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Senator DOMENICI. It is.

Senator EVANS (continuing]. And fix it up pretty quickly, because Senator Ford went through and elicited from a previous hearing the same testimony, that essentially all the deferrals represented the add-ons that Congress made.

In fact my next question was: In other words you want to act as if the congressional budget process never occurred and the administration continues to spend on the basis of its own priorities without any attention whatsoever to what Congress does in terms of new initiatives or changed priorities. The answer before was yes.

I am pretty distressed if that is the case here in our energy conservation budget. I think it is a very important one.

Senator DOMENICI. They did slightly better than that. The Department found that out of $1.625 billion that they asked for and got, they were wrong on $3.9 million and we were wrong on all the rest. So I did not get the percent, but they have an enviable record for being right. We have a disastrous record, obviously, for not being right.

Senator EVANS. Pure as Ivory Soap, 99 and 44/100ths.
Senator DOMENICI. We are wrong most of the time.

Senator EVANS. It is a deep concern. I do not know why, Mr. Chairman, why we even go through the process of oversight and the process of trying to do budgeting when it makes no difference. Either that, or we are going to have to figure out a way to make it make a difference. Maybe a way to make it make a difference is, as I suggested at the last hearing, was to pay all of the managers of all of the programs a percentage salary that depends on the spendout rates. For every deferral there would be a cut in salary, so that maybe we would get some action that way, somehow.

Otherwise, what difference does it make that we go through these hearings if the end result is that no attention is paid to them?

Senator DOMENICI. Frankly, I have about 20 questions for each, but I really do not believe I will ask them. I will submit them to them and they can answer them.

But I really think you might pass on, on behalf of at least one Senator, that he is pretty much a pragmatist and that probably one might have concluded that 40 or 50 percent of the add-ons-I will be overly critical of ourselves and say that they might have had parochial input, or they might have been vested with some notion that we have more money to spend than we really do—but I really think that deferrals of this magnitude in terms of numbers would have slightly more credibility if they were spread out a little bit among programs that you all put in your budget, too. We know how you do them.

I mean, fully half of them are done by OMB and half are done by you all. I think you could have at least, in the quiet of your deferring, given more credit to yours and less to theirs. Then we could have asked you, and you would have had some way to explain it a little bit. If I am being overly tough, excuse me. I just go through this myself all the time from every side.

In any event frankly I do not see any reason to ask why all of these programs were deferred, because basically what I would prefer to do if I had time, and I do not, is to go back through the

ponse think that is then Hollings. limits whatsoever

billion at

$1.6 billion in this area that you all submitted and find out what consideration was given to deferring some of those. I think that would make it a lot more valid exercise, but I will not do that.

Senator EVANS. Mr. Chairman, let me go beyond just my overall concern with a couple of specific questions.

First, the statement was made, I think by at least Mr. Bauer and maybe by both, that the Gramm-Rudman-Hollings limits and our response to those limits are what caused the budget to come in as it did. I think that is the biggest misunderstanding I know of as it relates to Gramm-Rudman-Hollings.

There are no limits. There are no limits whatsoever except that the budget must produce a deficit of no larger than $144 billion at the end of fiscal year 1987. There are no limits on spending. There are no limits on taxing. There are no limits on priority.

It seems to me that what the administration is saying now with this particular program, the combination of deferrals and the program as you look ahead toward fiscal year 1987 is that energy research and development on conservation is pretty low on the totem pole and it is not very necessary. Is that an accurate statement? Miss FITZPATRICK. Based on the budget figures, Senator, yes, it is.

Senator EVANS. I do not know if this is an internal affair or whether you feel you can answer it. Did the Department, in submitting its budget to OMB, request all these deferrals? Or was this OMB's idea?

Senator DOMENICI. I did not hear the question, Senator.

Senator EVANS. I said, were the deferral requests for all of these deferrals submitted by the Department to OMB, or was this all OMB's idea?

Miss FITZPATRICK. You have the Hollifield table, Senator. The deferrals were not a part of our request to OMB.

Senator Evans. Šo it is not your view of the priorities of this particular field?

Miss FITZPATRICK. Not at the time we submitted the request, which was sometime last summer, around August.

Senator EVANS. In your testimony, Secretary Fitzpatrick, in a number of areas you mentioned the hope, I guess, or the ability to move research off to combined efforts with private enterprise or research by others.

Why suddenly now do something like this? What is different about circumstances now as opposed to 1 year ago or 2 years ago or 5 years ago that makes this any more valid?

Miss FITZPATRICK. Senator, I do not think it is a sudden effort on our part, because we have for several years been emphasizing very strongly cooperative research with industry in the sense that we have asked them to work with us from the very beginning of our planning process, and our research contracts with industry are cost-shared as a matter of course.

What we are proposing is that we develop a new tool in achieving these same goals of leveraging Federal funding, of having industry participate in the setting of priorities, and having mechanisms which will encourage and enhance technology transfer.

Senator EVANS. Does that extend to joint research-how does that same theme work in terms of research and development carried on by private laboratories and by universities and colleges?

Miss FITZPATRICK. The particular mechanism which is an R&D cooperative venture requiring equity input by the non-Federal partners as well as the Government would not apply there very well to a university laboratory because they generally do not have the re sources to do that. In fact, with our research contracts with univer: sity laboratories, we rarely ask for cost-sharing, at least monetary cost-sharing. Sometimes we do for planning and personnel.

So I would not envision that university laboratories would engage in this kind of cooperative research. Some private laboratories in the country that we have been very active with might find that they would want to do this.

Senator Evans. Even if this is basically a partnership with private enterprise, are not their interests really in the energy-you know, if all of research and development is sort of on a continuum from pure research over here to actual prototype on the other side, is not their interest really closer to the prototype side of things?

Miss FITZPATRICK. Yes, it could tend to be. That is why we are only suggesting this as another tool that we use to address that entire spectrum of research needs.

Senator EVANS. Do you feel that with the deferrals made, are we doing an adequate job of producing the research at the Federal level, producing money for the research at the Federal level, in basic research in the beginning that has to happen before you get to any interest in the partnership program to secure our energy future?

Miss FITZPATRICK. Senator, I think that the budget request protects the basic interests and goals of each of the technology areas. What we have done is to try to narrow the focus and choose the highest priority prospects. That means that we will not be doing some things which we felt showed promise and were worth pursuing but we do not have the resources for.

What it means is, as a practical-

Senator Evans. Let me just interrupt and correct right there. You could get the resources for it if you asked for them possibly, and you chose not to ask for them.

Miss FITZPATRICK. There is a balancing, that is true. There is a balancing of interests and of needs that goes on, and with what we had available, we have made the best choices that we think we could

Senator Evans. Did you have a chance to reprogram after the OMB came back with the deferrals and their suggestions for cutbacks? Did you have a chance to reprogram what was left?

Miss FITZPATRICK. Within the budget limits that we had, we assigned what was to be done with the money.

Senator EVANS. Did OMB carry on the deferrals in some very specific programs?

Miss FITZPATRICK. That is true.

Senator Evans. Did you accept those and decide that was an appropriate new level for each of those R&D programs, or did you reprogram or change some of those afterward within the total amount of money remaining because you had a different idea of priorities than they did?

Miss FITZPATRICK. We were allowed a very small discretion in where the deferrals would come from.

Senator EVANS. Would you say essentially none?
Miss FITZPATRICK. Very close.

Senator Evans. One other question, Mr. Chairman. In the use of the Exxon money, how do you justify the allocation of money in that way, given the wording of the Warner amendment which I think clearly says this money will be used to supplement and not supplant. I think those are the two words used.

It just seems to me to be so clear that you have supplanted. How can you justify that, given the law?

Miss FITZPATRICK. Senator, the Warner amendment says that the Governors shall use the money to supplement, not supplant, funds which may otherwise be made available. So what we are saying is that it is not necessary to make funds otherwise available.

Senator EVANS. Well, I am looking around to see whether the Mad Hatter is in the room. [Laughter.]

I am afraid I cannot buy that logic, if there is any, there. This is money that was I understand what you are trying to say as closely as I can follow it, that a certain amount of money in one of these five programs was made available last year through fiscal year 1986 through the Federal Government, and it goes to the States for use in this low-income energy program

But now with the Exxon money, that will be distributed in those States, but it will be supplementary because you will take away this money so that it will be supplementary to zero. Is that essentially it? Miss FITZPATRICK. Yes, sir.

Senator DOMENICI. Before I yield to Senator Hecht, I have some Mexicans waiting for me, Senator Evans, and I would hope you would chair for me.

Senator EVANS. I would be delighted to.
Senator DOMENICI. I do have a couple of questions.

First let me for the record clarify the deferral statement I made because I am sure it was right, but I am not sure that I made it understandable.

The concept in the Budget and Recombinant Act is deferrals as compared with recessions. The deferral was to be overturned, if it was going to be overturned, by one House of Congress within the timeframe stated in the Budget and Recombinant Act, so that you would defer for X number of days as prescribed by statute, and the work is very descriptive.

Nothing happened. It was just held in abeyance for that period of time. Then one House would act to overturn the deferral and it would then be back on the books and the budget authority would be operative as if never adversely affected.

The Chadha case said that that is unconstitutional for one House of Congress to do that. So what we now have is we have the act there but we do not have a mechanism for overturning the deferral because the prescribed mechanism has been declared to have shortcomings constitutionally. So it is now presumed by the administration that deferrals still exist, which is now in Court. Yet they may not exist.

You may have these all back on the books by order of the Court because the Court could very easily rule that since the mechanism for overturning is gone, the operative mechanism for doing it is

Andwithout soing they ato be effecthat wouhadha case

gone. That is a 50-50 call from what I can tell as a lawyer. They could very well do that.

On the other hand, Congress is sitting now saying: One way to overturn deferral, we do not even see the deferral act. It is for both Houses of Congress to pass a joint resolution overturning the deferral.

But it is clear from the language of the Chadha case that that is a bill, that is equivalent to a bill that would have to be signed by the President in order to be effective. So you are pretty safe for now in assuming they are gone, because we cannot get them back on without something that is passed by both Houses and signed. And we are in an interesting bind because to the extent we would like to send all that up to the President, if we pick and choose, I assume we will agree with you on half and not on the other half.

We have to put that in some kind of appropriation measure. And we are bound by the ceilings that we now have under GrammRudman-Hollings and we have to find some other savings; so we are caught in that kind of a bind.

So I think that is the current status of things. Why did it not happen earlier with Chadha having been in existence for, what, 20some months? About how old is Chadha; 2 years? I think the reason we did not have the problem was that this was clearly understood by the administration last year as being a very unsavory, to use a mild word, situation fraught with danger on all sides and, consequently, deferrals were used very sparingly by agreement with then-OBM Director Stockman and the appropriators on both sides.

I am not now suggesting that they are being used unsparingly. It would appear to me that they are, but I have not looked at the whole package. Maybe this is still sparingly and with some kind of consideration for the fact that Congress is in this intermediary bind under the law.

In any event, that is about where we are. I have just two questions. I am kind of intrigued that sometime after the deferrals, $38.5 million of deferrals were changed into rescissions. I assume you are aware of that? Miss FITZPATRICK. Yes, Mr. Chairman.

Senator DOMENICI. That is the National Center for Chemical Research, Columbia University; Demonstration Centers for Information Technology, Brown University; Advanced Science Center, University of Oregon; Energy and Mineral Research Center, University of Alabama; et cetera.

Do you have any information as to why these achieve such an instant sort of exceptional status among university programs, Madam Secretary?

Miss FITZPATRICK. Mr. Chairman, those items are not in my budget, so I was not involved in any of the discussions on them.

I am glad you do not have to discuss it. Frankly, you are too nice to beat up on. [Laughter.]

Senator DOMENICI. I assume that you have looked into that poor little New Mexico University, one which did not receive such high status, the Southwestern Residential Demonstration Program? At least I gave you a little advance notice on that. I do not imagine you are able to compare its validity in the spectrum of things with

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