Hearing of the Senate Finance Committee - Nominations

Hearing of the Senate Finance Committee - Nominations

HEARING OF THE SENATE FINANCE COMMITTEE

SUBJECT: NOMINATIONS

CHAIRED BY: SENATOR MAX BAUCUS (D-MT)

WITNESSES: WILLIAM V. CORR, TO BE DEPUTY SECRETARY, DEPARTMENT OF HEALTH AND HUMAN SERVICES; ALAN B. KRUEGER, TO BE ASSISTANT SECRETARY FOR ECONOMIC POLICY, DEPARTMENT OF THE TREASURY; DEMETRIOS J. MARANTIS, TO BE DEPUTY UNITED STATES TRADE REP. WITH THE RANK OF AMBASSADOR

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SEN. BAUCUS (D-MT): (Sounds gavel.) We come to order.

Theodore Roosevelt said, "Far and away, the best prize that life offers is the chance to work hard at work worth doing." Congratulations to all three of you, for you have won the best prize.

You've all been nominated by the President. You've worked very hard doing incredibly with all things. You'll be serving and leading not only the agencies to which you have been nominated, but the United States of America. The President things that you are all up to the challenge, and I agree.

Mr. Corr, you have dedicated 35 years to healthcare policy. You have spent a lifetime preparing for the job. You started with Tennessee Department of Public Health in 1972. You put in many years of hard work on several subcommittees in both the House and the Senate. You worked with chief of staff for HHS, Secretary Shalala. You worked for the chief counsel and policy director for Leader Daschle, and you headed the Campaign for Tobacco-Free Kids.

Mr. Corr, your prize for this hard work is more hard work. (Laughter.) As Deputy Secretary of Health and Human Services, you will help lead the administration in the monumental task of healthcare reform.

We clearly need a healthcare system that meets all of our needs. We need a high-performing healthcare system that guarantees all Americans affordable, quality coverage, no matter their age, health status and medical history.

Healthcare reform will help to stabilize our economy, and it'll help to make sure that we are prepared to handle our long-term fiscal challenges. The path to economic recovery is through healthcare reform. The President stated that, as has Peter Orszag, as well as most everybody else who pays any attention to this issue.

In the coming weeks, the Financial Committee will need to hold healthcare reform roundtables and walk-throughs to discuss policy options. And by June, we'll be ready for a Finance Committee markup. We'll be working in good faith. We are making good progress. The Congress cannot do this work alone.

There we will speak and confirm Secretary Sebelius to head HHS. She will need a strong at HHS to help pass comprehensive health reform. And then, there's the work of maintaining the operations side of the department. We need proven managers at HHS. We need an assessment of the adequacy of the researchers at HHS top to bottom. And we'll also need to reauthorize the TANF program this year.

The challenges for you will be great. You, indeed, will have to work very hard to accomplish these tasks. But I can think of little that could be more worthwhile than to accomplish them.

Mr. Marantis, you have a wealth of experience in that excellent trade. As a lawyer of USTR, you gained hands-on experience enforcing international trade agreements. As my Chief International Trade Counsel, you advised me and many members of this committee and Congress on U.S. trade policies for the past several years. And I must say that I can't think of anybody that gave us better advice.

You know well that Montana's and America's workers are my top priority, and you've worked hard to look out for America's workers as we compete in the international marketplace. You have dedicated yourself to public service. You have worked extremely hard to ensure that Congress finds the right balance on international trade.

Your prize for all this hard work is more hard work. (Laughter.) As Deputy U.S. Trade Representative, you will be responsible for helping this administration find the right balance on trade policy. And in so doing, you will help America retain its economic strength in a global economy.

This is a vital task, and I can think of no better person for this job. Demetrios, I could go on and on and on about how good you are at your work. I know it, my whole staff knows it, everybody you work with knows it. You are aces. But I don't want this to turn into a filibuster, nor do I want to embarrass you any more than you probably already are. (Laughter.) Suffices to say, I will look forward to continuing to work with you in your role, and that's going to be a great job you have, and it's going to be just terrific, gratifying working with you in this new capacity.

Professor Krueger, you dedicated your career to the study of economics. More importantly, you have focused your work and study on the economics of labor markets, workers who are the very backbone of America's economy. No matter what economic this administration makes, America's workers will feel it. You know that, I know that, and we must never forget it.

Your prize for all of this hard work is more hard work Professor Krueger, in your papers, research and writings, you have shown that you are not afraid to shake things up. You say what you think. You've used your research to question other people's findings. Sometimes you've questioned your own. You've shown you're not afraid of new ideas. So I say, take that ingenuity and creativity with you to this new position. I know you will.

Our country is in difficult times, and the President has called on all of you to help lead. With your guidance, I'm sure that America will emerge stronger than before. So I encourage you, all of you, to seize this opportunity. I encourage you to work hard at the worthwhile tasks that you have been given, and I hope that you can thereby help to ensure that we all receive the prize of a better tomorrow.

Senator Grassley.

SEN. GRASSLEY: Mr. Chairman, I'm going to not give up my time, but I want to put a statement on the record, and speak off the cuff to our three nominees.

And I want to start with three or four words you've just used about Mr. Krueger, and he shakes things up.

I believe in congressional oversight, and each one of you three people have been involved in one way or another with powerful members of congress who have also been involved in oversight. I spend a great deal of time on oversight, and I'm glad to have each of you before us today with the experience that you have in oversight, particularly you, Mr. Corr, because where you come from, your former boss has quite a reputation for doing oversight. I hope it's as vigorous in a democratic administration as it is in republican administrations. I hope I have a reputation for doing it evenly, whether you have a republican or democrat.

So my pleading to all of you would be, since you know how -- you know all about the congressional responsibility of oversight. You probably know we probably don't do enough of it, but those of us that do do it, I hope that I can plead with you in understanding that when we write letters, we get answers to our letters. And more so than just getting answers to our letters, we get it answered right the first time, because I think with the frustrations you would have had with previous administrations, you would appreciate those of us that want to do oversight, want answers, those of us that believe that the public's business ought to be public, that there shouldn't be anything to hide.

And in some of these departments in the Bush administration, I didn't get the cooperation that I should've had. I thought disrespectful of a republican senator, but it's disrespectful of any senator of any party, of any administration of either party, when we don't get that proper response, just doing our job, you know. And so I would plead with you, since you've had experience of maybe not getting responses right away, that you would help us get our answers quicker and faster and more accurately, without pulling teeth, and with the understanding that the public's business ought to be public. And sometimes, congressional recite's part of that process.

And in that way, I hope you never retaliate against any whistleblower, because you know in your work particularly, Mr. Corr, that whistle blowing was a source of information, is very important. And so I hope you're in a position not only to cooperate with them, but also to protect them when they're needlessly harmed, because they're ruined professionally, you know. And we shouldn't ruin anybody's profession just because they're trying to be patriotic Americans in reporting what's wrong.

Thank you all very much. I look forward to working with you. More importantly, congratulations on each of your appointments.

SEN. BAUCUS: Thank you, senator. I'd like to say to all of you that what Senator Grassley said is exactly true, and we back each other up. As Senator Grassley sometimes asks -- (inaudible) -- for information, I help him and vice versa. There have been times when, although one might today wonder when the Republican Party's leading the majority, and in that case, I've made a request and he's backed me up, and vice versa. So we're a team and just helping. We're not tyrannical about it, but we're also very forthright about it too, and just want you to -- I know you'll respond in time.

Okay. Today's panel begins with you, Mr. Corr, and the senator from North Dakota's asked to introduce it.

SEN. CONRAD (D-ND): Mr. Chairman, Senator Grassley, Senator Enzi, it is my honor to introduce William Corr to be President Obama's nominee to be the Deputy Secretary for Health and Human Services. Doesn't really need an introduction around here because Bill has been an important part of the health scene in Washington for more than 30 years. I won't repeat all of his positions. Senator Baucus has already done that.

But I think all of us remember well his service as chief counsel and policy director for Leader Daschle. That's the role in which I knew him and worked with him the most. And I just want to say that the most important thing about Bill Corr is that he is an outstanding person. He is honest, he is hardworking, he is a straight shooter. And he treats people, even the people with whom he disagrees, with respect. And we need a lot more of that in Washington, so I could not be more pleased than to introduce Bill Corr, and to recommend and ask this committee to pass on his nomination and in a favorable manor.

We are very fortunate in this country to have people of his quality and his character who are willing to take on positions in public service. I thank him again.

SEN. BAUCUS: Well, thanks, senator, very much. Next, after Mr. Corr, we'll have obviously Demetrios Marantis, who has been the Chief International Trade Counsel to this committee, and has been nominated to be Deputy United States Trade Representative. And next, Al Krueger, nominated to be Assistant Secretary of Treasury for Economic Policy.

Thank you, all three, for coming. Our usual practice is to put your prepared statements in the record, and we'll do that, and encourage you to summarize your statements.

But before I proceed, Mr. Corr, an opportunity now for you introduce your family here.

MR. CORR: Thank you so much, Senator Baucus, and for your opening comments, and Senator Grassley, for yours, and Senator Conrad, thank you so much for that very gracious introduction. Senator Enzi, it's a pleasure to see you again.

You all know well that in positions like the one that I'm about to enter into, that if you don't have the support of your family, they're very hard to do. And it with the utmost gratitude that I would like to introduce my wife, Susan Steinmetz, and my daughter, Allison Corr, who actually happens to work on the House side these days. And our second daughter, Leah Corr, is at the University of Virginia taking an exam at this moment, so --

(Cross talk.)

MR. CORR: Thank you, senator.

SEN. BAUCUS: What's the course? What's she taking?

MR. CORR: She's a psychology major, and she's taking -- social psychology is the exam today and -- (inaudible) -- more to follow. I think we all remember those days.

SEN. BAUCUS: Yes, we do.

MR. CORR: Not very pleasantly.

(Cross talk.)

SEN. BAUCUS: Why don't you all stand up, family, so we can show our appreciation to your family. Okay, good.

(Applause.)

MR. CORR: May I proceed with a few other quick remarks?

SEN. BAUCUS: Absolutely.

MR. CORR: I wanted to acknowledge the enormous importance of the mission of the Department of Health and Human Services, and the career employees that work there. The mission is of critical importance to our nation, and it inspires public service. The mission is to protect the health of all Americans, and provide essential human services, especially for those who are least able to help themselves.

The more than 65,000 employees at HHS work every day to help deliver healthcare, to support children and families, and to protect public health. And their work touches the life of virtually every American. And it is with enormous pride that I return to that department, and to the men and women of the department who work so hard on behalf of our country.

It is a deep honor to be nominated by the President, and to have the opportunity to work with Secretary Sebelius as she leads the department on its critical mission.

I wanted to just point out a few things about my past because I think they're very relevant to the committee.

Having worked in the Appalachian Mountains of eastern Tennessee setting up primary healthcare centers, community healthcare centers, I learned firsthand what it means to try to deliver care in a rural area. And I also learned how important it is that we prevent disease rather than have to treat it.

In my work in the Congress, I have learned how valuable it is for the department to maintain a strong an productive working relationship with the Congress, and Senator Grassley, I can assure you that we will be doing that with you in your oversight responsibilities.

And this concerns -- I assume we will be returning to the department with an enormous level of energy and excitement about the opportunity to work with the ten very important agencies. HHS is a huge department, ranging from the Administration of Children and Families to the NIA, to the Indian Health Service. It is a place of very dedicated individuals.

I return at this time when it is so important, our healthcare reform being one of the major issues before the Congress, that the department provide support, technical assistance to the committee, and to other committees on the Hill so that you can undertake this monumental task.

If confirmed, I certainly look forward to working closely with the committee, and to others in the Congress to ensure that health reform is implemented quickly, effectively and consistent with congressional intent.

And given the enormous other responsibilities beyond health reform for this department, including now this crisis involving H1N1 flu, the department, if I am confirmed, will do everything in its power to work closely with the committee as it undertakes these major responsibilities.

(Inaudible) -- that I say I truly believe in the ability of the Department of Health and Human services to make this country healthier and safer for all Americans, and I am deeply honored to have the opportunity, if confirmed, to carry out its mission.

Thank you so much, Senator Baucus, and Senator Conrad, again, thank you for your very gracious introduction.

SEN. BAUCUS: Well, thank you, Mr. Corr, very much.

Mr. Marantis, opportunity now for you to introduce your family.

MR. MARANTIS: Thank you, Senator Baucus.

I'm very happy that my mother and my father, Corinne (ph) and Zachary (ph) Marantis, were able to come today, as well as my sister and brother in-law, Denise and Evan Grass.

SEN. BAUCUS: Could you all please stand so we can recognize you.

(Applause.)

SEN. BAUCUS: Well, I'm going to say to your parents directly what a great son you have. (Laughter.)

MR. MARANTIS: Thank you.

SEN. BAUCUS: I know you know, but I just want to confirm it from my prospective.

MR. MARANTIS: Thank you, Senator Baucus, Senator Grassley and members of the committee.

I am humbled to sit before you today as you consider my nomination to be Deputy U.S. Trade Representative. I am deeply honored to have been nominated for the post.

I've spent the past four years on the other side of the committee's dais on Senator Baucus' Finance Committee staff. Chairman Baucus, thank you for the opportunity to serve you, this committee, and the people of Montana.

And thank you, Senator Grassley, for the kindness and support you have shown me over the years. The relationship between the two of you is an example of the fairness, trust and honesty that I hope to replicate throughout my career.

I would also like to thank my family here who came today, as well as those who are here with me in spirit. And I would also like to thank the staff, the wonderful staff of the Senate Finance Committee, who I've worked with for the past four years and have made this job really special.

Sitting today at this witness table, I know that the position for which I have been nominated promises to be the greatest challenge of my career. I do not take that challenge lightly. I approach it with humility and dedication. I also approach that challenge with 15 years of experience gained from working in international trade in the public, private and non-profit sectors.

Yet, what I have done in my career is not as important as the lessons I have learned. I have learned that good trade policy requires the courage to proceed with tough negotiations that yield the biggest benefits for America's economy, as well as the courage to walk away from the deal that just isn't good enough.

Good trade policy also requires the creativity to find new tools to enforce our current agreements, so that our country's farmers, ranchers and manufacturers and small businesses can benefit from trade. Good trade policy also requires inclusiveness, consulting with all stakeholders, even if we do not ultimately agree.

I have learned that good trade policy requires a tenacity to doggedly pursue unscientific non-tariff barriers in the agricultural sector, as well as unfair subsidies that undermine America's manufacturers. Good trade policy also requires the vision and optimism to realize that small trade agreements and sectoral deals can grow into a bigger, regional or global opportunity for our country's exporters. And my experience has taught me that good trade policy can work to the benefit of the poorest countries around the world, as well as to the world's economic heavyweights.

Yet, the most important lesson I have learned comes from my past four plus years working on the Senate Finance Committee. That lesson is that good trade policy is simply not possible without your support, and without the support of your colleagues in Congress. And that support depends on recognizing that this administration's trade policy directly affects the workers, farmer and ranchers in each of your states, and across America.

I do not pretend that winning your support for this administration's trade policies will be easy. The issues this committee faces never are. But I have watched all of you, under the leadership of Senators Baucus and Grassley, try to form one product out of so many different voices. Sometimes it works, and sometimes it doesn't. But what you have taught me is that we cannot hope to make progress on any one issue, no matter how easy or how controversial, if we do not try to work through our differences together.

It is these lessons that I hope to take with me to the job as Deputy U.S. Trade Representative. If I am confirmed, I will apply these lessons and build upon them. I will use them to find a way to manage our existing challenges, whether it is our trade and economic relationship with China, or the issues associated with our trade agreement with Korea.

I also pledge to use these lessons to work toward new opportunities, including the form of our trade preference programs for the developing worlds, and tackling the trade and competitive issues associated with climate change.

These challenges occur in a time of profound skepticism in international trade, and in an environment of historic economic uncertainty and instability. Meeting these challenges is a daunting prospect, but America thrives in adversity when we all work together. And as history tells us, America's trade policy thrives when we approach it as a common bipartisan endeavor between the Congress and the administration.

Thank you for considering me for the position of Deputy U.S. Trade Representative.

SEN. BAUCUS: Thank you, Demetrios, very, very much.

Mr. Krueger and your family.

PROF. KRUEGER: Thank you. Let me introduce my parents, -- (inaudible) -- and Norman Krueger, and my daughter -- our daughter, Sydney, and my wife, Lisa. My son is currently attending classes at Princeton University, so he can't be with us.

(Applause.)

SEN. BAUCUS: (Inaudible) --

PROF. KRUEGER: Thank you.

SEN. BAUCUS: You may not see your son or your husband again if he's working so hard.

PROF. KRUEGER: I think my son appreciates that, that I'm not longer on campus.

Chairman Baucus, Ranking Member Grassley, Senators Conrad, Hatch and Enzi, I thank you and your staff for the work that you have done in considering my nomination, and I am honored to be here today. I am grateful to President Obama and Secretary Geithner for asking me to serve at the Treasury Department at this critical moment for our nation's economy.

I'm also deeply grateful to my wife, Lisa, and to our children, Ben and Sydney, for their support and their willingness to allow me to return to working in the government. My family has a tradition of public service. My mother worked as a first-grade teacher in East Orange, New Jersey, and my father had a long career as a certified public accountant, and as an army veteran. My wife is a math teacher in our local public high school, from which our son graduated and our daughter currently attends.

I have been very fortunate to work as a professor of economics and public policy at Princeton University for the last 22 years. My teaching has primarily been in the area of labor economics, statistics and public finance. I take great pride in the fact that one of the students in the very first undergraduate class I taught is now cabinet secretary, OMB Director, Peter Orszag.

I have conducted research on a range of topics, from unemployment and social insurance, to terrorism and time use. From bond markets to labor markets, and from the economics of education, to the economics of Super Bowl tickets. I've tried not to be tied to a particular doctrine of economic thought in my work, and instead, have sought to develop the best evidence possible to test theories of economic behavior.

I took a public service leave from Princeton, and served as Chief Economist of the U.S. Department of Labor in the mid-1990s. After returning to academia, I distilled three important lessons from my experience in the government that have influenced my outlook today.

First, as Senator Baucus mentioned, my main specialty is the labor market. A sound financial system is essential for economic prosperity, stability and job growth.

Second, it is essential for the public to be well informed about economics and finance. In this regard, I have written regularly for the public on economics. I have prepared a textbook for high school students on economics and personal finance, and I have also served as Chief Economist for the counsel on economic education.

Third, in the long run, our prosperity becomes first and foremost on our human capital. Human capital, defined as the skills and abilities possessed by the workforce, account for the largest share of our national income.

I am humbled and honored to have the possibility of serving the nation should I be confirmed. If you and your colleagues in the Senate give me the opportunity to serve as Assistant Secretary for Economic Policy at the Treasury Department, I promise to apply my human capital to the best of my ability to justify your trust and confidence. Thank you very much.

SEN. BAUCUS: Well, thank you, professor. You confirmed one of my theories, which is you show me an achiever, that you clearly are one. And also, that there's a high probability that one of his parents was a teacher. I've always suspected that, and you just confirmed it.

PROF. KRUEGER: It made your day.

SEN. BAUCUS: (Laughter.) And we're making yours, clearly. Okay. I have standard questions I have to ask here to the three nominees, and I'll ask them of all of you.

First, is there anything you're aware of in your background that might present a conflict of interest with the duties of the office to which you've been nominated?

MR. MARANTIS: No.

SEN. BAUCUS: Mr. Corr, no?

MR. CORR: No.

PROF. KRUEGER: No.

SEN. BAUCUS: Thank you. Do you know of any reason, personally or otherwise, that would in any way prevent you from fully and honorably discharging the responsibilities to the office in which you've been nominated?

MR. MARANTIS: None.

MR. CORR: No, sir.

PROF. KRUEGER: No, I do not.

SEN. BAUCUS: Thank you. Do you agree without reservation to respond to any -- (inaudible) -- summons to appear and testify before any duly constituted committee of Congress if you are confirmed?

MR. MARANTIS: Yes, I do.

SEN. BAUCUS: Great.

MR. CORR: Yes.

PROF. KRUEGER: Yes, I do.

SEN. BAUCUS: Thank you. Okay. I will start with you, Mr. Corr. As we see a need for healthcare form this year -- and it's a tremendous opportunity you all have to put in place a transformative, game changing new paradigm in healthcare policy. One that addresses a quality America, one that allows the coverage so all Americans have health insurance, and one that begins to control the increase in costs in this country. It is critical that you, among many others, especially here, HHS, the secretary for you -- or in administrative and so forth, rejuvenate, say CMS and HHS in a very creative way so that the agency, the department, feels that it's all on the same team.

There are some here who think that HHS sometimes is sclerotic. It's a high-bound, not very creative, crank turning bunch of folks there, and just not very thinking. And we cannot have that. Without getting into whether it's true or not, we just can't have it. And I just very, very strongly urge you to do all you possibly can to help address moral -- (inaudible) -- that could boost moral with the departments involved and agencies so that we can implement meaningful healthcare reform. I'd just like you to just comment on that for just a minute.

MR. CORR: Senator Baucus, thank you for that opportunity.

You know, it's a matter of moral. It's also a matter of vision. The administration, starting with the President, has laid out a vision for health reform. You, and this committee, have laid out a vision for health reform, and we are here with an opportunity here at a time when it is absolutely critical, as you say, that CMS employees, and others throughout the department, build upon that vision.

There are many things that we have learned that need to be applied. We have learned that there are ways that we can, though payment reform, improve outcome. We can improve quality.

We have the opportunity, because of the resources that Congress has provided, to improve health information technology. We have resources, through the recovery act, to expand our workforce and to focus more on prevention.

All of those need to also be realized in the way CMS operates. And there are opportunities outside of new legislation for Medicare and Medicaid to move forward with the same vision that has been articulated by you, and others now, for health reform.

I know Secretary Sebelius feels that way, and she is going to be looking for a very visionary and aggressive CMS administrator, and for others to fill the key positions in CMS. And I hope that it won't be very long before you'll be saying to us you're now doing what CMS needs to be doing.

SEN. BAUCUS: Oh, I appreciate that. That's argumentative. There are some very, very thoughtful people in health care, who really seriously wondered whether CMS is up to the job. I think that CMS -- it's arguable whether it does a decent job in implementing. But it is not up to the task in designing the new reforms that we have in mind. That's not been their job; and they're not, therefore, staffed up in that regard.

Some suggests to me another sort of outfit along side of CMS to do the design work for payment reform say and reimbursement reform. And the bundling and medical home concepts that we're talking about here; the accountable care organizations, et cetera. Others say well no, it is both -- (inaudible) -- and do the vision of CMS. There is very, very deep concern whether in fact despite the good intentions CMS is really up to it.

So comment a little further what you think. You know we have the vision in this legislation we're proposing. The vision is clearly there. And the next question is, is the agency there? Let me ask the same question a little bit differently. Presidents come and go, members of the Senate come and go, a little bit less though, or change parties God willing, God willing.

(Laughter)

But the bureaucracy is always there and they know it. They can hunker down. They can weather the storm. You know, this too shall pass. And that's an attitude in a lot of the bureaucracy in the country, not just HHS; but it's all agencies.

It takes a super human, special effort to really create and -- (inaudible) -- I mean a contagious brow booster. And the thought I had was maybe the president can do it. Maybe the president himself could personally go to HHS. Maybe the president himself, personally go to CMS and just spend some time there. His positive, upbeat attitude is very contagious. And his sense of hope and promise and so forth is a terrific opportunity here. And I just urge you to try to think of ways that, you know, are unconventional to boost morale.

MR. CORR: Senator, I want to say that it begins also with leadership. And I think that Secretary Sebelius is -- intends to bring in outstanding leaders to the department, to CMS. There is a great deal of leadership being provided by people all around the country. You have had many of them testify before the committee during your roundtable discussions.

So Secretary Sebelius certainly intends to bring in outstanding leadership to provide vision for those people; and to move the bureaucracy in a way that it takes full advantage of the expertise that does exist at the career level. It needs to be unleashed and directed in ways that are imaginative and productive for the American people. And I hope within several months that when you make that assessment again that you will be able to say different things about the direction that CMS is moving in.

SEN. BAUCUS: Thank you very much. I appreciate that.

Senator Grassley.

SEN. CHUCK GRASSLEY (R-IA): Following up on what he said; and let me say it this way. When you're in this position you're going to be in, you can make things change because with the bureaucracy, you're either going to lead or you're going to be led. And don't let them lead you.

The culture of bureaucracy Republican or Democrat maintains the same, got to have somebody change the culture. And you three people, at least in your areas, you're the type of people that can do it; and I would encourage you to do it.

I want to ask Mr. Corr. I'm not going to go into background of the False Claims Act. I think you know all about that, and so, my questions are about that. Let me ask four questions right in a row because I think they're simple enough. I want to get on to some trade stuff.

Will you work cooperatively with the attorney general and the Department of Justice to vigorously enforce the False Claims Act? Two, will you oppose efforts by industry groups, including health care industry, to weaken the False Claims Act; and to keep in provisions that are a part of it? Three, would you agree to promote a close working relationship between key -- (inaudible). This is kind of, sometimes a whistle blower these things you talk about, and the Department of Health and Human Services for the purposes of reducing fraud, waste and abuse in federal health care programs? And lastly -- let's answer those three questions, because the last one might -- (inaudible).

MR. CORR: This is your -- (inaudible) --

SEN. GRASSLEY: Thank you very much. This is about something you probably can't answer right now until you read the bill. But would you work cooperatively with me to ensure that a bill I introduced earlier this year, to restore the original intent of the False Claims Act is reviewed and commented on by the department in a timely manner?

MR. CORR: Absolutely.

SEN. GRASSLEY: And with constructive input?

MR. CORR: Absolutely.

SEN. GRASSLEY: Mr. Marantis -- and thank you for what you've done for us for a long period of time in your close working relationship with Republican staff members. Or maybe finance committee staff members, because there's not whole lot of difference between Republican and Democrat staff members when it comes to the issue of cooperation. It might be a little bit different in philosophy, but a commitment to get to the end. And you've helped that a long, thank you very much.

We've had a drop of the gross domestic product by 6.1 yesterday reported. Thirty percent decline in U.S. exports. So, I guess I'm kind of pleading with us since we're in recession here; and you're part of an administration that's fighting to get this recession over. One disappointment I would have is that I have not seen, with the importance of trade in creating jobs in America, more action to utilize trade to sustain and expand the number of good paying jobs we have in America.

I've seen movement on Panama, but not quite enough movement yet on Colombia and CREA. So that's one point I want to make before you comment. Secondly, you've made quite a commitment to engaging this committee on a bipartisan basis to advance a positive trade agenda. We've heard similar commitment from Ambassador Kirk when he was before the committee. But that commitment has to translate into action. You're in a position to make that translate into action.

So since the president has offered to move ahead on the Panama Treaty, and I understand that they're consulting closely with at least one Democratic member of Congress on steps to be taken. But so far, I haven't heard that Ambassador Kirk is communicating with Republicans. And I know that maybe we can be taken for granted, but I hope we won't be taken for granted. Because we get the same pressures of protectionism that everybody else gets; and it's going to take a bipartisan effort to get this done.

And then third, I appreciate your commitment to enforcing trade agreements. And I think that's very important. Just yesterday, I had representatives from an Iowa company visiting my office to discuss a case they filed under Section 337 of the trade laws. Apparently, a Chinese company has stolen its trade secrets, trying to sell products in the United States based on those secrets. So we need vigilant enforcement of these trade laws. We can't hesitate to take action with the WTO for a level playing field.

So my first question is do you agree with what I've said about enforcing trade laws?

MR. MARANTIS: Senator, thank you, absolutely. Ambassador Kirk -- one of his key priorities will be vigorous enforcement of U.S. trade laws. Because we need to have confidence in the United States if we're going to conclude trade agreements; that we're going to enforce them vigorously.

SEN. GRASSLEY: Yes, and then the last question is some ideas from you as you're going into this new job. And I don't expect you to know exactly everything about it at this point. But how can we encourage our trading partners, including China, to live up to the commitments they've made. And that probably falls in other departments other than just yours, but from your perspective.

MR. MARANTIS: Senator, USTR has a lot of tools in its tool chest to address enforcement. It has U.S. law; it has enforcement actions in the World Trade Organization. And it has a number of bilateral engagements with countries like China. And USTR needs to act on all fronts to accomplish whatever enforcement problem we find around the world. And I can commit to you senator that, if I'm confirmed, that will be one of my highest priorities.

SEN. GRASSLEY: Could I beg for one more minute?

SEN. BAUCUS: Absolutely, but you don't have to beg.

SEN. GRASSLEY: Okay. Would you indulge me to have one?

And this is for Mr. Corr. And another, I think a simple question, but I need to kind of get people on record so that we know where you stand. I'd already talked about my view of oversight so I don't need to repeat a long paragraph about that. But you know I intend to continue that with the same even hand in a Democratic administration as I think I've done in several Republican administrations. To do that, I'd like a commitment, if you're confirmed, that you would do something that kind of eliminates a lot of red tape I have to go through here.

And that's whether or not a ranking member can have access to information without having the chairman participate in that. Now, this goes back to the Reagan administration l986 -- '87. Some assistant attorney general someplace made a ruling that a ranking member didn't have the same right to information as a chairman had see. I hope I -- Chairman Baucus has always cooperated with me. I don't know once he hasn't, I hope I cooperated with him when I was chairman. But I'd like to have you think about answering my letters without my having to run to Chairman Baucus all the time to get your attention.

MR. CORR: Senator Grassley, I know this is an issue that you care deeply about. And in your opening remarks, I just wanted to say that because of my experience working for congressional committees, I'm very respectful of the need of congressional committees to do oversight on the department; and that it improves the department and its programs. And I certainly look forward to cooperating with you in your requests and to being as responsive as we possibly can.

SEN. GRASSLEY: Thank you.

Thank you, Mr. Chairman.

SEN. BAUCUS: Thank you.

Senator Conrad.

SEN. KENT CONRAD (D-ND): Thank you, Mr. Chairman. And thanks to all three of you for being willing to serve in the public sector. I think this is really a distinguished group of nominees. And I'm delighted about the quality of the people that I see being put forward by this president.

Bill, let me start with you. I have a special responsibility to my colleagues with respect to the budget. And as I look at health care reform, the thing that concerns me a great deal is that we're already spending almost 18 percent of our gross domestic product on health care. The trend line that we're on would take us to 37 percent of GDP for health care. And clearly, that's totally unsustainable. We're already spending twice as much as a share of our economy as anyone else.

And one of the fears I have, and I've expressed it to the chairman, is that in health care reform it is entirely possible that we put in a boat load of additional money, and don't bend the cross curve, don't reduce costs for the longer term. What can you tell me that will give me an assurance that we're going to avoid that fate? To me that would be the worst possible outcome to go through health care reform and just put in more money, take it to a higher level of our GDP going to health care, and put us in a totally unsustainable position.

MR. CORR: Senator, I suspect possibly at this stage the only thing that I could say is that my sense is that the administration and all members of Congress share the concern that you raise. One of the main reasons for doing health reform is to bring down long term, health care costs to the nation to make the economy more competitive. To the extent that everyone is focused on that and intent on producing that result; we have the best chance we're going to have.

I think the level of expertise around the country and in the Congress that's being brought to bear in thinking about these issues, I suspect over the next three to four months that this will be thoroughly debated and evaluated with the intention that I -- that the system, the reforms that are put in place will have a long-term effect of reducing overall health care costs below the costs projections that we're now on.

SEN. CONRAD: I appreciate that. I feel so strongly about this that it's got to be central to what we do. Because our country is in a situation in which unbelievable pressure is being put on our competitive position, on our families, on our companies. And you know, when we're spending twice as much as anybody else, and we're nowhere near the top in health care outcomes, something is radically wrong.

And you know, I look at the Mayo model and I compare it to UCLA. The Mayo model is getting the best health care outcomes and at a cost one half as much as the UCLA model. I mean Dartmouth tells us we're wasting 30 percent of our expenditure on health care; and not getting any improvement in health care outcomes for that expenditure. That's $700 billion a year, even in Washington that's real money.

Demetrios, just very quickly -- increasingly we're seeing countries manipulate their currencies for the purpose of gaining trade advantage. And I've raised this issue repeatedly in the finance committee as we consider trade agreements. Traditionally, people tell me well there is nothing we can do about considering currencies. We've seen circumstances in which we negotiate an agreement, reduce tariff barriers; and then have the country devalue their currency completely swamping the effect of the reduction in the tariff levels. What would be your attitude with respect to considering currency valuations in trade agreements?

MR. MARANTIS: Senator, I still have scars on my back from when this committee considered currency legislation in 2007. And the greatest thing that I could say to you right now is that the Treasury Department has the lead on all issues with respect to currency policy.

(Laughter)

Ask my colleagues sitting here. In all seriousness though, Senator Conrad, it's an important issue. And regardless of whether it's China or any other country, when we look at our trade and economic relationship with that country and what values our exporters face; we need to look at the whole panoply of issues. And currency is certainly one of them particularly when you look at our relationship with China.

SEN. CONRAD: Let me just tell you, in my staff memo to me about you, here's what they said. He's very smart, thoughtful, and well- versed in the range of trade issues he will cover at USTR. Demetrios, I mean, how can you beat that?

(Laughter)

MR. MARANTIS: Thank you, Senator Conrad.

SEN. CONRAD: Do I have time remaining?

SEN. BAUCUS: Absolutely.

SEN. CONRAD: Mr. Krueger, you are being asked to take on an extraordinarily critical position at this time. As I look at our economic circumstance, I believe one reason we got into this soup is we had an overly-loose fiscal policy, massive deficits and debt; overly-loose monetary policy under the control of the Fed. A dysfunctional trade policy; and an overlay of deregulation on top of it all that created the seed bed for bubbles to form. And the result is we've got a housing bubble. We've got much more than that. We've got a commodity bubble -- wheat went to $18 a bushel. We've got an energy bubble, oil prices $145 a bushel (sic).

What's your --

SEN. BAUCUS: A barrel.

SEN. CONRAD: $145 a barrel, yes. Thank you, Chairman.

SEN. BAUCUS: (Off mike) not that I remember as an Easterner, it's a -- (inaudible) state.

SEN. CONRAD: Yes, I understand. You know, we think of everything in bushel terms in my state. The chairman's state is not too far beyond.

What is your sense of what caused this almost a global collapse?

MR. KRUEGER: Thank you for the question. I think economists will be asking that for years to come. My view is that there were multiple factors that caused the recession, deep recession that we're in, and the financial crisis that we're in. I think that when we look back at this, we can't say it was just one factor. The economy has checks and balances; and there were multiple failures in those checks and balances.

One factor I would emphasize is the housing market. There were many bubbles, as you mentioned. The first one to burst in a major way was the housing bubble. And that is also an enormously important market in the U.S. and around the world. From there, there was collateral damage into other markets; and there were many reasons why. I think we can look at the housing market and ask what enabled this nationwide bubble to occur. You pointed to many of them.

One of the areas where the administration is looking very closely, as well as the Congress, is financial regulatory reform so that we can try to avoid having these types of problems going forward. But as I said, I don't think we get into this type of a situation from just one cause. There were multiple areas where the economy fell.

SEN. BAUCUS: Now, you'll have to --

SEN. CONRAD: Yes, I appreciate it.

SEN. BAUCUS: Thank you.

Senator Enzi.

SEN. MIKE ENZI (R-WY): Thank you, Mr. Chairman.

And I want to thank all of you for being willing to serve. You have very impressive resumes. And I think that it will be a real advantage to the United States to have you in the positions you've been nominated for. I want to ask some questions that are a bit Western oriented. I notice that all senators that are here are Western.

Start with Mr. Marantis. One of the concerns that the United States has is over soda ash, which is used in baking soda and making glass, and a whole bunch of other things. And the United States has a great deal of this, it's completely natural. China, however, makes a synthetic one; and in order to protect their market, they put a nine percent value added tax on it. And they took that off for awhile because they recognized that they were using a lot of energy and creating a lot of pollution making their product. And now, they've decided to add it back in again. Is there anything that you can do along those lines in your position?

MR. MARANTIS: Senator, one of the first letters I worked on, on the finance committee was the soda ash letter on this very issue with Senator Thomas. And it's been an issue; it's been an ongoing issue. And I can assure you, senator, that if I'm confirmed, it is something that I will raise at the earliest opportunity with the Chinese government.

SEN. ENZI: Thank you. And I hope that you can coordinate a little bit with the Department of Energy and the EPA too on helping China to realize the mistake they're making by going back into that production.

Another question that Senator Thomas would have asked you has to do with the Free Trade Agreement that we're looking at with South Korea. And I want to know what you'd be willing to do to ensure that the market share of U.S. beef products was protected?

MR. MARANTIS: Senator, this is another issue that I've worked very closely on in my time in the Senate. The U.S.-Korea Free Trade Agreement offers enormous potential benefits to the U.S. economy. There are some key concerns that we still have to address including on beef as well as on autos. On beef, senator, it's very important that this government is very vigilant with respect to sanitary and phyto- sanitary barriers that are not based on science. And having worked on this issue for a number of years, I can assure you that at USTR, if I'm confirmed, this will be a major priority of mine.

SEN. ENZI: Thank you.

Mr. Corr, as you know, I'm an opponent of tobacco. And I know you've worked in that area, as well. And consequently, it's my understanding, it's been reported any way, that you are going to get a waiver to handle any tobacco issues. If that's true, and you recuse yourself, who would be handling that in your place?

MR. CORR: Senator, under the administration's ethics guidelines, I will be recused from tobacco issues if I'm confirmed as the deputy secretary. But the secretary -- we spoke to the committee about this matter. I know that she will take a direct interest in how, if the Congress were to pass legislation; or short of that, in the programs that are -- now exist within HHS; she'll take a direct interest.

The ten agencies that make up the department also have very strong leadership. So to the extent that we're working on programs at the Centers for Disease Control, then the -- certainly the director would be responsible. To the extent that there is new responsibilities for the Food and Drug Administration; then certainly the commissioner would take on that responsibility. The department is large and there are many -- the assistant secretary for health is a critical leader within the department, as is the surgeon general. So I think there are a number of people who will certainly carry forward the banner that you have carried for so many years trying to discourage tobacco use.

(Inaudible) -- and if we could make progress in preventing tobacco use; we could certainly contribute greatly to Senator Conrad's concern about bending the health care costs curve a decade from now.

SENATOR ENZI: Absolutely. And of course, as you know, I'm a little disappointed, but health care wound up in reconciliation. I think that it's going to -- it has caused some risks there that didn't need to happen. Because I think everybody so far is working on making sure that the reform happens. And I want to congratulate the chairman on yesterday's walk through on the different alternatives that were presented for solving a portion of the problem, probably the easiest one. And it took us five hours to get through.

Something I was at a hearing on yesterday as well was the H1N1, which we're not referring to as swine flu because we don't want to decrease the sale of pork. And that is important, and it has nothing to do with eating pork. But on the H1N1, there are different case counts coming out from different parts of government and from international authorities. Is there any way that we can ensure better coordination during this and other public health emergencies?

MR. CORR: Senator, in terms of this one, the administration is endeavoring to have one set of numbers released each day. The Centers for Disease Control's Acting Director Dr. Richard Besser, in his morning press conferences, he's having one every day between 11:00 and 1:00. At that point, we are trying to release the latest numbers both domestically and internationally, as well as other information.

And we're trying to stay with those numbers all day so that the American people get one very clear picture about what's happening with H1N1.

Every afternoon around 3:00, Secretary Sebelius and Secretary Napolitano are holding press conferences in which we can update information. The goal is, as you say, to make -- to have a consistent set of information that is available based on the best science, the best evidence that we have. Our experts within our government are working closely with experts from around the world and the World Health Organization. Everyone recognizes that it is critical that we have -- we speak with one voice and there is one set of recommendations about what people need to do.

SEN. ENZI: Thank you. I apologize for running over. I had a question for Mr. Krueger as well. I'll submit that in writing. I don't want him to feel neglected; and I appreciate what he's willing to do.

SEN. BAUCUS: Thank you, senator.

(Inaudible) -- the statement about health care being in reconciliation. That is not necessarily going to be the case. While factors might intention that we not use reconciliation as we take up health care reform.

SEN. ENZI: I appreciate that.

SEN. BAUCUS: Senator Hatch.

SEN. ORRIN G. HATCH (R-UT): I want to commend the chairman for that comment because I think that it would be a catastrophic problem for everybody if this is made into a partisan exercise rather than a bipartisan one.

I want to welcome the three of you here today and have a lot of respect for each of you, as I think you know.

Mr. Corr, we've worked together a long time. I think very highly of you and of the people with whom you've worked. I find that this H1N1 flu breakout is disturbing especially since the vaccine will not be available they tell me until October. Is there a role for Congress perhaps through barter to help speed up the development of this vaccine?

MR. CORR: In terms of this vaccine, senator, I believe that the resources are in place. The president, as you know, has asked for some additional resources. The decision about whether to go to production on a vaccine has not been made yet. The work is being done now on the type of vaccine that would be produced. We certainly don't have a -- (inaudible) -- term issues in terms of our advanced research and development for medical counter measures.

And maybe the administration is going to want to be talking with you and other members of the Congress about the resources that we need to ensure that in other emergencies natural or otherwise that we are well prepared.

SEN. HATCH: Well, that's great. You know, we've been informed there are 91 cases in this country. We may have one in Utah as of today. And it's a matter of great concern to all of us throughout the country.

There are a lot of other questions I have on that. But just know that we'll be working with you; and we'll have an opportunity to work together in a lot of very crucial issues, especially FDA issues. And not just FDA, but certainly that will be part of them. And I look forward to working with you and I'm expecting you to get your old boss Henry Waxman to get back into the partnership with his old partner Orrin here. And we'll work with him and see what we can do on some of these very crucial issues.

MR. CORR: Senator Hatch, may I say thank you for your question about the resources for the vaccine development. As we move through this day by day, we will certainly let you know if there are issues.

SEN. HATCH: If you would, I'd appreciate it.

Mr. Marantis, thank you for your work on this committee, and we look forward to working with you at USTR. As you know, I've been an outspoken advocate for international trade. And most recently, I expressed my concern over the so called May 10 deal. I also have strong feelings about the vigorous and aggressive enforcement of our intellectual property rights throughout the world. And I am hopeful that you will really take that on as a very, very important part of what you're doing.

I'm also concerned about the message we're sending to our friends South of the Border, especially Colombia by not moving the U.S.- Colombia Free Trade Agreement. Here we have a leader who has straightened a lot of things up down there including the protection of labor union leaders, much more than anybody else has ever done.

They've been playing around with that agreement like its not important. And I really think we need advocacy by good people like you on the Democrat side to get them to wake up, that we can no longer play games with this type of thing in our hemisphere with all of the problems that we have. But to ask a question, can you please give me your thoughts on what more the U.S. can do to better protect American, you know, intellectual products?

MR. MARANTIS: Senator, thank you for that question. I've worked, over the years with your staff on developing some thoughts on IPR -- improving enforcement of IPR. It's a critical priority for Ambassador Kirk, and President Obama as well and his trade policy report underscored his commitment to vigorous protection and enforcement of intellectual property rights. And that's going to be a key issue with all countries that I deal with in my portfolio, if I'm confirmed. And I look forward to working with you, and members of this committee to figure out what better ways, and what more we can do to protect, and enforce U.S. IPR rights abroad.

SEN. HATCH: Well I'm also a firm believer that U.S. labor laws should be changed in the light of day. And you know I believe, you know, that any effort can change our domestic labor law through international trade agreements -- those efforts were wrong. We don't have the guts to stand up and do what has to be done right here in the Congress, and especially referencing the May 10th trade deal. Now, can you provide us your assurance that you will do all that you can while at USTR to ensure that there is no effect, or no effort to change U.S. labor laws through our trade agreements?

MR. MARANTIS: Senator, the May 10th agreement, the most important aspect of the May 10th agreement, was the fact that it was bipartisan, and any effort to make any changes to that will have to be done on a bipartisan basis, in very close cooperation with you, and members of this committee.

SEN. HATCH: Thank you. Mr. Kruger. I don't want to ignore you, I want to really give you a rough time, if I can.

(Laughter.)

SEN. HATCH: You have a great sense of humor, and I've really enjoyed listening to you today. But when you were writing in the New York Times in March of 2006 about a cost versus benefit analysis of going to war in Iraq, you noted that, to quote you, quote "credible estimation of counter factual outcomes of alternative policies for cost benefit comparisons is but a hallmark of modern economics," end- quote.

Now do you believe that a quote "credible estimation of counter factual outcomes of alternative policies for cost benefit comparisons" end-quote should also apply to the economic agenda including the Presidents similar TARP and budget. Well go ahead, you can answer that.

MR. KRUGER: Thanks for the question, Senator. I do believe that economic analysis can help guide decisions, and can impact decisions. Of course, economics is only one factor. A hallmark of modern economics is to try to understand the impact of policies by raising a question, what would have happened in the absence of those policies, it's an extremely difficult counter factual situation to answer.

One of the points I was trying to make in that piece in the New York Times that you cited was, that this is the way that economic analysis approaches an issue like the cost of war, depending on what input there's tremendous challenges once you base decisions just based on this particular input and one should be aware of limitations.

I think on the financial stability plan, that the financial system was facing tremendous crisis, and that the financial stability plan has been working to stabilize the financial system. It's an extremely difficult and challenging question to know what would happen in the absence of the actions that you have cited. Nonetheless, I think asking those questions help to guide in some respects the decisions.

SEN. HATCH: If I could just say, I wanted to congratulate and thank you for teaching me to be willing to serve, and I intend to support each of you. Thank you Mr. Chairman.

SEN. WYDEN: Thank you very much, Mr. Chairman, and I think we've got three very fine nominees here, and I look forward to supporting them. I just wanted to come down a few minutes. One of the virtues of really enjoying working with Chairman Baucus, is he often gives you a tough assignment, now as a --

SEN. BAUCUS: (Off mike.)

SEN. WYDEN: As the new chair of the Trade Subcommittee, I had a couple of questions for Mr. Marantis; we've all respected his work up here and a couple of points for Bill Corr, an old, old friend from the days when I served in the House.

Let me start with you, Mr. Marantis, with respect to international trade. I think it's well understood that there are some very important trade agreements coming out, but I'm one who has consistently voted for market expanding agreements. I voted for the Central American Free Trade Agreement, most recently. It is very obvious that there is great opposition to a lot of these trade agreements among the working class people.

There's just no doubt about it. And one of the interests I have is finding new policies that would expand the winner's circle under international trade -- to show middle class families that they are going to do more to get ahead, and this is an area that Chairman and I have worked together on over the years, almost with the idea of there're being something like a trade bonus for working people.

I'm not even sure you need legislation. This is something you companies can do even without legislation. For example, when there's a trade agreement that's passed and there's tariff reductions, some of those funds could be shared with workers -- even without any legislation.

So, start by telling me a little bit about your thinking with respect to ideas for expanding the winner's circle, so that more middle class workers and their families see the benefit of these trade agreements.

MR. MARANTIS: Thanks, Senator Wyden. The United States concludes great trade agreements. They are high standard, they are open markets, and they provide new export opportunities. We don't do a very good job at explaining how we should take advantage of those trade agreements.

I've spent the past four and a half years working with small and medium sized businesses in Montana, trying to help them identify export opportunities, how to take advantage of the trade agreements that the United States concludes. We need to do a lot more of that. We need to work closely with small and medium sized businesses to help them, to pair them up with the resources that the Department of Commerce and other agencies have, to actually export their products.

What I've learned in my time working with small and medium sized businesses in Montana, there is so much interest out there to export, but there's not a lot of information on actually how to do that well. And one of the things that I really would like to do, if I'm confirmed at USTR, is to try to help figure out how to help small and medium sized businesses take better advantage of the very high quality trade agreements that the United States negotiates.

On the trade bonus, Senator, I know that this is an issue that you've raised before. I've heard anecdotally that companies are beginning to experiment with trade bonuses. I don't know what experience they've had, but I would actually be curious to learn what they've done and how it's been received by their workers.

SEN. WYDEN: I appreciate both those points, there's no question the chairman and I have talked about this. We need to do a better job of explaining, you know, global economy -- what trade means. I do hope that we will look at some additional steps -- some practical additional steps. And I'm not wedded either, to whether there needs to be legislation. After the Central America's Free Trade Agreement, I suggest to companies, why don't you do it voluntarily?

You're going to get a tariff and a reduction, share it with your workers -- workers who have been skeptical about the agreement. They've seen an agreement passed in June, a few months later the company in effect says we all have an opportunity to get ahead as a result of a trade agreement, and here's going to be a few hundred additional dollars that are going to be part of what you see as getting ahead in that agreement -- sharing the winnings.

So, if you would continue to pursue that, and look at the experiments. I think you are right, some companies are interested in that. One question for you Mr. Corr, and it tracks something I know you have a great interest in -- and that's healthcare prevention. The department runs a number of very important preventive services.

The new secretary has a great interest in this, as well. And one of the concerns we're going to have in health reform is that much of the good preventive work doesn't even get scored as a saving. And one of the big challenges, we saw it yesterday, for example, in our closed session, is we've got to show that we're making some savings, in order to have some credibility with the American people to talk about the start up costs that are inevitable in any new kind of effort.

For example, I've been interested in a number of prevention efforts, I would like to have seniors who lower their blood pressure, and lower their cholesterol, get reduced Part B premiums. And if you send that kind of message, people who are far from their senior years are going to start thinking about ways to be healthier, and think about some of the preventive benefits.

What's your thinking about how the department can do more in the area of healthcare prevention, and particularly get to Chairman Baucus and all of us, some preventive approaches that can be scored, as actually generating savings?

MR. CORR: Senator Wyden that certainly is a goal of people in the department now, who are working on health reform. It's a challenge, because we have developed, actually a relatively good evidence base over the last decade or two that demonstrates that prevention makes a big difference, that it actually for individuals, reduces the healthcare that they need.

We have a problem, even in the field of tobacco; we have a problem within the ten year window that CBO scores are showing significant savings. What I could tell you today, is that people in the department, certainly understand, Secretary Sebelius certainly understands this issue, and we're going to do everything we can to bring the best minds in the country together, not only with the goal of trying to demonstrate savings, but also making sure that we've taken full advantage of every opportunity to prevent disease rather than treat it.

If we're going to reduce the long-term cost curves below current projections, we're going to have to do a better job of preventing disease.

SEN. WYDEN: My time is up. And Mr. Corr, I'm going to spare you with questions, but I'm going to support you. Mr. Chairman, thank you.

SEN. BAUCUS: Thank you, Senator. I'll just finish up with this last subject, Mr. Corr. I think the healthcare reform that we all want to pass is in danger; it's in jeopardy, if we cannot document meaningful, significant reductions in costs. I think we all talk about, you know, the cost curve. I've spent a lot of time with Peter Orszag at OMB, a lot of time with CBO, and we all have to work together to find ways to, honestly, get the scores that we must have if we're going to get healthcare reform passed.

With the huge deficits this country is facing, there are many who believe that it is not the time to pass a healthcare reform, it's just too costly.

Now, clearly we both know that the cost of inaction is much greater than the cost of action. But that's a somewhat difficult argument to make when people see healthcare costs perhaps going up, especially when coverage is going to be increased.

And I just want to underline the points that many senators here have said. Mainly we really need you to join the team, at HHS, OMB, CBO, all of us, to try to find ways to show honestly, you know, if reform is undertaken, will in fact, result in lower cost. Otherwise healthcare reform is in jeopardy.

MR. CORR: Senator I certainly look forward to that opportunity if I'm confirmed, and will do everything in my power to do so. And I know that others in the administration share the concern as you point out and we will be doing everything we can.

SEN. BAUCUS: Good, thank you. I just want to make it clear.

MR. CORR: (Inaudible.)

SEN. BAUCUS: Okay, Mr. Marantis, Panama. I believe that the administration must develop an action plan for Panama FTA that passes this Congress, otherwise there's a very deep concern of whether this administration really does have a trade policy -- one that cares about trade. And clearly we have to worry about, you know, the (buried ?) shares issue, I think that's pretty well been resolved. But the tax information and exchange agreement issues, I guess, I don't know if the Treasury is handling that more than USTR, I'm not sure, but that too has to be resolved, as well as some labor issues that some have raised.

I'd like to think that some of those issues that have been raised, by others here, while they're important, not get in the way of passing the Panama FTA. So, if you could just give us a little assurance that we're going to develop -- the administration is going to develop an action plan on the Panama FTA so that we can get that passed, I'd sure appreciate that.

MR. MARANTIS: Senator, I believe that as we speak, USTR is working with the Panama to address the outstanding concerns that you laid out, and hopes to work with Congress, soon to try to figure out what the most appropriate timing is to bring that agreement before you.

SEN. BAUCUS: I know you know it, but I just want to restate it, how important that is. I was down with the President, down to the Summit of the Americas, down in Trinidad, and spoke to President Torrijos of Panama, frankly spoke to our president too about it, and I know it's on his list, and I know he wants to get the Panama FTA passed this year, but you just can't delay -- we've got to move very quickly.

And I'm just urging you to send the message back that, hey, we've got to get moving on this thing, I think that would make a big, big difference, I think it would send a positive signal not only to South America and Central America, but also the world that, hey, we're open for business. We Americans really do care about trade, and it isn't a no brainer to get this done.

MR. MARANTIS: Thank you, Senator. Message received. And I will definitely convey that back to USTR.

SEN. BAUCUS: China. I would view that, how well we as Americans manage the relationship with China, going forward, the next five, 10, 15, 20, or 30 years, could very well determine the future of American citizens, Chinese citizens, and perhaps even other peoples in the world. China is growing so quickly, so rapidly, that it's going to be such a dominate player on down the road.

I'm concerned, frankly, that all administrations tend to look too much, you know, eastward across the Atlantic, rather than far east, in you know, Asia and China. And that's because by heritage, you know, we come from Europe, all of us, most of us in America, at least earlier we did, major networks are on the east coast, newspapers are on the east coast, we just think, you know, that way.

We don't think the other way. And I've sometimes thought that if Washington, D.C. were on the west coast, not the east coast, that we'd have a little different view of the world -- because proximity is power. You are where you are. And I'd like you to give me your thoughts about the degree to which we develop an Asian policy and a China policy, and what some of those components might be.

MR. MARANTIS (?): Senator, active engagement with the Asia- Pacific region is absolutely critical for our economic future, given that region's significance, economically both today and tomorrow. That region is integrating every day, and we need to be able to position our exporters and our companies, and our country for that matter, to be able to take advantage of the competitive advantages that the Asia-Pacific region presents.

There are so many opportunities out there for us, and so much of the past four and a half years working with you, and traveling to Asia with you, and seeing firsthand what's happening in that region, and having lived there myself for two years, it's a priority area. It's a priority for Ambassador Kirk. It's a priority for me, and I look forward to working with this committee, and getting your advice on what's the best approach, what should we do to be most effective, and to position ourselves most effectively in the region.

SEN. BAUCUS: I appreciate that, I just think that it's critical for our kids and our grandkids futures, that we kind of get this right, this relationship. It has so many different dimensions, clearly trade is one of them, but there are many, many others. But I again urge you very strongly to think strategically, think ahead -- where do you want to be with respect to China, five years from now, 10 years from now, 15 years from now, instead of just some ad hoc, you know, reactions on sometimes an even daily basis.

MR. MARANTIS (?): Senator, I've often said that 90 percent of life is showing up, and we haven't shown up enough in Asia. This country hasn't shown up enough in Asia, and that's one aspect of this job that I'm most excited about, is helping to think about how to best position American trade policy in that region.

SEN. BAUCUS: I appreciate that very, very, much, because I just, again, believe it's that critical. Mr. Krueger, some of us on this committee, and earlier I alluded to it, that policymakers in Washington, D.C. sometimes think about east coast, they think of the west coast, maybe a couple of states in between, industrial states, but tend to forget, you know, northern high plain states in developing policy.

And Mr. Corr you mentioned, I think, if I remember correctly, something about your rural work, and maybe Appalachia, I'm not sure where it was. I just want to remind everybody, there's a rural, and there's a rural. A long time ago, who was it, Doc Bowen was the HHS secretary, and in this very room he prided himself of being a rural doc from Indiana.

I reminded him that while rural Indiana is not rural in some of the other states in this country. In fact, I did a rough calculation that Indiana is 20 times more urban -- 22 times more urban than the state of Montana.

I'm reminded of Hillary Clinton, when she was First Lady, pushing her healthcare reform agenda, came to Montana, she got off the airplane, in Billings, Montana, which happens to be our largest city, she got off the plane and right away she said, this isn't rural, this is hyper-rural, mega-rural. I mean it just blew her away how rural that part of the country is. For example, New Jersey's population density is about 1,000 people per square mile, and in my state of Montana there's about six.

And so Mr. Krueger, I just wandered if you could tell us how much experience you have in living in, or visiting to get a sense of rural -- really rural America.

MR. KRUEGER: Thank you for the question. I have traveled all over the U.S., and also have gone further west to China. I understand there are differences, economic differences, significant economic differences across regions of the country. Differences in the way the housing crisis is affecting different parts of the country.

And I certainly appreciate that economic policy needs to be sensitive to those considerations. Should I be confirmed, I very much look forward to learning more about the issues facing rural America, and working with you on those issues.

SEN. BAUCUS: Have you been to Montana?

MR. KRUEGER: I have very much wanted to go to Montana.

(Laughter.)

MR. KRUEGER: And I very much hope to have the opportunity to go to Montana, but I have not been to Montana.

SEN. BAUCUS: That's a great answer. When do you want to go to Montana? You will love it. I mean, we're very proud of Montana.

MR. KRUEGER: I can tell you my former dean has a house in Montana, and I've tried very hard to get him to invite me to visit him.

SEN. BAUCUS: And who's that?

MR. KRUEGER: Henry Dingy (ph), who is now president of Northwestern.

SEN. BAUCUS: A lot of people in the east do have places in Montana.

(Laughter.)

MR. KRUEGER: I place Northwestern in the mid west.

SEN. BAUCUS: That's very interesting. Apologies to our friends from Texas; we Montanans like to think we are prouder of Montana, than Texans are of Texas, only we're not so loud about it. Because I think it somewhat captures just the pride we have in our state. You'll have a great time there.

MR. KRUEGER: I will follow up.

SEN. BAUCUS: In your new job, there's a number of tasks you can undertake, what's your number one priority, your second, and third priority, as you organize your life in this new world?

MR. KRUEGER: That's an excellent question. I don't come here with a particular agenda. What I have told people, told your staff, is my number one item on my agenda is to see the economy improve. I'm willing to look at lots of different ways of doing that -- entertaining different options. And I think, at the moment, stabilizing the financial market is absolutely critical for seeing improvement in the economy.

The Stimulus Bill that the Congress passed is going to help increase aggregate demand. But, to me the only item on my agenda at the moment is helping, should I be confirmed, helping the administration to evaluate policies, to see the greatest improvement in the economy, to see the economy working again for the American people.

SEN. BAUCUS: Including --

MR. KRUEGER: Including all parts of the United States, including Montana.

SEN. BAUCUS: Good answer. I think I forgot what I was going to ask you then. As you do all of that, I again urge you to get out there, to all parts of the country. What's the most unconventional position you've taken, that you've been most proud of?

MR. KRUEGER: I think it's probably the work I've done on the minimum wage. And I don't know if pride is, and I should be clear that, some of my work has challenged the conventional accepted views on economics. I didn't start out intending to challenge the views in any of that work. I approached working on minimum wage, and other issues as a scientific issue. We received valid criticism for the work, I took those criticisms very seriously.

I'm kind of proud, I suppose, that I think the work has held up to the criticism. But there are many areas where I'm really proud of research that I did.

SEN. BAUCUS: Okay. What's one of the most unconventional (views ?) your least proud of, and really blew it?

MR. KRUEGER: I have to tell you one that gets me into a lot of trouble. I did a study on the benefit of going to highly selective colleges, and there had been some previous studies which look at the benefit of attending an elite school, like Princeton, versus a less selective school. One of the difficulties is, it's hard to compare apples to apples. The students who apply to the most selective schools tend to have higher grades coming from high school, they might achieve more anyway.

And what I did was try to match up students together with co- author. What we did was try to match up students who had the same set of options -- they were accepted at the same set of schools. Within that set, it didn't seem to matter very much where they went to school, and even more importantly what we found was -- what seemed to matter most was the schools they applied to, whether they get in there or not.

So, what I concluded from that work is, what the students willing to, for higher education, ambition, or motivation they have is extremely important. It's also important what the school puts in, but just being a selective institution is not sufficient, the school has to put resources into the students' education.

Now, you can imagine that at Princeton University this was not necessarily finding what the university was expecting. Princeton's such a wonderful institution they put a link to my study on the home page for the university, so they didn't try to conceal it. But, it certainly was a result that has raised a number of eyebrows.

SEN. BAUCUS: I'm sure that Princetonians are certainly proud of Princeton, in law school I lived off campus with two fellows from Princeton. You won't believe all of the Princeton Tigers in that house (over there ?), everything was Princeton, everywhere. I was at Stanford.

MR. KRUEGER: I should have mentioned earlier that my family and I did live in Stanford. We lived in Woodside.

SEN. BAUCUS: Is that why your daughter is interested in going to Stanford?

MR. KRUEGER: that's partly it.

SEN. BAUCUS: It's interesting, although this may not be helpful. Your father is certainly proud of Princeton. Fifty percent of the senators, at this hearing today, are from Stanford, and they're all on this side of the aisle.

Well thank you all very, very much, and we wish you great luck and before I adjourn, I might tell the Senators that all Senators may have additional questions, I ask them to submit their questions before 5:00 this afternoon, and ask you all to respond very quickly so we can get you all confirmed.

The hearing is adjourned.

END.

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