architectural platforms from legacy environments, such as Novell Netware Operating Systems, which are not Y2K compliant, into current technology operating systems such as Windows NT, so that we can then in turn build upon the infrastructure and implement the appropriate applications necessary to solve the business processes that are needed in order to affect the missions of the agencies of the EOP.

    Ms. MEEK. Thank you very much.

    Mr. KOLBE. Mr. Price.


    Mr. PRICE. Thank you, Mr. Chairman. Ms. Posey, I would like to add my welcome to you and Ms. Crabtree and also to Mr. Lindsey, whom we know for his work with our colleague Lou Stokes for a number of years. We are glad to have you here today.

    As you say in your testimony, this is mainly a continuation budget with only incremental changes from the previous year.

    There is one change that goes beyond that. It has to do with your Capital Investment Plan, which the bulk of your testimony is dedicated to, $12.2 million for next year. In the portion of your statement that you did not read, you indicate that about 90-percent of that amount, one way or another, is directed toward the year 2000 effort.
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    Ms. POSEY. Yes.

    Mr. PRICE. You also point out that in effect what you are doing here is seizing the opportunity that the year 2000 problem offers to improve the overall quality of information technology services in the White House.

    Of course, the need for that is underscored by the figures you cite about the increased demands on the system from the public and otherwise. I wonder if you could elaborate on this year 2000 problem and the urgency with which you regard it?

    You say 90-percent of this $12.2 million is earmarked for that one way or the other. How is that going? Are you on schedule with regard to addressing this issue? What happens if we fall short of the budget request in terms of that specific issue, the year 2000 challenge?

    Ms. POSEY. Let me answer your last question first and say, again, that if monies are not provided for the Capital Investment Plan we will shut down the Executive Office of the President computing functionality.

    Mr. PRICE. Well, I heard you say that in response to Mr. Hoyer earlier. That is, of course, a rather draconian prediction. Is that based on the year 2000 problem? Is that why you use that terminology?

    Ms. POSEY. Yes. It is based on the year 2000 problem. Laura can speak more technically to this in lay person's terms. We have in the Executive Office of the President old legacy main frame systems and other software applications that simply will not compute for the year 2000.
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    One of the major applications that we have that is not Y2K compliant happens to be our E-mail Lotus Notes application. That is an application on our NT operating system that we use to communicate within the Executive Office of the President and outside of the Executive Office of the President.

    So, we have to update that software application and others. With regard to the two-for-one strategy, let me give you an example of one of the things that we are doing. With our help desk renovation, you should know that our help desk function resides on a non-Y2K compliant main frame system.

    This means we would not be able to communicate with our customers internally about what is happening with the computers that are on their desk tops. They would not know how to reach us in a sense. We would not know who is asking for what kinds of services.

    It is our automated trouble desk which we need these days for folks like me who are past the age of being able to learn how to use computers very easily, and software, and different hardware on our desk top and in our various agencies.

    What we are doing with the help desk is not only moving off a non-Y2K compliant mainframe, but we are also renovating it so that we provide information management systems within that help desk so I can identify, as a manager: what are the trends?

    Who needs what kinds of services where in the EOP? Who is having difficulty with the common software that we want to have in our areas? It would provide an opportunity for us really to capture the essence of what is going on with information technology through the help desk function. We are unable to do that at this time. So, there is a two-for here where, one, we move it off the main frame and put it onto a compliance system.
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    Two, we renovate the function so that we can get the kind of information, the data that we need, to make sound management decisions. That is the essence of the two-for-one strategy.

    Mr. PRICE. It is obvious that it promises considerable benefit, but the prediction of draconian consequences, if you are not able to move ahead, is based on the year 2000 difficulties.

    Ms. POSEY. Yes, sir.

    Mr. PRICE. Thank you. Thank you, Mr. Chairman.

    Mr. KOLBE. Mr. Istook.


    Mr. ISTOOK. Thank you, Mr. Chairman. Before my time, I would like to ask that the record include a letter that Mr. Barr has sent and asked to be put in the record. It is to the Comptroller General asking for an audit of the use of illegal services at the White House.

    Mr. HOYER. Reserving the right to object, Mr. Chairman. I do not intend to object, but I have not seen the letter.

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    Mr. KOLBE. All right.

    Mr. HOYER. I think it would be appropriate for this side to see the letter before we object or not object to it.

    Mr. KOLBE. I have not seen it either.

    Mr. ISTOOK. It is fairly straightforward, Mr. Hoyer.

    Mr. KOLBE. We will share this. If there is no objection, it will be placed in the record.

    Mr. ISTOOK. It is very straightforward.

    Thank you. Ms. Posey, thank you for being here. I understand that sometimes you get caught in the cross fire because you are not personally an attorney; are you?

    Ms. POSEY. No, I am not, sir.

    Mr. ISTOOK. You are certainly not employed by the White House in the capacity of legal counsel.

    Ms. POSEY. No, I am not.

    Mr. ISTOOK. That office, even though you have some supervisory functions for providing resources, that office basically functions independently of your supervision. Would that be correct?
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    Ms. POSEY. Yes, that is correct.

    Mr. ISTOOK. I know there is a lot of perception that, even though the White House takes the position that their attorneys spent time answering questions, there is a lot of people who take the position that their attorneys spend a lot of time inventing reasons not to answer questions. That is a controversy that I know we are not going to be able to settle today.

    I want to make sure that we are talking about the same things. The number has been mentioned of 34 attorneys, para-legals, and researchers. Is that the accurate number of persons employed in the White House Legal Counsel Office?

    Ms. POSEY. At this time, I believe there are approximately 34. I want to be sure. I do not want to give you specific numbers that do not jive with the reality because I do not want to come back to you, Mr. Istook, and say, whoops, we made a mistake.

    Mr. ISTOOK. It might range one or two from that figure, but that is pretty much accurate as best you know that.

    Ms. POSEY. As best I know, Mr. Istook. Also, if I can make this point. The White House Office budget that I present today has a ceiling of 400 FTE for all of the White House Offices.

    The White House Office, just like the Office of Administration, for which I am responsible for from time-to-time has to expand or contract different offices based on needs.
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    Mr. ISTOOK. Since we have limited time, how long then would you say then that it has been true that the approximate number has been 34 in the White House legal counsel?

    Ms. POSEY. I would not be able to answer that question with certitude, sir.

    Mr. ISTOOK. Does that number include detailees who are assisting the White House legal office but actually come from other agencies and who, accordingly, may for some period of time be paid for the payroll of other agencies?

    Ms. POSEY. Again, I would not want to speak to the specifics because I want to get the information correct for you.

    Mr. ISTOOK. I have seen a number that says there are approximately 12 detailee attorneys, but I am not sure if that 12 therefore brings the number from 34 to 46 and you are not sure either then.

    Ms. POSEY. That is true.

    Mr. ISTOOK. Let me ask, because I understand you have made representations regarding what these people do, but they are not really under your supervision. So, I think it is a very fair question to ask how do you know?

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    With whom have you briefed and prepared yourself or received any material to prepare yourself to make such a clear cut representation to this committee that the only use of their time has been for official purposes rather than personal purposes?

    Could you tell us who has provided that information to you?

    Ms. POSEY. Let me say, sir, that it is my job to understand the policies and practices of the various areas within the Executive Office of the President. I do have to understand that each agency or area within the White House complies, what they do, how they function.

    Mr. ISTOOK. But do they actually do what they are supposed to do?

    Ms. POSEY. The policy, sir. That is what I am speaking to.

    Mr. ISTOOK. We are trying to speak to the practice because it is very easy to have an official policy that may state, as the law does, that government resources must be used for official government activity and not for personal, private purpose. That is a criminal violation which perhaps should be investigated by the Department of Justice, if necessary.

    There is a great difference between having a policy and actually having that policy followed. Have you ever devoted any effort to determine whether the policy in fact is being followed?
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    Ms. POSEY. Sir, I can assure you that I have been assured that——

    Mr. ISTOOK. By who?

    Ms. POSEY. By White House Counsel staff.

    Mr. ISTOOK. Who? Give us a name or names if it is plural.

    Ms. POSEY. The White House Counsel staff, the counsel to the President.

    Mr. ISTOOK. Ms. Posey, you are telling us you do not have personal information. We are trying to find out how we can find out. I am asking you who has made those representations to you? What individuals?

    Ms. POSEY. The chief manager of the White House Counsel staff.

    Mr. ISTOOK. That is who?

    Ms. POSEY. Charles Ruff's Staff.

    Mr. ISTOOK. Go ahead, please. Who else?

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    Ms. POSEY. Charles Ruff is the chief manager of the White House Counsel's Office. He is the President's Counsel.

    Mr. ISTOOK. Did you inquire with him before the media reports of the last week? Did you make inquiries with him regarding whether these people were in fact performing only official duties as opposed to potentially performing private functions?

    Ms. POSEY. My staff contacted the White House Counsel staff to discuss what had been in the paper and, again, reassured, reassured once again that the policy that I spoke to is in fact practiced by the White House Counsel staff.

    Mr. ISTOOK. So, the oversight did not begin until media attention was devoted. I would like, if you have received, Ms. Posey, any sort of talking points, memorandum, e-mail, or other communication designed to give you guidance and information which would have come obviously from a person more important than you personally are on this, would you please provide that to us?

    Ms. POSEY. I will provide information to you, yes, sir.

    Mr. ISTOOK. So, if you have received any sort of memo or talking points from Mr. Ruff or anyone else who provided this information to you and to give you any guidance in testifying on this, you will provide that documentation to us.

    Ms. POSEY. I will consult with the office of the White House Counsel.
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    Mr. ISTOOK. That is not the same as providing the information, Ms. Posey. So, you are not willing to state whether you will give us that information?

    Ms. POSEY. I will give you all of the information that the office of the White House Counsel provides to me with regard to that question, sir.

    Mr. ISTOOK. I think we are kind of going in circles on that.

    I understand my time has expired. Thank you, Mr. Chairman.

    Mr. KOLBE. Mr. Istook, we will come back for a second round of questions. Mr. Hoyer, did you have a comment on the request for placing in the record, this letter?

    Mr. HOYER. I just want to make a comment because I have now read Mr. Barr's letter. Mr. Barr makes certain premises that may or may not be correct. Notwithstanding that, I am not going to object to the letter, although I cannot remember another Member's letter being included in the record of testimony, but I am not going to object to it.

    If Mr. Barr wants to make a request, I am not sure what it adds or detracts from the record, Mr. Istook, other than to continue to make allegations that cumulatively will be perceived as there must be something there. I will not object.

    Mr. KOLBE. Without objection, the letter will be placed in the record.
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    [The letter referred to follows:]
    "The Official Committee record contains additional material here."

    Mr. ADERHOLT. Thank you, Mr. Chairman. Ms. Posey, thank you for being here today. Of course, we have all received your budget request. I have one question. Does your budget request include salaries for support staff for any non-paid individuals working within the White House Complex?

    Ms. POSEY. No, sir.

    Mr. ADERHOLT. Are there any other expenses that are incurred to support these individuals?

    Ms. POSEY. No, sir.

    Mr. ADERHOLT. Okay. Thank you very much.

    Mr. KOLBE. That was short and to the point. We will start a second round and hopefully we will be able to finish on this round. I just wanted to say, once again, Ms. Posey that I am a little astonished that you tell me that you cannot give me the information, the break down, of the component parts of the budget within the Executive Office of the President.

    We did not ask you specifically for it. I recognize that. I am asking for it now. Your predecessor did give us that information for fiscal years 1993 and 1994. My understanding is it has not been asked for since that time.
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    I would just assume that it would be available. It breaks down about 14 different functions within the White House from Counsel's Office to the Immediate Office of the President, Legislative Affairs correspondence, the President and so forth. So, I would ask that you give us that information so that we know what we are talking about in the Counsel's Office on 1998, 1999 both of them, the current fiscal year, and in the requested year.

    Ms. POSEY. I will do that, sir.

    [CLERK'S NOTE.—The information requested is provided in ''Questions for the Record''.]


    Mr. KOLBE. Let me turn very briefly to the question of information technology. That is very much at the heart of this budget request this year. Ms. Posey, you mentioned that the actions of this Subcommittee had demoralized your staff and caused a great deal of hardship.

    Then you went on to say that perhaps it provided a wake-up call. We have taken an even tougher position with a lot larger agencies—we are talking about hundreds of millions of dollars for computer technology, such as with the Internal Revenue Service.

    This is not a partisan issue. In the case of the IRS, we are talking about something that goes well-back into the previous Administration and money that turns out to have been poorly spent and planned for.
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    This is doubly important with, as you have said, with year 2000 compliance. What this Subcommittee was attempting to do and has been attempting to do has been to get agencies, whether it was the IRS, or in this case the Office of the President, any agency, and that is a part of our oversight function, to focus on the need to have computer technology and an architectural plan that works and is compliant with the Y2K.

    We have not been doing this to demoralize your staff, to cause a hardship. We have fenced this in order to try to direct the White House to get this modernization program on track. As I mentioned in my opening statement, I am pleased. I think the progress we have made has been significant. We released that money to you almost, I believe, 11 months ago. So, you have had the funds from the previous year released to you.

    We are now talking about some additional dollars. I want to ask a couple of questions about that. There is a noticeable lack of cost data included in the ITA which was submitted to the Committee on February 20th.

    You provided a five-year table on February 28th. The price tag for this modernization effort over five years is a little more than $39 million. Is this what we are talking about to be the total cost of this modernization?

    Ms. POSEY. This is what we project. Certainly the $12.2 figure for 1999 is a number with great certitude. The years out, I would share with you, Mr. Chairman, that those are estimates. Those are our best estimates at this time.

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    We have not completed, although we will in April of this year, our total assessment for Y2K. We have completed our assessment of commercial off-the-shelf hardware and software. We are completing busily our focus on legacy systems. At that point, I will have even greater certitude with our figures for 1999.

    Mr. KOLBE. My next question then, when you say there are estimates, then can we assume that these cost figures have not been validated?

    Ms. POSEY. The cost figures for 1999 have certainly been validated.

    Mr. KOLBE. Who develops the cost figures and the estimates for you?

    Ms. POSEY. My internal staff has developed those figures and validated those figures. Most recently with our James Martin Group, our Y2K assessor outside consultants, they also have independently validated our $12.2 million figure for 1999.


    Sir, if I could just briefly address a statement with regard to fencing of the funds and the morale of the staff. I mentioned that in terms of my position as a manager and needing to deal with the reality of what the Committee was telling us.

    What the Committee was telling us certainly I acknowledge and the entire Executive Office of the President acknowledges that, that was something that you were not doing just to the EOP. It is very difficult to tell people who are working extraordinarily hard, 10 to 14 hours a day, who are career staff like Laura Crabtree here, that I cannot get the monies to help them do their job, their tools, because there are things we have to do first.
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    It was difficult to explain that to staff. I am not saying that it was the wrong thing to do. I am just merely saying to you that it was harmful with regard to me, as a manager, trying to continue to motivate folks to get them going. We have done a tremendous amount of work in 365 days. I appreciate your acknowledge of that.

    Mr. KOLBE. I give you credit for that, but obviously as you have suggested, that is one of the jobs of the manager to say we have to get these things done before we can go forward.

    Imagine what some of the people in the IRS thought after they had spent over $4 billion and have the head of the IRS computer technology information, the chief information officer tell this Committee basically that none of the money had been spent in a systematic way to develop the systematic functions we had talked about.

    That would be fairly demoralizing. My time is up. Mr. Hoyer.

    Mr. HOYER. Mr. Chairman, I may have some additional questions. I want to reserve my time.

    Mr. KOLBE. Thank you. Mr. Istook.


    Mr. ISTOOK. Ms. Posey, I realize that you have not been in your position throughout the Administration, but I have been a Member of this Subcommittee throughout that time. I certainly cannot recall any time when any witness from the White House, in justifying the appropriations which they sought, and that is what we are talking about, proper expenditure of appropriated money, taxpayer money, I cannot recall any instance where any person from the White House ever told us, we have need for more legal staff. I cannot recall a single incidence of that throughout the years.
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    You, of course, I know have examined the record for your predecessors, as well as yourself. Can you point me to any occasion during this Administration where they have told us that some of our needs, according to them, are for more legal staff in the White House?

    Ms. POSEY. Last year, sir, in my testimony, I talked about the 1,185 staff number for the Executive Office of the President. I specifically recall, and I can provide that to you, that I spoke to the need of adding staff, not only in ONDCP as the result of General McCaffrey's drug program, but also the White House Counsel's staff.

    Mr. ISTOOK. How many did you say at that time were in the White House Counsel staff? How many did you say were needed?

    Ms. POSEY. I did not say a specific number at that time.

    Mr. ISTOOK. So, certainly you have never mentioned that we need to go from what was the prior record of another administration, eight people to 34 or any such number?

    Ms. POSEY. I have not, myself, no.

    Mr. ISTOOK. In this review, because you have testified, and understand, you have an obligation not to make a representation to this Committee unless you know it to be true. You are testifying, according to what you have said before, as though it were personal knowledge on what the legal staff is actually doing. Has there been any review of the actual time expended by different members of the White House legal counsel staff on particular projects?
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    Has there been any reckoning to say, we expended 300 hours working on this task, or 50 hours working on that, or similar reckoning? Has there been?

    Ms. POSEY. Sir, I personally have no evidence to the contrary, but I would certainly be glad to take that question back to the EOP and the White House Counsel staff and ask them directly.

    Mr. ISTOOK. When you say you do not have evidence to the contrary, do you have evidence that there has ever been any such reckoning?

    Ms. POSEY. I do not have any evidence that there has or has not been.

    Mr. ISTOOK. So, when we try to understand, for what purposes have people expended time and taxpayers' money, there is nothing that has been in place, to your knowledge, that enables us to make such an evaluation, other than asking somebody for their conclusion, and they say well, my conclusion is that I have only followed the law.

    You do not really know of any records that have been kept by the Counsel's Office detailing the manner in which they have utilized their time; something akin to the time slips that are kept by an attorney in private practice?

    Ms. POSEY. Again, sir, I would not want to represent to you today what I do not know. It is important for me to find out specific facts. I will be glad to provide that information to you.
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    Mr. ISTOOK. That is why it is so important to know if you have talked to anyone, other than Charles Ruff, to make your broad sweeping statement that 34 or so people have done nothing except to work on official business. Have you talked with anyone, besides Mr. Ruff, before you made such a sweeping statement to this Committee?

    Ms. POSEY. Yes, sir.

    Mr. ISTOOK. So, you do not really know, do you, whether or not they have worked exclusively on official matters? Do you know?

    Ms. POSEY. Mr. Istook, the fact that I personally may or may not know does not mean that——

    Mr. ISTOOK. Can we first establish do you or do you not know?

    Ms. POSEY. Sir, I will tell you that the policy of the White House Office is that there is no unofficial business conducted in the White House Counsel or in any other office.

    Mr. ISTOOK. Ms. Posey, you are evading the question. The question is simple. Regardless of what the policy is, do you or do you not know if the White House has used this large number of attorneys to devote themselves exclusively to official business rather than performing personal legal business on behalf of the President or the First Lady. Do you or do you not know?
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    Ms. POSEY. Sir, I would, again, answer and say to you that——

    Mr. ISTOOK. Ma'am, you can answer yes or no. Do you know or do you not know?

    Ms. POSEY. I do not know specifically.

    Mr. ISTOOK. Thank you. Thank you, Mr. Chairman.

    Mr. KOLBE. I have no further questions. I have questions I will submit for the record.


    Mr. HOYER. Mr. Chairman, I have no further questions. I think Ms. Posey has answered the questions with respect to the matters of particular concern to the Chairman, myself, and this Committee.

    That is that we have every agency of government, large or small, obviously, the White House is a relatively very small office of the Executive Department; have the computer capability required of this day and age to operate effectively and efficiently, and to serve the American public responsibly.

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    My review of your budget, particularly the $12.2 million leads me to believe that it is in fact justified. That is really effectively the only increase above and beyond 3-percent of adjustment, which is essentially the salary adjustments, both in terms of the cost of living adjustment and the step increases for the career personnel.

    So, Mr. Chairman, I do not have any more questions. I thank Ms. Posey. Ms. Crabtree, I want you to know that I found your testimony very, very impressive. I am in a generation much older than Ms. Posey.

    So, when I hear people who are as literate as you are with reference to information technology systems, I am very impressed with the younger generation and very competent that we are going to be successful in the years ahead. Thank you.

    Mr. Lindsey, I want to join in that you of course have been a colleague here in the House. I have great respect for your integrity and intellect. You add a great deal to the White House Office. Glade to have you here, sir.

    Mr. LINDSEY. Thank you, sir.

    Mr. HOYER. Thank you, Mr. Chairman.


    Mr. KOLBE. Thank you very much. Mr. Hoyer, Ms. Posey, Ms. Crabtree, and Mr. Lindsey thank you very much for being with us here today.
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    This Subcommittee will have questions that will be submitted for the record. We would appreciate your prompt response to those so we can get the record completed.

    The Subcommittee will stand in recess until 2:00 p.m. when we will resume with Frank Raines, the Director of the Office of Management and Budget.
    "The Official Committee record contains additional material here."

Thursday, March 12, 1998.




Chairman's Opening Statement

    Mr. KOLBE. The Subcommittee on Treasury, Postal Service, and General Government will come to order.

    Mr. Hoyer is testifying before another Subcommittee and will be here in a moment. We have been advised by his staff that we may proceed. Hopefully, he will be here before we get to questions here.

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    Let me welcome this afternoon Director Franklin Raines, the Director of the Office of Management and Budget. We welcome you in your second appearance before this Subcommittee on the resource requirements of your office.

    Director, last year you had only been on the job a few months when you appeared before us. At that point, I was certainly willing to provide a lot of latitude.

    I did not expect that you would have the answers to some of the concerns that we have expressed relating to OMB's oversight and management responsibilities, not only for the agencies that come under this Subcommittee's jurisdiction, but government-wide.

    Now, I am a little less inclined to give latitude. I hope I am not harsh today with questions, but I am going to ask what I hope are some tough questions because I think they require some tough answers.

    As we proceed with the hearing, I want you to understand that my concerns about OMB actions in this area that are critical, not only for the effective operations of federal programs, but I believe they also go to our ability to make a qualitative difference in the day-to-day lives of many Americans. There is certainly nothing personal with the questions that I am asking.

    I have three areas of serious concern. First, is OMB's performance goals. One of OMB's performance goals is to coordinate and maximize the President's fiscal policy budgetary goals and programmatic objectives.

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    This goes to some statements that I made last week in an earlier hearing with some of the Department of the Treasury. If the objective has been to achieve what I think is a disjointed, inconsistent, and one-sided law enforcement policy, then I guess maybe we have met the performance goal.

    Mr. Raines, I have traveled, along with my staff, traveled along the southern tier of states here in the United States, the border states. We met with Treasury law enforcement personnel. Frankly, we met with a lot of the others.

    We also met with the INS Border Patrol and other Justice Department Agencies. What we have seen is Black Hawk helicopters with no apprehension teams on board; night operations that are handicapped by a lack of night vision equipment; air and marine assets that are not being coordinated.

    That, I think, Mr. Director, only scratches the surface of all of the disconnects that I see in the area of federal law enforcement. Actually this should not come as any surprise to you and it certainly does not to me when you look at the budget figures.

    If you look at the resources for Treasury law enforcement bureaus, you begin to understand why the situation exists. Since 1997, resources have been much more abundant for the operations of the Justice Department; notably for INS and Border Patrol.

    This is not the case for Treasury, and particularly for Customs Service, which most of us believe and have acknowledged in the past is the first line of defense in drug interdiction into this country.
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    During these years, INS law enforcement funding has grown by 51-percent, while Customs' rose by only 3 percent. Between 1994 and 1999, INS pending will rise by 178 percent in real terms, while Customs' spending will increase by only 15 percent.

    While I accept the critical role that Congress plays in the allocation of resources to these agencies, and we bear some of that responsibility for not having redirected that, the power of the purse does rest with us after all.

    I am disturbed because I do not see the Administration proposing what I would consider an equitable or logical or coordinated allocation of law enforcement resources among the budgets of the different agencies of the Federal Government.

    This year, the Administration is asking for an additional 1,000 Border Patrol Agents. I dare say, since I live along the border, I can tell you that we need them. The request for Customs is 119.

    As we proceed through the appropriations cycle, and I know this from my 10 years' of experience on the Appropriations Committee, the Administration will threaten to veto overfunding levels for INS, but they will barely engage in the debate on levels of funding for the Customs Service and other Treasury law enforcement bureaus.

    So, I would say the history is the report card for your office and the Administration in this regard. I think it is clear the Administration really has not shown the interest it needs to show what I would call an integrated law enforcement strategy.
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    I want to underscore those words, an integrated law enforcement strategy. I am not saying that we need to take money away from Border Patron, INS, and the other Justice law enforcement agencies.

    It just does not seem to me that when we look at the allocation of resources, do we have anything that makes any kind of a management sense? I am hoping today that you can share some of your thinking on that with us.

    Second, OMB is charged with providing management leadership to agencies. In this regard, I ask where has OMB been in the management of agency efforts to ensure our computer systems are ready for the century date change?

    Frankly, I find the OMB performance in this area to be seriously lacking. This is not an issue that we can afford to deal with tomorrow. January 1, 2000, the beginning of the millennium is coming, like it or not.

    I do not think we are going to postpone it with the law. You are not going to postpone it with an Executive Order from the President's Office. So, if our information systems are not ready to accommodate this change, the effects, I think you would agree and we would all agree, are going to be crippling and they are not going to be just temporary.

    It has draconian implications for our national interests and for our international security interests. Director, I just have to tell you that I think that OMB's performance in this area is unacceptable.
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    I do not see, as I talk to the other agencies, the leadership being given by OMB in this area. We are running out of time. OMB has to take aggressive action now. The resources we give you to oversee these efforts are going to have to be moved someplace else if we do not see this action, to make sure that they get to someone who is going to get this done for all of the agencies.

    I have to tell you that I talked to a small agency the other day in a personal visit; not one of the agencies under this Subcommittee. When I asked about Y2K, the head of that agency just blinked and said, ''What are you talking about? I have never heard of it. I do not know that anybody in this agency is doing anything.''

    He made a little note to check with some of the management administration people in that agency. Now, it is a small one. It only has a couple of hundred people, but they have some very important issues with regard to Y2K, it seems to me as I look at the operations of that agency.

    Third, and finally, Director Raines, as if the first two issues were not enough, I have concern over OMB's Performance Plan, its lack of detail on how OMB is going to measure specific outcomes of the job it does.

    I believe that OMB, who has been doing this for other agencies, needs to act as a leader for the other federal agencies and the implementation of the Results Act. I think your performance plan is a start. But I think it misses the point when it actually comes to measuring results. So, with these words meant in the spirit, I hope, of trying to encourage some dialogue and to help us to help you.
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    I look forward, Mr. Director, to hearing your testimony today. Before we ask you for your testimony, let me call on my colleague, Steny Hoyer, for any opening remarks that he might have.

    [The statement of Mr. Kolbe follows:]
    "The Official Committee record contains additional material here."


    Mr. HOYER. Mr. Raines, I am pleased to welcome you to the Committee. I know that you will be giving us an account of your stewardship over the last year and talking to us about your budget.

    The federal budget I think is $1.8 trillion or thereabouts this year.

    Mr. KOLBE. Just under $1.7 trillion.

    Mr. HOYER. Just under $1.7 trillion. We live in interesting times, but I think we always have. This morning we had at least two television cameras present in the room. We had at least ten reporters in the room.

    We had great interest in the room over White House expenditures, some of which were in the hundreds of thousands of dollars, not insignificant dollars.

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    It is ironic that dealing with the Gentleman who is charged with the responsibility of overseeing that $1.7 trillion that we have such little interest in terms of relaying your comments to the American public.

    That is not, I want to make it clear, a comment on anything that the Chairman has done or that the Committee has done.

    Mr. KOLBE. Well, the three of us that are here. We are here today.

    Mr. HOYER. Right. It is a comment on the intent in this country to focus on the small and on the sensationalized. In any event, Mr. Director, I want to say how proud I am of what you, OMB, and this Administration are doing. You presented for the first time since 1969, with the President, a balanced budget.

    We are going to get to a balanced budget before fiscal year 1999. It appears at the end of fiscal year 1998 we will have at least a $10 billion surplus. Now, we all realize that we have a unified budget.

    Social Security receipts are in that. There is a surplus in Social Security masking an operating deficit. The fact is we have always done that. So, given level analysis, we are going to have a budget surplus.

    Quite frankly, in my opinion, that budget surplus resulted from two very significant acts that the Congress took, as well as obviously a very strong economy and a very, very strong entrepreneurial private sector.
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    One of those, of course, was the 1990 Budget Agreement forged between Former President Bush and the then-Democratic Majority. It was a budget agreement that was savaged by the present Speaker, by the present Majority Leader, and by the present Majority Whip.

    In fact, Former President Bush ended up repudiating that agreement during the course of the 1992 elections. The other reason for that, Mr. Director, in my opinion, was the courage and wisdom that the President showed in offering to the Congress an economic program in 1993 that was adopted on the closest of votes. CBO's analysis, not OMB's, but CBO's analysis indicates that it was that agreement that brought down the budget deficit very dramatically.

    That coupled, of course, with a very significant and surprising greater than expected growth of the U.S. economy has lead to that budget surplus.

    As you know, again, the Speaker, the Majority Leader, the Majority Whip, the Chairman of the Budget Committee, and numerous others leaders in the Majority Party now said that, that bill, if passed, would lead to very significantly increasing the deficit, which was then $292 billion.

    Very significantly increasing unemployment. Very significantly increasing interest rates. Bottom line, being that the economy would go into the dumpster if we passed that agreement. We passed that agreement.

    For the first time in our history since the end of the Civil War, in over 130 years, you, and this Administration, and the President have brought the budget deficit down every year you have been in office; unprecedented accomplishments.
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    Mr. Director, I share some of the Chairman's concerns, obviously about the specifics that he talked about. He is reflecting, I think, a view of many of us on this Committee.

    In general, I want to tell you that I am very pleased that you are where you are. You are doing an excellent job. We have some differences. I will ask you some questions about how good the economy is going.

    The fact of the matter is, you are doing outstanding, and as a direct result of your service and this Administration's policies, the American public is enjoying today, the best economy they have enjoyed, in many respects, in their lifetime, if they are under 35 years of age.

    For those of us over 35 years of age, one of the best economies we have ever enjoyed in the history of this country. You probably have to go back to the Kennedy years to find economic times as good as we are having today.

    So, I might say, Mr. Chairman, obviously this may be somewhat partisan, but as a Democrat, who was at times very sensitive about the fact that Democrats were not perceived by some and alleged by others not to responsibly manage the economy.

    This economy, as reflected by public opinion and by every economic indicator, and as attested to by no less an authority than Alan Greenspan, not a publicist for the Democratic Party or this Administration, has said the economic programs of this President, this Administration, are due much of the credit for the status of this economy.
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    You, as the Director of OMB, are a critical element in that. I congratulate you. Thank you.

    Thank you, Mr. Chairman.

    Mr. KOLBE. Ms. Meek, do you have any opening comment?


    Ms. MEEK. Thank you, Mr. Chairman.

    Welcome, Director Raines. I must say to you that I am very pleased and encouraged by your performance as OMB's Director. I served one session on the Budget Committee prior to your coming to this position.

    I want to tell you, when you came, you broke things down in such a way that those of us who were lay people who were just coming to that Committee could understand the budget process and how the President's budget is made, and how it reflects on us.

    So, I must say as a planner, you are the best, you and the people in your area, in that OMB is more than an acronym because you are dealing with management. You are showing us the path to good management.

    I appreciate so much that no longer is the dictum around that we must balance the budget. It was almost like an acronym. You heard it everywhere you went. Balance the budget. Balance the budget. It was like a pulse.
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    Then the deficit. The deficit. Now, you have taken that out of our nomenclature. We no longer can run around and talk about that all the time because, under your leadership, the budget has been balanced, with the help of both parties.

    We now have some indicators as to where we are going. In your management, you have been very precise. You laid out a strategic plan. From that, after that strategic plan, you laid out your performance goals and objectives.

    It looks like from reading the information you gave us that you are following that. There is no better way to manage the federal budget or any other budget than the way you have gone.

    I commend you and your staff. Certainly I hope that we are able to keep within the framework of what you have laid out to us. Thank you for being here.

    Mr. KOLBE. Thank you, Ms. Meek.

    Ms. MEEK. Mr. Chairman, he asked for just a 2.7-percent increase. So, I know it is not, with the performance he is doing, that is a good indicator that he has been a shrewd manager. Just a 2.7-percent increase is good.

    Mr. KOLBE. Thank you very much, Ms. Meek.

    Mr. Raines, please proceed. As you know, your full statement will be put in the record. So, if you would like to summarize that for us, it would be helpful so we can go directly to questions.
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    Mr. RAINES. Thank you very much, Mr. Chairman, Mr. Hoyer, and Ms. Meek for those introductory statements. I do have a longer statement for the record, but I would like to just summarize some of the points included.

    I particularly appreciate your kind words about the performance of the economy and our fiscal policy. There is nothing more important for an OMB Director than to be a participant in establishing a sound fiscal policy because so much else flows from that.

    It has been a great privilege for me to be a part of that effort in this Administration and to be a part of extending this extraordinary expansion that we have seen that will, by the end of this year, become the longest peace time expansion in the nation's history.

    In the post-war period this is the only one of the long expansions that has not been fueled by deficit spending. Unlike the 1960s and the 1980s when the full employment deficit was rising and helping to push along the economy, this expansion is happening with the full employment deficit declining.

    So, we see a strong quality to this performance, particularly in the private sector. We are here today to request from the Committee funds to operate the Office of Management and Budget for fiscal year 1999.

    The President's budget included a request for just slightly more than $59 million for salaries and expenses. That would be a 2.7-percent increase over 1998 and finance our 518 full-time equivalent positions; the same level as in fiscal year 1998.
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    The budget also included an allowance for later transmittal related to information technology. The President, on March 9th, sent to Congress an additional request for $1.6 million for information systems improvements that are related to the production of the President's budget.

    That brings our total request to $60.6 million. OMB has been playing a leading role in the effort to balance the budget to improve government performance, audit government programs, and manage information technology.

    We have had many new and broadened responsibilities added by Congress in recent years. A number of those laws, in particular the Government Performance and Results Act (GPRA), required intensified OMB activity as they reach full implementation.

    We responded to this increased work load by expanding our utilization of technology, increasing the ratio of analysts to total staff, and improving our work load management. While we continue to handle our expanding responsibilities without an increase in staff size, it is essential that we maintain our current staffing level.

    To continue to meet these growing needs at the current staffing level, we need to invest in information technology. My written testimony includes more information on OMB's implementation of major new statutes, including GPRA, the Unfunded Mandates Reform Act of 1995, the Paperwork Reduction Act of 1995, the Information Technology and Management Reform Act of 1996, the Government Management Reform Act of 1994, the Electronic Commerce Provisions of the 1998 Defense Authorization Act, and the 1996 act setting forth Congressional Review Agency Rulemaking. I will not take the time here to review our implementation, which is reviewed in that written statement.
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    I would note that since I became Director, I have reaffirmed the approach in the OMB 2000 Reorganization that was put in place by my predecessors to improve the integration of our budget and management capabilities.

    It is my goal that our implementation of these important statutes reflect this improved integration. Let me take just a few moments to describe OMB's Performance Plan and the steps we are taking to improve our productivity by investing in information technology.

    As required by GPRA, OMB submitted its strategic plan to Congress on September 30, 1997. The plan contains a statement of missions, four general goals, and 16 objectives related to our major responsibilities.

    GPRA also requires that we present an annual performance plan covering each program activity set forth in our budget. We submitted the OMB Performance Plan for 1999 concurrently with our budget justification.

    The performance plan follows the same structure of the strategic plan with performance goal indicators that track those general goals and objectives. Some highlights of our plan include development of a balanced budget as part of the national fiscal policy.

    Helping agencies meet important objectives, such as year 2000 computer compliance, receiving clean audit opinions on annual financial statements, ensuring annual performance plans are fully integrated with budget submissions, maximizing the benefit of regulations while minimizing their costs and burdens, reducing paperwork burden on the public, improving agency procurement systems, and effectively using interagency working groups on a wide range of government functions. Another part of our performance plan highlights recruiting, developing, and retaining a high quality and diverse OMB staff.
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    Let me pause for a second on that one. We are an agency that expects a lot of our people. It is an agency that during the budget time, our people work seven days a week, often 18 hours a day. This takes a real toll.

    When I was at OMB 20 years ago, the turnover rate was substantially lower than it is today. That is because OMB was larger then. Its responsibilities were narrower then, and we did not provide or have as much of a burden on junior examiners as we do today.

    This is a matter of great concern to me; something that we are trying to put efforts into to deal with. I wanted to highlight it to the Committee because OMB is nothing but staff. If you look at our budget, you will see that our entire budget is pay for our people, space for our people, technology for our people. We have nothing else. It is important to me, as Director, and I think for any Director, and I hope for my successors, that there be a focus on sustaining the quality of the staff.

    It really is a national resource. It is not a resource of just any particular President. It is a national resource. One important focus for now and through 1999 is our plan to improve the President's budget submission to Congress through the use of automation.

    You know it is very complicated putting together the President's budget, given the short time frame which it all has to come together. We worked closely with this Subcommittee and its counterpart in the Senate to design and approve a five-year Information Technology Improvement Program that has already greatly improved the production of the President's budget.
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    We have implemented that plan on time and on budget. We are now taking further steps to improve our information technology resources. We have established an Investment Review Board consistent with the Clinger-Cohen Act.

    This Board is an integral part of our strategic plan to leverage technology to assist our people in doing their jobs. We have hired an information technology systems engineer to work internally and with the Office of Administration. We have also looked to see what additional needs we might have. We are asking for $1.6 million of appropriations to allow us to migrate our large budget applications from the White House Office of Administration's main frame computer to a separate year 2000 compliant data center.

    We started this migration in 1994 to increase the efficiency of our budget process and to reduce the burden on other agencies.

    We have been working closely with the Office of Administration and their team to provide an orderly transition. Before moving to a new data center, OMB will work with OA to assure that all of these applications are updated, verified, and tested for year 2000 compliance.

    For the other applications that OMB uses, we will work with OA to assure that they are year 2000 compliant. They will remain resident in the OA Data Center.

    Mr. Chairman, the Bipartisan Budget Agreement requires agencies to continue their efforts to do more with limited resources.
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    Our proposed budget will allow us to meet our new and expanded requirements of the laws that I have discussed, in addition to our many existing responsibilities, with the same staffing level as in fiscal year 1998.

    We are committed to increasing and maximizing our efficiency; particularly through the use of information technology.

    That concludes my statement. I will be happy to answer any questions that Members of the subcommittee might have.

    [The statement of Mr. Raines follows:]
    "The Official Committee record contains additional material here."


    Mr. KOLBE. Thank you very much, Mr. Raines.

    I will lead off. I mentioned three areas. I hope to get to all three of them, but I certainly want to get to the first two. That is the issue of law enforcement resources and the Y2K.

    Let me start with the issue of law enforcement resources. I hope this does not come as any surprise. These were charts we used last week. Presumably you have some knowledge of them.
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    You see in these charts a really rather striking disparity of funding levels between Treasury Law enforcement and Justice Law Enforcement. This is the funding level here. You notice a rather sharp increase in Justice, lead largely in part by Congress in its concern over immigration, specifically as a result of immigration reform and the problem of undocumented persons coming into the country.

    Also, a lot of it having to do with FBI and a lot of it having to do with drug problems and drug interdiction. You will notice the flat line there for the Treasury. I think the next chart shows personnel, if I recall correctly here.

    Those are the personnel numbers which is even more striking in terms of numbers; 0-percent increase from 1994 to today. I think then there is one more chart here.

    These next two narrow it down to looking at just INS and Border Patrol versus Customs. Here, it is even more striking as you can see the increase in INS and Border Patrol; again, the flat line in Customs. Go on to the next one there. It is the same in personnel; a very dramatic increase there. For Customs, a 3-percent increase. It does not even look like it from the numbers there, but a 3-percent increase in the number of law enforcement personnel.

    So, the bottom line is I think it is safe to say whether we look at Treasury versus just as a whole or whether we just take Customs and INS, the two major agencies. When I say major agencies, with regard to drug interdiction.

    We have a huge disparity here. I am wondering whether you, personally, are aware of some of the problems in Customs. The fact is in Customs we have interdiction boats that do not have crews. We have Black Hawk helicopters that do not have apprehension teams on the helicopters. We have operations that have no night vision and infra red. We have air and marine assets that are not being coordinated.
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    Can you give me some explanation of what is going on here? Why do we have so much in one department and not in the other.

    Mr. RAINES. Well, Mr. Chairman, this is an issue that we looked at specifically during what we call our Director's reviews in putting together the budget this year. Let me give you my perspective on this.

    First, we do not start with the assumption that the budget of one agency is necessarily related to the budget of the other. Because they have different functions and they are at different stages of their development, at different times one budget may go up dramatically and another budget may not.

    Mr. KOLBE. Well, I think there is pattern here.

    Mr. RAINES. It would not be unusual to see different agency budgets move differently, even though law enforcement agencies, they are enforcing different laws in different ways and facing different problems.

    Secondly, some of these changes actually have been to the benefit of the Customs Bureau. For example, there has been historically a problem of INS not really providing 50 percent of the personnel at points of entry.

    We have worked over the last several years to move them from where Customs had to provide about 62 percent of those personnel where INS is providing more. That has now freed up some Customs personnel for other activities.
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    If you look just in the most recent year, I think you will see that even though these agencies continue to do far better than the rest of the budget, these are very large increases for both of these agencies, compared to a 4.7-percent increase for the government as a whole in discretionary funds.

    In this most recent year, if you take both the appropriated funds and the mandatory funds that each of these agencies has available to it, Customs' budget is going up 10.4-percent year-over-year, and the INS budget is going up 10.3-percent. So, the extent to which there is a disparity in the prior years, that is not playing out in 1998 to 1999.

    As you know, Congress and the President have supported substantial increases in our law enforcement budget since 1993. You see that line takes off in fiscal years 1993 and 1994. We have had very large increases in the number of Border Patrol agents.

    Where we have proposed large numbers, Congress has added. Last year, we proposed 500 Border Patrol agents. Congress added another 500 on top of that, which has made a difference in these numbers as well.

    We are using different years and different sets of numbers here. So, I do not want to compare the numbers I have directly to the ones you have. In most comparisons between Justice and Treasury, you have to first take out of those comparisons the grant programs that Justice has that Treasury does not have.

    Prisons that Justice has that Treasury does not have and some specialized problems, such as you mentioned, Border Patrol where we have had a dramatic increase in their personnel dealing with the illegal immigration problem along the border.
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    We do not view this as favoring one over the other. We look at each of the requests. We look at their mission. We try to match resources to the mission that they are given.

    Mr. KOLBE. So, you see no problem with the funding that we are giving Treasury and law enforcement agencies?

    Mr. RAINES. Well, I think, again, as the Budget Director looking at the whole budget, both of these agencies have fared far better.

    Mr. KOLBE. The figures I have up here are taken from your budgets.

    Mr. RAINES. Let me give you an example. Since 1993, discretionary spending for the government as a whole has gone up 4.7 percent. Treasury law enforcement is up 26 percent. The Department of Justice is up 94 percent.

    So, again, within the context of very tight budgets, both of these agencies have done very well. As between the Treasury and Justice, I think that there are particular aspects of their mission that account for the differences.

    To the extent to which they are not managing their resources well, and you are seeing unutilized capital assets, you are seeing a failure for them to coordinate. That is the real management problem that we will look into and try to see why is it that an agency that has adequate resources is unable to utilize these very expensive capital assets in an effective manner. I will be happy to look into that.
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    Mr. KOLBE. It does not seem to me there is any acknowledgement of the pressures you put on law enforcement and Treasury when you make the kinds of increases you have in INS. For example, just the sheer numbers of increases of Border Patrol agents has a tremendous impact on the Federal Law Enforcement Training Center which comes under Treasury.

    We are not seeing the kinds of increases there that seem to go with that. My bottom line is, I do not think that there is any integrated approach in law enforcement by the Administration.

    It looks like it is a battle between two agencies and one has clearly won out here. I do not see you exercising the management function of trying to provide an integrated approach to this law enforcement problem.

    Mr. RAINES. Well, I think if you talk to these agency heads——

    Mr. KOLBE. We have.

    Mr. RAINES. They will tell you that when they have disputes among themselves, whatever the topic may be, they almost uniformly come to us to help resolve those disputes among themselves from a management standpoint.

    I know that the Secretary of Treasury and the Attorney General have consulted with each other on integrating their strategies. I know that General McCaffrey has put in particular reference in coordinating not just the civilian law enforcement, but also military personnel; particularly down in Florida.
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    The President was in fact down visiting there and looking at some of the coordinated activities. To say that the coordination could be better I think is almost certain. Twenty years ago when I was the Associate Director of OMB, this was one of the agency's accounts that I had.

    We had similar problems then. I would like to say that we have resolved some of them, but we had similar problems then. There are some inevitable problems that come from law enforcement agencies being in different departments.

    It is just a fact of life or my experience is they each want to replicate whatever the other one is doing.


    Mr. KOLBE. This leads me then to my last question before I yield my time because I have gone over my five minutes, but it leads right into that.

    Some have suggested that we need to consolidate federal law enforcement. Do you think that we should be looking at putting law enforcement under Justice or one agency of the Federal Government?

    I would like your rationale for that or not. You can think about it and provide it in writing if you would.

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    Mr. RAINES. I will be happy to follow-up in writing.

    I think the answer is probably no. I think there are real concerns about having a federal police agency, where we have concentrated all of that authority in one place.

    Also, I think it would also overlook that even though they are nominally involved in law enforcement, many of them have functions that are very specialized. The Secret Service, for example, has a very specialized function.

    It is not a general, all purpose, law enforcement agency. Customs officers, similarly. The Drug Enforcement Administration very similar.

    They have very particular purposes that tie them much more closely to their agencies than to law enforcement generally. So, I do not believe that having one large police agency at the Federal Government would be a good idea.

    [The information follows:]
    "The Official Committee record contains additional material here."

    Mr. KOLBE. Mr. Hoyer.


    Mr. HOYER. Thank you, Mr. Chairman.

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    Let me make an observation in response to one of the observations made by Director Raines. There have been times when Justice law enforcement agencies and Treasury law enforcement agencies have had disagreements on functions; essentially turf battles.

    I want to say that in recent years, Mr. Chairman, as you may know, OMB has been helpful with respect to law enforcement, ATF, in particular, ballistic imaging, and the Secret Service as well in terms of money laundering issues. I appreciate that. I think that OMB has shown an even handed approach to that.

    I do share the concern which is not necessarily intentional in its result, that when people think of law enforcement, they naturally think of Justice, especially that when we know 40 percent of law enforcement is in fact in Treasury.

    In fact, ATF deals with some of the most dangerous and deranged criminals in America and; not only dangerous but compounded by their derangement in many respects. The funding levels sometimes do get, by the Congress as well as by the Administration, out of balance.

    So, there is a concern. We hope that you will look at that and reflect a concern for making sure that Treasury law enforcement stays as viable as it needs to be. Now, having said that, let me move on to a different subject, the Y2K problem.

    In your latest quarterly report on this issue you report that, ''While good progress is being made, it is not rapid enough overall.'' Now, I am concerned about the implications of that and what you think it might mean to us next year.

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    Mr. RAINES. Well, Mr. Hoyer, I am very concerned about the progress that we are making in dealing with the Y2K problem. The President and the Vice President share that concern. Indeed a few weeks ago, we had a meeting with the Cabinet on which the President, the Vice President, and I all talked to the Members of the Cabinet about the essential requirement that this become a major priority for Members of the Cabinet and all agency heads.

    The Vice President followed up on that with a meeting with the President's management counsel, the chief operating officers of the major agencies where he personally reiterated this message and the priority.

    We have been taking a number of steps, some of them suggested by Members of this Subcommittee and other Members of Congress to try to step up our efforts. The President issued a new Executive Order making sure that each of the agencies is aware that they will be held accountable.

    We have said to the agencies that dealing with the year 2000 problem is their number one information technology issue and they should fund it before any other applications that they have before them.

    The President has just appointed as his Assistant to the President and head of a new council over the year 2000 problem, John Koskiner who was formerly my Deputy Director for Management.

    He has an outstanding management history, dealing with crisis management, and corporate turn arounds, as well as having done an excellent job in the government. His full-time responsibility is to be the year 2000, czar to oversee this problem.
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    It is a very different problem. We are, I think, getting up to speed, but I am concerned that not all the agencies are putting their resources into this.

    I have said to Members of the Cabinet, if they do not personally know the person who is in charge of this problem, if they do not personally know what the plan is, if they do not personally know when the solution is to be in place, they should assume that there is no such person. There is no such plan. There is no such date.

    I can tell you that a number of Cabinet Members have told me since our meeting with them that they have personally become involved in managing this problem. So, it is a great difficulty. I share your concern and that of the Chairman.

    Indeed, virtually every speech I give now, almost no matter who it is to, I include a segment about the year 2000 problem, and it is not just a federal issue.

    It is a problem for state and local governments.

    It is a problem for private companies. It is a particular problem with our counterparts in foreign countries who are further behind than any segment in the United States.

    Just last evening, I gave a talk to the city council and other representatives from the Chamber of Commerce from the City of New Orleans, which I spent a period of time talking about the year 2000 problem. So, this is something to which I have given a great deal of attention.
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    It is a problem that is going to require ever-increasing effort. The numbers in our report I predict will get worse before they get better. So, we do not have a poly-annish view toward this. We think this is going to take an enormous amount of effort by the agencies to have this problem dealt with on time.


    Mr. HOYER. Well, you are right. The Chairman certainly has been as outspoken and strong a leader on this issue as any of us. I have joined with him. We are all very concerned what might happen next year as we move close to 2000.

    It is tough to think of what will happen with the international community which is behind us. I might ask you another question in terms of resources, the utilization of resources.

    Has OMB looked at the availability of sufficient resources in the fiscal year 1998 as well as fiscal year 1999 budgets in all of the departments? Was this a priority to make sure they had sufficient resources to carry this out?

    Mr. RAINES. It was indeed a priority in 1998 and in 1999. We have said it is the first priority for each agency. That if they are short of resources for the year 2000 problem, that they should set aside other application development efforts and move the money to year 2000.

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    We have a number of agencies who are in fact doing that. So, we have estimated, I think in our last report, that this is going to cost about $4.7 billion. I assure you that before we give you our last report on this, it will cost more than that. We are encouraging agencies to make the investments needed to ensure that their systems are year 2000 compliant.

    Mr. HOYER. Thank you, Mr. Chairman.

    I know I have used my time. I will ask further questions on the second round.

    Mr. KOLBE. Ms. Meek.


    Ms. MEEK. Yes. Thank you, Mr. Chairman.

    I understand, Director, that OMB has certain targets that they set to reduce civilian employment. Is that correct?

    Mr. RAINES. We had an initial target that was met that was tied to the funding of the Crime Trust Fund. We currently do not have a numerical target that we are aiming to government-wide.

    There are certain agencies who have pledges that they are all working toward. We have not set a new numerical target for personnel level.
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    Ms. MEEK. So, you do set certain employment ceilings for certain agencies?

    Mr. RAINES. In each agency, we make a determination with that agency as to how many people they will need. It is not an arbitrary number. We are not artificially trying to hold down agencies who may have needs. In part, because we have done a very good job at bringing down the level of civilian employment. We are down over 300,000. We have not tried to set arbitrary FTE requirements on the agencies.

    Ms. MEEK. Well, let me see if I can set sort of a scenario as to what could happen and ask you how you would respond to that.

    This has to do with Customs. That is very crucial to the area I represent. Let us say if a private company such as Federal Express and move or UPS is willing to reimburse the Federal Government for Customs inspectors for its operations.

    These additional Customs jobs must be offset, as I understand it. I need to know from you if they are, if that operation does happen. If they are offset by cuts by employment elsewhere in the Federal Government, do you match those off or are they offset?

    If so, that means that whatever happens will be at the cost of the Customs area. If UPS or one of these companies can provide those inspectors, then you must offset it, according to what I understand. Am I correct with that?

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    Mr. RAINES. No. We have actually entered into agreements with agencies who have reimbursement authority where we have entered into agreements with them where if they can pay for the additional employees through the reimbursements, that they have been permitted to increase the employment.

    It is done on an agency-by-agency basis. Now, sometimes agencies will come and they will only have one year of funding and do not want to hire permanent employees. We will be very resistent to that.

    Where we have had agencies that are providing service, they can collect a user fee for it. We have been willing to enter into agreements with them to account for those increases.

    Ms. MEEK. It is not taken out of any of the Custom functions.

    Mr. RAINES. I would have to look at that particular case. I am not familiar with that particular case. I am simply saying we have not done this in other areas. I will give you an example.

    The Veterans Administration, historically any collection that the Veterans Hospital made were turned over to the Treasury and were not available to the Veterans Department, and therefore could not support employment in the Veterans Department.

    In last year's budget, together with Congress, we permitted the VA to keep those fees which they can then use to support FTEs. We try to match the FTEs to what the agency can support as opposed to simply having an arbitrary number that is there.
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    We are obviously not trying to grow the size of the federal work force. Indeed, the only part of the federal work force that is really growing is the law enforcement area.

    Where agencies can demonstrate that they have the resources to pay for the people, we have been willing to enter into agreements with them permitting them to do so.

    Ms. MEEK. So, their association with the business community would not prohibit them from getting the same allocation or a similar allocation in some other Customs' function. It is not taken out of their hides.

    Mr. RAINES. In fact, if anything it probably would improve their argument because it would have a direct connection to providing improved customer service which is one of our major management objectives. The extent to which that can occur could be very helpful. It is a major objective of the Vice President, for example, to improve customer service with all of our agencies.

    Ms. MEEK. All right. Thank you.

    Mr. KOLBE. Mr. Price.


    Mr. PRICE. Thank you, Mr. Chairman. Mr. Raines, let me add my welcome and my commendation for the work you are doing and for the budget you just submitted in particular. The budget for fiscal year 1999 is balanced three years ahead of projections with a number of well-targeted initiatives, all of them paid for within the parameters of that budget.
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    I commend you for the quality of that effort. I want to return in a moment to a question involving some of those broader issues, but let me first focus on a line of questioning that the Chairman has initiated here today. It is directly related to the work of this Subcommittee. That is the disparity between Treasury and Justice, the law enforcement funding.

    I understand you do not want to set up a zero sum conflict between those two. I am not suggesting that you should. We have, in the course of our hearings this season, come across some fairly disturbing shortfalls in law enforcement funding in some of the projections for next year. I would like to ask you to address them further.

    Let me talk about ATF, the Bureau of Alcohol, Tobacco, and Firearms. When Director McGaw testified before us, he indicated that his agency is currently inspecting 73 percent of explosives facilities, far short of the 100-percent goal that he is reaching for.

    He says he requested 56 additional FTEs to reach the 100-percent goal and that OMB approved a request of only 24; less than half. The Director says the 24 additional FTEs will take the agency only up about 7 percent, to an annual inspection rate of maybe 80-percent.

    Now, you know as well as we do that this is an area of increasing concern. We certainly know it in North Carolina. Given the fact that there are increasing numbers of criminals and increasing severity of crimes involving explosives, I wonder if you could tell us what the rationale was behind funding less than half of ATF's request for these additional inspectors?

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    Mr. RAINES. Our overriding limitation in looking at the budget in fiscal year 1999 were the very tight caps on domestic discretionary spending that were negotiated as a part of the Balanced Budget Agreement last year.

    As you know, discretionary spending will decline by about 10-percent in real terms between 1998 and the year 2002. So, we are allocating scarcity when we put together that budget. ATF's budget increased in our request by $23 million or 4.1 percent year over year.

    That is up in the range of some of the highest increases of any agency in the government.

    Mr. PRICE. Could you repeat that? That is what percentage over what period?

    Mr. RAINES. It is 4.1 percent from 1998 enacted to the President's 1999 budget. At 4.1 percent that is a significant increase compared to other agencies. It is appropriate because law enforcement is a priority.

    The work of the ATF is very important. So, we do not apologize for them doing better than other agencies, some of whom were flat or declining. It is, in the context of a very tight budget where the caps are very tight, it is a significant investment of the scarce funds that were available to the President.

    Mr. PRICE. I noted in your response to Chairman Kolbe you gave a very similar answer with respect to Customs. What does that 4.1-percent increase look like in the context of the last several years? Do you have those figures readily available?
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    Mr. RAINES. I do not believe I have them at my finger tips for the ATF. I can get those for you.

    Mr. PRICE. That would be helpful, just to put this in a little broader context. I realize that the kind of budget restraint you are being praised for on the one hand, you are being asked to defend on the other when it comes to specific governmental functions.

    We are all, of course, interested in the specifics, as well as the overall numbers. This line of questioning, which a number of us have engaged in, underscores the priority we assign to this, and to some of the things we have heard over the last couple of weeks about law enforcement functions that are being only partially addressed.

    So, I would appreciate those further figures. We will refer to them in the future.

    [The figures referred to follow:]
    "The Official Committee record contains additional material here."

    Mr. PRICE. Let me return now to a considerably broader issue in the limited time I have here or is my time up?

    Mr. KOLBE. Time is expired.

    Mr. PRICE. All right. I will wait until the second round. Thank you.
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    Mr. KOLBE. Mr. Aderholt.


    Mr. ADERHOLT. Thank you, Mr. Chairman. Mr. Raines, thank you for being here today. I understand that OMB uses circulars to communicate certain instructions to executive departments on a broad range of issues relating to the budget and financial management. Is that correct?

    Mr. RAINES. That is correct.

    Mr. ADERHOLT. While certainly these circulars do not constitute regulation, there is an expectation that executive departments and agencies will comply with these circulars. In fact, I understand that circular A–1 states that the provisions of any circular or bulletin, except as otherwise specifically provided, shall be observed by each and every department or established in so far as the subject matter pertains to the affairs of such department or established.

    I take it that you agree with OMB's expectation with regard to the Executive Branch compliance with these circulars and bulletins; correct?

    Mr. RAINES. Yes, sir.

    Mr. ADERHOLT. I would like to direct your attention to a circular A-110, which is entitled ''The Uniformed Administrative Requirements For Grants and Agreements With Institutions For Higher Education, Hospitals, and Other Non-Profit Organizations.''
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    It was last revised August 29, 1997. In that particular circular under subpart C, the circular establishes standards for executive departments, agencies, and award recipients regarding data produced under a particular award.

    The circular states that under section 36 of Intangible Property it says,

    Unless waived by the federal awarding agency, the Federal Government shall have the right to:

    one, obtain, reproduce, publish or otherwise use the data first produced under an award; and

    two, authorize others to receive, reproduce, publish or otherwise use such data for federal purposes:

    I just wanted to ask you what you believed the intent or rationale behind this requirement on executive branches and departments is?

    Mr. RAINES. Well, if I remember correctly, our general policy is that if the federal government has paid for the creation of intellectual property, for example, that should be generally available to the public.

    I believe what that is referring to is that the creation of such intellectual property would be or should be available to the public, unless there has been a determination by the agency to the contrary specifically.
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    Mr. ADERHOLT. I guess also in essence it is to protect the interest of the taxpayer to make sure that they assure the public they receive the full benefit from their expenditure I would assume as well.

    Mr. RAINES. Yes, that is the same. I was trying to make the same point. To make sure that if the government is paying for something, it is not just kept as a private property of the grant recipient, but that it should be available generally to the public.

    Mr. ADERHOLT. Also, of course I mentioned, it says ''unless otherwise waived by the federal awarding agency.''

    As a matter of policy, how often do federal agencies waive this right to obtain or reproduce or publish the data under a federal award?

    Can you provide the Committee with examples where agencies have willingly waived the right obtain the data?

    Mr. RAINES. We would have to look to see. I am sure we do not keep track of such waivers, but we could see if there are some examples of that.

    Mr. ADERHOLT. All right, thank you, if you could provide that. That is all.

    [The information referred to follows:]
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    "The Official Committee record contains additional material here."


    Mr. KOLBE. Thank you Mr. Aderholt.

    Mr. Director, I am going to return to the Y2K issue here and leave federal law enforcement for the moment. I appreciate the comments you made about how you talk about this every place you go and the concern that you have.

    Excuse me if I just act a little bit like a worry wart on this issue here. Maybe I have been reading too much. I just read a Forbes' piece on it and a Business Week's piece on it and scanning a book on the subject here.

    It is a serious issue. I am concerned when I look at your statement here. The sum total of your comments on Y2K is ''highlights for the OMB Plan for 1999 include . . . achieving compliance with the year 2000 computer changes.'' That is it.

    Starting a couple of years ago, in 1997, Congress required the OMB to submit reports on agency progress to correct the Y2K computer problem. Your most recent report submitted yesterday shows that only 35 percent of the agency's mission critical systems are compliant.

    Sixty-percent of the 7,850 systems; That is down, I might say, from the last quarterly report. still must be repaired or replaced.
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    Now, in and of itself, that should not be a matter of concern because all of these things may be coming together at the right time. In the end, we are going to resolve all of these, but there is some real concern about that. Some other Committees have expressed concern and doubt that that will happen. The Information Technology Subcommittee, Chaired by Representative Horn, reports that, in their view, one-third of the Federal Government's critical information systems will not meet the Y2K conversion date deadline.

    They also say that the Administration is not taking an effective leadership role in coordinating and ensuring Y2K compliance, which will contribute to the crisis we are facing. So, let me, if I might, ask you a couple of questions.

    Since one of the strategic objectives of OMB is ''working within and across agencies to identify solutions to a mission-critical problems'' is it safe to assume that you will consider Y2K a mission-critical problem?

    Mr. RAINES. Absolutely.

    Mr. KOLBE. The literature on the subject is pretty consistent. It is not a technical problem. It is a managerial problem. Do you agree; that the issue really is mostly getting management to focus on this problem and deal with the complex labor requirements that are required to actually address the problem?

    Mr. RAINES. Well, I do not think I would agree with that. I think that management is a very large piece of it. So, I do not disagree that, that is very important. That is why I emphasized the need for agency heads to be directly involved.
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    If nothing else, it sends a very important signal of priority. There are some technical issues that are involved here. There are some technical resource issues. Let me give you an example.

    The FAA had a plan for dealing with the year 2000 problem. Their plan involved updating some of the inroute computer systems which are large main frame computers that have been in place for years.

    A part of it was they were focused on their software. The hardware, they were dependent on the manufacturer to provide the solution. They were recently told by the manufacturer, that the manufacturer was not going to provide a solution to the hardware problem.

    That there were not enough of these systems still in use. We are one of the few remaining users of these old main frames. And they are just not going to do that. Now, that is a technical problem that is now going to turn itself into a huge management problem.

    That is something that, from the technical side, has caused difficulties. Another is the software renovation. There are tools now that have been developed for going through legacy applications to find out what is in them.

    For many of these big main frame applications, there is no documentation as to what is in them. They have been changed so many times over the years without adequate documentation, that no one knows what the use of date coding is within the application. It may be buried down two or three levels.
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    So, there is a need to use these new technical resources to go in and actually find what is in this application. So, there are some technical issues. The last one I would mention is a very simple one.

    It is not high tech, but it involves thinking technically. I will give you an example. Lots of elevators have within them a computer chip that ensures that the elevator is maintained periodically.

    If it has not been maintained it is to shut the system down. What it does is every day it says, ''What is today?'' It compares today to the last time there was maintenance. If the period is too long, the elevator goes to the basement and shuts down.

    Well, when the year 2000 problem comes around, it is going to say, ''What is today?'' It is going to say 1900. It is going to calculate the difference in time between 1900 and the last time it was serviced.

    Then it is going to say, ''Oops, I have got to shut down.'' Now, that is not a high tech problem, but you have to know how many of these embedded chips that there are. There are more embedded chips than any of us just sitting in normal life would ever think about. If you said Y2K problem and someone said elevator, I mean, none of us would naturally say, yes, that is one of the problems. Well, that is just an example. So, there are technical aspects to it.

    I do not want to elevate the technical over the managerial, but I do want to indicate this is not something that if we simply have a lot of good generalists looking at it, that they will be able to cure it. There is a need for some serious technical skill.
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    Mr. KOLBE. I appreciate that answer. I think it kind of confirms what I am saying that the elevator is not, as you have said, a purely technical issue. It is a labor-intensive thing; identifying the problems and then making the changes.

    The changes are not that difficult to make. You just have to do it. You have to find them and do it and make those kinds of changes.

    Mr. Director, you said that your office has a policy that you would withhold or not provide, or you would look askance at requests by agencies for funding for information technology that was not Y2K specific.

    If they were not making sufficient progress, if that agency was not making sufficient progress on the Y2K, can you tell me if any agency request for non-2000 information technology investments were denied by OMB as a result? If so, which ones?

    Mr. RAINES. No. During our budget review process, there were numerous requests by agencies that for additional funding for non-Y2K where they were not making sufficient progress, where we diverted the money to Y2K——

    Mr. KOLBE. That was my question. They were specifically diverted or not approved for those non-Y2K because of their failure to really address, or their slowness to address, the Y2K problem?

    Mr. RAINES. Yes. We also took the position that we were not simply going to give them money for Y2K, in addition to funds they already had. You have before you now a supplemental request from the IRS where they want to invest additional funds in Y2K.
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    We said to them what we have said to everyone. This is your number one priority. You should reprioritize within the agency to move funds that are available to you to Y2K. They have a supplemental request up here now to do just that, which would give them the authority to spend additional money on year 2000.

    Mr. KOLBE. I have some more questions in this area, but my time is up. We will come back. Mr. Hoyer.


    Mr. HOYER. Thank you, Mr. Chairman. I mentioned the economy was in probably the best shape it has been in since President Kennedy's years. Would you tell the Committee whether you think that is accurate?

    Mr. RAINES. It is accurate. It may be that the economy is in better shape than those years, which is startling to me. I did not think that I would ever sit around seeing that. The reason I say that is that this expansion is being propelled fundamentally by the private sector.

    Whereas, the later years of expansion in the 1960s was being propelled by government spending; particular the build-up in Viet Nam. So, we are now moving into the time when we are going to equal or exceed the length of that expansion without a buildup of government spending as the thrust.

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    I think that is, in part, accounting for this low inflation, steady growth, job creation nature of this expansion, as well as the additional revenues that it is throwing off for governments at all levels.

    Mr. HOYER. I think your observation in terms of being private sector driven is absolutely correct. I have talked repeatedly about the Kensian approach to government taken by the Reagan Administration and fueled by deficit financing the economy, which I think was what happened.

    We poured vast amounts of deficit spending into the economy. At that point in time, did you think we would have a surplus in fiscal year 1998?

    Mr. RAINES. Not in 1998. When we closed up the budget, we thought we would have a slight deficit in fiscal year 1998.


    Mr. HOYER. We are all very pleased with the budget report and I mentioned the CBO report on fiscal year 1998. We are now going to have a surplus. While the budget was put together in October, November, December of last year, happily under the law the President will have another opportunity in August to make a determination whether FEPCA, under the present status of the economy should be followed.

    You and I have had some discussions, all of which have been good-humored, but also serious on both sides. I want to ask you two questions. First of all, I would hope you would do this.
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    I hope that OMB and the Administration, as it is required to under law, revisits the recommendations it will make by August 31st on federal employee pay.

    We will look at the economy's present state and compare that with FEPCA requirements and follow the law. Would you like to comment on that?

    Mr. RAINES. Well, we will certainly follow the law.

    Mr. HOYER. I think that may be enough.

    Mr. RAINES. We have had very good discussions on this issue. It is quite a serious ones. There is federal pay, as well as other areas.

    For example, various trust funds, Highway Trust Fund and other trust funds have been areas in which we have had very strong fiscal restraint during our periods of serious deficits. This President and other Presidents have utilized the authority given to them in the law. We have expressed our policy concerns about some aspects of this Act and how it functions and expressed a desire to work with Congress to see if we could improve some of the calculations under the Act.

    Certainly, the time is coming when we will have to look very carefully at the interaction of our fiscal policy decisions and the calculations of pay under this Act. They have very significant consequences.

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    So, we have to be very careful. For example, the pay raise that currently would be called for under the Act would cost an additional $7.4 billion.

    Mr. HOYER. What figure are you using; at 12 percent?

    Mr. RAINES. At 12 percent. That is over the $2.5 billion we already have. That $7.4 billion would have to come from agency budgets within the caps that we have. So, that is a very large resource allocation question.

    I think that we need to face that question just as we are now facing questions related to the Highway Trust Fund and other ones, and make some very tough decisions about how we are going to proceed in allocating those resources.

    Mr. HOYER. I thank the Director for his answer as usual, who is thoughtful, candid, and honest. Mr. Chairman, this Committee has had the opportunity through the years to, as you know, adjust federal pay in a fashion that we thought was fair. That has been supported very strongly by the Congress, by the House, and by the Senate. This is an issue which, as you know, we have not visited recently.

    There has not been an adjustment from the President's numbers for a number of years, specifically because I and others understood the position that the Administration was in, and we were, as a Congress, and the state of the budget deficit.

    I thought it inappropriate to visit it at that point in time. I think it is appropriate for us to visit it now. We do have a surplus. There is a statute on the books. That statute passed with some 25 Members voting against it. It passed overwhelmingly.
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    We made a commitment to our federal employees that they would be treated comparably with the private sector. That is always fair. We should not do more than the private sector. As a matter of fact, the statute provides that ultimately we will do 95-percent of private sector comparability.

    The last question, therefore, Mr. Chairman, I would ask the Director is, because I think this is very legitimate and we need the Director to deal with it.

    What steps have you and/or the Administration taken to deal with the coming to a consensus on a formula that you believe accurately reflects what would be a fair pay system? I want to tell you, frankly, since 1981 I have had Administrations tell me, obviously Republican and Democratic, that gee whiz, it would be nice to do, but the formula does not accurately reflect what the pay adjustment ought to be.

    Since 1981, I have been hearing that and nobody has ever come up with a formula where they said, but this one does. I am in the position, as you know, Mr. Director, of saying fine. Which one does?

    It seems to me it is a serious matter. In fairness to our federal employees who do, in my opinion, extraordinary jobs, that we ought to have a formula that we can all refer to and say is the accurate formula.

    We know it is a difficult task. They do have some good benefits. Certainly, the retirement benefits are superior to the private sector. Nobody doubts that. The health benefit has become as good as the private sector, not because it is has gotten better, but because the private sector has come down, both in terms of contributions and in terms of benefits.
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    On pay levels, even if you take those into consideration, I am convinced that whatever formula you come up with will show a significant disparity that needs to be addressed, if we are going to remain competitive in the market place.

    My last comment, and I know, Mr. Chairman, I have gone some time, but this is a very big issue that we are going to have to deal with in this Committee, in my opinion, this year.

    I am not sure where we are going to get the money. We clearly cannot go to 12 percent. That would be totally unreasonable. We do not have $7 billion.

    I would certainly hope, Mr. Chairman, that we could focus on making an adjustment above the 3.1 percent that is proposed because that 3.1 percent, when compared with 12 percent, is 25 percent of what the law, in my opinion, requires.

    So, we are going to have to deal with this. We ought to deal with this in fairness to our federal employees.

    Mr. RAINES. Well, Mr. Hoyer, since we last talked about this, we have set up a working group between OMB, OPM, and the unions to begin talking about this issue. We have had several meetings between employee representatives and senior Administration officials.

    I have had meetings myself with them to talk about the issue. OPM has included in its strategic plan and in its performance plan coming up with a pay reform proposal. So, we have begun the process.
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    We certainly have not concluded it. I think we are getting the focus more on the issue of how can we have a process that we can all depend on. Where it does not become a litigated issue each year.

    I agree with you. I think federal employees have a right to be considered. That their pay is not considered to be the last item to be put into the budget. I think that is wrong.

    How we get from where we are to a pay system that makes sense for the Federal Government I think is important, if for no other reason than from a management standpoint. We all put a lot of emphasis now on making the government work better.

    We have got a lot of difficult problems. How will we expect to deal with all of these and, at the same time, underpay our employees in a tight labor market, does not make a lot of sense.

    Over time, what is going to happen is that our best people are going to leave. They are going to leave and go elsewhere and we are going to be constantly wondering why is it we cannot perform to the levels we would like to perform?

    We will quickly find that we are not being competitive for our best people. That does not mean everybody is our best. So, we are going to have to have some ability to make some judgments. That will be hard for some of the employee representatives to permit judgment to be a part of that process.
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    Good management will require that as well. I am hopeful we will come up with something that can endure and not just simply be a one-year wonder as most of these have been. Then as the reality of the cost hits, then we sort of shrink from carrying it out. I do not personally have the formula yet, but I have been working to try to come up with one.

    Mr. HOYER. Thank you, Mr. Chairman.

    Mr. KOLBE. Mr. Price.


    Mr. PRICE. Thank you, Mr. Chairman.

    Mr. Director, I would like to just briefly refer to the discussion you had with Mr. Aderholt. You may or may not want to comment on this, but it occurs to me that this business of ensuring that the public has access to publicly-funded research has some complexity to it. It requires some common sense in application.

    Departmental waivers may be one thing. Common sense may be another. There are lots of questions that occur to someone thinking about this for five minutes. What is the accountability of the individual researcher?

    What is the responsibility of the individual researcher for responding to requests from whomever? How is this to be administered? What do we mean when we talk about the product of research?
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    Are we talking about review of the transcripts? Are we talking about the laboratory data? Are we talking about material where there may be a confidentiality question? Are we talking about the finished product of the research?

    As I said, you may not want to give a detailed response, but I think there are some complexities here that do not necessarily lend themselves to simplistic solutions.

    Mr. RAINES. I tried to be careful in my answer to talk about the creation of intellectual capital. That is different than reading the circular as being a Freedom of Information Act in disguise.

    The research that the Federal Government typically funds, particularly university research, the results typically are published, if they are publishable. Sometimes the result is something that is not publishable, but it typically is published.

    Most universities insist on that right to be able to publish the result of research. It is important that we encourage the dissemination of research because it does add to our intellectual capital.

    As to the information that is otherwise associated with a grant, we have other laws and regulations that relate to those as to when Freedom of Information requirements apply, when Privacy Act requirements apply, when the ethical requirements for whatever the field of research may be.

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    Those should not be read into a general requirement on the recipients of grants that the product, the intellectual product, the intellectual capital be made available.

    The clearest example of that is where there is a patent that comes from the research. The agencies have to negotiate that with the grantees.

    Who gets the rights to the patent? Who has the rights to the work? It is getting more complicated because now we are encouraging more and more of our grantees to put their own money in.

    Therefore, you must have a negotiation because it is a partnership. We are not paying 100 percent of the cost of many of our grant programs as we did in the past. So, you are going to see on a case-by-case basis where it may in the government's interest to in fact waive its rights because it will encourage the recipient to take certain actions or make certain investments.

    A general proposition that I think is the right one, that the product, the intellectual product of research, must be made available to the public; not only because it is publicly-funded, but because a part of the reason we are funding it is to add to the nation's intellectual capital.


    Mr. PRICE. Absolutely. We should not be funding it if there is not a legitimate public purpose involved. Well, that is very helpful.
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    Let me move to my broader question before my time expires yet again. It has to do with a much remarked upon feature of your budget presentation last month. That is the decision to recommend against spending any surplus that might be generated and to reserve those funds until some kind of long-term Social Security plan is developed.

    The President proposed that and the result, as you remarked before our Budget Committee, would be to buy down the debt owned by the public in the process of reserving those funds.

    Let me ask you for your preliminary comments on this. What if we used that surplus to reduce the debt owed to the Social Security Trust Fund and then prudently invested those funds in a more diverse portfolio, including equities.

    As you know, some have suggested that, including some long-term champions of Social Security. What would be the advantages of such a course in your view? I wonder if you could offer us some brief thoughts on this as we anticipate this national discussion.

    Mr. RAINES. Well, without prejudging where the Administration may come down on this issue, let me give you a little of our analysis of investing Social Security Trust Funds in things other than the special treasuries that they are now invested in.

    The first affect is that investment would count as an outlay. Therefore, if you invested, for example, $10 billion of a surplus, having made that investment would cause that $10 billion to go away in a unified budget, so that you would be spending it in that sense. Since it is a surplus, it would not throw the government into deficit.
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    Then you have got the question of how you make the decision of what to invest in. Equities have traditionally and over long periods of time had substantially higher returns than treasuries.

    So, you would have an expectation of a higher return over the long run. One of the reasons equities have a higher return is that they have a higher risk. That risk is manifested in the volatility in the value of that stock.

    So, that over any period of time, you would expect the value of that portfolio to have substantial changes, as much as 25-percent changes, during any one particular period of time. If you are investing the Trust Fund, what that can mean is that you may see periods in which the value of the Trust Fund would decline dramatically.

    You will see periods where it will rise very dramatically. We would have to, as a government, get comfortable with that prospect and not decide, as many individual investors do, to sell at the bottom because of the drop and then fail to recover to the top and then again buy in at the top and sell at the bottom.

    That is a discipline that the Government would have to develop. We would also have to decide who gets to decide what to invest in.

    Mr. PRICE. We would need to have some type of government structure in which we could have confidence.

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    Mr. RAINES. Well, you would have to have that, but it would have to be fairly independent because very quickly you could understand how for good and sound public policy reasons, people might want to say, well, yes I believe in investing in equities of companies, but not in these kinds of companies; not in companies who engage in these kinds of activities.

    For example, if we were still in the period when South Africa was under an apartheid government, would companies that did business in South Africa be eligible or not? There is a lot of research that has been done by universities as to what affect that has on returns.

    Who would vote the proxies? Since that controls the management of the companies, would the Government vote its proxies? So, there are a number of issues that would have to be resolved in any such plan.

    We would have to, as a government, get ourselves comfortable with the government owning some share of the economy and its actions as an owner of some share of the economy.

    Over the long run, the portfolio theory would tell us that you would have higher returns from investing in equities than you would from investing in fixed rate treasuries.

    Mr. PRICE. Therefore, the solvency of the Trust Fund would presumably be extended by some years.

    Mr. RAINES. Yes. A rough rule of thumb is $100 billion added to the Trust Fund today would extend the life of the Trust Fund by about one year if it was invested in treasuries, and some multiple of one year if it were invested in equities.
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    Mr. PRICE. Thank you, Mr. Chairman.

    Mr. KOLBE. Mr. Aderholt.

    Mr. ADERHOLT. I do not have any questions right now, but I might have some to submit for the record.

    Mr. KOLBE. Certainly. Submit those for the record.

    Mr. KOLBE. Just one thing on what Mr. Hoyer was suggesting here on the issue of voting. I have some other questions back on Y2K. But on voting the proxies, the Thrift Savings Plan does not vote any of the proxies.

    Mr. RAINES. If you own the stock, you do not have any choice. You cannot vote.

    Mr. KOLBE. Is that what we do with the Thrift; all of the stock that is held by the Thrift?

    Mr. RAINES. No. The Thrift Savings Plan actually has an instruction to those to whom are managing the funds that they will vote the proxies in the interest of the shareholders. So, it has been delegated to the managers of the several funds.

    Mr. KOLBE. So, there is no decision by the government.
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    Mr. RAINES. That is right.


    Mr. KOLBE. I have just been advised that the Maryland Basketball Game is on. We have some priorities. I do have a couple of very quick questions.

    Mr. Raines, you gave what I thought was a very good answer on the issue of, or at least I was hopeful about your answer that you have actually withheld or redirected some of the money for non-Y2K information technology in order to resolve this problem.

    You also said, last year, that if agencies were falling behind in reaching their compliance with the Y2K, that you would set up some specific structures, management structures, to oversee it. Have such structures been set up in some agencies? Can you tell us which ones or give us a list for the record of those?

    Mr. RAINES. I can give you a list.

    [The Y2K compliance list referred to follows:]


    All agencies have designated a senior official to be responsible for the Y2K effort. Ordinarily that official is the CIO or reports directly to the CIO. And in every major agency, the agency head is personally involved in assuring that the resources necessary to fix the problem are being applied.
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    In our March 10, 1998 report to the Congress on Y2K progress, we listed six agencies where we believe progress is not satisfactory. In these agencies in particular, the effectiveness of the current management structures is one of the issues we are examining. Of those six agencies, only in the Labor Department are we satisfied with the current structure. In four of them—Education, Energy, Transportation, and AID—we are working very closely with top management to assure that a senior, qualified Y2K team is in place with adequate authority to make satisfactory progress. In the sixth, HHS, the problem is structural. The Health Care Financing Administration has limited ability under statute to induce its Medicare contractors to address the Y2K problem in a timely manner. We have transmitted legislative language that would correct this structural problem.

    Mr. RAINES. Let me just mention quickly two. The IRS has a special board that manages their technology investment.

    Mr. KOLBE. I am very aware of that one.

    Mr. RAINES. We have a representative who sits on that board. Within HCFA, a similar structure has been set-up. We have representation there as well. We are working now with the Department of Education in a similar way with regard to their student loan operations.

    So, we expect that we will see, over time, more of our participation in areas where there needs to be an additional dose of management.

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    Mr. KOLBE. Are there independent mechanisms for overseeing what agencies are doing on the Y2K or do you just rely on their reports when they tell you, oh yes, everything is coming along fine?

    Mr. RAINES. Because we only have 500 people, we cannot do audits.

    Mr. KOLBE. So, what do we do to make sure an agency is really doing what we think they should be doing, that they say they are going to do?

    Mr. RAINES. Well, we have got several. One is these periodic reports that are not just done by their CIOs, but are also reviewed by their budget offices internally. Their Inspectors General have the right to go in and look at whether or not these reports are accurate.

    The second is we have been motivating the general management of the agency through the President's Management Council, to make this one of their management priorities. So, those managers are looking, overseeing this as well as OMB.

    So, there may be cases where the information is not accurate, but I think we are giving an intensity now to the seeking of information that we will have all of the management structures of the Federal Government focusing on this issue through this next year and a half.
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    Mr. KOLBE. One final question, Mr. Raines, on January 2, 2000, we have had a major failure of, let us say, the FAA computer systems. If we have the failure to get Social Security checks in the mail, tell me, where do you think the buck stops on this? Who do you think we should hold responsible for this? Should it be the agency manager, director, or at the level of secretary, or should it be Franklin Raines at OMB, or should it be Congress? Who should it be?

    Mr. RAINES. Well, this is the responsibility of management. All of those of us who signed up for fixing this problem as one of our performance goals should be held responsible.

    OMB has signed up. The Assistant to the President, John Koskinen, has signed up. The Cabinet Members in their performance plans have signed up. I expect that they are holding accountable people within their agencies. So, each of us who signed up in the performance plan should be held accountable. That is why we are working so hard on this to make it happen.

    That is the purpose of performance plans, to get people to sign up, and then you hold them accountable. If we have serious problems, then it will have been a serious management failure.

    It is one that I hope that we can avoid. I cannot promise you there will not be any problems. My hope is that there will not be serious problems because we have focused the best talent in the government on trying to solve this problem.
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    Mr. KOLBE. Thank you, Mr. Raines.

    Unless Mr. Hoyer has some questions that override the basketball game, I am prepared to complete the hearing.

    Mr. HOYER. No, sir I do not. My assumption was, if it were the Arizona game, we would have ended before this. But maybe it will be Maryland and Arizona at some point in time.

    Mr. KOLBE. It could be. Mr. Raines, thank you very much for being with us today. The Subcommittee stands adjourned until tomorrow morning.
    "The Official Committee record contains additional material here."

Friday, March 13, 1998.




Chairman's Opening Statement

    Mr. KOLBE. The meeting of the Subcommittee on Treasury Postal Service and General Government will come to order. We are very pleased this morning to have with us General Barry McCaffrey, the Director of the Office of National Drug Control Policy, as he testifies on the President's 1999 budget request in this area of drug control.
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    The problem of drugs and the human tragedy that it has caused has been with us for a long time. But at no time in history have there been so many resources, so many people and institutions that have felt its sting. We are reminded daily of the destruction that drugs cause in our country, and the damage it wreaks on children and families, the waste that it lays to communities, the millstone that drug production represents to the struggling societies in Latin America and Asia, the health scourge that it represents, the horrific violence, crime, the corruption that it engenders.

    The Federal Government's effort that we mount every year against drugs is tremendous, or at least it seems so. $17.1 billion is requested for fiscal year 1999. But it is only a small part, really, of the total cost that the Nation bears in this fight. Certainly, that $17.1 billion is not too high a price to pay if we can be making a difference in the war against drugs. That is the issue that we have before us today. That is the concern that I have and that our committee has. And I know that is the reason, General McCaffrey, that your office exists today.

    I hope that we are going to be able to explore with ONDCP how you think we are doing in that regard—both in terms of your agency's activity, but even more importantly, in terms of the overall National Drug Strategy and how well we are doing with that. General McCaffrey, you have heard my views and those of some of the others about the concerns that I have expressed in Committee hearings here in the last couple weeks about the imbalance in the resources and the attention that is paid to Treasury law enforcement, which happens to come under the jurisdiction of this subcommittee.

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    I do not believe, however, that my concern about this is a parochial one, just because I chair this Subcommittee, as it is related to resources. I think I would feel the same if I was chairing the Subcommittee that has Justice Department under it. And I say that because both of them are important along my border. It is really whether or not we have an integrated approach to the drug policy, whether or not we have the ability to manage Federal programs so that we can respond to the dynamic situations that confront this country in drugs. It seems to me there is a major disconnect in the development of a coherent policy on law enforcement and the implementation of that policy—and counterdrug efforts are central to that.

    I think, I am afraid, that we are not succeeding, as well as we might as a government in this area. We have the resources, the people. We have talent. We have the will. But we seem to just lack what I would consider a concerted approach to our policy. It is not enough to compile a book with all the Federal programs that are in it or to develop a detailed performance plan that looks good on paper. These are points of departure as we discuss the national drug policy.

    What is needed is to be able to make the best use of our Federal agencies, the State, local, foreign governments with which they work, given the flexibility and the vast funding that is available to our opponents. But that, too, it does not seem to me is happening, and we are not doing the best we can to serve the American public when that happens.

    I know that you oversee the entire Federal counterdrug effort, so I think it is right that you address some of these concerns today. Even if we disagree about the metaphor that is best used to describe the drug problem in our country, whether we talk about it in terms of a disease or war, I think you will agree with me that law enforcement, interdiction and supply control legs are all critical to our success in this effort.
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    General, you oversee an organization that will soon reach an authorized level of 154, including the detailees that are assigned to you. Your budget, chiefly coming from the Special Forfeiture Fund, has grown as well. Although there are misgivings about the top-heaviness of ONDCP, this Committee is certainly giving you the support, all the support and more actually, that has been requested by the Administration, and we wait expectantly to see what it is bringing us.

    I think so far the results are very mixed. Let me highlight a few of those. Last year, you announced that youth drug use seemed to be peaking; that the rate of use and attitudes seemed to be leveling. In the most recent Monitoring the Future Study, however, the tables in your survey indicate there was an increase in drug use of various types, including marijuana, cocaine, heroin, and LSD. While the rate of increase in drug use may be slowing, it is not good enough; we need to see some real and actual reductions.

    Seizures of drugs are up for the Coast Guard, but significantly, significantly, down for Customs, where drugs appear to continue to make it through our borders. Seizures of cocaine by Customs went down significantly in 1997, 12 percent for cocaine. Smuggling appears to be continuing unabated, which suggests that something is going on with new avenues of smuggling into the country.

    New and creative pressures seem to be driving more contraband to where we are not doing the interdiction job; in containers, railcars, cargo trucks, and to new destinations. The seaports are facing massive pressures with mediocre resources, and there is very little inspection of growing railcar traffic between the United States and Mexico.
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    You claim that our international efforts are bearing some fruit, and yet for the reductions of cultivation in Peru and Bolivia, there may be mixed explanations and they seem to be offset by the increased cultivation in Colombia, where our strategy seems very unclear at best. In the Caribbean, where activity is increasing dramatically, we are being caught short, resources there have been reduced quite dramatically.

    Defeating money laundering is critical to throttling the drug lords' business and hitting traffic organizations where it counts. Yet, we seem unable to really get the resources into this area in the direction where I think it is beginning to bear some fruit in several major investigations.

    Operations by law enforcement agencies are being hampered by the lack of adequate tactical, operational intelligence, despite increased funding for intelligence operations of all kinds in different agencies.

    General, I am uneasy that all these resources and energy, and the lives that have been risked, and the lives that have been lost in this struggle, we are not putting it to the best use because we just do not seem to have adequate coordination, both in and out of the budget process to see that all the pieces in this drug fight fit together between agencies of the Federal Government and, frankly, between agencies of State and local and Federal Government, and between the United States and other countries.

    I know that you have to defer to the OMB for some of this problem, but just yesterday before this subcommittee, Director Raines said that OMB does not specifically consider the impact funding one area may have on another. I think the OMB and ONDCP have to take a bigger view to be able to address this problem and to fix it.
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    But finally, I want to credit ONDCP, and I am not trying to be totally critical here today. I want to credit ONDCP with developing a system to measure performance effectiveness. I know about the work that went into the product that you have delivered recently to us, and we are going to continue to evaluate this over the coming year. We accept it as a very good faith effort to make the agency performance accountable so the policy, and most certainly resources, are going to be used in the most effective manner possible.

    Now that the system is in place, it really has to be used; it has to stand up to the test. This subcommittee and, for that matter, I think the whole committee, and I think the entire Congress authorizing committees, as well, is going to be watching this very closely as to how well we monitor and hold the agencies' feet to the fire on their performance standards.

    It is critical that the scarce resources that we are using in this effort have the absolute maximum impact we can. And that may mean that we are going to break somebody's big rice bowl along the way. That, General, is where you have got to be willing to stand up, stick your neck out, and be counted in this fight. You have done it before in your career, and I have every confidence that you can do it again.

    I look forward to hearing from you this morning. I know we have some presentations as part of your remarks. But before I do, let me call on our ranking member, Mr. Hoyer, for his remarks.

    Mr. HOYER. Thank you, Mr. Chairman.

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    Let me echo the chairman's remarks with reference to the scourge of drugs that confronts our country and confronts the international community. It is a cancer in our communities that we seek to eradicate, we seek to confront as effectively as we possibly can. That is why, of course, the Congress in the latter part of the 1980s adopted legislation which set in place an operation to coordinate the drug effort.

    I am pleased to welcome General McCaffrey to this enterprise. General McCaffrey, on numerous occasions, has been requested by his country to confront some of its most deadly enemies. He has done so in every instance with distinction and with courage and with great ability.

    It is important for us to recall that he began his military career at the age of 17 as a cadet at the United States Military Academy. On graduation from the Academy and during the course of his career, he served in four combat tours in the Dominican Republic and two tours in Vietnam and most recently in the Persian Gulf.

    In fact, Mr. Chairman, as you know, when he retired from the United States military, he was the youngest four-star general in the U.S. Army and the most decorated soldier in America. He twice received the Distinguished Service Cross, the Nation's second highest award for valor. He received two awards of the Silver Star for heroism, and three Purple Hearts for wounds that he received in the service of his country.

    It was for all those reasons that the President chose General McCaffrey to lead this critical effort. It was obviously the President's perception that we needed someone of unimpeachable integrity, unquestioned courage, extraordinary organizational skill, who had held large critical enterprises in the past. I believe since undertaking this responsibility, Mr. Chairman, that General McCaffrey has gone about the business not of politics, but of accomplishing an objective. He has done so by bringing to bear his skill in identifying the objectives and organizing to accomplish those objectives.
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    I remember when General Schwarzkopf came back from the victory in the Persian Gulf, he spoke to a joint session of Congress, Mr. Chairman; and you will recall as well, he said to the Congress that he thanked the President, the Congress, and the American public for having the faith and trust in him and the men and women, including General McCaffrey of the forces that we sent to the Persian Gulf to give them an objective, to give them resources sufficient to attain that objective, and then although he did not phrase it exactly this way, getting out of the way. Doing that, we saw ourselves victorious.

    I am convinced, Mr. Chairman, that we can be victorious in this battle as well. In 1989, Mr. Chairman, we spent $6.7 billion on the coordinated drug effort. That was six/tenths of the budget, which was then $1.2 trillion. This year's budget, Mr. Chairman, is $1.7 trillion, and we are going to dedicate 1 percent, a 40-percent increase over what we did in 1989, in the effort to confront those who would undermine the health of our communities, the lives of our young people, the safety of our families by bringing drugs into this country, by selling drugs and by lionizing a drug culture.

    General McCaffrey, I congratulate you for the multifaceted approach that you have outlined in your strategy. That strategy has been attacked, as you know. You are not unused to having your strategies attacked, both rhetorically and on the battlefield. I have confidence that you will be able to answer those attacks, convince the American public of the rightness of the strategy, and the confidence that you have in the effectiveness of that strategy in doing what the American public wants done, eradicating to the extent possible illicit drugs, those undermining the health and safety of our communities, from our communities.

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    So, General, I look forward to hearing from you. This is a very important hearing. It is important that the American public have confidence in our plan and that the Congress have confidence in that plan so that we can implement it in an effective fashion. And as General Schwarzkopf has said, define the objective, allocate the resources necessary to accomplish that objective, and then trust those whose responsibility it is to carry out the plan and accomplish the objective.

    I, General, have confidence that you are such a leader, but I share the chairman's view, and I have said this to you in private as well, it is critical that someone of your skill and ability and reputation ensure that all of the disparate elements of our Federal Government and, indeed, State and local governments that are critical to the accomplishment of this objective do, in fact, coordinate their efforts and marshal the incredible resources that we are spending, $17.1 billion at the Federal level, but billions more at the State and local levels, marshal those efforts for success.

    General, I look forward to your testimony and thank you very much.

    Mr. KOLBE. Thank you very much, Mr. Hoyer. Do any of the other members have any opening statements? All right. We will go directly to General McCaffrey. I think you have a presentation as well that you want to give us this morning. Thank you very much, General McCaffrey, and again welcome.

    General MCCAFFREY. Thank you, Mr. Chairman and Congressman Hoyer, and other members of your committee. Let me, if I may up front, thank you quite sincerely for your own leadership and support, you personally, as well as other members of this committee over the last year.
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    In particular, I could underscore, Mr. Chairman, your own commitment to strengthening the Southwest Border. The 1998 Strategy had $105 million in there for the port and border security initiative. We will deploy a thousand new border patrol agents, and more importantly, possibly in response to your own concern which I share, we will give Customs Service the technology they need so that these 20,000 dedicated men and women of the Customs Service can begin to more effectively do their jobs.

    Now, let me also underscore that there are others in the Congress that have been vital to this interdiction effort. I need to publicly thank Congressman Wolf for his own energy in the interdiction effort as well as the leadership of Congressman Dennis Hastert and others from your caucus.

    I would also like to publicly state my gratitude to all of you that were involved in the National Youth Media Strategy; $195 million bipartisan support, both Houses of Congress. It will pay off and I will talk about that in some detail. But I would specifically mention Congressman Carrie Meeks and her belief in this from the beginning, and the energy with which she personally became involved in it.

    We are in 12 pilot cities right now. We are collecting data; we will try to go nationwide in June. Mr. Chairman, there are present with us in the room, and I am very grateful for their support and participation in creating these strategies, some folks that I would like to recognize; Mary Elizabeth Larson from CADCA has been absolutely vital, integral to our community coalition efforts, and as you know, CADCA represents more than 4,000 community coalitions across America. And with the support of the Portman-Levin bill, which also had very strong bipartisan support in the Senate, we will try and expand the number of those community coalitions from 4,000 to 14,000 in the coming 5 years. So we thank CADCA's leadership and support.
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    We also have Mike Townsend and Sean Clarken, both Vice Presidents for Partnership for a Drug-Free America; our media campaign partner, Jim Burke, of course, has provided overall vision and leadership, 30 some odd professionals who have made absolutely major contributions for 10 years to communicating a no-drug-use message to America's children. I thank them for their participation.

    There are several people here from the Baltimore-Washington HIDTA. They are representative of the more than 20 HIDTAs that are now supported countrywide because of the money that your committee has stood behind. But I thank Tom Carr, Johnny Hughes, Floyd Pond and others for being present with us.

    Finally, let me mention, if I may, probably the most important person around, Dennis Windsheffell, because he is a Lion's Club representative, who has acted as one of our primary leaders to what we call the Civic Alliance. We brought together 33 of the great patriotic organizations of this country, One Hundred Black Men, Kiwanis, YMCA down the list, the rotary of the great organizations that make America work at the community level. And they wrote in the space of 3 days a program that they have dedicated themselves to in the coming years. And we believe that the 56 million Americans who are participants in those 33 coalitions are really another major component of what we are going to achieve in our efforts to confront drug abuse. So I thank all them for being present.

    Let me very briefly, Mr. Chairman, give you an overview of what we are trying to do, and I will do that to give you a context for the $449 million ONDCP budget. But to see that as part of a larger reality, which as you say, involves our leadership of 14 Cabinet officers and President Clinton's Drug Cabinet Council and in nine appropriations bills totaling this coming year $17.1 billion, a 6.8 percent increase with, disproportionately large investments in prevention and treatment of drug abuse, and in linking those treatment programs to the criminal justice system.
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    I would be glad to talk about that larger budget context to the extent that you wish. Let me make sure that I hold up and tell you of the four key documents that are my management tool approved by the President of the United States to bring together this Federal and national effort. Document number 1 by law is the National Drug Strategy that I send to you each year. It was released to the American people by the President in a radio address a few weeks ago. It is a 10-year document.

    We will put it on the table each year to take into account the dynamic changes in this problem over the years. We have suggested that the five goals that are outlined on the chart to your right, and the supporting 32 objectives, represent a coherent long-term look at the problem that is informed by the people in this country in prevention, treatment, law enforcement, education, medicine and coalition building who know what they are talking about.

    This document has been extremely well-received. It should have been. It was the product of more than 3,000 individual consultations, most of them in writing. I, my chief of staff, and my strategic planner read each one of them. So I would underscore that we do have the Strategy. It is widely understood in the field to be the central conceptual outline around which we will organize our efforts.

    The second document you should be aware of is OMB and ONDCP's 5-year drug budget. Now, we ought to be modest in our estimation of how good it is. This is the first time in our history that OMB and ONDCP, with the other nine appropriations bills that we have sent to Congress for the 1999 budget, have had a progression of our drug funding. I welcome your own guidance and leadership, along with the other congressional appropriators, on this issue.
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    I don't think we can talk about drug abuse in America in a 1-year time frame. If we are to see the trade-offs between prevention and treatment and the $36 billion we now spend on locking up 1.7 million Americans, we simply have to have a longer perspective than simply next year's budget. Frank Raines and I offer that for your consideration in that document.

    The third document, and there is a chart here that may be helpful in understanding this, are the performance measures of effectiveness. Mr. Chairman, I thank you for your kind remarks about its utility. This is a revolutionary step for Dr. John Carnevale of my staff, and 26 work groups around the Federal Government who spent over a year of effort to produce this document.

    We think it is probably a first-rate initial attempt to gain a handle on the output functions of government, in response to the 1993 GAO guidance. It finds some way to measure not just how many dollars and manpower were expended on input, or to talk about the process, but to say, what did you achieve with the resources that Congress gave you last year?

    We have identified and articulated 12 outcome functions. Where do we want to be in 10 years? We put numbers on those outcomes. We then backed off and said, what would the 5-year intermediate goals be, and we put numbers on those goals. In the coming year, we will develop annual targets so that our intent clearly is to yield ourselves vulnerable to debate by this committee and others on what did you do last year with the money we gave you. And that is the purpose behind this document. I am sure we will learn from it. I am positive we will find that the 82 intervening variables that we identified may need revision, and I would welcome your own input in that process.
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    Now, let me, though, be unequivocal on one aspect of it. And I have asked Sarah Vogelsberg to put up this chart. If we achieve the 10-year goals as outlined in the President's performance measures of effectiveness, we will have reached the lowest rates of drug abuse in America in 30 years. Before my two shiny new grandsons are in the eighth grade, we would get drug abuse among youngsters and the adult population down to the lowest rates in over three decades. And that is a laudable goal.

    Now, I also think it is absolutely fair for the Congress to debate whether those goals are adequate or whether they can be achieved in a front-loaded manner. I would welcome a debate, founded on expert opinion and studies, as opposed to what I am concerned about, a political debate oriented around the November congressional elections or the Presidential election.

    So that is on the table. We believe those are ambitious but achievable goals. And I would tell you they were developed with the absolute direct involvement of some 200 experts around the country: at UCLA, at the University of Michigan, at Harvard, at Johns Hopkins, at the National Institute of Health, and the National Institute on Drug Abuse. I leaned very heavily on the advice of Dr. Alan Leshner our NIDA Director; Dr. Harold Varmus, a Nobel prize laureate NIH Director, and others. I offer that performance measure of effectiveness for your consideration and debate.

    Now, finally, we have a classified secret document. This is the second year we will put it out. This gives our strategic guidance to the 50 agencies of the government who are involved in either law enforcement sensitive actions or intelligence functions or DOD support of the drug effort. We will try and make sure that this year's achieves a better sense of integration with the unclassified and principal document. That is also on the table.
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    Very quickly, let me mention our own budget. The ONDCP budget is on the table. It includes 154 positions. You are quite right, we are now up to almost full strength, 124 full-time employees.

    I still lack the Senate-approved positions. We have one approved, a very distinguished police chief in Rochester, New York, Bob Warshaw. I will soon, hopefully, see an approval of Mr. Tom Umberg, our Director of Supply Reduction. And we have two more beyond that to table and get approved.

    I think that the budget achieves our purpose, and I would welcome your own questions on the HIDTA program, which is a part of our $449 million, on the Drug-Free Communities Act, on the National Youth Media Strategy, on the CTAC scientific technology budget.

    Let me very quickly talk about some of these programs. Let me see what the next one is. The National Youth Anti-drug Media Campaign, and we can respond to your own questions, but we are enormously encouraged by where this is going. You gave us $195 million, $178 million to be spent this year. We have designed and are now implementing our pilot test phase, $20 million, 12 cities.

    PDFA, of course, is our coequal partner in this. But we have been assisted by some really smart people. The Porter-Novelli Corporation is providing our strategic document and planning. We borrowed DOD's media buying service for this pilot phase. We have had Annenberg School of Journalism involved in it, the QUAD–A, the Ad Council of America, and others.

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    We are seeing some unintended effects that we are going to have to assess before we go national in June. It is prompting a greater sensitivity on the part of these 12 communities to the extent of the problem in their midst, and it is therefore creating a cascading effect in which Americans who are facing this tragedy of drug abuse in their own family, the 13 million of us who are abusing drugs around the country, are now calling in asking for help. We think this is solid good news.

    We are also seeing a tremendous increase in orders for information out of our clearinghouse. We are seeing an enormous increase of volunteerism in which the local news media is also now tracking over to the issue. So the initial program is pretty good. In June we will go countrywide. The big challenge will be a national effort sustained for 5 years that is targeted on 200 different news media areas of the country so that the message is not just national TV, but local radio, local print, on the Internet, and a message that resonates with the target population, Native American, Hispanic, African American, Hawaiian, Southern. The message has to resonate with our children and our parents regionally.

    Next chart. Let me, again, go back to why this is important. If we look at University of Michigan data, one of the four principal Federal studies that we look at each year, Secretary Donna Shalala, of course, being the principal monitor of this study, as well as the household survey, we understand that drug use among adolescents is a function of their attitudes. If we can shape their values between the ages of 9 and 19 and do it with parents, school teachers, ministers, coaches, community coalitions, local law enforcement and this news media campaign, we will then affect their likelihood of being fearful of drugs and not using them. And if we look back over the history of it, on MTF data, we have seen that 1990 youth attitudes started to go bad. In 1991, fear of drugs started to go bad. In 1992 drug use rates went up and it went up for 5 years straight.
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    Now, Mr. Chairman, what happened last year, we ought to be cautious about characterizing. But last year, for the first time in 5 years, it didn't go up. The Household Survey said it went 10.8 percent down to 9 percent. This is not statistically significant. But what is significant was it didn't go up.

    In the Monitoring the Future study, we are seeing a continued momentum in increase in drug use by 12th graders. If you look at the eighth grade population, and I would argue that is the most sensitive group, the drug use, and the value system relating to the use of drugs including alcohol and cigarettes for the first time in 5 years went down and not up. So I would say it is premature to be optimistic. What I hope to alert you to is that next year I hope we are looking back at this last year as the turning point in which we started to bite into youth value systems.

    Next chart. Let me just briefly mention the HIDTA program. We do have the Baltimore-Washington HIDTA in the room. There have been three new HIDTAs identified. I will designate them in the coming weeks. This is a widely applauded program. It began, as you know, a very short time ago with some five HIDTAs, primarily a port of entry approach into the United States. We are now up to $162 million funding for this effort. There are 20 of them.

    We have five of them that link the entire Southwest border. The whole notion is, that local, State and Federal law enforcement and prosecutors—and now we are adding to this council, the corrections community, and to some extent, prevention and treatment people—attempt to integrate their approaches to the drug problem on a regional basis. It is undoubtedly a program that you and others of your colleagues need to consider. As I finish my study this coming summer, I will be recommending further HIDTAs for your consideration.
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    Let me just close up by summarizing the Drug-Free Communities Act. The Portman-Levin bill, of course, was supported very strongly in the Senate by both Senator Grassley and Biden and others.

    We have got the money. It is a $10 million pilot program this year; 8.7 million of that I will put out in grants between now and 30 September. We are going to be careful to be prudent in our awarding of those grants. It is modest. It is 100 to 200 potential grants nationwide. We are designing a system where we place those out so that we have regional diversity, large and small, new and old, and we will try to get some sense of the payoff over the next year. I've asked in this 1999 budget for $20 million; the following year for $40 million. Twenty million will also be a rather modest expansion of the pilot effort.

    But, again, the whole purpose behind this, which as you know, is strongly supported by both parties in both Houses is to explode the number of community-led efforts to some 14,000 before 5 years have gone by.

    Finally, let me mention CTAC, run by Dr. Brandenstein. We have in the budget a $16 million request to fund the Counterdrug Technology Assessment Center. We are very optimistic. We are starting to get a better comprehensive approach to this. As you know, we have a $13 million technology transfer going on in the 1998 budget. We have a partnership with Fort Huachuca to manage that money, and we are going to try to get some of the technology that has been tested and works out in the hands of law enforcement primarily by using the HIDTAs, the 20 HIDTAs you funded, as the mechanism by which we distribute these funds.

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    Let me, if I may, just close up by suggesting that I have pulled together our thinking in a written statement. I would ask, sir, for your consideration to enter this in the record and look forward to responding to your own questions and comments.

    [The information follows:]
    "The Official Committee record contains additional material here."

    Mr. KOLBE. Yes, General McCaffrey, of course, your full statement will be placed in the record, as it always is.

    We will go to questions at this point. And I suspect we have a lot of different questions for you. I know I have several areas that I'd like to direct some questions to. We will try to adhere as closely as possible to the 5-minute rule here so that we go back and forth and do our rounds here.

    General, just something from your testimony, your informal testimony here that I want to ask about. You mentioned that we have 14 Cabinet offices that are involved in these nine appropriations bills. I can't imagine a war being fought—and we use the analogy of war a lot, you are a general, you were brought into this department because we think we have to use a military approach to this thing—where the person at the top, and I put that as you at least under the President, has no line or operational authority. Is that a fundamental problem that we have got in this thing, we have got so diverse and so scattered nobody has the overall operational authority?

    General MCCAFFREY. Well, clearly, I don't have operational responsibility under the 1988 law that authorized my agency. And I might add, we have sent the reauthorization bill over to the Congress. It is being considered. I would argue that.
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    Mr. KOLBE. That wouldn't change that through the reauthorization you have sent.

    General MCCAFFREY. No, it would keep us as a policy budgetary operation.

    Mr. KOLBE. Right.

    General MCCAFFREY. But it is there as a vehicle for you to consider any way you wish to see this agency.

    Mr. KOLBE. I don't have the answer. It would be, obviously, a huge, huge change. I'm just wondering about that.

    General MCCAFFREY. Well let me, if I may directly say, it seems to me that we now have, by Presidential directive, the interagency responsibility to look at all these drug issues, both foreign and domestic. We have started to exercise our certification responsibility under the law on agency budgets.

    I would argue that the big people in my life are absolutely part of the team, Secretary Donna Shalala, Attorney General Janet Reno, Secretary Dick Riley and the others. And some of them have billions of dollars involved in it. The Secretary of Veterans Administration, $1.38 billion, the Secretary of Defense, over $900 million. I think we have a reasonably good coordinating process now in which the strategy is accepted as a conceptual framework in which they understand that the budget is absolutely certified by ONDCP and the OMB and in which I intend to hold all of us accountable for achieving results over time.
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    So I would argue that there is a pretty decent policy consensus and a shared commitment to achieving the results that you demand.

    Mr. KOLBE. Like I say, I don't have the answer to this. Because, politically, probably there is no way that this would be different. But again, using that analogy, it would have been unthinkable for General Schwarzkopf in Desert Storm to have had operational control only over his Army forces, and that he would have convened some council to talk about how the Air Force and the naval forces might have been used, but then they all go back and use them depending on whether they agree or not. They use them as they see fit.

    General MCCAFFREY. Of course, that is how we won World War II, just that way. But it worked a lot better in Desert Storm, I would agree.

    Mr. KOLBE. Well, what do you mean? I mean General Eisenhower did have operational control over all forces at D-Day.

    General MCCAFFREY. Well, that is questionable. I think the Goldwater-Nichols Act has changed in a major way for the better.

    Mr. KOLBE. Well, there is no question about that. Let me go to the five goals. I wonder if we might put that one chart back with the five goals. And I like the goals; I think they are good. But, again, I am just asking questions. Some of these are definitely advocate kinds of questions here. At this point, there is a little bit of everything in there. There is some prevention, there is some treatment, and there is some interdictions in there.
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    Are these goals that again, you have goals in a war that you thrashed out that are political goals, but then if you're talking about military objectives, you use the best intelligence that you have and the commander comes to the decision about what the objectives are going to be. These are clearly the kinds of things that are thrashed out more in the political arena; would you not agree? When I say ''political'' I mean internal, and the larger arena that we deal with.

    General MCCAFFREY. We will exercise leadership after having consulted literally around this country and, in many occasions, the international community. Then we achieved a governmental consensus that this was the way to organize it, and we have had the President approve it. So these five goals, and more importantly, the 32 objectives now that define the outcome of those goals, are an agreed upon concept for our entire government. The 50 agencies, the 14 Cabinet officers, the nine appropriations bills, that is the scheme; that is the concept. That is where we are headed.

    Mr. KOLBE. Okay. Thank you. I haven't even gotten to my starting point here for my line of questioning here. So let me stop and we will go to—I will come back with another line of questioning in a little bit—Mr. Hoyer.

    Mr. HOYER. Mr. Chairman, it is my understanding we are going to go to 12:30; is that correct? So I imagine we will have a number of rounds.

    Mr. KOLBE. Yes.

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    Mr. HOYER. General, I want to ask some additional questions on this round, and then I will go to some more serious questions on the second round. Not that these aren't serious questions, but there are serious concerns about this program, and I want to get to them.

    You have referred to the fact that we are not facing a national drug problem, but a series of regional drug epidemics. I would like you to relate that concept to the 1998 National Drug Strategy and how it ensures that this series of regional epidemics will be addressed in an effective way, especially at the national level.

    General MCCAFFREY. Well, I borrowed some of this thinking from several really distinguished students of this problem. I normally quote Jeremy Travis, who worked for Attorney General Janet Reno, being the author of a very good study that talks about the idea that drug abuse in America does have a regional context. It spreads in a regional way. Different drugs have a different impact on different communities. Methamphetamine has had a devastating impact in the Midwest and Hawaii and San Francisco; but it seems in Washington, New York, and Miami, that the age of the people, the races involved, all of it lends itself to suggesting that to even understand what is going on, you have to collect data in a regional environment; then, organize yourselves to confront it. Since at the end of the day it is not a Washington policy paper, but a community coalition, it is the local law enforcement backing up educators, the health community, and others.

    So I would suggest that the focus we are bringing to bear on this problem is one in which you see the expansion of the HIDTA as a concept that provides Federal resources to allow the police chief, the sheriff, the State attorney general, the State prosecutors and others to coordinate with the Federal agencies, and to do it in a regional context. The same thing will happen with our National Youth Media Strategy.
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    You have got to talk to people in the L.A. basin differently than you talk to those in Hawaii or in the New York City area. We are going to try and reflect that in everything we do: decentralize policy and resources [CLERK'S NOTE.—Agency added ''and distribute them''] to regional actors and then back them up. That is why this Mayors Conference, Mayor Rich Daley, Brent Coles and Scott King and others, have been so important to us to help us see this issue more clearly.

    Mr. HOYER. I think that makes sense, and for the reasons you have stated, obviously there are different problems in different regions. It is a part of a fabric of drugs period, but obviously you are correct. I think there are different aspects of the problem found in different geographical areas of our country.

    You mentioned, if we could put that other chart up, which shows the goals and the performance measures, that the goal that we have is to reduce drug use to the lowest point in 30 years. Now, 30 years ago would have been the 1968 period, which was, from my perspective, having gone through those years after college, different, frankly, from those 5 or 6 or 7 years younger than I. Going to college in the late fifties and early sixties was a radically different experience than going to school in the late sixties and early seventies.

    But I presume that is a period that we are relating to when the drug use and drug culture and drug psychology, and very deleterious, I think, and detrimental philosophy that all could do your own thing, whatever that was, was fomented on young people of America with devastating effects. But that is, I suppose, when our drug use started to rise; is that correct, General?
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    General MCCAFFREY. Of course, I normally lend credence to my own arguments by citing Professor David Mustaf at Yale University, who is probably the best scholar in the country watching the history of drug abuse. Basically, you are quite correct that in 1964 when I left college level studies, there was no drug abuse in America one would argue. By 1968, no one was saying that, and that is why we had 70 million adult Americans, 1 out of 3 in the population, that had used an illegal drug. But we have had worse drug problems before.

    In 1900 to 1918 after the Civil War, there was a rise and fall of opiate and cocaine drug abuse in America. Now not unsurprisingly, when you look at these measures, we put up here current drug use is 6.1 percent. We are saying let's get to 3 percent. We do believe based on expert argument that that's achievable.

    The 30-year low is 1992 at 5.8 percent. In 1992, it came down dramatically from the worst point of 1979 when 26,000,000 Americans were regularly using drugs, or 14 percent of the population. It is half as bad now as it was then. Cocaine use, casual cocaine use is down by 75 percent.

    Again, our problem is more likely to be youth drug use. Most of these have a lag time of a decade or so. The kids who are smoking pot in their adolescent years right now and smoking cigarettes and abusing alcohol, will be the body from which will come the chronic drug abusers of 10 years out. Again, that is why I welcomed your own focus in this committee on supporting us on youth-oriented initiatives.

    We are going to try and raise the age of initiation, for example, of drug use. We will try and make sure that that is later in their life and that youth drug use—12 to 17 years old—currently at 9 percent, down from 10.6 percent last year, goes down to 4.5 percent. The lowest it ever was, was 5.3 percent. So these are very aggressive but achievable goals.
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    Now, if we get out 5 years from now and have some real successes, and I wouldn't argue that couldn't happen. Len Bias death was a gift to other young Americans. It so shocked the country that it and his mother's subsequent speeches around the country knocked down cocaine use in America substantially in one year and so we may see some surprises out of our efforts. But what we said is cut it in half, 4.5 percent of drug use rates for 12 to 17 years old, and that would be the lowest in 30 years.

    Mr. HOYER. I thank you, General. My time is up. But I am going to be referring to those figures in my second round.

    Mr. KOLBE. We will be coming back.

    Mr. Aderholt.

    Mr. ADERHOLT. Thank you, General McCaffrey, for being here today and testifying before the subcommittee. It appears that one of the key foundations of the paid media program is the network of the advertising industry members who have contributed their creative talents to the ad campaigns by the Partnership for a Drug-Free America, which most of us, I think, are all familiar with. What safeguards have you put into place to ensure that those pro bono contributions will continue now that we are paying for the actual broadcast and the print media space?

    General MCCAFFREY. It is a vital question, and it is vital not only to the drug question, but also other public service announcements. If you look back over the past decade that Jim Burke and his associates have been doing this, they maintain a magnificent record. But in the last few years alone, their PSA time went down by 30 percent in dollar value. I think it was worse than that because we weren't getting the time slots to communicate with the target audience we were after. So these dollars have now allowed us to achieve a penetration rate of the target we are talking to, youngsters and their parents, at incredibly high rates.
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    That is what our pilot statistics are telling us. At the same time we are gratified to learn that we are getting the matching PSAs that we had hoped to. We built that into our media negotiation strategy. Now, the details of it are proprietary information by market area, but essentially let me just suggest to you that we have got over a 100 percent of the public service match for media outlets that we needed. It is a surprisingly good news story.

    In Tucson, as an example, we have a total of about 1800 public service announcements as a result of our ad negotiations with TV, radio and print media, and a majority of these PSAs are in attractive time slots. So I think we are getting great support out of the industry.

    Mr. ADERHOLT. One of the things that has convinced, I think, many of us to support this program last year was the fact that we were told the Partnership for a Drug-Free America would be central to the program development; and that is to say that you would draw directly on the experience, which dates all the way back to the Reagan Administration.

    Could you describe to us the nature of ONDCP's agreement with the partnership and what their role would be over the life of this program?

    General MCCAFFREY. Well, Jim Burke is one of probably the most magnificent people I have run into in the last 2 years in this job. He is a personal friend. He has been a mentor. The genesis of this idea was really the two of us talking 2 years ago. He will remain in that posture. We have an MOU with PDFA them that outlines our agreement.

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    Essentially, they act as the principal conduit of the creation of this work pro bono by the industry. And the Ad Council is going to be the principal conduit of PSA matching efforts. PDFA also will be the recipient of scientific and other findings out of the National Institute of Health Community and others, for example, Annenberg School of Journalism, and we will try and provide feedback so that the creative industry hears how we are doing as we evaluate these ads. I would term them as my right hand in exercising this responsibility.

    Mr. ADERHOLT. That is all I have for right now, Mr. Chairman.

    Mr. KOLBE. Mr. Price.

    Mr. PRICE. Thank you, Mr. Chairman. General, welcome. We appreciate your testimony and fine work you are doing. I want to focus on the National Youth Drug Media Campaign, which you have described briefly.

    Last year, Congress appropriated $195 million for that campaign and you are requesting about the same amount in next year's budget. And as you note in your testimony, that makes this one of the largest paid advertising efforts ever undertaken by government. The pilot program ads began airing in January in several cities across the country, and I understand you are going to take this nationwide in late spring. You say in your testimony that you have a goal of reaching on average 90 percent of the target audience at an average frequency of four exposures per week.

    And, of course, that is a far more concentrated exposure than any public service ads that we know about. You also say that prevention experts believe that this public-private campaign is will begin to influence the attitudes of youths in a measurable way 2 or 3 years out. Does that mean that the level of exposure that you are going to be able to reach with these ads is going to be enough to in some significant percentage of cases influence attitudes and behavior?
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    General MCCAFFREY. I think there is very high confidence by all that are involved in it that this single tool will have a measurable impact directly on youth values, and will also have an impact on their parents. Forty percent of the targeting is at parents, not kids. Probably even more importantly is what we anticipate and we are now seeing. It will have unintended secondary effects of enormous benefit to all of us. It is going to create suddenly the demand for treatment and prevention services from families and communities who are suffering and do not understand what they can do about it. Now suddenly they are going to have a telephone number and they can get scientifically valid information from NIDA, from HHS, and from SAMHSA, from Partnership for Drug Free America, and from CADCA on what they can do about it. So I think there will be a direct payoff.

    Having said that, I would argue that the heart and soul of the effort is not the National Youth Media Strategy. It is organizing community coalitions, parents, educators, and local law enforcement to act in concert with one another so that young people from 3:00 p.m. to 7:00 p.m. and on weekends and during the summer have positive engagement with mentors and with activities.

    Mr. PRICE. That was my next question. What kind of partnerships do you anticipate flowing from this? What kind of participation, financial and otherwise, do you expect this 195 million to leverage in bringing forth perhaps complementary ad campaigns but also the kind of community based activities that you are talking about?

    General MCCAFFREY. We are already seeing some incredible response. Phase 3 is when a lot of these will really start coming on-line. We will go nationwide in June with phase 2, but then as soon as possible, I would anticipate October to December, PDFA will have regionally targeted ads and we will start seeing public-private partnerships come on-line. We have already got people like Gateway 2000 with $100,000 and United Parcel Service with $30,000 out in Sioux City in our pilot program. We have got KTIV TV in Sioux City donating all the revenues they got from our paid ads to local coalitions and charities. There is a great will, we sense, among the business community and coalitions not to exploit this but to benefit from it. We went to Hollywood and the Actors Guild has agreed to forgo their payments on these PSAs when we run them under appropriated funding. There is just great cooperation in that creative industry.
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    Mr. PRICE. The professionals involved in this and the media outlets in many cases are recycling the funds.

    General MCCAFFREY. Yes, sir. Very encouraging. In Boise, Idaho the same kind of thing is happening. San Diego too.

    Mr. PRICE. What kind of creative talent have you marshalled to design these ads? This is a notoriously hard audience to influence in the way that we want sometimes. How have you made these ads attractive and is this going to be monitored carefully in this pilot period?

    General MCCAFFREY. Well, we have Partnership for Drug Free America. They have 10 years experience in dealing with arguably the most creative industry in America, which is these advertising firms. They are used to creating results. We have given them a slightly more difficult task than not to impel people to buy a product, but create a new mindset, and values among adolescents and to some extent parents. So it is a tough proposition. There are two new communities that are now in this mix. One of them is the scientific/medical. We need to have Dr. Allen Leschner, our National Institute of Drug Abuse Director and SAMHSA, Dr. Nelba Chavez, involved. They have to be part and parcel of what we are doing. The ads have to have scientific validity. And then, secondly, we are going to start measuring the impact of these ads just like we would do if I was CEO of 3M. What feedback, what return am I getting for my money. So there are three people in the creative mix. That will be something that we will work out in the coming years. I am very optimistic that they are working in partnership now.

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    Mr. PRICE. Thank you. Thank you, Mr. Chairman.

    Mr. KOLBE. We will begin our second round of questions here. General, just kind of a small aside here, what kind of message do you think was sent to people by the snow boarder, Canadian snow boarder at the Olympics who got his medal back after he tested positive for drugs?

    General MCCAFFREY. We were troubled by it. Let me tell you, I am asked what is the most dangerous drug in America. You can show the films from the California narcotics officers of a 30-year old white male on methamphetamines with a blown brain function or watch the devastation of a crack addict age 30, HIV positive, tuberculosis, unemployed, or somebody involved in heroin addiction with the absolute devastation that that causes. I wear this 17-year-old girl's memory bracelet, who died in her first semester at college from heroin abuse. Many of us would argue the most dangerous drug in America is a 12 to 16-year-old regularly smoking pot. And oh, by the way, he probably started with cigarettes and added alcohol. If they do a lot of it, we just got handed as taxpayers a two million dollar potential lifelong liability from that young person's addiction.

    The biggest challenge in our National Youth Media Strategy is how do we talk about why marijuana and cigarettes and alcohol abuse are the principal threats to our young people's future. That was a bad signal in that case. It is unfortunate.

    Mr. KOLBE. That was just purely an aside. I want to move on to something that I know you and I have discussed before. You have heard me talk about it. That is this, what I regard as this troubling imbalance between Justice and Treasury in law enforcement. I think that goes to the whole heart of the question about how we are coordinating these resources. We have had a massive increase in INS and border patrol as you know, but only very token increase in Customs law enforcement and the numbers in Customs—virtually no increase. Meanwhile Customs has recorded a significant drop in the seizures on the southern border. You and everybody agrees that there has really been no drop in supply, so there has clearly been a shift that has taken place here. I have some of the charts that we have used before. We used them with Secretary Rubin here.
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    We have massive amounts of sea containers, railroad cars, truck traffic that are coming in. These [charts] just show the numbers in Justice and in Treasury law enforcement. You can see a rather dramatic increase in the Justice resources that have been available. This is in personnel here. Again, not to take away from the need for more in the area of INS and border patrol, DEA, FBI, all those that are in Justice, but just to ask the question about what are we doing, really to ask the question, are we coordinating the resources in the best way? Is there an explanation as to why law enforcement in one cabinet office should go up much, so much more dramatically than law enforcement in the other? I say the other because the two major law enforcement Cabinet officers being Justice and Treasury, most of us acknowledge that Customs is kind of the first line of defense on the interdiction.

    General MCCAFFREY. Well, Mr. Chairman, let me start off by acknowledging I share your concern. I think you are quite correct. We must have what Customs has called packages of enforcement capability. You cannot build a fence at border patrol and not take into account you will run drug smuggling in increased amounts through the port of entry. If you do the port of entry, you have got to include the Department of Justice lawyers, and administrative detention facilities. If you are going to do that in San Diego, you have to do the Maritime-Coast Guard-border patrol-Customs adjunct to it. I think you are entirely correct. I have given the President a concept which he has approved. We are involved in attempting to come up with a more coherent southwest border strategy than we have had in the past. Basically I share your own viewpoint. We need to work on that.

    Let me if I can, though, give you some other ways of looking at it. First of all, we did come over and ask for drug funding for Customs. Last year you enacted 606 million. We asked for 672 million in the '99 budget. So I hope you find that that is responsive. The interdiction portion of Customs you enacted 501 million last year. We asked in '99 for 558 million. So we are putting increased energy into that effort. Indeed, I pulled out the three budgets I have been privileged to work on, '96 to '99, and Customs had an increase in funding of 19.8 percent in those three budgets. That is not meant to dispute your point, which I think is right on the money. But we do have more energy in Customs.
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    Let me also suggest one caution. When Congress passed the Violent Crime Reduction Trust Fund, they—between '95 and '98 they put almost 16 billion into Justice and 319 million into Treasury. So Congress has put grossly disproportionate funding, I think for probably decent reasons, into Justice as opposed to Treasury. I would also tell you that when you look at the drug piece of Customs and the drug piece of Justice, our own methodology suggests that Justice agencies are 49 percent of the Federal drug control budget, almost half of it. And Treasury law enforcement agencies are 8 percent. They are a much more modest piece of that whole budget.

    Now, if you will, let me tell you what I pledge to you. First of all, we have an incredible public servant, Ray Kelly, going before the Senate for consideration. Hopefully we will pick up leadership in Customs. There is a professional over there, Sam Banks, who really knows what he is doing. Their problem is they have got 20,000 people and more money when what they need is technology. We cannot inspect 82 million cars, 3 1/2 million trucks, 340,000 rail cars with manpower at 39 ports of entry on the busiest international frontier on the face of the Earth. By the way, they are our second biggest trading partner. You cannot do it with mirrors and fiberoptics. You have to have an intelligence system that supports law enforcement better and you have to give them things like back-scatter radar, which we now are proliferating to these other ports of entry. I think that is the future. We need to give our Customs people the tools they need to do their job.

    Mr. KOLBE. My question took all of my time, but if I might just indulge the Members for one follow-up. If you agree with the basic premise of what I am saying—can you raise this issue with—in the budget discussions? Because I don't think I am mischaracterizing Director Raines yesterday, who basically told us, no, the resources are adequately appropriated and they are adequately allocated between the different agencies.
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    General MCCAFFREY. Well, we are working with the President, Erskine Bowles and others, certainly the Attorney General and Secretary Rubin. I have been with them in several meetings on just this point. We owe the President a better concept by this summer on how to do just what you say. I think we have work to do and we owe you a more rational answer on how to support an integrated southwest border approach. I think you are right on the money.

    Mr. KOLBE. Mr. Hoyer.

    Mr. HOYER. Thank you, Mr. Chairman. I share your view as generally you and I have discussed in terms of the focus on the Treasury law enforcement component of this money laundering, critically important for drug dealers because profit is the ultimate objective of the folks who really organize this industry. Clearly I think what I heard Mr. Raines saying yesterday was that, and I appreciate what he was saying, Justice funding is not a function of Treasury funding and Treasury funding is not a function of Justice funding; i.e., discrete decisions are made as to what Justice needs to carry out its objectives, what Treasury needs to carry out its objectives and recommendations made in those two instances, as opposed to saying that if Justice goes up 10 percent, Treasury ought to go up 10 percent.

    I understood his comment there. But unfortunately all too often there is the concept if you are fighting crime you are giving money to Justice. In point of fact, Treasury law enforcement is 40 percent of crime fighting in America. I am very pleased to see Tom Carr here, Johnny Hughes and other members of the Washington-Baltimore HIDTA. We are very enthusiastic about the Washington HIDTA. Last year 186 drug organizations dismantled, 1,616 arrests made, 12 firearms organizations dismantled, 466 weapons seized. This is critical, $11.3 million in assets seized. In other words, the cost of that HIDTA was offset entirely by the dollars that were seized, give or take $200,000 or $300,000. Additionally, looking at the success rate in terms, General, of what you have talked about, which is I think a critical component, if you have got drug buyers that are on drugs, one of the ways to defeat the drug sellers is to get those folks off drugs, stop the consumers from wanting to buy drugs. The Washington HIDTA has a prevention and rehabilitation component which is unique. Prior to HIDTA, 60 percent client dropout rate throughout the Washington Metropolitan Area; HIDTA, 10 percent. Clients testing positive, 100 percent; that is on retesting, 100 percent prior to HIDTA, 13 percent, Mr. Chairman, the success of HIDTA. This was of course started in your State and as you know, you are really the leader on this, it's working. Percent of on time sanctions imposed for failing to go along with drug rehab, 10 percent prior to HIDTA, 75 percent in the Washington metropolitan HIDTA area. This is a staggering statistic. And if we could replicate it, it would be an incredible victory for us. Recidivism rate, before HIDTA, 50 percent. We are spending money and all of this is recycling. Under HIDTA clients, 12 percent recidivism rate, 88 percent not recidivism. That is extraordinary progress that we have made.
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    I congratulate the Baltimore-Washington HIDTA, but I also congratulate you, General, on the effort because HIDTA really is the coordination of all our resources, State, Federal and local and it is working, and my guys, when I say guys, the sheriff, I have three Republicans sheriffs in southern Maryland. Two of them are not directly involved, Charles County is. They are very enthusiastic about this program. Anne Arundel and Prince George's, which is involved, as well as Montgomery and Baltimore County, are very enthusiastic.

    That is not a question really. That is an observation. I take that opportunity to bring it to the attention of the public and to the chairman and the members of this committee, and I congratulate you for your leadership on this effort.

    However, here is the question I have: This timid, defeatist attitude set a lofty but achievable goal with us.

    Let me do the full sentence: ''I urge the President to renounce this timid, defeatist attitude and set a lofty but achievable goal.''

    General, I talked about your career at the outset of this hearing. I do not perceive you as an individual that wants to be associated with a timid, defeatist program. I would like you to comment on the observations that Speaker Gingrich made about this program which you have outlined so well as a timid, defeatist program.

    General MCCAFFREY. Well, let me say first of all that I know and respect the Speaker. He is a brilliant man. I am listening very carefully to his viewpoints and the viewpoints of others. Congressman Denny Hastert, Rob Portman and Bill McCollum certainly were given to me by House Republicans as their leader. I do not have a monopoly on wisdom nor do the people I consult with. So we will be very attentive to the ideas we hear.
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    Having said that, Mr. Chairman, this is a serious effort. This is a result of thousands of hours of work, of me listening carefully to people who know what they are talking about in law enforcement, education, the health professions, religious leadership, and the mayors and governors. That is a management tool. Basically what I have been my entire life is an organizer of people, machinery and money. I have been expected to achieve results and those were really the guidelines upon which I accepted this job. The President of the United States told me to run this in a nonpartisan manner. That is what the law tells me to do. I am determined to offer a rational, effective policy.

    Now, I also would argue that if we do not do that, if we cannot allow the country to come together behind a common sense approach, then we are about to lose four years of addressing this problem seriously. We have got three years left on this. I intended to stick around until the next President of the United States released me and turn over something with momentum and balance in it. That is really where I come down on the issue. It is not only appropriate, but will be valuable to me for Congress to look very carefully at that five-year budget, for Congress to look at the notion of these performance measures of effectiveness, the 12 outcomes, the annual targets, the 82 variables. I take into account your viewpoints, but I do not see how I can provide leadership in the interagency, never mind in the national setting, with slogans. I need sensible objectives and that is what we have put down on paper.

    I thank you for that question, Mr. Congressman. I hope that is responsive to what you are getting at.

    Mr. HOYER. Just to make the point, am I correct in reviewing your record and knowing you as I do that you would not be associated with a timid, defeatist program to attack this critical problem facing America?
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    General MCCAFFREY. Well, I just would say unequivocally, I have been honored to take part in this effort. I feel a tremendous sense of obligation to people in the room like Linda behind me and the therapeutic communities and the mayors I am working with. I see myself as their servant in this effort. I turned in my retirement salary. I would be honored to take part in it for another 3 years. I will not be a hockey puck in a political game. That is really where I come out on it.

    Mr. HOYER. Thank you, general. Thank you, Mr. Chairman.

    Mr. KOLBE. Mr. Aderholt.

    Mr. ADERHOLT. Thank you, Mr. Chairman. Let me follow up with one question. In regard to the safeguards that you have put in place to ensure that the pro bono contributions will continue now that we are actually paying for the actual broadcasts and the print media space, do you ever anticipate ever using public funds to pay for the creative developments of these advertisements?

    General MCCAFFREY. Our notion is we will pay cost of production. I am enormously grateful to the Writers Guild, Producers Guild, Actors Guild and others. The Partnership for a Drug Free America of course is really the lead on this. We will continue to get the creative best out of America's advertising world pro bono. It is very gratifying to see this kind of response.

    Mr. ADERHOLT. My last question deals with another key motivation for the support of many of us, and that is the public-private partnership aspect of the program. Could you define for us how you define public-private partnership as you and the President see it?
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    General MCCAFFREY. Well, we have got an awful lot of it bubbling up now. There is one major concept that I am not really prepared yet to outline to you, in which we have linkages between the big organization corporations and this effort. We are seeing money, talent and energy in the business world and among mayors and among the news media to take part in this effort. So they are already up on the net. They are trying to find a creative way to support what we are doing.

    I would also tell you that I have got to find a better way to link the National Youth Media Strategy and the Safe Drug Free Communities Act. I think there is a linkage there. The telephone numbers ought to impel you not only to have a new attitude toward the threat of methamphetamines but to see that you now are linked into community leadership. I think we are going to move in that direction also to link those two together.

    Mr. ADERHOLT. Thank you, General.

    Mr. KOLBE. Mr. Price.

    Mr. PRICE. Mr. Chairman, thank you. General, I was interested to hear you say a minute ago that 40 percent of the media campaign is going to be aimed at parents. It brings to mind the discussion we had before the subcommittee last year about strategies for involving parents in the whole range of drug control efforts. As you know, we requested in our appropriations bill last year that you pull together information about the efforts that you have underway. We now have a report which details this, a report delivered on February 4, concerning the various strategies for involving parents and mentors in drug control programs. Let me just quote a few sentences from the summary of this report. ''ONDCP, along with its Federal prevention partners, have initiated a range of parenting and mentoring initiatives that seek not only to educate parents on the dangers of drug use but also to provide them with the skills and resources to establish dialogue with their children on drug use, to become mentors to youth in their communities, to recognize how their behavior influences their children's behavior, and to take a leadership role in the communities on prevention issues to reduce the incidence and prevalence of drug use and ensure a drug free future for the Nation's children. Assessment of the effectiveness of these measures are crucial to ensuring that only the most effective programs are implemented in communities throughout the country.''
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    I would like to give you the opportunity to comment on where we go now with this assessment strategy or any other aspects of this report you would choose to highlight?

    General MCCAFFREY. Well, the assessment of course is going to be crucial. The actual National Youth Media Strategy, had built into it from day one an evaluation component trying to get a baseline before we started the ads. We are at midpoint. We are going to gauge them. Then prior to the kids getting out of school we will go back and again try and capture what was the impact of these ads. We thought that was probably inadequate. We have tried to widen the field of view to involve other evaluation actors, not only in the National Youth Media Strategy but all those who take part in the parenting approach to influencing value systems on drug use among kids.

    So there is, in every one of these programs, we will assure you, an evaluation piece. We are trying to build that into the Drug Free Communities Act of 1997 to make sure that every grant we make—100 to 200 this coming year—will require an evaluation component.

    Back the performance measures of effectiveness. This is the document that all of us in the country need to start picking up and using. This does not say a system for assessing the National drug control strategy. It talks about assessing the performance of the National Drug Control Strategy. So if you are receiving federal or state or local money, they need to go back and see what is it we are trying to achieve and how do we intend to go about evaluating it. We have got some excellent tools that are already on the table. Donna Shalala has Monitoring the Future, Household Survey, the DUF data, the DAWN data and other systems. Institute of Justice has got other instruments by which they assess the effectiveness of the various programs.
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    Mr. PRICE. Thank you, Mr. Chairman. I would like to request that we put in the hearing record this brief report on the efforts of General McCaffrey's office to develop parenting and mentoring strategies.

    Mr. KOLBE. Without objection, that will be placed in the record.

    [The information follows:]
    "The Official Committee record contains additional material here."

    Mr. PRICE. Thank you.

    Mr. KOLBE. We will begin what I would guess to be a final round of questioning. We have been joined at the dais by one of our colleagues, Mr. Mica of Florida. I would ask unanimous consent of the Subcommittee Members that the rules be suspended and he be allowed to ask a question when we complete this round.

    Since it does appear this will be our last round, I will try to get into one other thing. I just wanted to come back to the issue that Mr. Hoyer raised, and it is certainly a valid one, about the comments of the Speaker. I think that there can be legitimate differences over the goals that we have and the time frame for those goals. I see much of what as I have listened to the Speaker. I have talked to him some, about his frustration that the timetable is too long on these goals, that we are really not putting our best foot forward and saying that we can do this faster than we have done. I guess the question I have for you, General, don't the long-term goals that we have have impacts in later years? I ask that because if we look at your projected funding, these are—I wish I had this blown up in a larger chart but this is taken from your own funding requests here—estimates of funding. You show beginning with this next year a decline overall, if you measure Treasury, this is just the drug part, the part that is spent by Justice and Treasury on drug interdiction, you show a gradual decline, not massive but a gradual decline over the next several years in drug spending in these two areas. I guess my question is, does this mean that we will be shifting, having a gradual shift away from interdiction over the next several years and if that is true, I think maybe even though I don't believe this has been seen by the Speaker, this may be at the heart of what he is talking about. I wish you would comment on that?
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    General MCCAFFREY. Mr. Chairman, I think one aspect of this is my failure to adequately communicate what we are doing. This 10-year performance measures of effectiveness that we have, 141 pages done with thousands of hours of work, does have a 10-year focus on it. It has 5-year midpoint targets identified and 82 supporting variables. This coming year we will provide some way of getting at annual targets. I welcome the viewpoint of Congressmen and for that matter the country's expert opinion on how we can front load that option. So there is no question that this is not a case where 10 years from now we will ask my daughter, when she is back as the drug czar, how we did. We are going to get a measurement of this next year, sir. I welcome your involvement in telling me if you have a different view of how quickly we can achieve that.

    Having said that, let me also suggest that we cannot do anything without a 10-year perspective on a question of this legal, social, medical and international complexity. We could not build the interstate highway system without a 10-year plan. We could not put a man on the moon without a 10-year plan. It took us 15 years to produce the armed forces that won the Desert Storm war. It takes a 10-year business acquisition plan to buy a Boeing air transport and make sure you have thought through how to exploit it. So I do not think we will ever achieve our purpose if we do not have a perspective that understands this is a generational business we are in. I also expect you to demand results each year. Again that is why I think Donna Shalala and Janet Reno and Dick Riley and I have been careful on how optimistic we sound, but there is no question in my mind we will give you results over time.

    Mr. KOLBE. I want to get into one other area. You didn't really address this question. If you could give me a very quick answer. You still show a decline over the next five years at least in combined Justice-Treasury drug funding.
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    General MCCAFFREY. The '98 to 2003 budget goes from $15.977 billion up to $17.183 billion. It would be a plus 8 percent over that time frame. Here is the tough thing. Here is where Congress can help me with these 5-year budget predictions. If this works, there is no reason that you and I should assume that the drug budget by the Federal Government will go up every year. It should not go up every year. As we get out to five years, if we link drug treatment in the criminal justice system, Janet Reno put $85 million in to break the cycle this year. Donna Shalala put $200 million additional into drug treatment. There is additional money, as I have noted, in Customs. If it works, drug abuse in America is going to go down, not up. We ought to be spending far less money a decade from now than we currently are because we have got 13 million Americans abusing drugs.

    Mr. KOLBE. You are right in one sense, I might have some difference over that, but let me, if I might, in my last question here come to a very specific budget question here. You have requested $251 million from the Special Forfeiture Fund, apart from another $195 million for the media campaign, that includes $20 million for the Drug Free Communities Act, $10 million above last year's funded level, and also $10 million to fund the project to estimate the size of the hard core user population. There is also $26 million there for discretionary spending.

    Can you give us some justification for the $26 million beyond the general description in your budget materials? Did you make specific requests to OMB that were denied that they then just put into a discretionary pot for you? Would you give us some explanation of that?

    General MCCAFFREY. Let me if I may, Mr. Chairman, give you a table in which we laid out our request to OMB and the President's decision on it. Both of them equal $251 million. I asked for $251 million, I got $251 million. OMB rather than funding each one of my line items, chronic user study, domestic heroin, expand break the cycle, modeling drug trafficking flows and intelligence architecture, did not fund any of those lines, wrapped it up, give me $26 million and said, go back and spend this money prudently and get results. So they gave me the money I asked for but moved it down. I asked for no discretionary funds. I got $26 million. Those are the ways we intend to spend it, intelligence, modeling drug trafficking flows, expand break the cycle, domestic heroin and a chronic user study. Then also, as you have already mentioned, drug free communities program and the national media campaign.
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    Mr. KOLBE. You intend to use them in these areas that—I have got that chart.

    [The information follows:]
    "The Official Committee record contains additional material here."

    General MCCAFFREY. Yes, sir, that is our intention.

    Mr. KOLBE. Four areas they didn't put anything in.

    Mr. Hoyer.

    Mr. HOYER. Thank you, Mr. Chairman. General, because I think these things need to be answered and we are going to hear about them in the future, I would like to have you answer them here in this forum. A recent Washington Post article stated that the southwest border, quote, was in shambles. That Mexico has not met its goals or accomplished its counternarcotics objectives, nor have they succeeded in cooperation with the United States. Because clearly this is a critical problem in terms of not only the southwest border, which I know the chairman is concerned about, but also with respect to interdiction efforts generally having the cooperation of our international partners in this effort in South America and Central America, as well as in other parts of the world, would you comment on that story?

    General MCCAFFREY. I thought it was accurate reporting by Molly Moore and Doug Farrah, both very astute reporters. I think most of the facts they probably had right. A lot of them were old information rather than where we think they are now. I think they were probably on the money. Last year on that border there were over 200 violent attacks on our law enforcement officers. Men and women of the Customs Service, Border Patrol, DEA, FBI, and local law enforcement are at risk from massive levels of violence and corruption based on what we say is $50 billion, U.S. funds, spent on illegal drugs, 60 percent of which is coming through Mexico. And by the way, it is not only U.S. dollars driving that, it is U.S. weapons going south. On the other side of the border there is incredible levels of violence and corruption as well as a growing drug problem.
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    We also believe that there is a very strong will on the part of people like their Attorney General Jorge Madraso, their President, elements of the armed forces, the new organized crime unit that Mr. Mariano Horan has put together and others to confront this problem. Thank God for Tom Constantine, the DEA and the FBI training Mexican law enforcement. The Mexican border task forces now finally have funding and people who have been trained and vetted here in the United States.

    The OCU and other elements of Mexican law enforcement fired their whole drug police force, 3000 people, and they started over. The number they now have vetted and on-line is sensitive but significant and growing. They have passed new laws and legal reform. They have coordinated maritime operations with them. We have given them a lot of equipment. Normally I give you a chart, and I will provide that, on extradition, and expulsion of fugitives between both nations has gone from none four years ago to a growing number today. I share a frustration and sense of fear. What we have done though is we have looked at the partners we are working with and we have looked at our interest in defending the American people and said let us work in partnership. We are convinced this is going to pay off for both nations.

    Mr. HOYER. Am I correct then, you believe the certification at this point in time as recommended by the President is appropriate.

    General MCCAFFREY. Yes, sir, no question. The Mexican authorities are in trouble. They know that. They are trying to preserve democracy and the future of their own country from massive levels of internal criminal conduct. We ought to work with them on that.
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    Mr. HOYER. Thank you.

    Mr. KOLBE. Before I call on Mr. Aderholt, let me just say that I was in Mexico 10 days ago and had a meeting with the President and the Attorney General. I think the start they are making, building a new police force for vetting it and using the kind of techniques that we have used—they have very tough drug testing—is very encouraging. But they have a long way to go. They are starting from ground zero with it. I think there is a real commitment there.

    General MCCAFFREY. I might add, I thought the Speaker's comments on that were very helpful as well as Senator Dole and Senator Trent Lott and Mr. Armey, Governor George Bush and the others who have come up on the net and said, let us work with our second biggest trading partner to try and solve a threat that faces both of us.

    Mr. KOLBE. Mr. Aderholt.

    Mr. ADERHOLT. Mr. Chairman, thank you. General, many Americans have heard about the triple fences that have been constructed on our borders where we have concerns about drugs coming across our borders. I have been told that this is very effective in keeping drugs out of the country. I would like to note what your thoughts are on this and do you support that effort? Just briefly give an overview of your thoughts and concerns about that.

    General MCCAFFREY. Yes, sir. We have this 2000-plus mile border. The first month I had this responsibility two years ago I had a group work its entire length. I have been down there multiple times listening to the Border Patrol, the Customs people, local law enforcement, mayors and then crossing into Mexico and asking them for their views on how the two nations can work together to maintain the rule of law, to protect people in those border regions, not only the ones living there but the people moving back and forth across the border. I think we are making progress. One of the things we need is we need to give the manpower technology and doctrine and resources for U.S. unilateral efforts so that on our side of the border we finally have a mechanism, as the chairman has noted, that makes sense. Customs cannot do their job without technology. The Border Patrol could not do their job with the manpower of 3000-plus that they had five years ago. Now they are at 7000. They are programmed to go to 10,000. Some of us are studying whether that is an adequate figure: The best place I have seen is in southern California. There we finally got in the last three or four years through hard work, as I remember it, 46 miles of fencing and a modest increase in border patrol and some technology for the Customs Service. That San Diego-Tijuana area is the biggest international city on the face of the Earth. If I remember the numbers correctly, three years ago there were over 60 murders in that part of the frontier and over 10,000 pounds of drugs seized. Last year because of this new energy and organization there were zero murders and 6 pounds of drugs outside the Customs POEC. And you can go out and look at the beach—I held a press conference out there and looked at families sitting on the beach on both sides of the border where three years ago it was no man's land. We have to extend that kind of common sense thinking to other parts of the border. That is one way and I think there is a lot of commitment to that on the part of the Attorney General and the Secretary of the Treasury.
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    Mr. ADERHOLT. Thank you.

    Mr. KOLBE. We welcome our colleague, Mr. Mica, to the dais here.

    Mr. MICA. Thank you, Mr. Chairman and also our democratic Members, for granting me the opportunity to participate today. As you know, I am on the National Security-International Affairs-Criminal Justice Oversight Subcommittee on the House side that has had the responsibility to deal with our national drug policy. I might say at the outset that we have had the good fortune of working with the director and I will say publicly that General McCaffrey has done an excellent job in restarting the war on drugs. We have had some differences of opinion over the time as to how we should proceed. But I do want to compliment him on his fine efforts. I have just a couple of questions today. We did have a hearing yesterday. We had Admiral Kramek, the commandant of the United States Coast Guard, testify both at a closed session and also a public session and General Charles Wilhelm, Commander in Chief of the United States Southern Command, and also Mr. Donny Marshall, who is the Acting Deputy Administrator of DEA. One of the things that, there are two things that have concerned me and I have been involved in this a bit since 1980 as a staffer over on the Senate side, now on this committee, is that we try to put our limited resources, taxpayer dollars, where they do the most good. I noticed that the President's budget contains $190 million, 12 percent increase for drug interdiction programs over the '98 level. I have also sort of guesstimated, maybe you could help us with this, Director, the level of money that is spent on the source countries and what percentage of increase we see again having dealt in this, sometimes if you can stop drugs at their very source, basic source, it can be cost-effective. I saw a report that said we spend around $200 million on source countries and that is out of about $16 billion overall when you take in treatment, enforcement, education, interdiction, other elements. Could you tell us where we are and what is proposed and do you think that that is adequate?
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    General MCCAFFREY. Let me first of all say that I share a concern on the part of the Coast Guard and the DEA in the Puerto Rico Virgin Islands HIDTA, those who are responsible for the eastern Pacific and western Caribbean. We have got to be more flexible in using the assets and resources. We have to follow these international drug criminals. I am not sure we have got it right yet. I am really grateful for General Wilhelm's leadership on this as well as all the Southwest Border HIDTAs as well as the Caribbean HIDTA. Having said that, our source country strategy is beginning to work. Cocaine comes out of three nations. For 8 years nothing has worked. Last year we finally saw the second year in a row of a decrease in coca cultivation, net, overall, on the Andean Ridge, a dramatic drop of over 40 percent in Peru, a drop, notional, of some 9 percent in Bolivia and probably about 110 metric tons less of cocaine were produced last year than the year before that. It is a function of a lot of things, not just the effectiveness of our DEA, armed forces and Treasury Department team, but also President Fugimori's leadership and political will, the defeat of the Sendero Lominoso, and the reassertion of civil law in growing areas. We have a new team in Bolivia that we are impressed by, President Banzar and others. They have had a national dialogue. They tell us they will take Bolivia out of coca production in the next five years. That is the good news. The bad news about that source country strategy is that Colombia has dramatically increased coca production for the third year in a row. They have lost control of probably 40 percent of the land area of the nation and the armed forces and the police are suffering tactical defeats by battalion-sized units operating in conjunction with the drug cartels. So we have got a problem. But the source country strategy with rather modest investments of U.S. funds is paying off. The INL budget is a problem. It is 46 percent of the level it was in '92. So that is a challenge and I welcome your own thinking on it.

    Mr. MICA. Could you give us the figures of, again, what are the source country, you said they are 42 percent of what they were in 1992.
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    General MCCAFFREY. Forty six.

    Mr. MICA. And they are increased to what, what percentage this year?

    General MCCAFFREY. It has gone up. Essentially international funds goes up 9.6 percent.

    Mr. MICA. Well, again, in the two instances you cited, Bolivia and Peru, we have had cooperative government. We have had problems of potential human rights abuse, but we have had committed leaders in both of those countries, having met with President Fugimori, having discussed the issue personally on a number of occasions with President Banzar. They are committed, they are doing things with a very small amount of money and stopping drugs at their source. Colombia right now we learned yesterday is a total disaster and partly because the money that the Congress funded, the request that we have had for waivers, the granting of waivers to get equipment to the General Serrano, the head of the national police, most of that equipment is still not there. Within the last two weeks I think they suffered an incredible slaughter of 150 troops who are fighting, as you, General, and testimony yesterday indicated that their sole source of hard cash is from narcoterrorism. It is important not only that this Congress funds these efforts but that the money gets to these countries. Columbia may be lost but, Mr. Chairman, it is critical that we get the money to these folks. We have also seen that tough enforcement does work. Mr. Hoyer cited his HIDTA and its success. I thank others for cooperation and this committee for getting a HIDTA in central Florida to get tougher enforcement. I was reminded of how well tough enforcement works when I walked into the Cannon Office Building today. There is an Officer Thompson who is at the corner, I think it is First Street, right near the metro stop. And he was there this morning. He is not there some mornings but when he is there, Officer Thompson enforces the jaywalking law. And this morning no one was jaywalking. I think you talk to almost every staffer, they find that they do not jaywalk when they see Officer Thompson out there. It is a very effective means. In Mr. Hoyer's district, they have a HIDTA that is very effective because we have tougher enforcement. You see a reduction of almost 40 percent of the crime, a lot of the drug trafficking in New York City because a tough prosecutor has instituted tough prosecution.
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    Finally, I would like the Director to provide our committee and your committee with drug prosecutions at the Federal level. The last information we had is that they were down 12 percent. This committee deals with, I think, funding some of the prosecution levels. I believe if you could provide us, Director, with the information and how we could increase the prosecution, getting tough nationally, not just in selected areas where we have a little bit more political clout to get that done, hopefully we could more wisely spend our taxpayers' money. Thank you, Mr. Chairman.

    General MCCAFFREY. Mr. Chairman, let me thank Mr. Mica for his comments. I share his pride in the HIDTA program. I look forward to working with him and Senator Bob Graham in the central Florida designation which is coming up.

    Let me remind us though of what we have in the '99 budget on international funding—last year you enacted $500 million. We are requesting $548.1 million. I would ask for your support for that funding. We have increased our interdiction budget by 36.6 percent. It is going up. We share your view that a rigorous interdiction campaign has to be supported. I will listen for your own ideas on it.

    Now, finally, I will give you the numbers on the Department of Justice, but if I may suggest that Attorney General Reno and the Federal Government, State and local government have one thing we don't lack. It is strong law enforcement. We arrested 1 1/2 million people last year for drug-related crime. In the Federal government we put 19,000 people in front of Federal courts and locked up 17,000 of them. Now 66 percent of our 105,000 Federal prisoners are for drug related offenses. And I am glad of it. I think what is lacking though is an adequate recognition of drug treatment dollars that are effectively linked to that criminal justice system. That is one of the areas we are going to work on. I share Mr. Mica's views that neither prevention nor treatment can work unless we stand behind U.S. law enforcement.
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    Mr. KOLBE. Thank you very much. General McCaffrey, I know that there we have—I have several other questions. I am sure others on the Subcommittee may have other questions for the record. If there is not——

    Mr. HOYER. General, I thank you very much for your testimony. For your leadership and your agreeing to take on this task. Your experience, as I said earlier, in managing large enterprises directed at accomplishing specific and critical objectives I think, is and will bode very well for this effort being successful.

    Mr. KOLBE. I would echo that, General McCaffrey. Thank you very much for your testimony today. We certainly appreciate your being with us and sharing this information with us. We will have other questions as we go through the record here.

    Mr. HOYER. Before we adjourn, we had some significant discussion yesterday about counsel in the White House. The reason I bring this up at this time is, I want to, while it is fresh in everybody's mind, talk about the request for some $4 million or $3.4 million out of the contingency fund that was provided to the House Committee on House Oversight and which has been appropriated. The reason I raise this is because of that sum, Mr. Chairman, that was for contingencies that would be unforeseen. We have already approved at the request of the Speaker, 7 attorneys, 2 researchers to help those attorneys, another paralegal and 2 investigators and a forensic auditor at $60,000 for six months.

    My only point being, Mr. Chairman, that we are not doing too badly ourselves getting counsel on board.
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    Mr. KOLBE. Mr. Hoyer, I am sure we will make that point in the record at the appropriate place.

    The subcommittee will stand adjourned.
    "The Official Committee record contains additional material here."