Title: Briefing by OMB Director Panetta 1993-10-26
Date: 26 Oct 93 16:28:54 UT
Date: Tue, 26 Oct 1993 15:12:13 -0400 (EDT)
Content-Type: text/plain; charset=US-ASCII
Message-Id: <"45822162013991/505 EOPMRX"*@sprint.com>
THE WHITE HOUSE
Office of the Press Secretary
For Immediate Release October 26, 1993
OMB DIRECTOR LEON PANETTA
The Old Executive Office Building
10:57 A.M. EDT
DIRECTOR PANETTA: What I would like to do is to present
a brief summary of the elements of the package that we will be
presenting and forwarding to the Congress later today. We have
Elaine Kamarck and Al Burman speak to the procurement issues. Also
present is Colleen Preston from DOD, and she's familiar with
particular issues that relate to DOD with regards to procurement.
Let me again emphasize that the primary effort of this
package is really making an effort to try to make government work
better and to try to achieve savings in that process. But the main
focus is really on government reforms. We're trying to do a number
of efforts at streamlining that I'll describe, at eliminating
programs, at consolidating programs. We're also doing a major reform
with regards to the whole collection process within government, to
try to expedite the ability to make these collections on outstanding
debts; also to try to provide incentives for efficiency
competitiveness, as well as the procurement reform that both the
President and the Vice President spoke to.
Let me mention the key elements that are in the package.
Hopefully, you all have a briefing packet on that. It's basically
tied to the four areas that were described in the National
Performance Review -- cutting back to basics, cutting red tape,
putting customers first, and empowering employees to get results.
Let me just hit some of the highlights. I don't want to
go through every one of these pieces, although I should say before I
get into this package that I want to pay tribute to the staffs of
particularly OMB -- Phil Lader, John Angel and the rest of the staff
at OMB, as well as the Vice President's office, because what we had
to do here, essentially, is put a reconciliation package or the
equivalent of a reconciliation package together in a matter of a few
short weeks, and that means working on all the legislation, getting
it all done, getting it all packaged. So there's a lot of work that
went into this in the package we're going to be sending up.
The key elements of it that I want to just draw your
attention to is, first of all, on streamlining, we are going to
include legislation that would provide the Secretary of Agriculture
the authority to streamline and achieve his 1,200 office reduction
with regards to field offices, as well as his bureaus here in
Washington. That would achieve almost $1.6 billion in savings just
by accomplishing that over five years.
In addition to that, we're going to include language
that would allow the Secretary of HUD to proceed with the
streamlining of the HUD operations as well. And in addition, we're
including a directive to the Corps of Engineers to achieve savings of
almost $105 million over five years, basically by implementing a
reorganization plan, again, to reduce the costs in operations in that
area as well.
In addition, we are eliminating a number of programs and
facilities: the uniform services -- university for health services.
That's the Department of Defense's operation to provide medical
training. That is being eliminated. That's something that was
contained in their bottom-up review and we're fulfilling it here.
We're also eliminating the federal aviation higher education program,
which is a program that has long been identified as one that we ought
to get rid of. We're also phasing out the Bureau of Mines mineral
institutes. The President mentioned wool and mohair, which is also
part of the package, although Congress is already moving that
legislation. As a matter of fact, we have a major piece of that
legislation here at the White House. We're doing the same with
honey; the honey program will be eliminated on the same basis as wool
and mohair. And we're also going to be eliminating essential air
service subsidies for those airports that are located within 70 miles
of a major hub. Those are some of the key streamlining proposals
that are part of the presentation.
In addition, what we're doing on collections -- the
essential part of the collections reforms are basically to allow the
agencies to have -- to be able to retain a portion of what they
collect from delinquent debts in order to pay for credit management
and the debt collection improvements. That's something that's never
happened before. We're trying to lift the restrictions on the use of
private collection agencies. We're also trying to bring technology
into their collection efforts. Those are all part of this proposal.
That affects, in particular, the Department of Justice, as well as
HHS and others.
The Veterans Affairs departments, we're going to pick up
almost $420 million by basically authorizing them to use the same
data bank to determined whether veterans are receiving health care --
those who receive health care have private insurance that could cover
those kinds of costs. That's included in this provision as well.
We have efforts at basically trying to target fraud in
government. It's amazing when you look at the fact that we, for
example, cannot right now cut off benefits to people who basically
defraud the government in various areas. And so we are now
authorizing that we are able to cut off their benefits, plus also bar
from the program those who are convicted of defrauding it, which is
something that currently is still allowed by the law. So we're doing
some reforms on those enforcement areas.
On fair compensation, we are creating the opportunity
for local commanders at DOD to be able to use some of the resources
at the local level, so that if they are able to sell, for example,
recyclable materials that are generated at the installation, they'll
be allowed to use those funds at the local level and give them that
authority that we ultimately predict will save about $500 million.
We're also adjusting monetary penalties to the inflation
index. We have a broad amount of monetary penalties. They have
never been increased for a number of years. We're basically going to
tie those to an inflation index.
We're also doing power marketing reform, which is
something, as Chairman of the Budget Committee, we have been trying
to do for the last almost 16 years. We finally have been able to
work with Bonneville Power. We've worked with others to try to work
out something that would allow us to be able to reduce the kind of
subsidies that are provided to those PMAs. So that's a major effort,
and it has the support of the delegations that have been working on
In addition, we are providing the increased use of
technology to streamline financial services. We are now going to
require measures to promote electronic transfers by direct deposit of
federal salary and retirement payments. And so we are finally, as
the President and Vice President said, going to move to actually
making allowance for electronic transfers. That will save about
We're also doing a couple things that have been talked
about for a long time in government. On year-end spending, in order
to try to cure the "use it or lose it" syndrome with regards to the
year end, when you get to the end of the year, if you have additional
savings, the incentive now is to basically spend those savings rather
than trying to save them or use them. And so the incentive is
exactly the wrong approach with regards to the government. What we
will do is encourage federal departments and agencies to be able to
roll over those savings so that they can use those savings for either
bonuses or within the programs that they have within in their
In addition, we're going to reduce the number of
congressionally-mandated reports. We've got a stack of mandated
reports that is almost a foot and a half high, and we have now gone
through each of those. We're going to send to the Congress
recommendations to try to cut out some of those mandated reports that
have lost their relevance.
And lastly, we're going to try to provide the incentives
to encourage voluntary separation. This is really related to the
effort to cut 252,000 federal employees. We think we do need to have
the ability to buy out those employees who are ready for retiring.
The last thing I would mention is that we are
eliminating the kind of federal printing monopoly that developed with
GPO. We're going to basically permit and encourage that there be
more competition when it comes to printing in the government. Those
and others -- we've got about 40 different programs, as I said, that
are presented in particular. Let me just give you a quick run-down
of the process that we think we're looking at right here.
First, with regards to reinventing government, as the
Vice President said and as I've testified, three key things --
executive orders, which we're implementing; the package, which we're
presenting; and also the '95 budget, which will contain many of this.
On savings we're looking at $9.1 billion of savings that
are in this package of recommended savings in the various areas --
$9.1 billion. We will then be sending later in the week a rescission
package. And the reason we haven't included it here is because five
of the appropriations bills still are with the Congress and have not
been completed. But we hope to complete that action by Friday, and
we expect that the amount of savings in that package could range
anywhere from $1 to $2 billion. That will take this package to well
over $10 billion. Plus the procurement reform -- obviously our view
of the savings on procurement reform is we'll achieve $22 billion
over five years. That's five percent of procurement costs in the
government. The CBO will obviously estimate that at much lower --
somewhere between $3 billion to $5 billion. So we're looking at a
minimum by CBO at a package of somewhere around $15 billion. By our
count, it would be closer to $30 billion, based on what we think are
real savings on procurement.
The process we're looking at right now is that the
package will go to both the House and the Senate. We will send up
this package late today. It will be distributed in the House to the
various committees of jurisdiction, as it will be in the Senate. On
the House side, however, because of their rules, they will require
that there be a two-week consideration and then a report back to the
rules committee where this package will be assembled as one and
brought to the floor. We expect there will be amendments that will
be offered on the floor, but we are very confident of action on the
On the Senate side, it's much more difficult because of
their rules, but we think that because of the merits of the package
and the pressure of trying to get it done, hopefully, before the end
of the session, that they'll be able to pull it together as well.
But it's going to be much more difficult on the Senate side.
Q If you were still Chairman of the Budget Committee,
would you have the same view about these numbers? Do you believe
strongly that these numbers really can be lived up to? And how much
do you intend to try to squeeze out to spend on crime? Will that
come from the rescission package, or would that depend on how much is
DIRECTOR PANETTA: We're very confident of the numbers
that are in the base package. When I tell you $9.1 billion in this
package, it is a very solid number. I think CBO will support it. We
may even actually pick up some additional savings, hopefully by
virtue of their scoring. But it's a very solid number.
On the rescission package, which I said we'll introduce
later in the week, that's also very solid. When you're rescinding
spending and you put a number in there, believe me, that's real. So
the rescission package will also provide us with over $10 billion.
That $10 billion will basically go for savings and for deficit
reduction. The amount that would be dedicated to fighting crime are
the savings that we hope will flow from the procurement package. And
that will be, as I said, savings that will flow over the next five
years. But hopefully, that -- because we believe those savings are
real -- we would commit those to the crime bill.
Q On the commitment the President made to Senator Bob
Kerrey of Nebraska to come up with additional deficit reductions,
does this package that you're unveiling today -- the rescissions plus
the procurement reforms -- does that meet the commitment, or is there
anything else that you plan to further reduce the deficit that would
go back to that commitment? And I have a related question after
DIRECTOR PANETTA: We think this more than fulfills our
commitment. At the time both on the House side and on the Senate
side we made clear that we would come back with an additional
proposal with regard to spending cuts and savings reflecting in large
measure the Vice President's effort on improving government,
reinventing government, this package fulfills that commitment. We're
going to be producing, as I said, in excess of -- under our terms, of
course, we think with procurement reform we can get almost $30
billion in savings. But at the very least, with regards to CBO, it's
$15 billion over five years in real savings.
This more than meets our commitment with regard to
advancing additional efforts to try to find savings, and again
focusing on improving government. There will be opportunities,
obviously, on both the House floor and the Senate floor for members
to offer additional amendments to this package. That commitment was
made to a group of members on the House side by the Speaker. They
will have the opportunity to offer that kind of amendment on the
House side, and the same thing I'm sure will happen on the Senate
side. So it's possible this package could be increased in terms of
savings before it's over.
Q And speaking about deficit reduction, what do you
say to those critics of the health care reform package who suggest
that what you're doing is simply releasing another uncapped
entitlement program that will further increase the deficit at a time
when the country simply can't afford it? And if there are caps, how
do you maintain the universal coverage that the President said is a
DIRECTOR PANETTA: There will be briefings, obviously,
on the health care package, but I can assure you that our approach
was to basically ensure that we had capped entitlements in order to
maintain some discipline with regards to spending in that area. We
think it's important. We think the President feels it's important
that we not create open-ended entitlements, particularly when we're
trying to discipline the rest of government spending. And the
mechanism that has been built in to try to help us with regards to
what happens if we reach the cap I think more than meets the
requirement with regards to covering those that might be impacted.
Q Are you talking about three separate pieces here
and having them move very rapidly through Congress -- do you
anticipate that everything will be joined in one? Within the two
weeks you'll have just one bill that will pass Congress?
MR. PANETTA: Well, obviously, we're going to leave some
of that judgment up to the leadership on both the House and Senate
side. I should tell you, the rescission bill goes up on a separate
process, just by the nature of a rescission bill, which is expedited
when we send it up on a very limited time frame Congress has to act
On the House side, they may very well wish to join those
issues, at least bringing those bills to the floor with one title
being rescission, the other title being the spending savings.
On the Senate side, I believe their inclination is to
handle the rescission bill as a separate bill. But the ultimate
decision on that will be made by the leadership.
Q Has the administration abandoned the ticket tax to
pay for NAFTA, and if so, have they come up with other ways to pay?
MR. PANETTA: We are in the process of putting that
package together. We have, we feel, have come together on what we
think is a funding package that is more than supported by the facts.
If there are to be any fees in that package they will only be used to
cover the additional costs with regards to customs fees. The bulk of
the coverage will be from other areas of savings.
Q How much of this package is actually going to be
used for deficit reduction and how much to meet the caps and targets?
DIRECTOR PANETTA: In the package we're presenting here,
if we use CBO's numbers, again $10 billion we would commit for
savings and the ability to reduce the deficit. The amount above that
we would like to commit to helping to fund the crime bill.
On the overall package of $108 billion, as I've pointed
out in my testimony, about $44 billion of that -- particularly the
amounts with regards to the bottoms-up review at Defense -- are
already very much in the process of having to be accomplished in
order to meet the '94 targets that have been established under the
budget. And $66 billion involves essentially new savings that we're
hoping to achieve over these next five years to meet -- again, either
provide for deficit reduction or help us to meet the caps that have
been provided by the budget agreement.
As I've emphasized, these caps are tough. We're looking
at a hard freeze over the next five years. Obviously, some of these
savings will be used for that purpose and some of the savings will be
used for deficit reduction.
Q The President has mentioned today that this is
somehow tied to getting money for crime fighting. Could you explain
how that mechanism will work and how you would link this --
DIRECTOR PANETTA: Sure. Let me explain -- in the crime
package, the spending in the crime package is basically on the
discretionary side. We're not looking at entitlement spending on the
crime side. Discretionary spending -- money for cops, money for
additional programs to try to assist communities, money for prisons,
money for law enforcement, generally. That's all discretionary
What we would like to do is if we achieve procurement
savings, which we think we can achieve, that money under the cap
could be then used in order to help meet these new funding
requirements if the crime bill is passed, and that's what we hope.
So it's basically the ability to move savings under the cap into the
crime area. That's what we're talking about.
Q But there's no mandate in this bill?
DIRECTOR PANETTA: We would have to fight to make sure
that the Appropriations Committee, in fact, meets the President's
commitment, which is to use this money for crime. We think we've got
a good argument to make with the American people, and that's the
argument we would make with the Appropriations Committee.
Q But is it your intention to expand the crime --
Q The $9.1 billion -- you mentioned that wool and
mohair have already been passed, and there are a couple of other
things in here that have already been passed. How much of the $9.1
billion is, in fact, new, and how much of it is stuff that's already
in the appropriations process?
DIRECTOR PANETTA: The vast majority -- the only
exception would be wool and mohair, which is, as I said, a good piece
of that is here at the White House for signature by the President.
But everything else is essentially new legislation that will achieve
Q Back on the crime bill. Is it your intention to
expand the provisions of the crime bill if you get this money, or to
use this money to pay for what you already proposed in the crime
DIRECTOR PANETTA: Our view is that we don't want to
make a commitment to spending on the crime bill that we in fact
cannot meet. I mean, the problem we've had in the past is, there
have been a lot of promises, either on the war on drugs or the war on
crime. Everybody sticks a number in, and it's not met because of
constraints in the budget.
What the President is basically saying is, we are going
to meet the number that is in the crime bill. And if we can't meet
it with procurement savings, which we think we can, then we will find
other cuts in order to meet that commitment.
Q So you don't really have any number at all about
how much of this program would go to crime reduction, would go to
funding the crime bill?
DIRECTOR PANETTA: We estimate that that number would be
somewhere between $4 billion to $5 billion.
Q Would any of it go to pay for health care?
DIRECTOR PANETTA: No. Health care is really on a
separate track, and obviously that track will be presented based on
each of the elements that we need in order to support and pay for
health care. That is really on a very different track. There is
nothing in here that would be used for health care.
Q A bipartisan House group is going to finalize, I
believe this evening, a package of perhaps $100 billion in cuts which
they hope to offer as an amendment on the House floor to this package
that you're talking about today. Given that you haven't seen it yet
-- I don't know if you've been told by any of the people down there
what's in it - do you think that the administration would look
favorably or unfavorably on such a cost package that's 10 times
greater than what you're proposing here today?
DIRECTOR PANETTA: Well, obviously we'd like to review
the particulars of it, which my understanding is that Tim Penny and
John Kasich are still putting the pieces together on that package.
So we would like to review it.
The test is this, as always on these things. I mean, if
an amendment winds up hurting our chances to get this package through
the Congress, then that's cause for concern. Because our goal right
here is not only to propose the savings that are part of this
package, but to get it done and get it done before the end of the
session. So often, when you get into these budget battles, everybody
has a plan that can either multiply or quadruple the amount of
savings in any proposal, but you never have the votes, and it's
always blocked for some reason.
So one of the tests for us will be, does this help or
hurt in terms of our ability to complete action on the package? The
second thing I would mention is that my understanding is that they're
talking about including some very key elements with regards to
funding that affect health care, particularly on the entitlement
side. And we would be very concerned about taking those resources,
and instead of using them for health care reform, use them as part of
the savings package -- because that could really hurt us in terms of
health care reform.
Q What very key elements?
DIRECTOR PANETTA: I think they're talking about
elements that would relate to means testing on health care
entitlements. And that concerns us because those are some of the
same areas we're considering with regards to health care reform.
Q You would oppose that?
DIRECTOR PANETTA: I'm going to introduce --
Q Before you do, on the year-end savings for the
agencies, on "spend it or lose it," you say that they're going to be
able to keep a portion of that. Do you have that apportioned out in
your legislation? For example, a dime on a dollar in terms of the
additional savings that agencies will be able to keep as well as the
debt collection they'd be able to keep?
DIRECTOR PANETTA: This package doesn't really relate to
the '95 budget. I mean, this is on a separate track.
Q That would be the '95 budget?
DIRECTOR PANETTA: The '95 budget is where we will use
some of the remaining savings, hopefully, to meet those targets.
END11:21 A.M. EDT