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Nomination of Alice M. Rivlin : hearing before the Committee on Governmental Affairs, United States Senate, One Hundred Third Congress, first session, on the nomination of Alice M. Rivlin to be Deputy Director, Office of Management and Budget, January 13, 1993 online

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Online LibraryUnited States. Congress. Senate. Committee on GoveNomination of Alice M. Rivlin : hearing before the Committee on Governmental Affairs, United States Senate, One Hundred Third Congress, first session, on the nomination of Alice M. Rivlin to be Deputy Director, Office of Management and Budget, January 13, 1993 → online text (page 1 of 14)
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S. Hrg. 103-251

NOMINATION OF ALICE M. RIVLIN



Y 4. e 74/9: S. HRG, 103-251

Honination of Alice fl. Rivlin, S. H...

HEARING

BEFORE THE

COMMITTEE ON
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE

ONE HUNDRED THIRD CONGRESS
FIRST SESSION

ON

NOMINATION OF ALICE M. RIVLIN TO BE DEPUTY DIRECTOR, OFFICE
OF MANAGEMENT AND BUDGET



JANUARY 13, 1993



Printed for the use of the Committee on Governmental Affairs







DEC 2 3



t^^^-l



^^*^5^^^



U.S. GOVERNMENT PRINTING OFFICE
64-14.5 & WASHINGTON 1 1993



For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402
ISBN 0-16-041702-3



S. Hrg. 103-251

NOMINATION OF ALICE M. RIVLIN



Y 4, G 74/9: S, HRG. 103-251

Honination of ftlice tt. Rivlin* S. H...

HEARING

BEFORE THE

COMMITTEE ON
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE

ONE HUNDRED THIRD CONGRESS

FIRST SESSION
ON

NOMINATION OF ALICE M. RIVLIN TO BE DEPUTY DIRECTOR, OFFICE
OF MANAGEMENT AND BUDGET



JANUARY 13, 1993



Printed for the use of the Committee on Governmental Affairs







DEC 2 3



-'■ ,^



•' - ssssisga



r«"-



U.S. GOVERNMENT PRINTING OFFICE
64-14.5 ±5 WASHINGTON : 1993



For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402
ISBN 0-16-041702-3



COMMITTEE ON GOVERNMENTAL AFFAIRS

JOHN GLENN, Ohio, Chairman

SAM NUNN, Georgia WILLIAM V. ROTH, Jr., Delaware

CARL LEVIN, Michigan TED STEVENS, Alaska

JIM SASSER, Tennessee WILLIAM S. COHEN, Maine

DAVID PRYOR, Arkansas THAD COCHRAN, Mississippi

JOSEPH I. LIEBERMAN, Connecticut JOHN McCAIN, Arizona
DANIEL K. AKAKA, Hawaii
BYRON L. DORGAN, North Dakota

Leonard Weiss, Staff Director

Doris M. Clanton, Assistant Counsel

David F. Plocher, Councel

Mark Goldstein, Professional Staff Member

Franklin G. Polk, Minority Staff Director and Chief Counsel

Michal Sue Prosser, Chief Clerk

(II)



CONTENTS



Opening statements: P^s^

Senator Glenn ^

Senator Roth ^^

Senator Cohen ^'

Senator Dorgan ^a

Senator Cochran j]!

Senator Sasser ^V

Senator Pryor J^

Senator Levin ^„



Senator Lieberman



58



Prepared statement:

Senator McCain ^

WITNESSES
Wednesday, January 13, 1993

Alice M. Rivlin, nominated to be Deputy Director, Office of Management and

Budget ^'f.

Biographical and financial information o

Responses to pre-hearing questions 15

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Responses to additional pre-hearing questions from Senators McCain and

Pryor ^^

(III)



NOMINATION HEARING OF ALICE M. RIVLIN TO
BE DEPUTY DIRECTOR, OFFICE OF MANAGE-
MENT AND BUDGET



WEDNESDAY, JANUARY 13, 1993

U.S. Senate,
Committee on Governmental Affairs,

Washington, DC.

The Committee met, pursuant to notice, at 9:36 a.m., in room
SD-342, Dirksen Senate Office Building, Hon. John Glenn, Chair-
man of the Committee, presiding.

Present: Senators Glenn, Levin, Sasser, Pryor, Lieberman,
Dorgan, Roth, Cohen, and Cochran.

Also Present: Senator Domenici.

Staff Present: Doris Clanton, Mark Goldstein, David Plocher,
Jane McFarland, Lorraine Lewis, Paul Ellis, and Deborah Cohen
(Senator Glenn); Susanne Marshall, Jeff Steger, and John Mercer
(Senator Roth).

OPENING STATEMENT OF SENATOR GLENN

Chairman Glenn. The hearing will be in order.

Good morning. Today the Governmental Affairs Committee
meets to consider the nomination of Dr. Alice Rivlin to be Deputy
Director of the Office of Management and Budget.

Dr. Rivlin is no stranger to government. She has held a number
of government policy and managerial positions over the years and
has served with distinction as the first Director of the Congression-
al Budget Office, and did an admirable job there in setting it up
and running it for what was it — 8 years?

Dr. Rivlin. Eight years.

Chairman Glenn. She has had a long association also with the
Brookings Institution. Dr. Rivlin is currently the Hirst Professor of
Public Policy at George Mason University and is the author of sev-
eral books on economics and public policy, the most recent of which
is entitled, Reviving the American Dream.

When confirmed. Dr. Rivlin will bring to 0MB extensive experi-
ence with the Federal budget as well as the intellectual perspective
necessary to help challenge our existing approaches to government.

All of us know the time has come to make hard choices. We're
hearing all sorts of talk; every time somebody gets on radio or tele-
vision these days, it's to talk about the hard choices. And we all
know that that's true. Our national debt and our Federal budget
deficit must be brought down. The economy, though coming out of

(1)



recession, is moving forward slowly, with job growth inhibited by a
legacy of corporate debt and downsizing.

Our rate of national capital investment, already less than one-
half the investment rate of Japan and lower than our other major
trading partners, continues to fall. The number of Americans with-
out health coverage continues to rise.

For our long-term economic well-being, policies of the Treasury
and the Federal Reserve will largely determine our future long-
term. But for the day-in, day-out operation of government that af-
fects every American — the matching of policy with money re-
sources, the monitoring of stifling overregulation, the reduction of
waste and abuse, etc. — the Director of the Office of Management
and Budget and the Deputy is the second most powerful position in
government, I believe, second only to the President himself.

The solutions to these policy problems depend to a large degree
on the leadership shown by 0MB. The trade-offs, the investments,
the spending cuts — all the decisions that Dr. Rivlin will be involved
in — will be critically important to our future.

If 0MB simply takes a meat cleaver to the budget, those people
who are focused more on the size of government rather than its re-
sponsibilities and quality would be happy; but I doubt if the result
would be salutary. Americans expect their government to help re-
invigorate the economy and strengthen public investment, and that
costs money. But all of us in government, whether in the Executive
or Legislative Branch, must ensure that such money is spent wisely
on programs that are well thought out, effective and get the job
done.

This first requires good information. Last Friday, Comptroller
General Charles Bowsher reported to this Committee that most of
the government's major programs are administered without the
basic information needed to tell managers how effective programs
are. That means that often, we don't know what programs cost, ex-
actly who they reach, and who the major beneficiaries are. And he
struggled, as Senator Roth pointed out, at that hearing to identify
a Federal program that he viewed as being truly well-run and ex-
emplary during the 11 years of his tenure at GAO. "None," that he
could think of offhand, was his answer, and then added he thought
the Army had made significant progress in its management prac-
tices. That was the only one he could think of.

Many of the government's programs are performing poorly be-
cause they suffer from inadequate investment in qualified people,
from poor financial and general management practices, and from a
rapid turnover in political appointees that undermines effective
management.

What can we expect when the average tenure in office of high
government officials is a mere 21 months, time to get another
credit line on their resumes, but not enough time to truly do the
job they were selected to do. Perhaps President-elect Clinton should
be asking appointees to guarantee their remaining on the job for at
least a period much longer than 21 months. I find that 21-month
figure just intolerable.

Although there have been some moves in the right direction, the
"M" in 0MB has not had sufficient emphasis. Just a few exam-



pies — and these are not all of them by any means — from GAO testi-
mony last Friday:

Out of $20 billion in the Farmers Home loan program, $7.6 bil-
lion is in default, and in most instances is just marked off the
books, with new loans being made to those who just defaulted.

Student loan records are kept so poorly that GAO could not get
figures together for an audit that they thought were reliable.

The same with the Pension Benefit Guaranty Corporation,
PBGC; records were too poorly kept to get a reliable analysis, and
that affects the retirement money for many, many working Ameri-
cans with the guarantee that they will have that retirement
money.

Another one — there has been an estimated $2 billion paid by the
government for Medicare costs that should have been paid by in-
surance companies.

Excess inventory in DOD is estimated to be worth $40 billion —
that's excess inventory — up from $10 billion 10 years ago.

IRS receivables that could actually be collected now — not the
ones that are owed by people who have gone into bankruptcy or
firms that have gone into bankruptcy, but $30 billion out there
from solvent firms that should be collected now — is out there and
has not been collected.

And EPA has collected only 10 percent of the $5.7 billion classi-
fied as recoverable.

And on and on. We could go on with others. These are just a few
examples. So obviously, the "M" in 0MB must come to mean more
than it has in the past.

Some programs are not operating effectively because of inad-
equate investment, also, and so no longer have the capacity to per-
form their public missions. And, like any undercapitalized business,
the result is often failure and a waste of the investment, even if
the underlying ideas and objectives are good. Determining which
programs should be retained and which should be eliminated are
among the tough choices facing the Clinton administration and
0MB in particular.

I am particularly pleased that President-elect Clinton has nomi-
nated Dr. Rivlin to be Deputy Director of 0MB, because I believe
she understands the magnitude of our problems, has worked in
these areas, as well as a sense of the urgency we face in finding
solutions.

So I welcome Dr. Rivlin before our Committee this morning and
look forward to working with you. Dr. Rivlin, in the months and
years ahead.

For the record, Committee rules require that an inquiry be con-
ducted into a nominee's experience, qualifications, suitability and
integrity. I think Dr. Rivlin would agree that the Committee's in-
vestigation has been thorough and extensive.

Dr. Rivlin. That's right.

Chairman Glenn. And I want to acknowledge Dr. Rivlin's coop-
eration in providing the necessary information for the Committee
to complete its investigation.

The Committee has received from the nominee financial state-
ments as well as detailed information on her educational back-
ground, employment record, and professional achievements. In ad-



4

dition, Dr. Rivlin has responded in writing to a number of pre-hear-
ing questions submitted by the Committee concerning the duties
and responsibilities of the OMB Deputy Director's position.

Copies of the biographical information and pre-hearing responses
will be placed in the record as part of this hearing and are avail-
able upon request. The financial statements are available for in-
spection by the press or the public in the Committee office.

Committee investigators have also examined the financial disclo-
sure reports submitted by the Office of Government Ethics to
ensure that no conflicts of interest are present.

Finally, I want to note that Senator Roth and I have reviewed
the FBI background investigation report and all other pertinent
matters on Dr. Rivlin; I haven't talked to Senator Roth this morn-
ing, but I found nothing in the FBI report that I thought was of
significance for this hearing this morning.

Did you have a chance to go over it, Senator Roth?

Senator Roth. Yes, I have, Mr. Chairman.

Chairman Glenn. Fine.

Prepared Statement of Senator Glenn

Good Morning. Today the Governmental Affairs Committee meets to consider the
nomination of Dr. Alice Rivlin to be Deputy Director of the Office of Management
and Budget.

Dr. Rivlin is no stranger to government. She has held a number of government
policy and managerial positions over the years and has served with distinction as
the first Director of the Congressional Budget Office.

She has had a long association also with the Brookings Institution. Dr. Rivlin is
currently the Hirst Professor of Public Policy at George Mason University and is
the author of several books on economics and public policy, the most recent of
which is entitled, Reviving the American Dream.

When confirmed, Dr. Rivlin will bring to OMB extensive experience with the Fed-
eral budget as well as the intellectual perspective necessary to help challenge our
existing approaches to government.

All of us know the time has come to make hard choices. Our national debt and
our Federal budget deficit must be brought down. The economy, though coming out
of recession, is moving forward slowly, with job growth inhibited by a legacy of cor-
porate debt and downsizing. Our rate of national capital investment, already less
than one-half the investment rate of Japan and lower than our other major trading
partners, continues to fall. The number of Americans without health coverage con-
tinues to rise.

For our long-term economic wellbeing, policies of the Federal Reserve and Treas-
ury will largely determine our future. But for the day-in, day-out operation of gov-
ernment that affects every American — the matching of policy with money resources,
the monitoring of stifling over-regulation, the reduction of waste and abuse, etc. —
the Director of the Office of Management and Budget and the Deputy is the second
most powerful position in government, second only to the President himself.

The solutions to these policy problems depend to a large degree on the leadership
shown by OMB. The trade-offs, the investments, the spending cuts — all the decisions
that Dr. Rivlin will be involved in — will be critically important to our future.

If OMB simply takes a meat cleaver to the budget, those people who are focused
more on the size of government rather than its responsibilities and quality would be
happy; but I doubt if the result would be salutary. Americans expect their govern-
ment to help reinvigorate the economy and strengthen public investment — and that
costs money. But all of us in government, whether in the Executive or Legislative
Branch, must ensure that such money is spent wisely on programs that are well
thought out, effective and get the job done.

This first requires good information. Last Friday, Comptroller General Charles
Bowsher reported on this Committee that most of the government's major programs
are administered without the basic information needed to tell managers how effec-
tive programs are — that means, often, we don't know what programs cost, who they
reach, and who the major beneficiaries are. He struggled to identify a Federal pro-
gram that he viewed as being truly well run and exemplary during the 11 years of



his tenure at GAO. "None," that he could think of off-hand, was his answer, and
then added he thought the Army had made significant progress in its management
practices.

Many of the government's programs are performing poorly because they suffer
from inadequate investment in qualified people, from poor financial and general
management practices, and from a rapid turnover in political appointees that un-
dermines effective management. What can we expect when the average tenure in
office of high government officials is a mere 21 months, time to get another credit
line on their resumes, but not enough time to truly do the job they were selected to
do. Perhaps President-elect Clinton should be asking appointees to guarantee their
remaining on the job for at least a period much longer than 21 months.

Although there have been some moves in the right direction, the "M" in 0MB
has not had sufficient emphasis. Just a few examples from GAO testimony last
Friday:

• Out of $20 billion in the Farmers' Home loan program, $7.6 billion is in default,
and in most instances is just marked off the books, with new loans being made
to those who just defaulted.

• Student loan records are kept so poorly that GAO could not get figures together
for an audit that they thought were reliable.

• The same with the Pension Benefit Guaranty Corporation: records were too
poorly kept to get a reliable analysis, and that affects the retirement money for
many, many working Americans.

• There is an estimated $2 billion paid by the government for Medicare that
should have been paid by insurance companies.

• Excess inventory in DOD is estimated to be worth $40 billion up from $10 bil-
lion 10 years ago.

• IRS receivables that could actually be collected now are estimated at $30 bil-
lion.

• The EPA has collected only 10 percent of the $5.7 billion classified as recover-
able.

And on and on. These are just a few examples. Obviously, the "M" in 0MB must
come to mean more than it has in the past.

Some programs are not operating effectively because of inadequate investment,
and so no longer have the capacity to perform their public missions. And like any
undercapitalized business, the result is often failure and a waste of the investment,
even if the underlying ideas and objectives are good. Determining which programs
should be retained and which should be eliminated are among the tough choices
facing the Clinton Administration and 0MB in particular.

I am pleased that President-elect Clinton has nominated Dr. Rivlin to be Deputy
Director of 0MB because I believe she understands the magnitude of our problems,
as well as the urgency we face in finding solutions. So I welcome Dr. Rivlin before
our Committee this morning, and I look forward to working with her in the months
and years ahead.

For the record, Committee rules require that an inquiry be conducted into a nomi-
nee's experience, qualifications, suitability and integrity. I think Dr. Rivlin would
agree that the Committee's investigation has been thorough and extensive.

I want to acknowledge Dr. Rivlin's cooperation in providing the necessary infor-
mation for the Committee to complete its investigation. The Committee has received
from the nominee financial statements as well as detailed information on her educa-
tional background, employment record and professional achievements. In addition,
Dr. Rivlin has responded in writing to a number of pre-hearing questions submitted
by the Committee concerning the duties and responsibilities of the OMB Deputy Di-
rector's position.

Copies of the biographical information and pre-hearing responses will be placed in
the record as part of this hearing and are available upon request. The financial
statements are available for inspection by the public in the Committee office.

Committee investigators have also examined the financial disclosure reports sub-
mitted by the Office of Government Ethics to ensure that no conflicts of interest are
present. Finally, I want to note that Senator Roth and I have reviewed the FBI
background investigation report and all other pertinent matters on Dr. Rivlin.

Prepared Statement of Senator McCain

First, Mr. Chairman, it is a privilege and honor to serve on this Committee with
you. I look forward to working with you and the other members of this Committee.
I also want to thank Ms. Rivlin for appearing before the Committee today.



Mr. Chairman, I was pleased to see that when Congressman Panetta appeared
before this Committee he was so forthcoming about the necessity of dealing with the
budget deficit. I was also extremely pleased to hear him state that everything was
on the table.

The deficit is threatening our children's future. It must not and cannot be viewed
as a partisan issue. The games and the posturing, the pork barrel politics, must end.
I would hope that Ms. Rivlin would use her position as Deputy Director of the Office
of Management and Budget to promote economic policy that will address the real
issues and problems that face our Nation. I am also hopeful she will do so in a non-
partisan manner.

We must work together, the Congress and the White House, Republicans and
Democrats, to address the deficit and long term economic growth for our country. I
hope Ms. Rivlin will commit to such a policy of cooperation.

Additionally, if we are to truly work on this problem, and as I have said, we must
or risk our children's future, everyone involved must be forthcoming and frank with
the American people. Vote-getting campaign promises and other overly optimistic
projections may make for good sound bites, but sound bites will not solve the deficit
problem or fix our economy.

We must act. We must change the system. We must, hopefully with Ms. Rivlin's
help, pass the line item veto to eliminate waste and pork, address the health care
crisis and its dramatic effect on the economy, and make the tough decisions needed
to get our economic house in order.

Again, I thank the Chairman for holding this hearing, and I look forward to hear-
ing from Ms. Rivlin.



Biography of Alice M. Rivlin

Alice M. Rivlin is one of the most respected economic policy analysts in the
United States. An author, economist and veteran of many years in government, she
is known for her intellectual honesty and straightforward style.

Rivlin was born in Philadelphia on March 4, 1931, and grew up in Bloomington,
Indiana. She graduated from Bryn Mawr College in 1952 and earned her Ph.D. in
Economics from Radcliffe College in 1958.

At 27 years old, Rivlin joined The Brookings Institution, an organization with
which she is still affiliated. Beginning in 1966, she served as Assistant Secretary for
Planning and Evaluation in the U.S. Department of Health, Education and Welfare.
Three years later, Rivlin left HEW, returning to Brookings as a senior fellow.

Chosen by Congress to direct the new Congressional Budget Office in 1975, she is
credited with shaping and defining that important office. The CBO was intended to
keep track of congressional spending after President Nixon impounded funds for do-
mestic programs he did not support. It evolved rapidly under Rivlin, and its mission
now includes economic forecasting and fiscal policy, as well as cost projections and
targeting of deficits and revenues. As Director of the CBO, she sometimes found her-
self at odds with the House and Senate Budget Committees — as well as a couple of
Presidents — for her steadfast numerical honesty.

In 1983, Rivlin left the CBO and returned to Brookings, where she is a Senior
Fellow in Economic Studies. She is also Hirst Professor of Public Policy at George
Mason University, and was awarded a MacArthur Foundation Prize Fellowship in
1983.

Rivlin is the author of many articles and books, and is renowned for her ability to
translate economists' arcane jargon into layman's English. Her most recent book is
Reviving the American Dream: The Economy, the States and the Federal Govern-
ment. A regular columnist for the Los Angeles Times, she is also a frequent contrib-
utor to other newspapers, magazines and journals.

President-elect Clinton has said that cutting the budget deficit is one of his prior-
ities, and his nomination of Rivlin reflects that sentiment. Rivlin is committed to
reduction of the federal deficit and fully understands the ramifications of fiscal
policy. "Economics is the focal point of public policy," she has said.

Rivlin is married to Sidney G. Winter and has three children and two grandchil-
dren.



Office of the President-Elect and Vice President-Elect
Statement of President-Elect Bill Clinton

December 10, 1992

As Director of the Office of Management' and Budget, Congressman Leon Panetta
will bring integrity to this critical office and will restore the confidence of the
American people and their elected representatives that 0MB is shooting straight
with the Congress, shooting straight with the American people and doing its best to
help us not only to have a responsible budget, but to manage the massive American
government in a different and better way than ever before. As Chairman of the
House Budget Committee, Leon Panetta brought a unique combination of strong
leadership and superb technical skills. With Leon Panetta as 0MB Director, I be-
lieve that agency can play the pivotal role we have to have to play in the swift and
effective implementation of our economic plan.

I am also delighted to announce that Alice Rivlin, the former Director of the Con-


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Online LibraryUnited States. Congress. Senate. Committee on GoveNomination of Alice M. Rivlin : hearing before the Committee on Governmental Affairs, United States Senate, One Hundred Third Congress, first session, on the nomination of Alice M. Rivlin to be Deputy Director, Office of Management and Budget, January 13, 1993 → online text (page 1 of 14)