Who is Shaun Donovan?
Recently confirmed by the Senate to head the White House’s budget office, Donovan at first appears to be a typical bureaucrat. He has held the position of Secretary of the Department of Housing and Urban Development (HUD) since 2009, and has now been promoted to one of the highest offices in the U.S. bureaucracy.
However, a look at Donovan’s tenure at HUD and his lack of knowledge about America’s fiscal circumstances shows that the Senate should have opposed his nomination. Instead, a majority of Republicans and every voting Democrat ignored Donovan’s ignorance about the federal budget and entitlements, as well as probable fraud at HUD under his leadership.
How little does Donovan know? Consider what Alabama Republican Senator Jeff Sessions, the Ranking Member of the Senate Budget Committee, said on the Senate floor in opposition to Donovan’s nomination. Sessions noted, per Donovan’s written testimony to the Senate Budget Committee, that Donovan has “not written any papers or given any talks or lectures that specifically lay out a comprehensive plan for Medicare or Social Security.”
Also, according to Sessions, “in response to one question about Medicare data, Mr. Donovan told me the data did not exist. The data does in fact exist, and Mr. Donovan’s response cited the very report in which the data could be found.”
Finally, Sessions pointed out that “at his hearing, Mr. Donovan could not answer fundamental questions from Senator Johnson about the Social Security Trust Fund.” During that hearing, Johnson asked Donovan if he found agreement with how the White House Office of Management and Budget (OMB) — which Donovan now heads — described the Social Security Trust Fund in 2010. As Johnson summarized the OMB report, “you have an asset in the Trust Fund offset by the liability, netting to zero value for the federal government.”
Donovan’s answer was to regurgitate political talking points. Specifically, he said that “it’s important for seniors to understand that those are full faith and credit obligations of the U.S. government…” He then said that — emphasis added — “if [the Trust Fund and liabilities] are offsetting, I believe…that the Trust Fund is a useful tool for the American people and seniors to understand transparently the long-term costs of Social Security.”
Donovan followed this non-answer with several nonsensical responses to Johnson’s next question, regarding how the Treasury would redeem Trust Fund assets in the form of Treasury bonds. He appeared to not know the proper answer: that taxes would have to rise, benefits would have to be cut, or more debt would have to be incurred.
He did eventually confess, at least in part, to a piece of the truth: that deficits greater than what could be funded by existing revenues “would have to be financed.” In other words, the federal government would have to borrow the money.
Yet the Senate Budget Committee approved his nomination, and the Senate allowed him to head up one of the most important finance-related offices in the federal government. In a statement to me, Johnson, who voted against Donovan, said that he did so because Donovan was dishonest.
“Congressional Budget Office Director Doug Elmendorf and Federal Reserve Chair Janet Yellen were willing to acknowledge what the Office of Management and Budget’s own publication stated — that the trust fund consists of an asset offset by a liability, netting to zero,” said the Senator. “They were willing to be truthful with the American public. Shaun Donovan was not.”
It is not just a lack of knowledge that should have kept Donovan from heading up OMB. Sessions’ speech also highlighted a fraud investigation taking place by the Inspector General (IG) of HUD. According to the IG report, published on May 30 of this year, a non-staff consultant for HUD was paid $622,369 from February 14, 2011 through February 27, 2014, from an account that was illegally accessed for the payments.
As one Hill staffer told me, “we could see the OMB director simultaneously in office and in jail” over the investigation.
Furthermore, Sessions noted that in 2013, only two of 24 federal agencies failed their annual audits. One was the Department of Defense, and the other was HUD — under Donovan’s leadership. And this was the second failure in a row for HUD.
In light of these concerns, I contacted Senate Budget Committee Chairwoman Patti Murray’s (D-WA) office several times to ask about Donovan’s nomination. Her office did not respond, leaving me to wonder why Murray, her Democratic colleagues, and even many Republican Senators seem unwilling to fulfill their constitutional obligations to give “advice and consent” for executive branch nominees.