Hearings to examine the President's fiscal year 2027 budget proposal.

Good morning everyone. Russell, Mr. Vought, thank you for coming. You did this in the House, right? Well you get to do it again, I'm sure it was a lot of fun, but I do appreciate you sharing with us the President's budget. Very quickly, I won't take long here. Great on defense, if you're a guy like me, this is the budget you've been dreaming of. I think a trillion and a half dollars, given the world I think is justified and necessary, given the changing nature of war and how complex it is and drones and AI and all that good stuff, we need to sort of change our military footprint so it's like the best military budget I've seen since I've been in Congress. On the other side, there's some cuts to programs that I think keep us safe, soft power is as important to me, not just hard power. So we'll take under advisement the budget like we do with every President and we'll work together and try to find a way forward among ourselves. The one thing I do want to mention is our immigration situation that we find ourselves in. During the four years of Biden, it was an absolute complete total disaster on every front that matters. More people coming in and the terrorist watch list by like a bunch. I've been talking about sanctuary cities, those cities and states that ignore federal law, they refuse to work with the federal government in deporting people here illegally are magnets for future illegal immigration and I'm dedicated like everybody on our side to do something about that. You can see the states and cities that have these policies, they have a lot of illegal immigrants and why not, if you can get here and never be deported, it's a magnet to keep coming. So why not mention that. We'll be moving to reconciliation soon to find ICE and the Border Patrol, why? I'm an appropriator. I'd much rather appropriate. I like the normal process of appropriating and I want to thank Senator Collins and the good job her and Senator Murray have done working that file. We've got a lot done and it's been quite frankly satisfying to see the Appropriations Committee work, but we had a problem when it came to Department of Homeland Security funding, we could not reach an agreement about funding ICE or the Border Patrol. I don't know about you, but it seems like there's a lot of bad things going on in the world and now's not the time to shut the Border Patrol down and now's not the time to defund ICE, put it out of business, reform yes, defund no. Why not mention that. We're going to move a reconciliation bill that'll be limited to make sure we have money for the Border Patrol and ICE to keep doing their job through the President's term, three and a half years, now why are we doing that? I just don't see any breakthrough with our Democratic colleagues about these two accounts. So reconciliation's available to us and I'm going to use it. When it comes to defense, there are a lot of pressure, defense hawks want defense money in the reconciliation bill. I'm trying to keep it as small and focused as possible. I have hope that the supplemental will get passed whenever you send one over, what you need for the military, that we can work in a bipartisan fashion, pass that supplemental, we'll have some things in it that my Democratic colleagues want as well as military funding. If that fails, I will urge the President to do another reconciliation bill for defense because the appropriations process would have failed and we can't accept failure when it comes to funding the Border Patrol, ICE, or additional money for the military. I'm hoping the Iran war winds down fairly soon in a way that won't start new wars, but there are other conflicts out there, Ukraine, Russia's one of the bloodiest wars in the history of this century. Last night there was a massive attack by Russia, Putin's the problem, not the solution and there's a bipartisan breakthrough I think coming when it comes to Russian sanctions to put in place a sanction tariff regime that will make those who buy cheap Russian oil pay a price. It's time to end this war and it's time to put pressure on Putin, I understand pushing Ukraine, but I want the Senate to lead the charge of putting in place infrastructure to put pressure on those who prop Putin's war machine up and I think we're very close to being able to reach an agreement with the White House, Democrats and Republicans to do that. So as to the budget, this committee is going to hear what you have to say, I'm enthusiastic about the defense part, concerned about other parts and we'll work together to my colleagues on the Democratic side, I appreciate very much your commitment to find a way forward against Russia. We don't have that consensus when it comes to the threats facing us from Iran and why are we doing reconciliation? You did the Obamacare, Inflation Reduction Act, you did big things through reconciliation, we did the Working Families Tax Credit bill, but the next reconciliation bill, the one coming up, is designed to fix a problem when the Appropriations Committee fails, this tool has to be used and as Budget Chairman, I'm going to use this reconciliation tool when the appropriation process fails to the extent that I can. Thank you.

I thank you very much Mr. Chairman and welcome Director Vought. My colleague to my left and I have worked on a number of projects together, but there's many points that we have, make sure that's where I sit, right, yeah, okay, good. We have, may have a very different perspective on and and certainly I know you mentioned reforming ICE, I I think that's incredibly important and was the key to being able to go go forward because ICE is operating like secret police. In a great irony, they've adopted the tactics of SAVAK, the secret police of Iran, of showing up in unmarked vans and unmarked uniforms and failing to get judicial warrants to knock down doors and detaining people without access to attorneys and family. People were being disappeared into the system. Those are all the types of of factors that made the SAVAK so hated in Iran that contributed to the 1979 revolution and yet now we have those same practices exercised right here and that is a terrible, terrible mark on our democratic republic. You're a very important man, Mr. Vought, you were a central architect of Project 2025 and now in your role as head of OMB, you are the chief engineer of the Trump administration's train, virtually nothing happens that doesn't go through OMB. So this is the first chance we've had to have you before the committee since the President came into office and I think that's important for you to be here. You noted in your opening message on your budget that and I quote, a historic paradigm shift in the budget process is occurring. And I certainly agree with that because this is an extraordinary families lose, billionaires win budget. We saw that in the major HR 1 piece of legislation last year that cut healthcare and savaged nutrition to fund tax breaks for the very richest Americans and which added by CBO's estimate $30 trillion to our debt over the next 30 years or if the interest rates are 1 percent higher than they had in their model, $50 trillion in additional debt over the next 30 years. To savage programs for families in order to run up debt and make billionaires even richer, well that is a paradigm shift and not a good one. And there is another paradigm shift underway that is deeply disturbing. The Constitution assigns three powers to Congress, the power of taxation, the power of the purse, and the power of war. And President Trump has violated all three of those allocations in the Constitution, trying to take and say those belong to the executive branch, I'm going to take those. And that is simply a huge assault on our Constitution. You know the very first bill the Senate ever considered after it convened was a issue of tariffs and for three weeks the senators sat around and said how much should it be on molasses and how should it be on a keg of nails and so forth. And every President has understood the power of taxation belongs to Congress until this President said no, I'm just going to willy-nilly assign 50 percent over here, 100 percent over there, or tomorrow I'll raise it to 20 percent without any congressional authorization to do so. And we certainly see under the power of the purse the cessation of programs that have been duly authorized and appropriated by this executive branch and that is a direct violation of the law and a direct violation of our Constitution as well. The Agency for International Development is certainly one of those agencies that was shut down despite being authorized and appropriated and public health experts estimate that to date 780,000 individuals died because of that sudden shutdown including 500,000 children. The weight of that rests on this administration. And then there's the Consumer Financial Protection Bureau of which you are the administrative head of, but you've basically shut it down. You know that that bureau has saved in refunds to American families $21 billion since 2011, $21 billion. That's not counting the probably four to five times that amount that was saved by stopping predatory schemes in their tracks. Everywhere I go I see look at all these new scandals that these new strategies to rip off our seniors and rip off our families across the country, why isn't the CFPB doing anything about it? Well because you shut them down essentially is the answer. And then there's the congressional power to declare war. A reckless war, a reckless war that has strengthened the right, the hardliners, that has weakened the reformers, that has enriched Russia after President Trump lifted the sanctions on Russia, that has left nuclear materials, enriched nuclear materials buried deep underground and that has shut down the Strait of Hormuz, raising prices for American families, but let's be blunt, also resulting in the death of our service members, the injuries to our service members and about a billion to $2 billion a day in national treasure. These are profoundly concerning changes and not a paradigm shift in sync with the Constitution. But I was struck in the budget, what's missing in this budget? No plan to bring down gas prices. No plan to bring down grocery prices. Nothing on Social Security even though we are just six years out from exhausting the Social Security trust fund. That's of great concern to seniors across this country who will be looking at a 28 percent cut in their Social Security payments. I really encourage the administration to take on this issue and I praise the Chairman of this committee for holding a hearing on this question, I hope we can get to an actual bill now, but I'd like to see the administration participating in that effort to save Social Security. No funding for aid to farmers hurt by Trump's tariffs. No additional funding to deal with unexpected disasters despite the enormous increase in wildfires, floods, and hurricanes. No credible plan to reduce the debt after adding $30 trillion last year, we're now at over 100 percent of GDP, that is debt to GDP ratio. And we have an entrenched 6 percent of GDP deficit between the roughly 17 percent of GDP that we're raising in revenue and the roughly 23 percent that we are spending. And in this budget, I didn't see any deficit projections. Now the law requires the budget to have those deficit projections. Section 31 of the US Code 1105 says there have to include at least five years of deficit and debt projections, but you chose not to put them in. That is breaking both the spirit and the letter of the law. What the budget does include are projections that President Trump will raise an eye-popping $1.6 trillion in revenue more than CBO estimates. And CBO estimates were made before the Supreme Court ruled Trump's tariffs unconstitutional. So you would think these revenue projections would actually be smaller than CBO's projection, not larger. So those projections really are fictional. And then we have this massive increase in defense spending, and certainly a difference of opinion that I have with the chair. What we're looking at right now, based on last year's HR 1 bill and what's in this budget, is a massive 42 percent increase in defense spending. And that means that we would be spending more in constant dollars, 2027 dollars, now than we spent in any single year in World War II when our whole entire national economy was driven by a world war. This budget doesn't include the billions or $1 to $2 billion a day we're spending in Iran. It does include a reduction in domestic programs for American families. And those cuts continue to compound. Your budget proposes a 45 percent cut in non-defense spending as compared to CBO's current law baseline projection. It has less for education, less for healthcare, less for housing. Its families lose and billionaires win. And that is not a good path for our nation to be on. To put it bluntly, billionaires have enough money. Running this government by and for billionaires and oligarchs, huge assault on the vision of government by and for the people. Let's remember the vision of this country was not a country by and for the powerful or the oligarchs or the richest, yet that's what this budget is designed to do. You know, President Trump when he campaigned, he said we're going to make this into an incredible country that can afford to take care of its people. We're going to take care of our country first. Well, what do we see? American families last. Americans' richest class, the Epstein class, first. That is just wrong. This budget is a betrayal of every working family. It's an extraordinarily dangerous change to the vision for our nation. And the debt that you all are running up is going to haunt this nation for a generation to come in terms of its ability to invest in healthcare, housing, and education. So I think it's important for Congress to recognize and ensure that this budget is dead on arrival. And I look forward to today's discussion.

Thank you, we have the OMB Director, Mr. Russell Vought, the floor is yours.

Thank you Chairman Graham, Ranking Member Merkley and members of the

Thank you. We have the OMB Director, Mr. Russell Vought, the floor is yours.

Thank you, Chairman Graham, Ranking Member Merkley, and members of the committee. Thank you for having me here to testify on the President's budget request for fiscal year 2027. I look forward to a productive conversation on how to continue the fiscal progress we've made so far. When President Trump took office, the nation was facing financial catastrophe under the failed leadership of the Biden administration and decades of status quo spending strangling our nation. Those decades produced nothing in the area of fiscal restraint. A lot of talk about the problem, but utter futility about doing anything about it. That fiscal futility ended with the return of President Trump. In just one year, the Trump administration and Congress have made historic progress on righting our fiscal ship, the speed and scope of which have not been seen in Washington for many years. The President drove enactment of the Working Families Tax Cut Act, which is a once-in-a-generation legislation to end fiscal futility, invest in critical priorities, and cut and extend taxes for working Americans. This bill bent the cost curve for federal spending, achieving nearly $2 trillion in mandatory savings while securing historic investments in our nation's defense and the Department of Homeland Security without corresponding increases in objectionable non-defense spending. The President also shepherded legislation through Congress that rescinded $9 billion in wasteful spending, which was the first standalone rescissions package enacted by the Congress since 1992. He canceled $3 billion in excessive spending that was wrongly designated as an emergency by Congress and executed a historic pocket rescission to eliminate $5 billion in wasteful foreign aid. Upon signing this year's appropriations bills, President Trump continued to bring discretionary spending under control. The full year 2026 appropriations bills enacted the first real cut to spending in over a decade. It rooted out wasteful spending that the administration identified across federal agencies. The enacted bills reaffirmed administration policy to eliminate ineffective federal agencies that do not serve a useful purpose. For example, the bills eliminated all programming for USAID as the administration works to fully shut down the agency after decades of mismanagement and abuse. This also included the complete elimination of the Corporation for Public Broadcasting, which funneled billions of dollars into biased and woke programming at NPR and PBS. We look forward to working with you to achieve even more progress in this year's appropriations cycle. The 2027 budget builds on the President's vision by continuing to constrain non-defense spending and reform the federal government. The budget proposes a 10 percent cut to non-defense compared to 2026 levels. Within this total, the budget maintains investments in border security, immigration enforcement, delivers on the President's commitment to support law enforcement and combat violent crime with a 13 percent increase to the Department of Justice, and honors the nation's sacred obligation to military veterans. In addition, the 2027 budget eliminates wasteful Green New Scam projects that are dependent on foreign supply chains, returns control of education back to American families, and roots out waste, fraud, and abuse in programs both at home and abroad, ensuring that every taxpayer dollar makes America safer, stronger, and more prosperous. The budget simultaneously builds on the historic $1 trillion fiscal year 2026 defense topline by requesting $1.5 trillion for 2027, a 42 percent increase as promised by President Trump last year. This budget will ensure the United States continues to maintain the world's most powerful and capable military as we grapple with an increasingly dangerous world. It is a sizable increase that I want to explain. It is meant for significant paradigm-shifting investments. For instance, the President and his Department of War are exhibiting tremendous leadership to build more ships, planes, drones, munitions, and satellites faster without the backlog status quo. For the industrial base to double and triple capabilities, actually build more facilities, not just add shifts, it requires multi-year agreements to purchase into the future. That cost has to be booked in the first year. Under President Trump's bold leadership, every tool in the executive toolbox has been used to achieve real savings and our administration will continue to do so. A historic paradigm shift in the process is occurring, it's producing real results for the American public. Fiscal futility is over. Now that our fiscal ship has finally turned to face in the right direction, I look forward to working with you to continue to move it forward. Together we will achieve significant budgetary savings while implementing the President's bold vision. Thank you.

Thank you very much. We'll have five-minute questions and Senator Johnson's going to take over for me. I got to do something else, I appreciate that when I'm done here. What percentage of GDP to defense spending would it be if we passed the President's budget in terms of GDP spent on defense? Do you know what that is?

Probably about 4 and a half, 5 percent.

Okay. What's been the average since World War II? Do you know?

Probably 3 percent.

Okay. Right now we're about what, three?

Probably, yeah.

Yeah. On the lower end of what we've been, about average, right?

As a percentage of GDP, the increases are right about where we have been as a percentage of GDP.

Do you consider the world in which we live in in terms of threats to the United States average?

No, we have adversaries across the globe and the President is taking action against them.

I've spent a lot of time in this space. There's nothing average about what we're facing. We've got a world very dangerous, we've got bad actors on the move. Thank God President Trump is trying to stop one of them, the Iranians. This got nothing to do with the budget, but do you think if Iran had a nuclear weapon they'd use it?

We certainly wouldn't want to tempt them to use it. That's why a key foreign policy objective of this President is to deny them.

Yeah, we don't want to even play that game. If you're Israel, you certainly don't want to play that game. One Holocaust is more than sufficient. So we're having to deal with a nuclear-armed Iran, their ambitions. We got a more aggressive China. Would you say China's fairly aggressive, at least in the economic space, military buildup?

Yes.

China is on the move, folks. We all say, you know, we want to protect Taiwan, we got to do more than just talk about it. They're building a big deep-water navy. And we need to up our game. Do you know how many ships we have in our navy?

Around 290.

Okay. And they say we need how many to really cover the space?

We need to go up to at least around 400.

Okay. Well, how do you build more ships? You need money. And if you don't build more ships, you have a gap. So I would say there's nothing average about the environment we live in that we've got a lot to do in a quick period of time to keep us safe. That's why I support the budget. So we go from three to 4 and a half, but if you look in the history of America since World War II, 4 and a half is not like loading up the place. I think it's consistent with what we is kind of the Cold War number, to be honest with you. So my belief is that you're very much on track with defense spending, the necessity is there. When it comes to the supplemental for defense, do you know when it's coming?

Not yet, Senator. We're working on it. We do want to continue to assess when it will be needed by and how long the operations will last, but we have it, we're reviewing it, we're well aware, and we'll make sure we send it up sooner rather than later.

In terms of illegal immigration, does it cost America or is it a benefit to America?

Illegal immigration costs America both in crime, in communities being ravaged, but also just the extent to which these individuals are on our benefit rolls.

Okay. Now let me ask you this. Is it fair to say that every part of the government through the appropriations process has been funded for this fiscal year except ICE and Border Patrol?

Correct.

So as we sit here in the appropriations process, there's no money for these two accounts. How do you feel about that?

Well, it's worse than that. There is no money for the entirety of Department of Homeland Security. Now the Senate has passed a bill and we need reconciliation to fill those two holes, but as of right now, Department of Homeland Security is disintegrating because the Secretary and I are having to figure out ways to temporarily fund people's paychecks so that we don't have people quit and embark on new careers.

Do you think if we keep this up much longer people will quit?

They will indeed, and some of the things that we were seeing the weekend that Secretary Mullen took office was incredibly concerning. We have to have a funding mechanism for the entirety of Department of Homeland Security, including those two important law enforcement agencies.

Would you say if we fail to do that we put America at risk?

I would.

What kind of risk are we looking at?

Well, Department of Homeland Security was created for a reason. It was because this body wanted an entire department to...

It came about after the attacks on 9/11.

That's correct.

So the Department of Homeland Security was a reaction of the federal government to make sure 9/11 never happened again, is that right?

That's correct.

I want the American people to know there's no money for the Department of Homeland Security because we can't reach an agreement among ourselves. And if you thought the Department of Homeland Security was necessary to avoid another 9/11, the whole damn thing is shut down. So if there is another 9/11, don't blame me. I am trying everything I can do, bipartisan or otherwise, through reconciliation, to put money in an agency that's on the front lines of defending us all. What we're doing here is incredibly irresponsible, incredibly dangerous. And what you said about ICE, I want to disassociate myself completely with what Senator Merkley said. I've been here for a while, would like to stick around, I've never been more worried about the dysfunction of this place now leading to a bunch of Americans getting killed. Thank you.

I thank you very much, Mr. Chairman. And have you included, Director Vought, estimates or a fund for the war in Iran in the budget you presented to Congress?

No, sir.

Are you planning to present that in short order?

We are working on a supplemental for Congress for additional needs. We're working through that review process. Part of it is the length of the war, part of the operations overseas, part of it is the extent to which some items might be fiscal year 26 or 27, and we're working through that.

Thank you. Can I, would I be in the ballpark to say we've already spent at least $50 billion?

I wouldn't want to make a characterization of that at this point.

Okay. I would say as the most knowledgeable person in the executive branch on the budget, I would expect you to have pretty good numbers on that, so I'm a little disappointed in that answer. My understanding is that the most recent plans, at least circulated in the press, have been to present a supplemental of somewhere in the ballpark of $80 to $100 billion. Is that more or less where you're headed?

Well, again, I think my guess is if you were to be on the inside of the Department of War, these costs would fluctuate given the day, and so I think it's hard to give you an average cost, and that's one of the reasons we're going to come after much work and review to give you a full request with the time.

Thank you. I do think it's important when a budget to include all the things that we know are going on in order to have a good foundation when it's presented, but I do look forward to whatever you present in the near future. I noted that you did not include deficit numbers in your budget, even though those are required by law. Why not?

It's a discretionary budget. One of the things that I believe is important is to not confuse the country when we're in the middle of several reconciliation efforts over the next year. This is making sure you can start the appropriations process. We did a mid-session review in which we will comply with the law at the mid-session point about how we are doing. It's also, you know, one of the things when you do a full budget...

I'll take that answer. Thank you. And I disagree with the notion that it's discretionary to follow the law. The law did require deficit numbers. You can, they can be extracted if one sits down and does the numbers from your revenue and spending projections, and that includes a deficit of about $2.2 trillion in 2027. I think perhaps the reason you didn't want to include deficit numbers is you didn't want to draw attention to the we are in a situation where we are not in a major recession, and you're not including in this the costs of the war, so that's not a factor, and yet we're continuing to drive this nation deeper and deeper into debt. The projections show that in 20 years with this 6 percent structural deficit, we will be in the position of basically being able to fund only Medicaid, Medicare, defense, and interest payments, which means no investments in healthcare, housing, and education, and those investments are diminished in your budget. So am I accurate in saying, extracting from the numbers you do have in there, that the deficit is going to be about $2.2 trillion for 2027 as projected in your budget?

Again, this budget has not intended to tell you where we would be from the deficit, but I do appreciate the concern on debt and deficits. I do appreciate the concern. When we came into office, we were looking, staring into face $32 trillion in deficits. We have already gotten that down to $18 trillion. We are making progress each and every year.

I'll let you on your own time, thank you. Actually, the situation is you added $30 trillion last year to the debt over the next 30 years, or $50 trillion if the interest rates are 1 percent higher than CBO projected. So rather than reducing deficits and debt, you are increasing them, and this is on top of $8 trillion in hugely strategically misshaped wars in Afghanistan and Iraq, $8 trillion that was not invested in American families, and this budget continues the process of saying we don't care about American families. You know, the foundations for a family are healthcare, housing, education, and a good-paying job, and the President ran on providing a foundation for families, and this budget does the opposite. Social Security. Why not include a plan to address Social Security when we are just six years out from the trust fund being exhausted?

The President has made very clear that he is going to protect the benefits of Social Security into the future.

Exactly. So why not protect them? Why not have a plan? Why not come to Congress and say this has to be a priority? Why not have the President give a speech and say we're really pleased that Chairman Graham held a hearing on Social Security and we want to work in a bipartisan fashion to get this fixed and fixed now, not wait until the trust fund runs out of money and families are facing a 20 to 25 percent reduction in their benefits?

No senior is going to face reduction in their benefits. This President is going to fully protect them at each and every point of the deadline. Right now we have to get the government funded, and as a result, we need Congress to work again.

My time's up, thank you.

Senator Grassley.

I have one process issue to bring up with you and then just one question. First of all, Congress has appropriated money, you don't have the authority to impound it, and I'm interested in the release of Community Services Block Grant money, and the reason I'm interested in it because we are not getting any answers about why these quarterly allotments aren't given out. I follow this program in Iowa, and the reason it's kind of personal to me, one of your predecessors 40 years ago by the name of David Stockman suggested we do away with the program, and I and Senator Hatfield, no longer alive, kept that program alive and we've had it, so I want those quarterly allotments released. Now my question is this. My Democrat colleagues believe the only solution to our unsustainable debt and deficits is higher taxes on job creators and on families. However, history proves that high tax rates fail to raise significant revenues. Taxpayers, workers, and investors are smarter than we in Congress or bureaucrats are. We've had a 93 percent marginal tax rate, then a 70 percent tax rate, then a 50 percent marginal rate, and 30 percent and 40 percent and so on, but regardless of the rate, we've brought in about the same amount of revenue. And I have a chart that shows that. And on the other side of the ledger, federal spending is at levels that we've never seen outside of war and recession and is still growing. Isn't it true that our fiscal imbalance is primarily a spending problem, not a revenue problem? And then let me give you the second part of it. How is this administration working to rein in the bloated federal spending?

Yes, Senator, thank you for the question. It is a spending problem. If you look at our postwar average receipts as revenues has been about 17 percent of GDP. We will be at 18.3 percent under this budget on average. If you look at the postwar average, it's about 18, 19 percent for spending, and yet we've been over 20 percent, 22 percent at times as a percentage of GDP for spending, and so spending is the problem. It's also one of the reasons we believe strongly that we needed to extend the tax cuts and that to use a baseline that you were not allowing for current law taxation to be assumed, that was not an honest way to reflect deficits and deficits. And so we're thankful for the action that Congress took, and we believe it's in fact part of the economic growth that's needed to be able to deal with the deficit.

Okay. Thank you for your courtesy.

Thank you. Senator Murray.

Thank you, Mr. Chairman. You know, a budget is really an expression of our morals and our values, and frankly, looking at Trump's latest budget, I don't see it as a very moral budget. We're cutting tens of billions of dollars from housing and healthcare and education so we can spend a half a trillion dollars more to fund Trump's foreign wars. We should be sending more funding to our schools right here in America, not in my opinion buying more missiles that Trump can fire on schools in Iran. We should be building bridges here in America, not destroying them in Iran, and we should be bringing down our energy costs, not blowing money on wars that send gas prices for our constituents through the roof. So Director Vought, it will not shock you to hear that I believe that this budget is morally bankrupt and also by any objective measure deeply irresponsible because it will rob our families and burden our grandkids with mountains of new debt, and for what? For what? So Trump has more bombs he can threaten to end civilizations with? And also this budget robs states like mine. It zeroes out funding for Howard Hanson Dam once again, shortchanges Hanford cleanup, and now just to be clear, I rejected those cuts in our last funding bills, I will do it again as many times as it takes, but there is in my opinion only one place for this budget and that is in the trash bin. But having said that, I do have some questions for you. You and President Trump are asking for $450 billion in new defense spending. To be clear, that is the largest increase since World War II, and that does not include money that you reportedly still plan to request for the war in Iran. What is the total dollar amount requested for defense spending in FY 27, including annual appropriations and reconciliation funds?

$1.5 trillion, Senator, a combination between the appropriations and the mandatory. We are trying to increase the amount that you would fund through the appropriations, but we don't want the full increase to have to be borne in the appropriations process.

So $1.5 trillion. What is the total dollar amount requested for non-defense spending in FY 27?

$660 billion.

Okay. And what is the overall cut to non-defense programs that you're proposing?

10 percent, $70 billion.

$70 billion. We look at that as about $81 billion, frankly. So let me just say this, Director Vought, you count yourself as a spending hawk, and here you are arguing for a gob-smacking $1.5 trillion defense budget. I read that you disagreed with the President on that $1.5 trillion request, warning him that it would explode the deficit. Did you warn the President or administration officials that spending this much on defense would explode the deficit?

Senator, I fully support this budget. We go through a long policy process, it's needed for the Department of War. It's one time, it's made, it's designed to have paradigm shifting investments like I mentioned in my opening comments to be able to fund now what this President's willing to do, multi-year agreements. It is necessary to keep us safe. I mean, I've never been more confident that the administration is doing whatever it can to be efficient at the Department of War, but there are bills that need to be paid with regard to drones and munitions and planes that have to be capitalized on.

Well look, you can do your opening statement later. I will just say for the record that people at home need to understand this. President is proposing that we cut over $73 billion in our domestic funding for things like education and healthcare that are critical for our economy, for our families, for the future of our country to help pay for a truly jaw-dropping half a trillion dollars in increase in defense spending. So I just think that we have to all recognize what is going on here and be smart about how we put together a budget as we go forward. So Director Vought, let me just ask you, we're here to talk about next year's budget obviously, but as we talk about it this administration is spending billions on the war in Iran as we speak. I heard Senator Merkley ask you a question and I just want to confirm this. You have no idea, none, how much has been spent on the war so far?

We don't have that figures right now, I think in part because it's fluctuating on a day-in and day-out basis. But it's one of the reasons we want to are studiously reviewing what...

You can't even give us a range.

No, I'm not going to give you a range because I don't want to be...

You're just not going to tell you and tell us because you don't want us to know how much is being spent. We have a responsibility here, Senator Merkley mentioned that, we have to know how much is spent so we can put our budgets together so we can make our annual appropriations and I just find it outrageous that as Director you're not willing to tell us what those costs are. It's your job to know. Let me also ask you, you said that the appropriations process has to be less bipartisan. Do you stand by that statement?

Well, that was coming at a time during the rescissions process in which the use of a statutory process was derided by one side as a shot against the bipartisan appropriations process. And it's not. You pass appropriations bills right now and they have to get 60 votes, that's you all are famously making that point to the country right now. But you also have a congressionally enacted statute that allows us to use rescissions with a majority vote.

Well, let me just tell you this. As a member of the appropriations long-standing, we work out very difficult differences between each other. And if we can't trust that at the end of the day that a deal is a deal when we reach those bipartisan agreements, that is going to make it truly impossible for Congress to do its job. Thank you, Mr. Chairman.

Can I respond to that?

Certainly. No, on Chairman's time. Go ahead, please.

We had a deal with regard to a bipartisanly negotiated DHS bill that would have funded DHS and that was walked away from.

Let me make it very clear, I was at the table working on negotiating that. We worked really hard to come to an agreement. Obviously we are not there yet, the Senate has now passed twice a bill to make progress on that. The House has not taken it up. I will take a backseat to no one on working hard to get the funding done that we need to get done. Thank you.

Let me before I turn it over to Senator Cornyn, let's try and clarify how you account for defense spending, war spending. An awful lot of what is being spent on the war is just part of general annual operations and appropriations, correct?

Correct.

We've got ships sailing, we've got airplanes training, we've got the servicemen that are already being paid. So the cost of the war is obviously there's an uptick in terms of how much is spent on those kind of operational things, but again that's covered under appropriations. Then of course you have the depletion of the munitions, correct? So it'll take some time for you to really ferret out exactly what was all expended and what's going to have to be replaced, correct?

Correct.

In terms of 1.5 trillion, that's not necessarily outlays, correct? You are going to be authorizing 1.5 trillion but again as you're telling me in your opening, this is for long-term contracts and these outlays could be spread over a number of years. Am I getting that correct?

That's correct. We're always asking for budget authority, outlays spends out over a period of time.

So do you know what the increase in outlays is going to be 2027 versus 2026? Again, exclusive of the war costs.

Not as it pertains to DOD. I will say that DOD spending is typically going out a vast majority of it in that first year, it's not transportation funding which is you know takes forever to go through the system. So these are important investments, we've run a thorough process for fiscal year 27. One of the reasons why we're up here this month is because the extent to which we were working with Department of Defense to make sure this money is well spent and we're proud of the budget that we're here to articulate.

Okay. Senator Cornyn.

Director Vought, what components of the Department of Homeland Security are currently unfunded?

Senator, all of them are unfunded, including the disaster relief fund as we draw down that fund. We are not prepared for a natural disaster from a funding standpoint. All of the law enforcement agencies, TSA, right now we are temporarily using a fund from the one big beautiful bill to pay salaries so that the Secretary of Homeland Security doesn't have a complete walkout on his hands.

Does that also include the Coast Guard and CISA, the chief cybersecurity agency of the U.S. federal government?

Yes sir. No money for the Department of Homeland Security in its entirety.

So I understand our Democratic colleagues are angry with ICE because they don't believe in enforcing our immigration laws, but the tool they've used to defund Department of Homeland Security reaches far more broadly than just ICE, correct?

That is absolutely correct.

I want to talk to you about defense spending and do you believe as I do that national security is the first responsibility of the federal government?

Absolutely.

That all of the rights and privileges and freedoms that we enjoy as Americans flow from our ability to defend ourselves and our interests?

Absolutely.

And President Trump has been I think courageous in demanding that our NATO allies step up their defense spending to a level of 5 percent. Is what the President has proposed in this budget, does it exceed 5 percent?

No, it should be in the area of 4.5, 5 percent.

So basically what what the President is proposing is that the United States do what he's demanded that our allies do in Europe so that the American taxpayer doesn't have to bear the burden of supporting the national security apparatus for basically the entire world. I was intrigued to see in the I guess it was the Wall Street Journal a story about Steve Feinberg and the deputy secretary of defense or of war now and the transformation that is being undertaken to make sure that we are dealing with the changes in the way that wars are conducted. Obviously Ukraine has changed the nature of warfare and now instead of multi-million dollar weapons, cheap drones and other other weapons are being used on that battlefield and ironically enough Ukraine is now teaching the rest of the world how to use these new technologies. But talk to us in the long term, isn't it important that we get the Pentagon in a better position when it comes to purchasing the weapons and aircraft that we need and talk to us about the necessity of dealing with the ossified processes at the Pentagon in terms of procurement and acquisition of weapons in terms of making sure that tax dollars are being spent on things that actually help our warfighters and help deter war.

Senator, I think this is a really important point. I mean, I think sometimes you can assume that the defense contractors are just putting out what is needed for the various things that we're going to have to deal with in this world as opposed to getting the kind of annual yearly, this is what we do and we're not going to go beyond that. What the President has done and his team at the Department of War and I've worked hand-in-hand with them, I've been in these meetings with the prime contractors and the President is to say we have to you have to scale to a level that you know you have not been planning on. And that's going to require you need to do it, it's based on your bottom line, but you need to know that you have a partner in us that will procure over many years. It's not just enough to have an added shift, right? You need more facilities across the country and that's what this budget is designed to do. It's also coming at the time where the President's putting a lot of pressure on these same contractors not to do stock buybacks, not to do dividend payments so that when you get to a quarterly earnings and they've got a backlog of ships of which they do, that you're not rewarding bad behavior. And so this is part of a combined effort of putting pressure on that community but also making sure we have the resources so if they say look, we're going to build a facility that's going to add X number of drones and planes and ships, that we as a buyer can be ready to to take that good deal. That's what this budget is about.

Senator Wyden.

Thank you, Mr. Chairman. And I want it understood that I think what we have seen in this administration is a wildly skewed set of priorities and essentially all the money now there's an effort to send it to the war in Iraq and the reality is 100 percent of U.S. Senators voted for the DHS appropriation. We came together and did the right thing. You can't get on typical days 100 percent of the senators to order a 7-Up together. And 100 percent were there on this budget question that's so crucial. And what I want to do for my time is move this to the consequences of your budget for real people and what it means every day. And I'm going to start with the effort to talk about wildfire preparedness. What we're dealing with in our area is you all are bringing a wrecking ball, a wrecking ball to this crucial area when we are looking at one of the toughest wildfire seasons in decades. And the reality is you all illegally withheld funds in the past for firefighting which resulted in a departure of 1,400 qualified firefighters from the Forest Service. You empowered immigration enforcement agents to actually arrest and detain firefighters who were in the middle, in the middle of fighting a fire in order to protect all of us. And just a few weeks ago the Trump administration announced a complete dismantling of the Forest Service, the agency largely in charge of helping western states prepare and fight fires, once again for the budget. So I have a very specific question. Between your budget and the staffing cuts, I can tell you people in the West, all over the West, clearly in Oregon but all over the West, there's the same kind of concern. And I would like to hear you commit to me that my state will have the same number of firefighters and Forest Service staff on hand this summer in order to prepare for what looks like a devastating wildfire season. We make that commitment?

Senator, I need to unpack the claims that you're making. This president cares incredible amount...

This is my, this is my time.

No, but I understand there's a story to tell with regard to this. We fully fund all fire prevention accounts. This president cares a lot about it. He's very interested in making sure there's one point of contact to say...

But we've lost 1,400 qualified firefighting personnel at the outset. So that is a fact. And I want to know on my time, and you can talk to other senators on their time, but the reality is we want to know are we going to have the same number of people on a very different firefighting season?

During firefighting season you're going to have the full weight of the presidency to make sure it's fought with...

Okay, you're ducking. Let the record show...

No, I'm happy to look at whatever facts that you have after the hearing.

I'm asking a specific question. Will we have the same number of firefighters and Forest Service staff? And I'd like a yes or no answer to that. Will we have the same number of people?

Well, Senator, I'm not in charge of the Forest Service, so how they allocate their resources in fire season is something you have to ask them.

Well, you're making changes in the agencies, you're cutting projects all over the West. One more question because time is short. With respect to mental health, the Trump administration was planning to slash $2 billion from substance abuse prevention and mental health according to press reports. I and others made a gigantic stink about it. We said we're not going to let that happen on our watch and less than 24 hours later you seemingly backtracked on the cuts. Now the newest budget would eliminate the substance abuse and mental health program entirely and merge it into a new agency which you combine with a $5 billion cut from the new for that new agency. So we're seeing a failure when it comes to mental health as well. We're in the middle of an opioid crisis. What's your budget going to do to help with that?

We believe we have a very aggressive proposal with regard to a block grant for mental health and drug abuse, opioids addiction. We do make reorganizations within the department because we actually want the department to work better and our officials there have put forward proposals that we think will actually lead to better care. We want less funding to go through nonprofits sometimes as we are going through the process...

And those nonprofits who are on the front lines are completely against your program. They're completely against your idea of eliminating the substance abuse and mental health program. Talk to them and I think you'll see that.

Well, they often share a viewpoint on public policy that we reject, which is one of the reasons that we are going through programmatic reviews. Some of them are ended and we've put the funding forward. But those nonprofits are often of a different viewpoint than us.

My time is about to expire. I just think that your views with respect to mental health are yet another moment in hypocrisy because you give these big speeches in terms of fighting crime, but when we want to do something that will make a big difference, you say, oh, it'll be fine to block grant it and we'll just settle for that. Thank you, Mr. Chairman.

Senator Kennedy.

Mr. Director, welcome.

Thank you.

I want to ask you your thoughts on a few subjects. I consider you to be an expert on the federal budget and on public policy in general. I want to talk about the situation that you inherited from the Biden administration. Would it be fair to say that if we had discovered life on Mars, President Biden would have sent it money?

I think that's fair.

And would it be fair to say that the amount of money that President Biden and my Democratic friends spent was so outrageous that it resulted in 9 percent inflation? Is that a fair statement?

Precisely, and I was one of the people that was noting that at the time. They passed the bills that led directly to 9 percent inflation. Historically so.

And that gutted middle class Americans like a fish, did it not?

It was one of the most regressive taxes you can imagine.

You inherited a mess, didn't you?

Yes, sir.

Now you took steps to try to to put things in order. For example, at your suggestion we clawed back as I recall about $1.1 billion that the American taxpayers were giving to NPR and PBS. Is that correct?

Correct.

And we were told, were we not, that if we did that, Western civilization would end as we know it.

We were told those types of things would occur if we did not fund that program.

But here we are. And NPR still exists, doesn't it?

As does PBS.

Right. Okay. I want to ask you another question that doesn't, well, it has to do with the budget a little bit. When he was alive, would you have given Charles Manson a nuclear weapon?

Absolutely not.

Isn't that what Iran's all about?

This country, the country that we are engaged with operations against, does not and should never have, or should never have a nuclear weapon. They cannot be trusted with a nuclear weapon.

All right. Part of my last two minutes, and I'm going to stay within my time because our chairman here is tough as a boot and he's going to cut me off. Do you happen to know what our poverty rate is in America?

Yes, I mean it's about 32,000 as a family of four and it's this formula that you consider...

What percentage of Americans?

I don't know what percentage of Americans.

If you ask the Census Bureau, they tell you 11 percent. It's been 11 or 12 percent since God was a child. And I started looking at why that is. Are you aware that the Census Bureau under its definition of poverty only counts cash payments to the American people, not non-cash benefits? Were you aware of that?

I am aware of that.

And are you aware of the fact that if we count both cash benefits and non-cash benefits, for example food stamps, which the Census Bureau says doesn't count, if we count non-cash benefits, all this money coming of course from the American people, that the poverty rate would be one percent? Don't you think we ought to give the American people credit for reducing poverty in our country? I'm proud of that. Are you aware, I got 32 seconds, these are the programs that the Census Bureau refuses to consider as part of the American people's gift to neighbors who are less fortunate than them. I'm going to read them quickly. SNAP payments don't count. WIC payments don't count. Emergency food assistance doesn't count. Food distribution program on Indian reservations. The school breakfast program. The national school lunch program. The special milk program. The senior farmers' market nutrition program. Medicaid doesn't count. CHIP doesn't count. Medicare doesn't count. Give me 10 seconds extra, Mr. Chairman. The Affordable Care Act subsidies don't count. Low-income housing assistance doesn't count. Weatherization doesn't count. Section 8 housing doesn't count. If we, all these benefits that according to the Census Bureau says they don't count, if we counted them, the poverty rate would be one percent. And that's a rule set by the Census Bureau. Don't you think we ought to change that?

Senator, we definitely need to look at that. I don't think the American people are getting an accurate view of how well we are fighting poverty in this country. And I'm happy to work with you on that.

And a lot of people don't want us, want the American people to know that, do they?

No, sir.

Boy, you were generous. That's a long 10 seconds.

I know.

Senator Warner.

But it was well spent, wasn't it? Thank you, Mr. Chairman. We love listening to you.

Thank you, Mr. Chairman. I'm actually a little taken aback because I would have thought where my friend the senator from Louisiana was going, I thought you would have said, if it had been Joe Biden, he would have actually put an NPR station on Mars.

He just didn't think about it. If he had, I'm sorry. Excuse me.

Anyway, Mr. Vought, when you became director, you took an oath like I did to support and defend the Constitution of the United States, faithfully discharge the duties of the office. Now do you agree that Article 2, Section 3 of the Constitution of the United States says the president shall take care that the laws be faithfully executed?

Yes, Senator.

Thank you for saying that. I appreciate your acknowledgment. Now I believe by taking that oath you have a duty to faithfully discharge your office as a designee of the president. You have a constitutional duty to execute the laws faithfully, even if you don't agree with them. So I don't understand, sir, how I see the OMB director as having a role that is ministerial, not legislative. Yet, sir, I start just with what the nonpartisan GAO that says you have illegally impounded funds at least seven times. If you wanted to legislate, you should jump in the fray and try to get elected. We passed that impoundment law in 1970s when a president at that point, President Nixon, illegally impounded funds and we said going forward we want to make clear that if Congress appropriates, you got to deliver these funds. You and I have gone back and forth a number of times on CDFIs. I can't think of anything that's more bipartisan than CDFIs. The number of my Republican friends and those investments actually help lower that poverty rate. It's a capitalism-based system. But on CDFI funds, money was appropriated on March 15, 2025 and July 2025. We sent a letter signed by 13 of my Republican colleagues requesting that you release those funds. We heard crickets until last week. My hope and prayer is that you will follow the law and make sure that those 25 funds are released to the CDFIs. I can tell you one in Virginia, 300 units of affordable housing that was taken care of houses that had been destroyed in the southwest part of our state. So I am hugely disappointed that you somehow believe that you're a legislator. You're not a legislator. You are ministerially supposed to allocate the funds that are appropriate. I remember having Secretary Bessent, who's been a big supporter of CDFIs, come in and say he couldn't act because you wouldn't let him. Do you have authority over the Secretary of the Treasury?

Senator, the president has proposed to eliminate the CDFI program.

Do you have, sir, do you have authority, do you have authority over the Secretary of Treasury?

No, I don't.

Okay. Is your job ministerial or legislative?

The Congress has given us statutory authorities to make sure that funding is well spent. So when we...

So you are the arbiter in something like CDFIs, which frankly President Trump was the leading champion of in his first term, overwhelmingly supported. Your judgment is more important than the huge bipartisan majority that supported CDFIs?

No, Senator. In fact, we released the money last week, but we are trying to make sure CDFIs are consistent with our agenda. Let me just give you an example.

You released the funds over a year, you released the funds over a year after they were supposed to be released. I believe that is a violation of your duty. Let me just...

A pride fashion show called Sachet the Runway promoted transgender housing. 3.7 million for the Opportunity Finance Network, which has sought to address a white monopoly on capital through racial justice. Also, all of these CDFI programs are exempt from ability to repay.

Director Vought, if if Congress had appropriated money for housing on Mars, my belief is your job is to administer, not make that judgment. It is our job to make the judgment. It is our job to fight back and forth and then legislate. Administer it well. That is also our job. I think the GAO has said you have violated your office seven times illegally impounding funds.

We have not impounded a single thing.

I think it is disgraceful and I think I would hope and pray that my Republican colleagues would join me and say, because you don't, there may be a Democratic OMB director at some point. I don't want some future director of OMB determining what is good and what is not good. That is our job. Thank you, Mr. Chairman.

Senator Moreno.

Thank you, Mr. Chairman. So Director Vought, you're aware that 100 percent of Senators did vote to fund all of DHS except for Border Patrol and ICE because the Democrats would not fund Border Patrol and ICE without basically eliminating immigration enforcement in the interior of the country. Is that accurate?

That's accurate. And they left out that for about 100, for about an entire month, we were in a shutdown of the entire department.

Right. So obviously the choice, given the choice that Republicans face between ending immigration enforcement in the entire interior of the United States, making the entire country a sanctuary country, or funding everything at DHS but Border Patrol and ICE and then fixing that through reconciliation was the only path forward, correct?

It is the only path forward.

But you would agree that that's an abdication of the responsibility to actually appropriate money the right way, correct?

I would.

Like we don't want to be doing budgets going forward through half appropriations and half reconciliation, correct?

Correct.

All right. Now the more or less, so just give me a quick estimate of how many people work for ICE and Border Patrol.

You know, I don't have that in front of me, but thousands.

Thousands, right? Tens of thousands, probably?

Yes.

Do you think they're all bad people?

No. I mean, these are some of the best of our nation. These are people that in an environment that is very tense right now in our country, they have put themselves forward and says, I want to do my part to keep our community safe. And I think that's incredibly commendable.

So these are moms, these are dads, these are brothers and sisters. These are people who are American citizens working every day to defend us. What does it do to the morale when you hear even today, just today, in this exact hearing, those people compared to the Iranian secret police? What does that mean to that mom or dad who has their kid referred to that way?

I think it puts a target on them. And I think it's incredibly unhealthy for those individuals and they're not going to want to sign up for that kind of work anymore.

Yeah. I mean, I remember when Democrats used to be the party of working Americans. And when they disparage working Americans that way, it's a total and complete disgrace. Let's move on to another quick issue. One of the members of this committee earlier said that a budget is a reflection of, and I'm quoting here, their morals and values. When the Democrats had unified control of government, they passed a $7,500 subsidy for electric vehicles. Are you familiar with that program?

Yes.

And that program went to about 250,000 people per year to primarily lease foreign-made, extraordinarily expensive vehicles. And the people who benefited from that was the wealthiest of Americans. People who would lease an electric Rolls-Royce, an electric Lamborghini, an electric Porsche, an electric Mercedes. What does that say about the morals and values of the Democrats who every single one of them voted to give $7,500 to the people buying those types of vehicles?

It's out of whack and I think it's also out of whack to allow a Biden administration to let the child care program be so poorly run that you have an explosion in fraud. I mean, program after program we see this from the Democratic Party.

So let's talk, I'm glad you mentioned fraud. Let's talk about fraud. What's an acceptable level of fraud?

Zero.

Zero. And what's the current level of fraud in the federal government?

I don't think we know, but I think we have, you know, billions, hundreds of billions of dollars that is out there in fraud that this administration is going to go out with a with abandon.

So when we passed the Working Families Tax Cuts, by the way, which was no tax on tips, no tax on overtime, no tax on Social Security for working Americans, deductibility of auto interest for Americans to buy and finance American-made automobiles for working Americans. We took SNAP and said, hey, you can't have more than six percent fraud, which kind of honestly is a little crazy because that never should have been zero, right? But the Democrats will say, well, that was cutting SNAP. Is that cutting SNAP when you say you can't have more than six percent fraud?

No, absolutely not.

So it's just interesting to me that you would have a Democrat Party that's abandoned the working class and quite frankly, perfectly content, perfectly content with fraud. And by the way, not only abandoned the working class, disparages working Americans, calls them Gestapo and secret police, everyone. Because you know what's interesting to me is you look at the depraved individuals that serve in this body, people like Eric Swalwell, I don't know that I'd want to be categorized the same way and I don't think it's fair to do that to Border Patrol agents. One last thing. Ford and General Motors, do you think they have a lot of employees?

Yes.

About 350,000 combined worldwide. We've been able to eliminate that level of government employees. Is the government functioning at least as well or better than it was before we eliminated 350,000 federal employees from our workforce?

It's functioning better, Senator.

How's that possible?

Because we're doing things more efficiently and we're finding people in in places previously, that most of them are already gone, that were not performing enough to to warrant a taxpayer-funded job. And we've been able to do it better, cheaper, more efficiently.

Thank you.

Senator Kaine.

Mr. Chair, there has been some discussion about the bill that the DHS funding bill that the Senate passed unanimously now twice. The House, the votes are there in the House to pass it, the leadership will not take it up. You were before the House yesterday. Did you encourage the House to finally pass the DHS bill?

My interaction, we want the bill passed. My interactions yesterday were to remind...

But okay, but you do want the bill passed.

We want the bill passed.

Did you say that during the hearing yesterday?

Wasn't asked it.

Well, you said a lot of things during the hearing. If it was a priority for the administration...

In response to Democratic politicians that were saying that we were responsible for the shutdown. Hold on, hold on. Our shutdown?

Hold on, you had the opportunity to tell the House yesterday to pass a bill that you say you support that 100 percent of the Senate supports and you didn't bring it up. That's fascinating. Second question.

Senator, you had the opportunity to fund DHS without a month shutdown.

Second question. I was interested in the revenues in the budget that you've sent over. One revenue in particular that interested me was tariffs. What you're assuming for tariffs. You can see that the numbers on tariffs were sort of bumping around at less than $100 billion a year, $100 billion in 2022, $195 billion in 2025 when the tariffs started to kick in in IEEPA. Tariffs have been determined to be illegal by the Supreme Court, the IEEPA tariffs. Next week you're starting to refund $166 billion of tariffs. So I was interested to see what your tariff projection was going to be. And actually what I see is far from going down as you're refunding illegal tariffs, you're predicting dramatic increases in tariffs. What is President Trump going to tax next?

Senator, what you're looking at is you're we had 10-year assumptions for the IEEPA tariffs and those should be shaded a different way. Obviously the Supreme Court changed our strategy on that and we are going through a process to replace those, but we do not believe that the tariffs will be less than under IEEPA.

Right. So if you're going through the process, tariffs are a tax. I'd like to introduce, Mr. Chair, two documents from the New York Federal Reserve. 90 percent of the cost of the tariffs last year fell on American consumers and businesses. And another from the Tax Foundation, the average in 2025 was $1,000 per American tax household, if I could introduce them. No objection. So you're going through a process to decide what are you going to tax next? Who are you going to tax next to reach these astronomical tariff numbers?

We don't think they're a tax on the American people. They have not raised prices.

90 percent of the cost is fallen on consumers. Yeah, by a Tax Foundation paper that doesn't support tariffs. But who are you going to impose the tariffs on next?

Look, tariffs are imposed on the foreign importers, right? We've seen that they don't impact...

Okay, so what industry sectors are you going to hobble? Do you know yet?

It's not hobbling. It's it's ensuring that we have American manufacturing.

So I'm assuming you don't know. You don't yet know who the next tariffs are going to hit. You're just predicting all this money is coming in.

Our agreements with countries, Senator, have been out there ever since Liberation Day.

Liberation Day. Yeah, that's the one that you did right before Tax Day that took $1,000 out of American families' pockets. Let me go to the next one. I've heard you go back and forth between talking about the investment in the Department of Defense or the Department of War. Now just for everybody here, legally the name of this department is the Department of Defense, correct?

It's the Department of War.

And and why do you say that?

Because that's what the President and his team and has has renamed it.

And there's a statute that calls it the Department of Defense. The President did an executive order saying the Department of War was a secondary title in September of 2025. Have you been instructed to use the phrase the Department of War?

No, there's an executive order.

Okay, you're just you're just voluntarily complying with this whimsical cosplay. Let me ask you this. Let me ask you this. Do you object to the word, do you object to the name? Are you aware of legislation that's been passed by Congress to change the name? Understand the name?

No, I'm just curious to the extent to which I didn't realize this would be a debate, Senator.

Well, I'm I'm not debating you. I'm asking you a question.

It's a hostile world out there.

Are you aware...

The President did an executive order.

Are you aware of any bill to change the legal name of the department?

Not to my knowledge, but it's probably something we would consider.

Well, I'm saying there's an NDAA process right now. If folks want to change it, I would look forward to that debate because I think you'll get laughed out of the room and you'll become a punchline on TV. Nations all around the world have secretaries and ministers of defense. Do you know of any that has a secretary of minister of war?

Our founders thought it was a pretty good name when they when they categorized it as the Department of War.

And after World War II President Truman changed it back. Are you aware of any nation in the world that calls this function war rather than defense?

I did not realize that this was a source of trouble.

I will tell you that there's no other nation. Do you know in the oath that our military officers take is the word war mentioned?

I'm not aware.

Defense is mentioned, war is not mentioned. Finally, you've sacked 350,000 people. Do you know what percentage are veterans?

Senator, we have been sure that all of the veteran preferences are stuck to. There are...

30 percent of the federal workforce is veterans. So when you fire 350,000 people, I think you have fired more veterans than any administration in the history of the United States. I yield back.

Just point of clarification. The 350,000 fewer number of federal employees, how many of that was just through attrition? How many were people that took early retirement? Or they refused to come back from working from home? Do you have any sense?

The vast majority of that were people who took the the early retirement. The vast majority.

So that's not being sacked. That's not being fired. That's voluntary retirement.

Correct.

Senator Lee.

Thank you, Mr. Chairman. Thank you, Mr. Vought, for being here. One of the things that I want to talk to you about first is the U.S. African Development Foundation, USADF. During the DOGE process and through other inquiries, it's been revealed that there's been a lot of waste, fraud, and abuse within USADF. So much so that a couple of months ago, the same week we were called upon to pass a $5 billion appropriations package that included a staggering $12 million for USADF, the acting director of USADF declared it hopelessly mired in corruption and suggested that it should be defunded. I offered an amendment to try to strip the funding and that regrettably was tabled. But I want to talk to you about this. Do you agree that we ought to rescind funding from USADF?

I think we should defund that particular agency, yes sir.

Okay. Now, with regard to the state and local fiscal recovery funds, the SLFRF, when Democrats passed the American Rescue Plan Act, which, you know, could have been called the COVID exploitation bill, there was a lot of money going around. $350 billion program that allowed states and localities to recklessly spend federal dollars. Very often, that's where we see a lot of abuse is if you have one government providing a large sum of funding, either through a block grant, an entitlement program, or otherwise, and then a state government in charge of administering it. Sometimes the deficits in the accountability chain there make it very difficult to detect and stop waste, fraud, and abuse. Just tell me a little bit about what you and OMB are doing within the administration to help ensure compliance with the expenditure deadline at the end of this year for the funds that have been obligated from the state local fiscal recovery fund.

I'm not aware of that particular fund, but it might be called a different name. I'm happy to check up on it.

Okay. Now, President Trump last month established something called the Task Force to Eliminate Fraud. Very worthy objective and there's certainly plenty of fraud to go around. I tend to think when we see these instances of fraud that have gotten a lot of public attention in Minnesota, in California, I tend to think of the ones that we're aware of as the tip of the tip of a very large iceberg. Because again, this is the sort of thing that happens when you've got one government providing the funding and other governments doing the spending. There isn't the same type of accountability that is going on if their own states and localities were providing that same funding. Given OMB's position on this task force and the unique insights that you at OMB have into federal program accounts, how do you and your team at OMB plan to help carry out the responsibilities in the task force in conjunction with the rest of the administration?

Well, our role there is to be part of the government-wide efforts there. We want to make sure that agencies that need resources to be able to get investigators, if there are bureaucratic barriers to fighting fraud, we want to be there to help remove those. You raise a great point with regard to states and the extent to which often we're asking for rolls that we can then run them through various systems to make sure someone who is who they say they are, and they fight us on that. They don't give us those rolls.

They meaning the state.

The states fight us on that. And so that's the kind of thing that we may actually have to have come to you and ask for additional tools to be able to say, look, we're going to withhold funding here until you give us the rolls that we need to have assurance that someone is not getting childcare funding if they are not in fact serving or having a child in childcare. So these are a host of things we plan to tackle. We want to prosecute, have the Department of Justice prosecute everything they possibly can. We want to remove barriers to fighting fraud and finding it, and then we want to make sure it can never happen again so that we get down to as close to zero as the Senator from Ohio pointed us to.

Sure, sure. Getting as close to zero is always a good thing and it's a great aspiration. One has to wonder, particularly if in some programs you lack the tools, if you legally lack the ability under existing law with any of these programs to say if you don't respond to our reasonable request for information, we're going to withhold funds. If you don't have that, we need to do that. More broadly, is it tenable? Are we just going to continue seeing more waste, fraud, and abuse as long as we continue funding as many things as we do to the tune of however many hundreds of billions or trillions of dollars it is in a particular year? Is it tenable to root out waste, fraud, and abuse where the government spending the money is not the same government that is providing the money?

It's not tenable to have the size and scope of the federal government and not going to have a continued conversation about fraud, right? So when you see us eliminate programs that we don't think should exist, it's in part and parcel because we think that it's an incredibly fraudulent program that should go away. And part of what informs that is the extent to which the federal government's always going to have a hard time going that granular to see where the funds flow is, and it's particularly going to be hard when we can't trust many states to give us the information we need to come alongside them and help fight fraud.

Thank you, sir.

Thank you very much, Senator Lee. And two things that were mentioned, one was that the standard poverty rate would be a lot lower if you include the fact that there are various nutrition and housing programs. The government does do that calculation, it's called the supplemental poverty rate, but it also includes removing money that is spent on taxes or paid to taxes so that that's adjusted. And it includes the cost of housing and healthcare, which are not in the basic poverty rate. And actually, the supplemental poverty rate is higher than the standard rate because it accounts for the impacts of highly much more expensive healthcare and housing. And it was mentioned that ICE and CBP were unfunded. That is not correct. They received extra funding last year to the tune of $75 billion for ICE and $6.5 billion for CBP. And the entire Senate agreed to fund the other four agencies unanimously: Coast Guard, FEMA, Cybersecurity, TSA. Let it be understood that it was the House of Representatives that struck down the funding for those four additional, and those are very important agencies. And you know, I'm in a coastal state, Coast Guard, we love the Coast Guard. It was with great regret that the House failed to do that. Senator Padilla.

Thank you, Chairman, Ranking Member. Mr. Vought, several of us have recognized the $1.5 trillion increase in proposed spending for the Department of Defense. I mean, when that number first came out, when the proposed budget first came out, to recognize a 42 percent increase, it didn't just raise eyebrows. I think it raised alarm bells for a lot of people. And I'm not going to at this moment get into the debate of defense spending versus non-defense spending and the historical balance we've tried to maintain, but just that 42 percent increase, $1.5 trillion, seems like a whole lot of money for someone who has a track record of talking about fiscal responsibility and concern about the deficit. As I've tracked not just your testimony in the House yesterday, but through public reporting, I understand you've tried to justify it by, quote, "it's meant for significant paradigm-shifting investment." I think you used that language earlier today in this hearing. And that, quote, "for the industrial base to double and triple capabilities and build more facilities, cost has to be booked in the first year." Is that still accurate?

Mm-hmm.

Then logic would tell me that if we're booking those costs in the first year, then we should anticipate significant reductions in your proposed budgets and needs in the next fiscal year and the fiscal year after that. Is that what we should anticipate for future budgets?

This is viewed as a one-time increase of this level. I don't expect all of the defense levels into the future to be at this level.

So we would be able to count on significant reductions in your proposed budget next year and the year after that.

I'm saying that we have not built that into the budget and it was meant to be a one-time seize the moment, pay for what we can ensure that we have people that are driving the best deals possible at Department of War. What kind of deals can they secure if they have the money there? That's where this was. I'm not going to speak to next year's budget process other than to say that's been our intent.

For somebody who really claims to pay attention a lot to dollars and cents, it sounds like very vague and inconclusive. Speaking of your testimony in front of the House yesterday, did you take the opportunity to urge House members, particularly House Republicans, to pass the bill that's been passed twice unanimously by the Senate to fund TSA, pay those employees, to fund FEMA, pay those employees, fund the Coast Guard, pay those employees, fund CISA, pay those employees? Yes or no?

Senator, you all shut the government down, the whole government down, and then you shut DHS down for a month.

The Senate has passed this bill twice unanimously. Did you take the opportunity to encourage the House to pass it, yes or no?

Senator, of all those lines, yes, I encouraged the House to pass it, but all of those TSA lines are as a result of the Senate Democrats' shutdown of the Department of Homeland Security. I think the American people need to know that.

The House Republicans shut down. We have a pathway forward and you had a golden opportunity yesterday and you didn't take it. Now, moving forward, as my colleagues have recognized and every time we talk about the annual proposed budget, we talk about it being a statement of our values and our priorities. Right? The public has seen this proposal for what it is. It is not a significant investment in healthcare. It is not a significant investment in housing. It is not a significant investment in energy assistance. It is not a significant investment in disaster preparedness. It is not a significant investment in job training. It's a huge spike in defense spending. Now, some people, if they're trying to give us the benefit of the doubt, would say, well, whether we like it or not, because we know it's not authorized, but there's this war in Iran that the President has dragged us into. Maybe that would justify the big increase in spending. Yet you refuse to give specific numbers. You refused yesterday in front of the House and you're refusing here today to provide specific costs as to what this war is costing us on a daily, weekly, or monthly basis and going. We would expect so much more from the head of OMB. It sounds like, seems like you're not taking this job seriously to stay on top of the dollars, let alone this being a complete abandonment of a promise that the administration supposedly made to the American people to bring down costs. Cost of housing is still high, cost of groceries is growing, cost, the price at the pump that people are paying is still continuing to spike because of this unauthorized war. That's not a question, that's just my conclusion. I do have one more question, though. When you were coming through for confirmation, several of us here raised questions and concerns about your prior statements, an objective you seemed to have had to put federal employees into trauma. You remember those statements. You guys got off to a great start between DOGE experiment last year, funding freezes, layoffs, pushing people to retirement, the relocation of agencies making it hard for people who wanted to stay working in departments and agencies that they love. The elimination of certain departments. There's 350,000 fewer federal employees today and those that remain, a good chunk of them are worried whether they may be next. What grade do you give yourself in successfully putting federal employees into trauma?

I reject the premise of your question other than to say I'm going to let the President of the United States grade my performance.

Well, let's assess and evaluate what grade, if the President asked you what grade do you give yourself...

I'm going to let the President of the United States grade my performance, Senator. Thank you.

Yeah. We're going to grade this performance in November real quick. Thank you, Mr. Chair.

Senator Scott.

Director Vought, thanks for being here. Thanks for your hard work. I don't think it's easy what you're trying to do. Before the end of this year, our country's national debt will exceed $40 trillion. We are rapidly approaching $40 trillion in debt and this growing debt driven by wasteful spending is directly undercutting the government's ability to serve the American people. Currently over $1 trillion of taxpayer dollars are being spent just to pay the interest expense on our debt. It's crowding out money that could be used to help everyday Americans. Median household income in America is a little over $83,000. We have to take the household of 12 million American households just to make our interest payments. And that's pretty insane. And it's unsustainable. That's a drag on our economy, a drag on our national defense, and a drag on the American dream. We owe it to every American family to first stop spending so much of their money and saddling their kids with unbelievable debt. In the last seven years, the debt on this country has gone from I think 18 to 39 trillion. Secondly, we need to make sure that every dollar that we do spend is making them safer, stronger, and better off. I want to thank President Trump, I want to thank you, and I want to thank the entire administration because I know you're working hard to fix our government by cutting waste, fraud, and abuse. Protecting every taxpayer dollar from waste and fraud is one of the most important steps the government can take to tackle this fiscal, it's a terrible situation. I've introduced the Federal Taxpayer Funds Protection and Clawback Act, which will allow the federal government to claw back money from fraudulent programs like what we've seen in Minnesota and California. Removing waste allows our country to operate more efficiently, properly spend American taxpayer money, and reduce our deficit spending. Unfortunately, Congress continues to fail in doing its job of being a proper steward of the national purse by authorizing trillions in deficit spending. When I walked in as the Governor of Florida, Florida had only balanced its budget once in 40 years. We said, what's our revenue going to be, that's what our expenses are not going to exceed that. I believe our country's fiscal situation is a true national emergency. And it's one of the most important issues facing our nation today and we've got to start acting like it. I've introduced the Balanced Budget Responsibility Act, which provides the President with the authority and discretion to curb wasteful government spending and balance the federal budget. I applaud the President's efforts to clean up the federal budget by removing waste, getting government out of the way, and prioritizing the strength and defense of our nation. These are important steps, but it's just the beginning. We have to do more to combat the growing debt problem. So I'm very thankful for what you're doing. Under the Biden administration, tax dollars were recklessly misallocated. It was unbelievable. Going to wasteful programs and woke policies. No accountability, no results, nothing. Caused massive inflation. This created harmful inflation that has affected lower-income Americans the most. How are Americans feeling the effect of the inflation and wasteful spending created under the Biden administration?

I think they put this administration in office to deal with it and we have. We've gone from 9 percent down to 3 percent and we're going to continue to see improvement as we get through the operations in overseas in Iran to be able to keep working every day for more affordable policies to drive down prices and costs for the American people. But spending is a part of that and you've been a leader on this, Senator. We have to make sure that we drive spending down. Spending created the problem and getting rid of spending will be a part of removing that problem for the American people.

Director, can you highlight some of OMB's efforts to identify and combat rampant waste and fraud in the government programs?

Sure. I mean, this $70 billion in non-defense cuts is a part of that process of identifying education programs that we don't think actually educate kids, of programs that we think put forward a harmful ideology to the country. Those are the types of things that we think are wasteful. We're also a participant on the task force for finding fraud and we're going to make sure that the investments and resources are needed to be able to find it wherever possible. The Biden administration scaled down the number of investigators dramatically in Medicaid. And so, you know, when you have that dynamic in play, we've got to make sure that we address that issue.

Since I've been up here, all you watch these bipartisan deals and all these bipartisan deals mean more earmarks, more wasteful spending, no accountability, nothing. So Senator Johnson has talked about this a little bit. Do you think there's really any ability through the regular budgeting process to ever get the debt under control or is the only way we're going to be able to do this is through either eliminating the filibuster so we can do it on our own, Republicans can fix it on its own, or go through the reconciliation process and maybe have the whole budget process go through reconciliation?

I mean, we're right now where the Senate is and the inability to get spending cuts to honestly without spending cuts to fund the federal government through the normal appropriations process, it's making there to be an incentive to move more and more things to mandatory. And that's that is where we are. And I think that's the direction that things are headed.

Right. Thank you, Director.

Senator Van Hollen.

Thank you, Mr. Chairman. Bouncing around between hearings. Director Vought, I read your testimony and I saw some of your testimony from the House yesterday where you were talking about the Trump tax bill that was part of the reconciliation process. And you presented it as a bill that was really aimed at helping working people. And I just want to review that claim with you today because as you know, if you look at the distribution of tax benefits on under the Republican Trump tax bill, they overwhelmingly go to the richest people in the country. Do you agree with that?

No taxes on tips, no taxes on auto loans...

Mr. Director Vought, look.

No taxing on seniors.

Doctor Vought, I'm going to get to that. I'm going to get to that. I'm talking about the share of the overall tax benefit.

Which was an extension of current law tax policy.

The share of tax benefits, yes, it was an extension of the previous Trump tax bill that provided the overwhelming share to the top folks. Now, I'm looking at the chart. I mean, 72 percent of the benefits went to the wealthiest 20 percent, a whopping 22 percent of the benefits went to the top one percent. And the tax cuts you provided to the wealthiest were permanent, right?

Yes.

They were. But the tax cuts that were aimed at sort of working people, like no tax on tips, those will expire at the end of 2028, right?

Well, we will be working to extend those in future budgets.

But you didn't make them permanent in that bill, did you?

We were not able to because of the reconciliation and cost allocations that we were given.

Right. Because you didn't want to have to pay for them. So here's what I want to propose to you. I want to ask you. I've got a proposal and so I just want to make the other point that this distribution where it shows the overwhelming share going to the very wealthy will get even worse in 2028, right? When the no tax on tips expire and the other then this distribution table will get even worse.

Again, I haven't seen your chart as someone who worked in this body and have been a part of seeing many of the charts that have come through, I'd want to study it.

Yeah, well I'm happy to share it with you. So here's my question. I mean, I've got a proposal that is a really real working Americans' tax cut bill. I propose to give 100 percent of the tax benefits to taxpayers, people with income tax liability below the top 20 percent. Does that sound like a good proposal to you?

Senator, we're not considering a tax bill right now. If you have ideas for what the next tax bill should look like, this administration is always looking for ideas on how to do it.

Okay. Well, I hope you'll agree with me. It costs about $1.5 trillion to give real tax relief to working people and we pay for it with a surtax on people who make more than a million dollars a year. So on your first dollar over a million dollars a year, we have a surtax and that revenue more than pays for the proposal to provide real middle-class tax relief, unlike the Trump Republican plan that overall even after cutting Medicaid added $4 trillion to our national debt. This one would be deficit neutral and help folks in the middle. Let me ask you this, Mr. Director. Would you agree that if I'm somebody who has a certain income because I have tips and I'm another worker who has the same amount of total income but I don't have tips, shouldn't we both get a tax break?

We're always looking for opportunities to lower taxes on the American people and if there are ideas in...

But you chose not to do that, right? You chose not to provide a tax break based on someone's income. You chose to do the DoorDash thing.

Senator, every one of our tax reliefs on the Republican side for the last several decades have always included substantial amounts for individuals who are at the lowest amount of money from an income tax perspective.

Director Vought, I mean, the numbers put a lie to that claim. I mean, I'm more than happy to share this with you. I mean, these are from tax experts and I'm more than happy to share it. So for you to suggest that Republican tax cuts, the Trump tax cuts really were focused on working Americans when you can see 72 percent of the benefits go to the richest 20 percent and the benefits to those folks who are working expire at the end of 2028 unlike the other ones. I know you want to market it that way and I saw the DoorDash thing, but I hope you will all actually support a bill where 100 percent of the tax benefits go to people who are working paycheck to paycheck. I heard your testimony in the House saying that the Trump tax cuts were somehow going to make life much more affordable for a lot of people. Hard to believe when gas prices are going through the roof because of the war and other things. But the way to make it really affordable for a lot of people in addition to bringing down costs, which we need to focus on, is to actually give everybody, not just folks who make money off of tips primarily, and I'm all for that, but everybody. And I don't know why you would leave out everybody who's working hard paycheck to paycheck. Thank you, Mr. Chairman.

Thank you. Before I turn to Senator Whitehouse, I just want to pick up on a point somewhat related to what you talked about, but also what Senator Kennedy was talking about. Former Senator Phil Gramm has done an awful lot of research into and writing about the amount of benefits we provide to people and in the lower quintile, based on 2017 figures, the average household in the lower quintile received about $42,000 in tax-free federal benefits. $42,000. Run that forward to 2024, it's 64,700. So I'm basically picking up on the point that Senator Kennedy made is we're quite generous as a nation providing benefits. And so people who are working hard and making tips, working overtime, that's where the tax cuts were directed, right? I mean, they're the ones footing the bill. They're the ones that are providing the tax revenue to provide that level of tax-free benefit to the households in the lowest quintile. Are those figures roughly accurate?

They are providing the benefit. They are providing the ability to fund the federal government. Their tax dollars are coming in. And our side continues to believe that it is okay to cut their taxes. And we want to do things that are creative. This president ran on creative solutions to be able to ensure that there are no tax on tips or overtime. That's relatively new ideas for our side of the aisle. And that is something that we're very proud of as an administration. And we're going to continue to be putting forth policies on that front.

Well, again, I think what this president's done is certainly confirmed that Republicans are the party of the working men and women of this country. And based on the way the other side wants to defund ICE and CBP and open up the border, they're the party of the illegal immigrants. But to Senator Whitehouse.

Not until I get my clock reset. You burned through several minutes of my time. There we go. They just reset it. Thank you. So I want to talk a little bit about deficits and debt because when I chaired this committee and I had hearings into what climate-driven extreme weather portends for insurance, mortgage, and real estate markets, my Republican friends came here constantly to say, oh, but the debt. Oh, but the debt. Oh, but the debt. But if you take a look at where things are going, in Trump's first term, they added $8 trillion to the debt. And the recent billionaires bill, this one right here, is north of $4 trillion, $5.5 trillion if made permanent. And the role of this committee in making things worse, not better, on the debt is part of the problem. The tax scam bill, as we refer to it on our side, that the Republicans put through for their rich friends in the first Trump administration was $2 trillion of that. And that had to come through this committee to get to reconciliation to be able to push those rich people's tax cuts on a party-line basis. This $4 trillion had to come through this committee to get to reconciliation. And if it's made permanent, then it's going to be another trillion dollars. So we cannot pretend that the Budget Committee is a great place for solving the debt problem right now. And so I will urge my colleagues to think about going back to the Enzi-Whitehouse budget reform plan. And I'm going to start asking colleagues on both sides of the aisle to see if we can reboot that because clearly this committee has a better role than it can achieve at reducing deficits and debt. The other point I want to talk about is energy costs. The Iran war is dramatically increasing Americans' energy costs. Gasoline costs in Rhode Island for regular have crested $4. For premium, they've crested $5. For diesel, they're nearly $6. That is a pure product of the decision to start this war with Iran. Move to electricity costs, which is a really important part of family budgets. Electricity costs are going up. And Mr. Vought, I will contend that they're going up thanks to Trump administration policies on purpose. And I'll explain to you why I say that. Because the Trump administration, like the Republican Party, like the front groups you've worked for in the past, is more or less entirely funded by the fossil fuel industry. So now it's payback time. And the way the payback is being done is to suppress clean energy on the grid. And what happens when you suppress inexpensive clean energy on the grid? I'll give you a little example. If you want to know that clean energy is inexpensive, just go to your grid operator and ask them what the generation stack looks like. And what they will tell you is that they deploy clean energy first because it's less expensive. Grids run less expensive power first, irrespective of how it's fueled. And they run clean energy first because it's less expensive. Then on top of that, they've got fossil fuel energy. And what happens at any given level of demand, let's say this, if you have taken the clean energy out of the grid, now for that same level of demand, you're running way more fossil fuel energy. And what you've done is you've taken units at the top that wouldn't be running, units above my finger, let's say that's where the demand is, units above my finger that would not be running, now they run. They run because the clean energy isn't there. And when they run, they set the price for the grid. And when they set the price for the grid, they raise costs for consumers because almost always the most expensive unit running is the one that sets the grid price. And that grid price goes to Americans' electric utility bills. So the whole grid cost goes up to the most expensive fossil fuel unit that is running. And those units are more expensive when inexpensive clean power is not on the grid. And what happens then is that it's like a big money pump. It extracts dollars from family budgets by the billions, by the billions in higher electric utility costs, and it pumps those dollars to the fossil fuel industry, to your administration's, to Trump's big political donors. They make up all that added money that goes to the units that would not otherwise be running because they're too expensive to run because this administration has suppressed clean energy. And if you want a specific Rhode Island example, let me give you this one. We operate in an 18-cent per kilowatt-hour grid. The Trump administration tried to stop offshore wind projects that offered nine-cent per kilowatt-hour power. In an 18-cent per kilowatt-hour average grid, when you add a lot of nine-cent kilowatt-hour power, you do not have to be much of a mathematician to know that that will bring down average costs. And yet the Trump administration stopped work on those projects, put union people out of work illegally, they've all been thrown out in court, all to drive costs up for consumers so that that added consumer expenditure went into the pockets of the natural gas industry that is the default when clean and inexpensive power is not available. Thank you.

So I don't recall this level of outrage when gasoline prices nationwide averaged $5 a gallon in June of 2022 because of the Democrat war on fossil fuels. I don't understand the or don't hear the outrage of the incredibly high energy price in California that probably hues closest to the type of policies they want to promote in terms of energy. So again, the good news is we're actually utilizing God-given energy resource here in America. We are energy independent. We are the largest producer now of fossil fuels for energy. If you want a good economy, you need power. The cheaper the power, the better. And green energy hasn't done it. But to Senator Lujan.

As long as you're going to interrupt and challenge what I have said, I at least deserve the courtesy to reply. And I will tell you that there was considerable outrage when fossil fuel prices soared in the past. And in fact, I wrote an excess profits clawback bill because the fossil fuel industry took the biggest profits in world history taking advantage of the Ukraine war to raise prices on American consumers even for a dollar of gas that never went anywhere near Ukraine.

Listen, your Democrat policy has failed. But to Senator Lujan.

Mr. Chairman, I don't know the last time you put some diesel in your truck or your tractor, but go talk to the farmers back at home that are just trying to meal back there. It's 5.50 a gallon, man. If it's 5.50 a gallon, it's awful for anyone, anytime, any year. And any of us that were quiet when it was high before, shame on all of us. But this is ridiculous and it's hurting people and it's breaking people. So I'm certainly hopeful that we all will do something about this. I don't see anything in this budget that will help reduce prices for the American people. But the questions I prepared for today, Director, I don't know if you're aware the last hearing that Chairman Graham had in this committee room in the Budget Committee was around Social Security. And that's where my questions are. As you know, Social Security and Medicare are the foundation of financial and health security for older Americans, people with disabilities, and survivors. The programs provide dignity in retirement and protect the American people during hard times. I think we can all agree with that. I've heard the president say things like that before. Now, Director, does President Trump believe that Social Security and Medicare are worth protecting?

Of course.

Director, I presume that you're aware that both Social Security and Medicare face shortfalls in the next decade.

I'm aware of the accounting shortfalls, but I'm here to tell you that the president is fully committed to making sure that Social Security and Medicare beneficiaries are fully protected.

Appreciate that. Now, does the budget that you're here to talk about that was submitted for this fiscal year request, does it include any proposals to address the looming insolvency of Social Security or Medicare?

There are no mandatory proposals in this budget. It is a discretionary-only budget unless those mandatory proposals are part and parcel of the discretionary needs in this first year.

Does it make any proposals to protect seniors from harmful benefit cuts?

It is not a mandatory long-term budget. It is a discretionary-only. We do not have mandatory policies. This president fully protects Social Security and Medicare beneficiaries now and forevermore.

Mr. Director, are you aware that Republicans in the Senate and the House representatives are contemplating a budget reconciliation as soon as next week?

Yes, Senator.

Does President Trump, is he demanding provisions to shore up Social Security and Medicare in the budget reconciliation bill?

Senator, we're in a crisis right now because of the fact that the Democrats did not fund Department of Homeland Security for a month. And as a result, we had a Department of Homeland Security that was disintegrating. And the Senate then had to take steps to pass everything but ICE and Corporation for Public or the CBP. So now we're in a situation where we have to on the mandatory side pass a reconciliation bill to fund those two law enforcement agencies because the Democrats wouldn't do it through the normal appropriations process. This process has to be tight, it has to be timely, and we fully expect to get that done between now and June.

Director, you're in the U.S. Senate side of the Capitol today. Are you aware of that?

What's that?

You are on the U.S. Senate side of the Capitol today.

Yes.

Do you know who's in the majority in the U.S. Senate?

Yes.

Who?

The Republican Party who relies on Democrat votes to get through the filibuster.

I appreciate that. And Director, are you aware that the United States Senate passed not just once but twice funding of most of the DHS bill? Are you aware of that?

After a month's shutdown.

And are you aware of who's in the majority in the U.S. House of Representatives?

After a month's shutdown of the Department of Homeland Security.

Who's in who's in the majority, Director? Okay, let me give you a it's a secret. Republicans are in the majority in the U.S. House. Mike Johnson's the one that's sitting on his ass and not doing a damn thing to move the legislation. He lied to the American people and said he'd move it on a Monday and then on Tuesday, you know, I guess he he prayed to the to the Jesus that Donald Trump purports to be and then he changed his mind and now nothing's happening, sir. So let's talk about the facts. But let me get back to this. I appreciate today the clarity that you just told us that there's nothing in the budget bill to address Social Security, to address Medicare. When Chairman Graham was up here, I said, well, look, there's a budget reconciliation bill coming up. If you care about Social Security because we're having this hearing today, then do something about it. You don't need Democratic votes if you're going to go this way. Fill it and get it done. Director, I'm just beside myself in in some of these areas. Let me ask a question with my remaining time here. Is inflation up or is it lower than a year ago today?

It's much lower than the nine percent that was historic under Biden administration because of spending.

Appreciate that. Now will you answer my question? Is it higher or lower than a year ago?

Right now we are in the middle of a situation in Iran and as a result, we are going to be on the other side of that, hopefully soon.

Do you want to finish that? So what are you suggesting then? Is it higher or lower than a year ago?

Senator, I'm suggesting that the policies of the Democratic Party contribute to inflation. When I left office, inflation was never a problem.

If you disagree with me, Director, you can correct me. Inflation is higher right now than it was a year ago. Fact.

Senator, the policies of the Democratic Party contributed to the highest inflation since the 1980s, the lower early 1980s under Jimmy Carter.

I heard your I heard your question and response earlier. I'm asking about a year ago, Director. You came into this office a year ago. It's higher now. That's that's just fact, sir.

And the President's administration has driven down the cost of inflation because we have tackled spending, we have tackled the border.

Sir, it's higher than it was a year ago. The President took office a year ago. You can keep spinning this all you want. Again, I'll remind you what I told my colleagues a while back. A statistics professor of mine said figures don't lie but liars can figure. You can dance around all these numbers all you want, but they need to tell the truth. Let's be honest with the American people. When RFK was before me in the Finance Committee, I said tell the American people the truth. And his response was something along the lines they don't want to hear that. Let's just be honest with each other as we get to to this place. It is what it is. The facts are the facts. So I certainly hope that we can get there as well. And then Mr. Chairman, I know you're going to explain to everyone what I what I tried to say today, so I appreciate your clarity as a professor in explaining what the New Mexico farmer was trying to say to the Director today. But I'll just close by saying trickle down economic theory is not a new idea. The notion that you defended, Director, to the question asked by the Chairman on who got the tax breaks with the question that came from my colleague from Rhode Island in justifying that wealthy people getting tax breaks will make its way down to people. That's an old broken theory, man. Trickle down cancer's not worked in America. It's not working now. It's hurting people. So I hope that we get an explanation of what that means as well. I yield back.

So so I appreciate you asking me to clarify some of the things you were you're asking. So Director Vought, isn't it true that we cannot touch Social Security through reconciliation?

Yes, Senator.

Yeah, we we can't do that. So so I've got a quick round of questions myself and then I'll let Senator Merkley make closing comment and then I'll close it out. But we hit on a couple of these subjects. First of all, fraud. We had the CEO of LexisNexis come in front of our HSGAC subcommittee. And I didn't realize he'd research on this, but he according to their research, they claim it's about a trillion dollars per year in fraud. And one of the things he was talking about is, you know, these foreign governments like Somalia, they literally have learned how to defraud the federal government. They send their illegal immigrants here or even legal immigrants in in this country and they figure out how to defraud the system. Department of Justice in the 2025 National Healthcare Fraud Takedown website shows all the different prosecutions for fraud. It totals about 4.8 billion. So whether you take the trillion dollar estimate of fraud or 250 to 500 billion like GAO or Secretary Becerra, it's a massive amount of fraud. We're not going to recover it through prosecutions. I mean, it's it's hard to it's hard to prosecute this stuff. Once the money's spent, it's gone. So I realize this is a top priority of yours. I realize President Vice President Vance is running a task force. We we need to be addressing this aggressively and the best way to prevent fraud is stop spending the money. Can you mean can you give me some comfort that we're going to get this handled over the next two and a half years?

I think so. I mean, I think the you know, the first step was this bill that you all passed last year, the one big beautiful bill. Many of the reforms in there will contribute to having less fraud in this in our federal government. We are going to look at the task force to figure out what tools that we need that we don't have that we will come to you and ask you for those tools, ways to force states to give us the information that we need to collect to be able to make sure that they are who they say they are. And we'll always be looking at ways to to not do what we can't oversee. If we if something is if we're in a position where we're something the federal government's just too big and we can't oversee it, that's going to be the time where we have a conversation about what we do less of.

The other point, there's a great article written by Erik Prince, Too Big to Win. And we've talked about this, you know, the the Iran I mean, the Ukraine-Russian conflict has shown us warfare is different. We need to use what we have in our arsenal right now, you know, million dollar plus missiles knocking down drones that cost thousands. That's asymmetry that we simply can't afford. How aggressive is this administration going to push defense contractors and hopefully open up our process to, you know, not traditionally defense contractors who are going to do things a lot cheaper and a lot quicker? And we're going to have to respond very rapidly to this growing threat and and we could produce literally hundreds of thousands of drones for the cost of some of these procurement programs for, you know, the highly sophisticated missiles which we need some of. But what what is the dedication in terms of admin the administration in terms of completely changing the paradigm within the military industrial complex who's by the way, we did not we have not heeded General Eisenhower's warning on that at all. I mean, we are we are getting ripped off by the military industrial complex.

Senator, I don't think it could be higher. I mean, I've been in these meetings with both the President and the Secretary of War and how much pressure they're putting on the contractors, but also we're attempting to do both. We want to maintain our qualitative edge technologically and you're seeing that this year across the world. But we also want to ensure that we have low cost items that can be used, low cost munitions. I've personally visited factories doing this. Many of these are startups. Many of them put their own money on the table to do their R&D investment and then they come and sell us a product, which is not the normal relationship between a defense prime and the federal government. So we are all in on trying to do things differently and that's one of the reasons why we feel the moment is now to come and ask you for an admittedly large increase for defense.

We had Luckey Palmer come before our Senate conference. Again, real innovator, you know, one of the big tech geniuses. And you know, we need to open up this process to people like him. He's involved in it. But again, I think we can dramatically reduce the cost of of our defense effort and have it be far more effective and far more efficient. So and by the way, just talking here at the dais, I mean, I think that's something could gain a lot of bipartisan support. So, you know, that would be a good effort. One thing I have to point out, Senator Whitehouse is no longer here, but he talked about the the tax cut for billionaires. You know, that was the Tax Cut and Jobs Act that was beneficial to every American. Every taxpayer American they they had huge tax cuts. Democrats when they had the White House, Senate, and and House, they could have reversed that, couldn't they? They they could have used reconciliation, they could have repealed the Tax Cut and Jobs Act. Did they do that?

They did not, Senator.

Did they cut any taxes?

Not to my knowledge.

No. So again, from my standpoint, I think what we did in making sure that we we prevented a massive automatic tax increase last year through reconciliation, that was a literally bipartisan agreement. Nobody when Democrats were in power, they didn't increase taxes, neither did we. And that was the big part of that score, right? Just not increasing taxes because CBO scores based on a current law versus a current policy which we switched.

That is exactly what was going on. There was baselines that did not assume the extension of current law tax rates of which the American people would have been very surprised to know had changed from one year to the next.

So I'll close on on this talk. You've heard me say this before. Prior to the pandemic we were spending 4.4 trillion. This year we'll spend seven and a half trillion probably. Your budget shows for eight trillion. That's an 80 percent increase. We have to we have to figure out some way to return to a reasonable pre-pandemic level of spending. Listen, I believe defense spending is a top priority of government, has to be. We're going to be spending that amount of money, go back to we have to spend it far more efficiently. I don't think we'll have to spend that much more money if we spend it efficiently. But give me some comfort and I do appreciate telling me a little bit about the OMB efforts. You know, we got the $100 million for, you know, AI for, you know, going through the budget line by line, program by program. We're working with the folks that are, you know, doing dashboards on the cost effectiveness per outcome. Just just tell me a little bit about what OMB's doing there and your commitment to that over the next two and a half years.

Well, we're not going to stop with what we've been doing this year to end fiscal futility. We're very proud of the types of things that were achieved this year, but we have a pretty small staff. I mean, people don't realize the extent to which if you look at us compared to say GAO, we are very, very small and people ask us to do a lot of things. And we honestly wish we could do more and I think because of you all are going to be and we're in the midst of scaling up to be able to ensure that we have fraud fighters in a way that we previously did not. We, you know, we compile the budget, we we monitor as best as we can, but I think you and technology have ensured that we're going to have people with a dedicated workforce in the teams are already working on this and developing ideas on how this will will will go. And I think it'll serve the task force that is up and running under the Vice President. I think it'll inform next year's budget. It'll inform any of the reconciliation bills that we do this year and we're going to need more than one reconciliation bill.

Well, spending on anti-fraud is going to be money well spent. I mean, you know how tough it was during the last reconciliation just achieving 1.5 trillion, which we didn't achieve, I mean, because we spend in other areas. At the lower end of the estimate of fraud, 250 billion, that's 2.5 trillion over 10 years. At the LexisNexis estimate, that's $10 trillion. I mean, those are the kind of figures we have to be looking at. That's the kind of savings we have to start achieving. But with that, Senator Merkley, do you have any closing thoughts?

Well, I do. Thank thank you very much, Mr. Chairman. And I do think this hearing highlights a lot of the differences in philosophy and interpretation of current circumstances, but our our challenge on this Budget Committee is to try to reach across that chasm between Democrats and Republicans. I do think this topic you just addressed and that's the massive fraud that's in the Defense Department is something that is bipartisan. A department that has never been able to pass an audit of any of any kind. And having worked for Cap Weinberger and done a cycle in the Defense Department under the Secretary of Defense's office on the Budget Committee, I mean, it was just astounding. The waste was so deep you could you swimmed in swam in it every day. And I do I did find it kind of remarkable that DOGE didn't go to the place where the biggest waste is. You know, Willie Sutton said, why did you rob banks? He said that's where the money is. That's where DOGE should have gone was to the Defense Department because that's where the massive waste is. A few closing comments. It was commented on and I heard you say this, Mr. Director, that Democrats didn't fund ICE and CBP. Well, actually, ICE and CBP were funded last year to the tune of $65 billion for CBP and $75 billion for ICE, and those were funds equal to seven years' time, seven times their normal annual production, so they were already funded. So that is simply an inaccurate summation. And then as pointed out by several members, Democrats and Republicans universally in this chamber funded the other parts of Homeland Security, all four of them: Cybersecurity, TSA, FEMA, and the Coast Guard. And it was the House that decided to torpedo all four of those agencies. So now let's turn to the commentary about I heard Republicans are for working families, and I must say that is astounding to everyone in America. We saw who was lined up behind the President at the inaugural address. It wasn't champions for healthcare or housing or education. It wasn't folks working to improve working conditions for families. No, it was the oligarchs. It was Elon Musk. It was Jeff Bezos. It was Mark Zuckerberg. And then when we look at what that bill did, well, let's see. Ways and Means Committee in the House says you may have saved up to $600 for a family earning $50,000, but other experts say it's closer to half that at $300. That's less than a dollar a day for a working family. But that same bill increased the cost of nutrition by about $3 a day and the cost of healthcare for many families by $30 a day. So what do we have? We have that comparison where the net effect actually worsened the condition of working families across America. And that's why it was a massive betrayal. But what it did really was help billionaires. In fact, if you earn a million dollars a year, it gave you, depending on the structure of your income, $70,000 to $90,000 versus decreasing the standard of living for working families. It's crumbs for working America. It's the red carpet and the Rolls-Royce for the richest Americans. That bill gave Amazon a tax cut of $18 billion. Tesla, a tax cut of $1.2 billion. In fact, I think their taxes are zero now. Alphabet, Google, $18.4 billion tax cut. So there we have it. It is families lose, billionaires win, and it is government by and for the powerful. And that's what this budget is, and if we don't change it, working people, ordinary families in America are totally screwed.

Well, I appreciate that. Again, I'll just point out not increasing taxes is not a tax cut. And when you were in control, when you had the power, you could have increased taxes, you could have repealed the Tax Cuts and Jobs Act. You didn't do that.

If I can just note on that point, those were going to expire. And so the Democrats did not extend them. It was Republicans who extended those tax breaks for billionaires.

Again, we refused to allow a massive automatic tax increase that would have harmed this country economically, harmed every American. So anyway, Director Vought, appreciate you appearing before the committee. The hearing record will remain open until noon tomorrow for the submission of statements and questions for the record to the committee clerk. The hearing is adjourned.