Chris Van Hollen

Mr. VAN HOLLEN

Mr. VAN HOLLEN. I yield myself such time as I may consume. Mr. Chairman, this bill is an important, bipartisan measure. It has bipartisan support here in the House. It has strong bipartisan support in the Senate where it's introduced by Senator Carper and Senator McCain and has strong bipartisan co-sponsorship. It's supported by the Obama administration. But Mr. Simpson is absolutely right: it's not the bipartisanship that makes this bill the right thing to do. It's the fact that it calls for greater transparency and greater accountability in our process. Everybody in this body has to concede that we can improve our budget process. Yes, we should work on the tax expenditure component. Yes, we should work on mandatory spending. Of course we should. But this is a simple bipartisan measure we can take to provide more transparency when it comes to over $1 trillion in discretionary spending. And I go back to where I started. Just look at this bill, 1,200-plus pages. This House took less than 15 hours, less than 15 hours to review this bill. Now, given the fact that we didn't have adequate time to scrutinize this, I don't see anything wrong with saying that if the President of the United States, Republican or Democrat, identifies some savings we can make for the taxpayer that go to deficit reduction, that this Congress should have to vote on that. You don't have to say yes. You just have to vote, up or down. And for those who argue otherwise, I have to say that I don't think putting turf over the taxpayer is a winning argument when it comes to dealing with our budget issues because, make no mistake, this is constitutional. It's been designed to be constitutional. Mr. Young said I said it wasn't relevant that it's constitutional. That's not what I said. It's totally relevant that it's constitutional. And it's designed that way; Congress has the final say. That's what makes this constitutional. Are we giving the President a little more power? Well, only if you say that it's more power to recommend to Congress some savings for the taxpayer and that we will then vote on them. It seems to me that's just basic responsibility. Well over a majority of Governors have total line-item authority. This is not line-item authority because it requires congressional vote and oversight. So I would say that the process is broken. It's not broken because of the Appropriations Committee. They do incredible, hard work and put in lots of hours. But at the end of the day, we just saw last December, less than 15 hours to review 1,200 pages of appropriations bills. Who, in this body, can say that they looked at everything, they scrutinized everything, that we can't find any additional savings for the taxpayer for the purpose of deficit reduction? So I ask my colleagues to support this bill, not because it's bipartisan, but it is; and I think that's an important reflection on the fact that people on both sides of the aisle, bringing their own independent judgment to bear on this, have concluded this would be in the best interest of the country. But, in addition to that, because it does take one measured, responsible step toward improving a broken budget process, and my goodness, at the end of the day, that would be a good day's work in a bipartisan Congress if we could get that done. I thank, again, the chairman of the committee, Mr. Ryan. I thank his staff and our staff, the Democratic staff on the committee, for working together. And with that, Mr. Chairman, I yield back the balance of my time.

Mr. VAN HOLLEN. Mr. Chairman, I yield 3 minutes to the gentleman from Virginia (Mr. Connolly), a former member of the Budget Committee.

Mr. VAN HOLLEN. Mr. Chairman, I yield 3 minutes to the gentleman from Vermont (Mr. Welch), who has spent a lot of time focusing on budget issues.

Mr. VAN HOLLEN. Mr. Chairman, I reserve the balance of my time.

Mr. VAN HOLLEN. Mr. Chairman, I yield 3 minutes to the gentlewoman from Florida, a member of the Budget Committee, Ms. Castor.

Mr. VAN HOLLEN. Mr. Chairman, I yield myself such time as I may consume. Let me begin by thanking the chairman of the committee, Paul Ryan, and our staffs for working together in a cooperative and bipartisan manner on what I think is a very important piece of legislation to bring before the House. While we have deep disagreements in this House over many policy issues, I know that we all agree that we should be responsible and careful stewards of taxpayer dollars. That's what this bill before us is all about. It creates new mechanisms for greater transparency and greater accountability in spending taxpayer dollars. I believe that it will, over time, result in a better use of those taxpayer dollars, and savings identified through this process will go to deficit reduction. For those of us who believe that government can play a positive role in people's lives by creating opportunities, like investing in education for our kids, like strengthening our economy through investments in infrastructure--our roads, our bridges, broadband--by making key investments in scientific research, for those of us who believe that, it is especially important that taxpayers have confidence that their tax dollars are being used wisely. To the extent they don't believe that, it makes it more difficult to invest in the common good. So we should take every opportunity in this body to make sure those taxpayer dollars are being well spent. Let's be clear about what this bill does and what it does not do. As the chairman indicated, it does not give the President unilateral line-item authority. The Supreme Court ruled in 1996 that the line-item veto law that was passed by an earlier Congress was unconstitutional because it handed over that unilateral authority to the President of the United States. I think that was the right Court decision. I also think it was the right policy decision. This approach is entirely different. It's different because it expressly requires congressional action before any savings, sometimes called rescissions, proposed by the President can take place. It simply requires Congress to consider and vote on the President's proposed savings. Congress, by a majority vote in each House, can support the President's recommended savings or reject those savings. In the end, Congress has the final say. Now, I think everybody here knows we can do a better job in this Congress of scrutinizing spending bills. This bill provides a strong incentive to do that. Let's consider how the process worked just last December with the Consolidated Appropriations Act of 2012. That bill was over 1,200 pages long and included over a trillion dollars in spending. In fact, Mr. Chairman, I've got that bill right here. It was submitted to this House at 10:47 p.m. on December 15, 2011, and was voted on less than 15 hours later. No one can say they had an adequate opportunity to scrutinize that spending bill. Let me mention a couple facts about that bill. It included in it nine separate appropriation bills rolled into one. Of those nine bills, four had not been reviewed or voted on by the full House. The House had never had a chance to look at them or vote on them. Two of them hadn't even had a vote in the Appropriations Committee. One of those two, the Labor-H bill, $160 billion in taxpayer money, not voted on even in Appropriations Committee. The Foreign Ops bill, not voted in Appropriations Committee. Only one of those nine was voted on in the United States Senate before that last-minute decision. I want to make this clear. This is not a criticism of the Appropriations Committee. This is a criticism of the process that we've had in this Congress whether you have Democratic Houses in control or Republicans in control. What this bill does is try and provide a small fix to that process so that we have a little more scrutiny. Under current law, the President can already propose savings, but under current law, the Appropriations Committee can totally ignore it. All this does is say let's take up those recommended savings in the light of day. Let's have an up-or-down vote in the United States Congress and, you know what, if we agree the President's identified additional savings, that will help reduce the deficit. This is a good bill. It's a bipartisan bill, and I urge my colleagues to support it. I reserve the balance of my time.

Mr. VAN HOLLEN

Mr. VAN HOLLEN. Mr. Speaker, I demand a recorded vote.

Mr. VAN HOLLEN. Madam Chair, I yield myself such time as I may consume. I was actually reading from the original document, ``Reforming Credit Reform,'' by Marvin Phaup and Deborah Lucas, where they say straight- out here that including a risk premium in subsidy costs produces a cost estimate that, on average, exceeds outlays for realized losses. Now, we can argue whether that's an appropriate methodology or not. But the reality is it will, as a budgetary matter, systematically inflate the cash outlays for different credit programs going forward. I reserve the balance of my time.

Mr. VAN HOLLEN. Madam Chair, again, I wish we were here debating the President's jobs plan. I wish we were focused on bringing to the floor the conference committee report so that we could provide relief to 160 million Americans through the payroll tax cut. With respect to the budget bill before us, as I indicated, it's just not ready for prime time. You would think that before undertaking a change which seems small, is very complicated, and could have lots of unintended consequences, especially with respect to things like student loans--as I've said, if we were confining this debate and this bill to things like Fannie Mae and Freddie Mac, I have no problem. In fact, the Congressional Budget Office already applies this methodology to Fannie Mae and Freddie Mac. But the scope of this is much, much broader than that. It goes, as I said, to all credit programs, including student loan programs, and will, as a matter of accounting, show in the budget greater dollar outlays than will actually reflect the ongoing costs of things like student loans, again, in a systematic way. The last point I want to make, Madam Chair, is one that was raised by one of my colleagues, which is: Where do you actually draw the line when it comes to moving in the direction of this other kind of accounting? Now, this bill applies to all credit programs, but there are other programs funded by the Federal Government where the costs rise and fall based on what's happening in the market, based on what's happening in the economy. There are lots of ag programs that rise and fall based on what's happening in the economy. Medicaid is a program whose costs rise and fall based on the economy. And in talking to lots of people, it's not clear where you draw a bright line, and I certainly don't know where the argument ends with respect to moving toward this kind of accounting. Before we begin to move even further in this direction, I think we should have a debate on what exactly that would mean for our budget and for the American people. Again, I commend the gentleman for raising an issue, especially as it's been in the context of Fannie Mae and Freddie Mac. I think this deserves a lot more attention before you expand it throughout all the credit programs of the United States Government. I'm particularly concerned the impact it would have on the affordability of going to college and student loans. And then, as I said, there's no clear demarcation between credit programs and the argument that's being applied here and to some of the other programs where the risk to the taxpayer also fluctuates based on market risk and the performance of the economy. Madam Chair, I would urge my colleagues to oppose this legislation. I yield back the balance of my time.

Mr. VAN HOLLEN. Madam Chair, I yield myself such time as I may consume. Here we are on the floor of the House, another day when we haven't taken up the President's jobs bill that he presented right here before a joint session of Congress last September. We have had some good news in the economy, some numbers that show that we have a fragile recovery going on. It would be a huge mistake not to do everything we can to nurture that recovery. So I hope we will finally take up the President's proposal, and I hope that the ongoing conference committee on the payroll tax cut will complete its work in an expeditious manner. Now, with respect to this particular bill that is before us, it raises some very serious and very complicated issues regarding budget accounting for credit programs, and I want to commend Mr. Garrett from New Jersey. I want to commend him for raising some legitimate issues as part of this conversation, issues that deserve our attention. But it is totally premature to bring this bill to the floor without having more hearings and more review. In the Budget Committee, we've not had a single hearing on the comprehensive question of how we deal with all the credit programs and how to account for them. We had one hearing with respect to whether we apply this to the FHA, the Federal Housing Administration; but this bill goes way beyond that and would direct CBO to change its method of accounting for credit programs like student loan programs and for other programs throughout the U.S. Government. It has very far-reaching consequences. This is a matter on which people who've spent their lives looking at the budget disagree, and so the Budget Committee at the very least could spend a few hours on a hearing to understand fully the consequences of doing this. I just want to read from a letter that was sent to us from the former head of the nonpartisan, independent Congressional Budget Office, Robert Reischauer. He says, I strongly oppose this change. He goes on to say: ``The accounting convention used since the enactment of the Credit Reform Act of 1990 already reflects the risk that borrowers will default on their loan or loan guarantees.'' He goes on to say: ``H.R. 3581 proposes to place an additional budgetary cost on top of the actual cash flows.'' And he goes on to explain what is a very complicated issue, a very complicated matter. I would say to my colleagues, not that this isn't an appropriate question for the Budget Committee to take up, but it's totally inappropriate for the Congress to direct the Congressional Budget Office to take up a different accounting measure which is not ready for prime time and for which we have not had the time to fully review all of its consequences. With that, I reserve the balance of my time. Robert D. Reischauer, Bethesda, MD, January 23, 2012. Hon. Chris Van Hollen, Longworth H.O.B., Washington, DC. Dear Representative Van Hollen, I am writing in response to your request for my views on the desirability of adopting ``fair value accounting'' of federal direct loan and loan guarantee costs in the budget as proposed in H.R. 3581. I strongly oppose such a change. The accounting convention used since enactment of the Credit Reform Act of 1990 already reflects the risk that borrowers will default on their loans or loan guarantees. Under Credit Reform, costs already are based on the expected actual cash flows from the direct loans and guarantees (with an adjustment to account for the timing of the cash flows). H.R. 3581 proposes to place an additional budgetary cost on top of the actual cash flows. This additional cost is supposed to reflect a cost to society that stems from the fact that, even if the cash flows turn out to be exactly as estimated, the possibility that the credit programs would cost more (or less) than estimated imposes a cost on a risk- averse public. Under the proposal, this extra cost would be the difference between the currently estimated cost of direct loans and loan guarantees to the federal government and the cost of those loans and loan guarantees if the private market were providing them. A society's aversion to risk may be an appropriate factor for policymakers to take into account in a cost-benefit assessment of any spending or tax proposal but adding a cost to the budget does not make sense. Nor is clear that the cost of societal risk aversion should be based on individual or institutional risk which is what the private market reflects. Inclusion of a risk aversion cost for credit programs would be inconsistent with the treatment of other programs in the budget (many of which have costs that are at least as uncertain as the costs of credit programs--for instance, many agriculture programs and Medicare--and would add a cost element from a traditional cost-benefit analysis without adding anything based on the corresponding benefit side of such an analysis. It would also make budget accounting less straightforward and transparent. H.R. 3581 represents a misguided attempt to mold budget accounting to facilitate a cost-benefit analysis, with the result that neither the budget nor the cost-benefit analysis would serve their intended purposes well. I would be glad to discuss these issues in more detail if you would like. With best wishes. Robert D. Reischauer.

Mr. VAN HOLLEN. I yield 3 minutes to the gentleman from New Jersey, a member of the Budget Committee, Mr. Pascrell.

Mr. VAN HOLLEN. I yield the gentleman 1 additional minute.

Mr. VAN HOLLEN. Madam Chair, it's unfortunate that some of our Republican colleagues can't take just a moment away from politics to celebrate the fact that we did have some good economic news over the last month. Over 250,000 private sector jobs were created. That's good news. Is it enough? Of course not. Of course, we need to do more, which is why we'd like to see our Republican colleagues bring the President's jobs bill to the floor of the House. It's still sitting somewhere around here. It includes a proposal to invest in our infrastructure, in our roads, in our bridges and broadband so that we can make sure that we have an economy that can compete and win with respect to our global competitors. So it would be great if we could take up that bill. In the past, investment in infrastructure has always been a bipartisan initiative, but the President's proposal is still languishing. With that, I yield 2 minutes to the gentlelady from Wisconsin, a member of the Budget Committee, Ms. Moore.

Mr. VAN HOLLEN. I yield the gentlelady an additional minute.

Mr. VAN HOLLEN. Madam Chair, I reserve the balance of my time.

Mr. VAN HOLLEN. Madam Chair, I yield myself such time as I may consume. Look, if this legislation only dealt with Fannie and Freddie, that's something that I certainly would support. In fact, the Congressional Budget Office already puts Fannie and Freddie online. I know it's an easy catch phrase, but the reality is, behind the discussion of Fannie and Freddie is a whole other discussion about whether we want to apply these rules to things like student loans. And the reality is that if you apply this methodology to student loans, you will systematically overestimate the cost in the budget in terms of outlays. I would just like, Madam Chair, to refer the body to a report that was written by two of the prime advocates for this. It's called ``Reforming Credit Reform.'' Deborah Lucas was one of the coauthors. This was in ``Public Budgeting & Finance,'' winter of 2008. Just let me read a portion because it says: Including a risk premium in subsidy cost produces a cost estimate that on average exceeds outlays for realized losses. That discrepancy between cash flows and subsidy costs must be reconciled in the budget so that over the life of a credit cohort, actual cash flows match budget costs in expectation. Now, as I said, this is a complicated issue, and that sounds like a lot of complicated budgety gobbledygook. Bottom line is, what this bill does is systematically overestimate the costs in the budget on a cash- flow basis. And it's important that everybody understand this. Right now, when the Federal Government budgets for credit risk, we take into account the default rate. In other words, whether it's student loans, whether it's clean energy loans, whether it's Fannie and Freddie, people make an assessment about what the likely default rate is. That is taken into account and then discounted for present value when you put together your budget. Now, even the advocates of this legislation concede that. That's not a question; we already do that. And even the advocates of this legislation concede that it will, again, systematically, in the budget, have a higher cost number associated with outlays than reality will dictate. What do I mean by that? It will say that student loans are actually more expensive on a cash basis than they really are. Let me repeat that. If you direct that the Congressional Budget Office move to this kind of accounting, the numbers that will appear in the budget on a cash basis will systematically exaggerate, inflate the costs of the credit program. What that means is if you're a Member of Congress and you're looking at a proposed student loan program and you're looking at the numbers that are forecast, you're going to think that it's more expensive in cash terms to the taxpayer than it really is, on average, over time. Therefore, you're going to be less likely to make that investment, potentially. So I think it's important as we look at this that we recognize that in place of something that, as I said, the former head of CBO, Bob Reischauer, has said provides an accurate picture of the costs on a cash basis to replace that with something that systematically gives us a different picture, and one that systematically exaggerates the costs would be a mistake. And again, I just end this portion here by saying we just don't think this is ready for prime time. We don't think that we've fully understood all the impacts. There are experts on both sides of this issue, but it seems to me the Budget Committee could at least devote one hearing to this general topic. Again, we had one hearing on applying this to FHA. If you want to apply it to Fannie Mae and Freddie Mac, CBO already does that, no problem. But this leaps from that to applying it throughout the budget, including student loan programs, and I don't think we've begun to understand what impact that would have on the affordability of going to college and the other impacts throughout the budget. I reserve the balance of my time.

Mr. VAN HOLLEN

Mr. VAN HOLLEN. Mr. Speaker, I rise today to pay tribute to my constituent, Major Greg Dash, for his distinguished service to our country as a member of the United States Air Force. Major Dash, known to his fellow airmen as ``Fez,'' was raised in Gaithersburg, Maryland. After graduating from Wootton High School, he received an appointment to the United States Air Force Academy, where he earned a degree in Electrical Engineering and graduated on the Commandant's List. He was commissioned in May 1998. After having served his country for 18 years, Major Dash will be medically retired this month. Throughout his service in the Air Force, Dash excelled in both his tactical judgment and outstanding leadership capabilities. As an Air Battle Manager, he qualified in three separate weapons systems and was selected for graduation from the distinguished United States Weapons School. Major Dash earned a number of awards and decorations, including the 2012 Air Traffic Control Association Earl F. Ward Medallion. Over the course of his career, Major Dash had several combat deployments. During his last deployment in Afghanistan, he collapsed and was medically evacuated from the country. Later, he was diagnosed with a rare and highly lethal form of cancer. But he was undeterred. After a 1\1/2\-year-long battle with cancer, Major Dash has heroically defeated the disease with the same spirit and determination he brought to his years of military service. Although his cancer has cut short his Air Force career, his talents, personal qualities, record and achievements bode well for great accomplishments in the future. I know that he will continue to make our Nation proud. Our country owes Major Dash a debt of gratitude for his service, impeccable character and model of selfless leadership. I urge my colleagues to join me in recognizing him and in thanking him for his service and sacrifice.

Mr. VAN HOLLEN

Mr. VAN HOLLEN. Mr. Speaker, today's vote is not an easy one. FAA Reauthorization is long overdue, and I support many of the provisions in today's conference report. It makes a much-needed investment in our nation's air infrastructure and includes important new policies to strengthen safety and improve consumer protections. But unfortunately, this is not a clean transportation bill. Inexplicably, it includes an extraneous, ill-conceived, and completely unnecessary labor provision that has no place in this legislation. Under this bill, it is much more difficult to organize a union for the workers who fly the planes than it is for the workers who build the planes. How does this make sense? We don't know the answer to that, because we haven't had a single hearing on this issue. Mr. Speaker, I want to vote for a clean, long-term FAA reauthorization and strengthens our national aviation system. This is not that bill.

Mr. VAN HOLLEN

Mr. VAN HOLLEN. Mr. Chairman, I agree with Mr. McClintock that more information is helpful. We just don't want to ask for the information in a way that we only get one side of the story. I hope our colleagues are going to vote for the amendment a little later on the floor that says we should also try and figure out what the economic impact of major investments in infrastructure is through the appropriations process. They've removed that analysis from this bill. In addition to the fact, it's very curious that when it comes to tax policy, they've written this in a way that when CBO does an analysis of, again, the major decision that would be made by this body in the next few years, whether or not to extend some or all of the 2001/2003 tax cuts, that will show no impact on economic growth because of the way they've written this legislation, when, in fact, we know, at least from earlier CBO reports, that in the out-years, 10 years out, it will actually be a drag on economic growth because it will increase the deficit when you allow the tax cuts for the folks at the top to go on and on and on. So, yes, we want more information. Let's just not ask CBO for information that is designed to only extract one side of the story. And, unfortunately, that's what the bill does in its current form. I reserve the balance of my time.

Mr. VAN HOLLEN

Mr. VAN HOLLEN. I yield the gentleman 1 additional minute.

Mr. VAN HOLLEN. Mr. Speaker, I am pleased to yield 3 minutes to my colleague from Maryland, the distinguished Democratic whip, Mr. Hoyer.

Mr. VAN HOLLEN. Reclaiming my time, but look, we're doing everything in the light of day. The issue isn't whether it's done in the light of day or not. Of course it's done in the light of day. It's what picture we're presenting to the American people in terms of the budget numbers on what their tax dollars will be able to purchase in terms of goods and services. And in my view, it's misleading to say we're going to be spending the same nominal dollar amount for veterans 10 years from now in the budget when we know, according to your own testimony and according to what we know, that that's not going to be the case. That's why we try and put together a document that gives us the best representation of the information we have as to what it will cost; then we can make a decision to add or subtract. I reserve the balance of my time.

Mr. VAN HOLLEN. I yield to the gentleman from Texas.

Mr. VAN HOLLEN. So here's the point. So you're going to create a document for the American people that says, hey, we're going to be spending this much in year 10 for veterans when we know that that's not true. We know right now, in fact, you've just said on the floor of this House, that number's going to be a lot bigger. And my point is we can make it bigger, we can make it smaller. This bill doesn't save a dime in terms of what decisions we make. But why would we want to present the American people with a misleading sense of what it's going to cost in real dollars and cents? I agree with the Member.

Mr. VAN HOLLEN. Well, thank you. And taking back my time, you really made my point, which is that if the purpose of a budget is to try and provide the most realistic projection of what services we're going to provide in the future compared to today, you should take into account the cost of those increases. The gentleman has just said that of course we're going to build in inflation with respect to veterans programs. In fact, we're going to do better than that. And I'm glad to hear that because we're going to take into account the fact that medical inflation runs higher than regular inflation. But the point is, if you put different numbers in year 10 that don't take into account inflation, you're going to give people a very misleading sense of what can be purchased for their tax dollars in terms of goods and services. The same holds true with respect to DOD, in other words, the Defense Department. Why don't we want to present the American people with an accurate representation of what it will actually cost to maintain the current defense or current discretionary veterans programs? That's the whole purpose of this. The Appropriations Committee can do what it wants with respect to decisions in increases and in cuts. I reserve the balance of my time, Mr. Speaker.