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[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]

                              MEMBERS' DAY

=======================================================================

                                HEARING

                               before the

                        COMMITTEE ON THE BUDGET
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION

                               __________

             HEARING HELD IN WASHINGTON, DC, MARCH 8, 2001

                               __________

                            Serial No. 107-7

                               __________

           Printed for the use of the Committee on the Budget

  Available on the Internet: http://www.access.gpo.gov/congress/house/
                              house04.html

                                 ______

                    U.S. GOVERNMENT PRINTING OFFICE
70-919 DTP                  WASHINGTON : 2001

_______________________________________________________________________
 For sale by the Superintendent of Documents, U.S. Government Printing 
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                        COMMITTEE ON THE BUDGET

                       JIM NUSSLE, Iowa, Chairman
JOHN E. SUNUNU, New Hampshire        JOHN M. SPRATT, Jr., South 
  Vice Chairman                          Carolina,
PETER HOEKSTRA, Michigan               Ranking Minority Member
  Vice Chairman                      JIM McDERMOTT, Washington
CHARLES F. BASS, New Hampshire       BENNIE G. THOMPSON, Mississippi
GIL GUTKNECHT, Minnesota             KEN BENTSEN, Texas
VAN HILLEARY, Tennessee              JIM DAVIS, Florida
MAC THORNBERRY, Texas                EVA M. CLAYTON, North Carolina
JIM RYUN, Kansas                     DAVID E. PRICE, North Carolina
MAC COLLINS, Georgia                 GERALD D. KLECZKA, Wisconsin
ERNIE FLETCHER, Kentucky             BOB CLEMENT, Tennessee
GARY G. MILLER, California           JAMES P. MORAN, Virginia
PAT TOOMEY, Pennsylvania             DARLENE HOOLEY, Oregon
WES WATKINS, Oklahoma                TAMMY BALDWIN, Wisconsin
DOC HASTINGS, Washington             CAROLYN McCARTHY, New York
JOHN T. DOOLITTLE, California        DENNIS MOORE, Kansas
ROB PORTMAN, Ohio                    MICHAEL E. CAPUANO, Massachusetts
RAY LaHOOD, Illinois                 MICHAEL M. HONDA, California
KAY GRANGER, Texas                   JOSEPH M. HOEFFEL III, 
EDWARD SCHROCK, Virginia                 Pennsylvania
JOHN CULBERSON, Texas                RUSH D. HOLT, New Jersey
HENRY E. BROWN, Jr., South Carolina  JIM MATHESON, Utah
ANDER CRENSHAW, Florida
ADAM PUTNAM, Florida
MARK KIRK, Illinois

                           Professional Staff

                       Rich Meade, Chief of Staff
       Thomas S. Kahn, Minority Staff Director and Chief Counsel

                            C O N T E N T S

                                                                   Page
Hearing held in Washington, DC, March 8, 2001....................     1
Statement of:
    Hon. George W. Gekas, a Representative in Congress from the 
      State of Pennsylvania......................................     1
    Hon. Thomas H. Allen, a Representative in Congress from the 
      State of Maine.............................................     4
    Hon. Bob Goodlatte, a Representative in Congress from the 
      State of Virginia..........................................     6
    Hon. Robert A. Underwood, a Delegate in Congress from the 
      Territory of Guam..........................................    10
    Hon. Steny H. Hoyer, a Representative in Congress from the 
      State of Maryland..........................................    14
    Hon. Brian Baird, a Representative in Congress from the State 
      of Washington..............................................    19
    Hon. Bob Clement, a Representative in Congress from the State 
      of Tennessee...............................................    21
    Hon. Michael N. Castle, a Representative in Congress from the 
      State of Delaware..........................................    23
    Hon. Bill Pascrell, Jr., a Representative in Congress from 
      the State of New Jersey....................................    26
    Hon. James P. McGovern, a Representative in Congress from the 
      State of Massachusetts.....................................    31
    Hon. Charles A. Gonzalez, a Representative in Congress from 
      the State of Texas.........................................    33
    Hon. Rosa L. DeLauro, a Representative in Congress from the 
      State of Connecticut.......................................    36
    Hon. Nancy Pelosi, a Representative in Congress from the 
      State of California........................................    40
    Hon. Gregory W. Meeks, a Representative in Congress from the 
      State of New York..........................................    46
    Hon. Curt Weldon, a Representative in Congress from the State 
      of Pennsylvania............................................    50
Prepared statement of:
    Mr. Gekas....................................................     3
    Mr. Allen....................................................     6
    Mr. Goodlatte................................................     9
    Mr. Underwood................................................    12
    Mr. Hoyer....................................................    17
    Mr. Baird....................................................    20
    Mr. Clement..................................................    22
    Mr. Castle...................................................    25
    Mr. Pascrell.................................................    28
    Mr. McGovern.................................................    32
    Mr. Gonzalez.................................................    35
    Ms. DeLauro..................................................    38
    Ms. Pelosi...................................................    43
    Mr. Meeks....................................................    48
    Mr. Weldon...................................................    53
    Hon. Todd Akin, a Representative in Congress from the State 
      of Missouri................................................    54
    Hon. Judy Biggert, a Representative in Congress from the 
      State of Illinois..........................................    55
    Hon. Michael Bilirakis, a Representative in Congress from the 
      State of Florida...........................................    56
    Hon. William Lacy Clay, Jr., a Representative in Congress 
      from the State of Missouri.................................    57
    Hon. Baron P. Hill, a Representative in Congress from the 
      State of Indiana...........................................    58
    Hon. Eddie Bernice Johnson, a Representative in Congress from 
      the State of Texas.........................................    59
    Hon. Dennis J. Kucinich, a Representative in Congress from 
      the State of Ohio..........................................    60
    Hon. John J. LaFalce, a Representative in Congress from the 
      State of New York..........................................    61
    Hon. Carrie P. Meek, a Representative in Congress from the 
      State of Florida...........................................    65
    Hon. John E. Peterson, a Representative in Congress from the 
      State of Pennsylvania......................................    66
    Hon. Charles W. Stenholm, a Representative in Congress from 
      the State of Texas.........................................    68

 
                              MEMBERS' DAY

                              ----------                              

                        THURSDAY, MARCH 8, 2001

                          House of Representatives,
                                   Committee on the Budget,
                                                    Washington, DC.
    The committee met, pursuant to call, at 2 p.m. in room 210, 
Cannon House Office Building, Hon. Jim Nussle (chairman of the 
committee) presiding.
    Members present: Representatives Nussle, Spratt, Clement, 
and Holt.
    Chairman Nussle. The Budget Committee will come to order. 
Today is an opportunity for what we call Members' Day. It is 
the one hearing that is, as I understand it, commanded by the 
Budget Act, and we are pleased to have a number of Members 
before us today. I believe that we will go in order. Mr. Gekas, 
I believe you are the first one. We will invite you to testify.
    Just for the Members, we will include your entire testimony 
in the record, and you may summarize your testimony during the 
5 minutes.
    Mr. Gekas.

 STATEMENT OF HON. GEORGE GEKAS, A REPRESENTATIVE IN CONGRESS 
                 FROM THE STATE OF PENNSYLVANIA

    Mr. Gekas. Thank you, Mr. Chairman, and to the members of 
the committee for this opportunity. I come today to repeat an 
old plea on my part. For every session dating back to 1988 now, 
I have introduced legislation to try to bring about prevention 
of government shutdown. Everyone is familiar with my forays 
into this particular arena.
    Each time I meet all kinds of obstacles, until a few years 
back it finally was passed, but then President Clinton vetoed 
it. That is part of the problem, that the President of the 
United States, Democrat or Republican, has been, in my 
judgment, a problem in this regard, because they view it 
sometimes as if we were successful in implementing this 
antishutdown legislation, somehow the President would be robbed 
of dealing power, negotiating power.
    So, I could understand that on the part of the President, 
President Clinton. Frankly, I thought that the same thing would 
happen when we started with this new session. But, guess what, 
Mr. Chairman? President Bush in his various statements on the 
campaign trail that dealt with budget process, with 
congressional procedures, and lately in the Blueprint for a New 
Beginning, which I know you are familiar with, a responsible 
budget for America's priorities, they devote an entire section 
to government shutdown prevention.
    On page 175, I want to quote this, because it has--it is 
better stated than any of my testimony could be. Under the 
President's proposal, if the appropriations bill is not signed 
by October 1st of the new fiscal year, funding would be 
automatically provided at the lower of the President's budget 
or the prior year's level. The President's proposal would 
remove incentives for the President or the congressional 
leadership to use the leverage of shutting down government to 
achieve spending objectives or to attach extraneous measures 
they could not otherwise obtain through the normal 
appropriations process.
    My gosh, my testimony should end right there, but my ego 
will not let me stop. But it is an absolute perfect statement 
of what we have been trying to achieve.
    The Chairman, to his credit and for my gratitude, has 
joined in every year that I have introduced this in trying in 
various ways to support the measure, but we have not been 
successful.
    I have to hark back then to another organ of the 
government, the GAO. Back in June 6, 1991, back then I had only 
introduced it a couple of times. Since then it has been even 
more. But in their report on the budget procedures, et cetera, 
they make reference on the last page to a shutting down of the 
government during temporary funding gaps is an inappropriate 
way to encourage compromise on the budget. Very little has ever 
been said on this. But in a footnote they say this: As we were 
preparing this report, a bill was introduced in the House, H.R. 
And so forth, providing new authority for an automatic 
continuing resolution that, although broader in scope than our 
recommendation, is aimed at preventing government shutdowns.
    The bill to which they refer was my predecessor to this 
bill on ending government shutdowns.
    One worrisome feature about all this is the appropriators. 
We seem to run into an obstacle with the appropriators deeming 
it, just as Presidents have in the past, as a hindrance to 
their negotiating power at the end of the fiscal cycle. We 
believe we have to encourage everyone to understand that this 
does not rob them of any power. This still provides them with 
whatever incentives they have to mold a new budget after 
October 1st, while keeping the old budget intact, if indeed we 
had not completed the spending plans.
    So we have some selling to do, I know, but for the first 
time we have the President of the United States eager to help, 
and Secretary Daniels--could I yield to the Chairman for one 
question? I would like to yield for him to answer. Is the 
Secretary due to testify before your committee soon?
    Chairman Nussle. Actually, Director Daniels of OMB has 
testified this last Monday--excuse me, this last Thursday.
    Mr. Gekas. Did he touch upon this?
    Chairman Nussle. He did not touch upon the budget process 
reform issue at length, but in part that is because we believe 
that budget process reform will be an issue that we take up as 
soon as the budget is done. So I think he was just keeping his 
powder dry until that time.
    Mr. Gekas. Thank you.
    It is interesting to me also that Congressman Kleczka, who 
is a member of your committee, I believe--is he or is he not?
    Chairman Nussle. Yes.
    Mr. Gekas [continuing]. Has been a cosponsor of my 
legislation throughout our joint careers in the Congress, and 
it is noteworthy that his State, Wisconsin, has a mechanism in 
place that does exactly what we are talking about here. So do 
several other States, by the way.
    But the point is that for the first time we have a 
convergence of legislators, budget people, and the White House 
eager to prevent government shutdown.
    I yield back the balance of my time.
    [The prepared statement of George Gekas follows:]

    Prepared Statement of Hon. George W. Gekas, a Representative in 
                Congress From the State of Pennsylvania

    Mr. Chairman, Members of the Committee, thank you very much for 
allowing me to testify at this important hearing. I appreciate the 
opportunity to appear before you and once again bring to your attention 
a matter of great concern to many and an issue that is near and dear to 
my heart: preventing government shutdowns.
    As you may be aware, I have been introducing legislation to prevent 
government shutdowns since 1988. My current legislative effort, H.R. 
29, the Government Shutdown Prevention Act, does the same thing as its 
predecessor bills: it removes the threat of the government shutting 
down due to an impasse in budget negotiations by providing for an 
automatic continuing resolution, at the previous year's spending level, 
if an Appropriations bill has not been passed.
    Under the language of this bill no new programs can be proposed, no 
old, terminated or unfunded programs can be resumed, reborn or 
refunded. Those determinations are to be made by the committee, not my 
bill. The language of my bill is preventative, not curative: it seeks 
to prevent problems which could arise from a government shutdown but 
does not cure any underlying problems with that budget.
    The threat of a government shutdown is very real. Since 1977 the 
government has been shut down seventeen times, costing the U.S. 
taxpayer over $1 billion. Since my own election to the House in 1982 I 
have witnessed eight government shutdowns.
    This issue has resonated very strongly with our colleagues. Past 
supporters of this legislation included Chairman Nussle, former 
Chairman Kasich, Reps. Gutknecht, Klezcka and Toomey. It has also been 
endorsed by such organizations as the Concord Coalition Citizens 
Council, U.S. Chamber of Congress, Americans for Tax Reform, Citizens 
Against Government Waste, The Committee for a Responsible Federal 
Budget, and the National Taxpayers Union among others.
    Unfortunately, the last Administration was opposed to an automatic 
continuing resolution and vetoed a bill which contained this provision. 
But now we have an Administration which supports it. OMB Director Mitch 
Daniels has stated, ``I believe a measure of this kind is needed to 
ensure that the continued operations of government programs are not 
threatened by political disputes.'' We now have a real opportunity to 
enact this ``good government'' provision.
    This legislation has been criticized--unfairly, I believe--as an 
attack on the Appropriations Committee and an attempt to usurp their 
power. In fact, nothing could be further from the truth. This bill 
would give the Appropriations Committee the extra time that it needs to 
work out the wide-range of budgetary issues that confront them at the 
end of every Session.
    It is also argued that implementing this kind of provision would 
take away the incentives for us to get our spending bills done on time. 
I strongly disagree. For nineteen out of the last twenty years, 
Congress and the President have not finished the budget process by the 
October 1st deadline. This past year only two of the thirteen spending 
bills were finished on time. As a result, Congress had to pass twenty-
one separate continuing resolutions to prevent the government from 
shutting down. This provision will not remove any incentives, but will 
rather act as a ``safety-net'' while eliminating the need for awkward 
and partisan debates over passage of continuing resolutions.
    Furthermore, enactment of an automatic continuing resolution is not 
some sort of grand experiment. The State of Wisconsin has taken this 
good- government approach to budgeting, and it has worked well. It has 
not diminished the power of the appropriators and it has not reduced 
the pressure to reach agreement on state budget funding levels. An 
automatic continuing resolution has been proven effective and workable 
at the state level and it can be effective and workable at the Federal 
level.
    This provision is a good-government, pro-taxpayer idea. It is 
simply wrong to shut down the government. It is also wrong to use the 
threat of a government shutdown for the advancement of a political 
agenda. This is something that we should be committed to making off 
limits. We need to assure the taxpayers that regardless of the 
disagreements and battles that occur in Washington, they can always 
count on the government to be operating and providing its proper 
services. This is the people's government. As such, we have no right to 
shut down the government or use the threat of a government shutdown to 
advance our political agenda. The shutdowns of the past have shaken 
America's faith in government. It is within our power to send a clear 
message to the American people that there will be no chance of them 
ever being a victim of our inability to come to a consensus on our 
budget priorities.
    In closing, Mr. Chairman, I would like to thank you for your past 
support and I ask that the Budget Committee once again consider this 
modest, but important, reform.
    Thank you for your time and indulgence.

    Chairman Nussle. Mr. Gekas, there is nobody in the Congress 
that is any more tireless a champion of budget reform than 
yourself. You have been carrying this banner a long time. I am 
pleased to be on your team, and willing to help in many ways to 
try and adjust the budget process so we can fix some of these 
problems.
    My commitment to you is that while we may not be able to 
make the adjustment in this budget because, of course, the 
budget does not have the force to accomplish what you and I 
would like to accomplish, I will tell you that as soon as we 
are done with the budget, we hope to have an exhaustive look 
and examination about the budget process so that we can improve 
it, and I would hope at that time that you could come back and 
maybe share some of your wisdom with us and maybe some of your 
ideas on ways to refine this to overcome the concerns that the 
appropriators have had.
    As you and I have talked, they have some legitimate 
concerns that we need to address, and it is worth exploring 
that in the budget process reform debate. I thank you for your 
testimony.
    Mr. Gekas. I thank the Chair.
    Chairman Nussle. Any other questions or comments?
    If not, Mr. Allen.

 STATEMENT OF HON. THOMAS ALLEN, A REPRESENTATIVE IN CONGRESS 
                    FROM THE STATE OF MAINE

    Mr. Allen. Thank you, Mr. Chairman, Mr. Spratt, and other 
committee members. I appreciate the chance to testify before 
the committee about the budget resolution for the fiscal year 
2002.
    I want to speak on special education today, and I urge the 
committee to fully fund the Individuals With Disabilities in 
Education Act this year. No phase-ins, no excuses. With the 
budget surpluses that we see in front of us right now, this is 
the time to fulfill, at last, an old promise.
    IDEA was enacted by the Congress in 1975, and it authorized 
the Federal Government to cover 40 percent of the cost of 
special education in order to provide all students with 
disabilities a free and appropriate public education. To date, 
however, the government has never funded more than 14.9 
percent. We reached that level last year based on the third of 
three successive years in which we increased appropriations by 
about $1 billion a year.
    Last year's appropriation was $6.3 billion through the 
grants to the States program. According to the Department of 
Education, all we need to do is approximately $17.7 billion. 
That would represent the full 40 percent funding formula for 
fiscal year 2002. This is an increase of about $11.4 billion 
over current funding levels.
    With the ongoing debate merely focusing on how to use 
trillions of dollars in surpluses, budgeting $17.7 billion for 
special education is not asking too much. If we invest only a 
fraction of the estimated surplus, we can help States, towns 
and cities meet the needs of all their students in a way they 
choose.
    I have been holding different forums in Maine with parents, 
with teachers, with administrators and some students, and the 
number one issue that comes up in all of those meetings is 
special education. The second has to do with the problems they 
face in attracting and holding teachers, and the third has to 
do with the cost of construction. But, by and large, it is the 
cost of special education that is most on their minds.
    Everyone suffers because the Federal Government has reneged 
on its commitment to fund 40 percent of special education 
costs. Students with disabilities often do not receive 
necessary aid; students without disabilities miss out on 
programs that cannot be funded; and local property taxpayers 
experience a very high tax burden.
    Here in Congress we talk a lot about fully funding this 
mandate, but we never put up the money to do it. We pass 
nonbinding resolutions on full funding to make us feel good, 
but we hang our local school districts out to dry.
    Just last year we did it again. We passed H.Con.Res. 84 by 
a vote of 413 to 2 to urge Congress and the President to fully 
fund its obligations under IDEA. In fact, the language there 
made it clear that we should fully fund that program prior to 
authorizing or appropriating funds for any new education 
initiative.
    Well, here we are again, it is another year, and this time, 
for a change, the first time since I have been here certainly, 
and probably the first time in anyone's memory, there is a 
surplus that is more than adequate to meet this particular 
need.
    We don't need more resolutions, more phase-in bills. We 
don't need catchy reforms. We simply need $17.7 billion for 
special education costs this year and make full funding of 
special education an old promise with a new future.
    The bill can be paid, and our responsibility met, without 
pain, if you compare this modest investment here in Washington 
with the amounts proposed for other uses of the surplus, like 
the proposed tax cut of $1.6 trillion.
    Let me just say this in conclusion: If the tax cut passes 
at the level of $1.6 trillion, there will be people back at 
this table next year saying we need to fully fund IDEA, but the 
opportunity will be gone because the surplus will be gone. That 
is why this is the only year in which we can do this. This is 
the only committee that can make that message clear right at 
the beginning of this Congress. A simple reduction of $150 
billion in the tax cut, and you fully fund IDEA. In the long 
run, keeping that promise is more important than anything else 
we can do with that money.
    Thank you very much. I yield back the balance of my time.
    Chairman Nussle. Thank you for your advocacy. We appreciate 
that.
    [The prepared statement of Thomas Allen follows:]

    Prepared Statement of Hon. Thomas H. Allen, a Representative in 
                    Congress From the State of Maine

    Mr. Chairman, Mr. Spratt, and other committee members, thank you 
for allowing me this opportunity to testify before the Committee about 
the Budget Resolution for Fiscal Year 2002.
    Today, I want to speak on special education, and urge the Committee 
to fund the Individuals with Disabilities in Education Act (IDEA) in 
full, this year. No phase-ins. No excuses. With these budget surpluses, 
the time is now to fulfill, at last, an old promise.
    In 1975, Congress enacted IDEA, and authorized the Federal 
Government to cover 40 percent of the costs of special education in 
order to provide all students with disabilities a free and appropriate 
public education. To date, however, the government has never provided 
more than 14.9 percent.
    In Fiscal Year 2001, Congress appropriated $6.3 billion (14.9 
percent) for special education assistance through the grants to states 
program. According to the Department of Education, approximately $17.7 
billion would represent the full 40 percent funding formula for Fiscal 
Year 2002. This is an increase of about $11.4 billion over current 
funding levels. With the on-going budget debate in Washington focusing 
on how to use trillions in surpluses ($5.6 trillion in surpluses and 
$1.6 trillion (or more) in tax cuts), budgeting $17.7 billion for 
special education costs is not asking too much. If we invest only a 
fraction of the estimated surpluses we can help states, towns, and 
cities meet the needs of all their students in a way they choose.
    In conversations with teachers, legislators, families, and others 
in my home state of Maine, the number one challenge facing local school 
districts today is the cost of educating special education students. 
Everyone suffers because the Federal Government has reneged on its 
commitment to fund 40 percent of special education costs. Students with 
disabilities often do not receive necessary aid; students without 
disabilities miss out on programs that cannot be funded; and local 
property taxpayers experience a high tax burden.
    Congress talks a lot about fully funding this mandate, but never 
puts up the money to actually do it. We pass non-binding resolutions on 
full funding to make us feel good, but then leave our local school 
districts out to dry. Last year, the House passed, by a vote of 413-2, 
H.Con.Res. 84, to urge Congress and the President to fund fully its 
obligations under IDEA. It specifically stated that the President and 
Congress must ``give programs under the Individuals with Disabilities 
in Education Act (20 U.S.C. 1400 et seq.) the highest priority among 
Federal elementary and secondary education programs by meeting the 
commitment to fund the maximum State grant allocation for educating 
children with disabilities under such Act prior to authorizing or 
appropriating funds for any new education initiative.''
    Yet, what good are such feel-good resolutions when we consistently 
ignore them at budget time, and consistently ignore the promise we made 
to our states?
    Today, we talk of education reform and how to leave no child 
behind. Proposals have been aired to cut funding for failing schools 
after 3 years. Well, Congress and the President should first look at 
its own track record regarding special education. We have been failing 
our obligations since 1975. But that does not mean we have to keep 
failing. We can succeed by meeting our 40 percent obligation, now.
    There is one solution that achieves true reform. It is not more 
resolutions, or phase-in bills, or enacting ``catchy'' reforms. It is 
simply to budget $17.7 billion for special education costs this year, 
and make full funding of special education an old promise with a new 
future. The bill can be paid, and our responsibility met, without pain, 
if you compare this modest investment with the amounts proposed for 
other uses of the surplus, like the proposed tax cut of $1.6 trillion.
    Again, thank you, Mr. Chairman, Mr. Spratt, and other members of 
this Committee for allowing me to testify. I look forward to working to 
ensure that the Federal Government finally meets its mandate of funding 
40 percent of special education costs, and I urge the Committee to 
budget $17.7 billion this year to make this mandate a reality.

    Chairman Nussle. Mr. Goodlatte.

 STATEMENT OF HON. BOB GOODLATTE, A REPRESENTATIVE IN CONGRESS 
                   FROM THE STATE OF VIRGINIA

    Mr. Goodlatte. Thank you, Mr. Chairman. I also want to 
endorse Mr. Gekas's budget reform efforts and fully funding 
special education, but George told me if I endorsed his 
proposal, he would endorse mine. I thought that was a pretty 
good deal.
    I would like to bring to the committee's attention three 
issues of nationwide import that I would hope you would take 
into account in your budgetary considerations and in the budget 
that you submit to the Congress. The first is legislation that 
I introduced and which passed the Congress last year and was 
signed into law by the President dealing with funding for the 
Rural Utilities Service within the Department of Agriculture to 
fund a loan guarantee program so that every community in the 
country can receive local-into-local television service. This 
is something that about the top 30 television markets in the 
country today are receiving, but nobody in rural Iowa or South 
Carolina is getting, and that is to allow satellite dish owners 
in your district and in my district and virtually every other 
district around the country to be able to get their local 
television stations by satellite.
    Ultimately this will also mean the possibility of getting 
high-speed Internet service by satellite, because what this 
will allow is for private enterprise to construct a satellite. 
It could be a consortium of the small television stations in 
the nearly 150 smaller markets that will never get this without 
a loan guarantee, or it could be the rural electric 
cooperatives. And the loan guarantee is up to $1.2 billion 
authorized by the legislation.
    The cost to the Budget Committee in putting this into your 
budget is obviously substantially less than that. It depends on 
whose figures you use, but it is no more than $200 million in 
terms of the cost of funding whatever risk there may be.
    The legislation requires insurance that if the rocket is 
launched and blows up, the taxpayers don't get stuck holding 
the tab. There are other protections. Any loan guarantees have 
to be approved by a panel of the Secretary of Treasury, the 
Secretary of Commerce, the Secretary of Agriculture and the 
Federal Reserve Board Chairman. So it is going to undergo 
pretty tough scrutiny to qualify for one of these. But unless 
this takes place, the ability of folks to get their local news, 
weather, sports, emergency information, community information 
by satellite and end what has probably been, for you as for me, 
one of the largest generators of correspondence from 
constituents, that is their being upset about the fact they 
can't get their network programming on their satellite because 
of protection of local licensing requirements, is very 
important.
    The second issue that I would like to bring to your 
attention is the need to fund efforts to combat crimes 
committed over the Internet. As the world becomes increasingly 
interconnected and reliant upon global telecommunications 
structures to provide these connections, a new vector for 
criminal activity has arisen. I support increased spending 
levels for programs that provide funding to investigate and 
prosecute individuals who commit illegal acts over the 
Internet.
    Recent events have brought to light the serious problems 
surrounding security on the Internet. With an increasing number 
of consumers corresponding, conducting business and shopping 
online, it is critical that all Americans maintain their 
confidence to use the Internet as a means to live their daily 
lives. By providing law enforcement officials with the tools 
they need to combat the burgeoning problem of cybercrime, 
Congress can help ensure that consumers and businesses will be 
protected and the Internet will continue to grow at its current 
pace. Therefore, I encourage you to strengthen resources for 
the government to investigate and prosecute crimes committed 
over the Internet.
    The last area I would commend to your attention is the 
issue of combined sewer overflow problems. I have an eclectic 
group of issues to bring before you. There are many, many 
cities all across the country that are older and have older 
water and sewer systems and storm overflow systems that are 
combined that cause serious environmental problems. We have 
over the years tightened up the Federal regulations to deal 
with this. In many instances those regulations are very, very 
appropriate. But, nonetheless, the burden has been imposed upon 
these communities to change how they are operating based upon 
Federal mandates imposed upon them.
    The community of Lynchburg in my district, and Richmond in 
Eric Cantor's district, are the two I am aware of in Virginia, 
but there are many others around the country as well. The rates 
that the users in those communities have to pay in order to 
make these hundreds of millions--in the case of Lynchburg, a 
city of 65,000 people, the cost of making these changes to 
their sewer system is in excess of $200 million. So help from 
the Federal Government is very, very important, and the more 
you can allow for this, the better.
    The 2-year grant program that is proposed would be 
administered by the EPA and is triggered by a $1.35 billion 
appropriation to the Clean Water Revolving Loan Fund for 
wastewater treatment facilities. Grants will be awarded to 
facilitate the implementation of both combined sewer overflow 
and sanitary sewer overflow control programs, and the Federal 
share will be at least 55 percent. Priority consideration will 
be given to communities that have already invested local 
resources into their sewer improvement programs as well as 
financially distressed communities.
    The condition of our Nation's wastewater collection and 
treatment facilities is alarming. In its 1996 Clean Water Needs 
Survey, the EPA estimates that nearly $140 billion will be 
needed over the next 20 years to address wastewater 
infrastructure problems in our communities. In March 1999, the 
EPA revised its figures upwards, with infrastructure needs now 
estimated at $200 billion. Other independent studies indicate 
that the EPA has undershot the mark, estimating that these 
incredible unmet needs exceed $300 billion over the next 20 
years.
    Simply put, we are talking about a new generation of 
municipal water quality infrastructure. Given the great need in 
our Nation for wastewater infrastructure improvements and to 
protects the environment, I believe the Federal Government has 
a responsibility to assist communities trying to fix their 
problems and comply with Federal water quality mandates. 
Therefore, I strongly urge the committee to include full 
funding for the new sewer overflow grant program.
    Thank you, Mr. Chairman.
    [The prepared statement of Bob Goodlatte follows:]

Prepared Statement of Hon. Bob Goodlatte, a Representative in Congress 
                       From the State of Virginia

    I thank the Chairman and the members of the Committee for the 
opportunity to appear before the Budget Committee today to share with 
you several items that I believe deserve priority in the FY 2002 
budget.
    First, I want to express my support for full funding for the Rural 
Utilities Service within the Agriculture Department, specifically for 
the administration of the loan guarantee program enacted last fall to 
address the inability of many of our constituents in rural and smaller 
communities to receive their local network television signals over 
satellite.
    The loan guarantee program will enable consumers outside the top 40 
television markets (there are 211) to receive this ``local-into-local'' 
service. Since enactment of the Satellite Home Viewers Act over a year 
ago, consumers outside the top 40 markets have expressed their desire 
for this legislation to make available to them `local-into-local' 
technology. I know my office received thousands of letters and calls 
from constituents concerned about this issue. This new law, when 
supplemented by the loan guarantee program, will allow satellite 
providers to become more effective competitors to cable operators who 
have been able to provide local over-the-air broadcast stations to 
their subscribers for years. It will also benefit American consumers in 
markets where local TV via satellite is made available by offering them 
full service digital television at an affordable price.
    The bill is crucial for Americans in rural and smaller markets who 
rely on their local television stations for news, politics, weather, 
sports, and emergency information. Local television is often the only 
lifeline folks have in cases of natural disasters such as hurricanes, 
tornadoes, blizzards, earthquakes, or flooding. The bill's language to 
encourage the delivery of local television signals to these 
constituents in America will not only benefit consumers, it will save 
lives.
    Next, I would like to discuss Congress' efforts to combat crimes 
committed over the Internet. As the world becomes increasingly 
interconnected and reliant upon global telecommunications structures to 
provide these connections, a new vector for criminal activity has 
arisen.
    That is why I support increased spending levels for programs that 
provide funding to investigate and prosecute individuals who commit 
illegal acts over the Internet. Recent events have brought to light the 
serious problems surrounding security on the Internet. With an 
increasing number of consumers corresponding, conducting business, and 
shopping online, it is critical that all Americans maintain their 
confidence to use the Internet as a means to live their daily lives.
    By providing law enforcement officials with the tools they need to 
combat the burgeoning problem of cyber-crime, Congress can help ensure 
that consumers and businesses will be protected and the Internet will 
continue to grow at its current pace. Congress has the opportunity to 
provide law enforcement officers with the tools they need to prosecute 
these crimes, and we should not merely blink our collective eyes at 
this issue.
    Therefore, I encourage you to strengthen resources for the 
government to investigate and prosecute crimes committed over the 
Internet.
    And lastly, I want to express my support for full funding--$750 
million--for a new sewer overflow control grant program which was 
authorized in the Consolidated Appropriations Act for FY 2001.
    The new law authorizes a $1.5 billion grant program to help local 
communities upgrade and improve their wastewater collection and 
treatment systems. The 2-year grant program will be administered by the 
Environmental Protection Agency, and is triggered by a $1.35 billion 
appropriation to the Clean Water Revolving Loan Fund program for 
wastewater treatment facilities. Grants will be awarded to facilitate 
the implementation of both combined sewer overflow and sanitary sewer 
overflow control programs, and the Federal share will be at least 55 
percent. Priority consideration will be given to communities that have 
already invested local resources into their sewer improvement programs 
as well as financially distressed communities.
    The condition of our nation's wastewater collection and treatment 
facilities is alarming. In its 1996 Clean Water Needs Survey, the EPA 
estimates that nearly $140 billion will be needed over the next 20 
years to address wastewater infrastructure problems in our communities. 
In March 1999, the EPA revised its figures upwards, with infrastructure 
needs now estimated at $200 billion. Other independent studies indicate 
that EPA has undershot the mark, estimating that these incredible unmet 
needs exceed $300 billion over 20 years. Put simply, we are talking 
about a new generation of municipal water quality infrastructure.
    Given the great need in our nation for wastewater infrastructure 
improvements, I believe the Federal Government has a responsibility to 
assist communities that are trying to fix their problems and comply 
with Federal water quality mandates. I strongly encourage you to 
include full funding for the new sewer overflow grant program which has 
already been authorized.
    Again, I thank the Committee for allowing me to testify before you 
today.

    Chairman Nussle. Just a quick question. Is that the Federal 
share that you are talking about in the estimates from EPA, 
200- or 300-?
    Mr. Goodlatte. That is, I think, the estimate of the total 
cost of accomplishing it. I think the program provides 55 
percent of that to be paid by the Federal Government.
    Chairman Nussle. Thank you.
    Mr. Underwood.

STATEMENT OF HON. ROBERT UNDERWOOD, A DELEGATE IN CONGRESS FROM 
                     THE TERRITORY OF GUAM

    Mr. Underwood. Thank you, Mr. Chairman. I am willing to 
endorse all these ideas if they endorse mine.
    I appreciate the opportunity to raise an issue of concern 
to Guam and other territories. The Federal budget affects all 
Americans, no matter where they reside. So as Congress 
continues to debate deficit reduction and the size of our 
Nation's surplus and the level of tax relief for U.S. 
territories, I feel compelled to speak from the point of view 
of someone from Guam.
    I am very concerned about the President's proposed budget 
on U.S. territories. Unbenownst to most Americans, and I think 
most Members of the House, while the Nation as a whole has 
experienced economic growth over the last several years, the 
U.S. territories have not fared as well and continue to face 
staggering double-digit unemployment rates and dismal economic 
conditions.
    We do not have the luxury of talking about what portion of 
the national surplus should be used for tax relief like the 
States do. While I support the concept of a tax cut for the 
people of Guam and hard-working taxpayers across the country, 
especially for middle- and low-income families, the President's 
tax plan and the budget does not take into account the 
budgetary shortfall it will have on the U.S. territories, 
especially Guam and the Virgin Islands.
    Unlike the rest of the Nation, Guam and the Virgin Islands 
are the only two U.S. jurisdictions which have tax systems 
which mirror the U.S. Internal Revenue Code. That means that 
Guam's tax law mirrors the Internal Revenue Code as required 
under the Organic Act. Whatever tax policies are implemented at 
the Federal level will take effect at the local level without 
any input from the people or Government of Guam. Unlike the 
States, however, the tax cuts for Guam will come from the 
Government of Guam, not the Federal Government, since the 
Federal revenues collected remain on Guam.
    This will greatly disrupt the revenue stream for the 
Government of Guam since the territorial government has no 
surplus and will directly affect government services and the 
local economy. We anticipate a $30 to $50 million reduction in 
revenues from the President's tax plan, which is approximately 
5 to 10 percent of total operating revenues for Guam.
    Guam's economy is still rebounding from the Asian financial 
crisis, particularly since our tourism industry relies heavily 
on tourists from Japan and other Asian countries. Guam's 
unemployment rate is currently over 15 percent, which is a 
dramatic increase over the early 1990's when the Asian 
economies were doing well, when our unemployment rate was below 
2 percent. Due to these circumstances, I am asking that special 
consideration be given to Guam and other affected territories 
for the fiscal year 2002 budget.
    I have already requested White House and Treasury officials 
and the appropriate congressional tax committees to find ways 
to ameliorate the effects of the President's tax plan on the 
territories through actual offsets or through proposals that 
deal with tax equity for Guam, Federal obligations to Guam that 
have not been fully paid, mainly compact-impact aid, and other 
important issues that affect our Federal territorial 
relationship, like the child tax credit and the earned income 
tax credit.
    On the budgetary front, I urge the Federal Government to 
start targeting some of its surplus toward economically 
distressed areas, including the U.S. territories, through 
economic incentives or recovery plans similar to those devised 
for rural areas in American Indian communities.
    As an example of how hard it is to get anyone to pay 
attention to the territories, last Congress the territories had 
to fight continuously to be included in the President's New 
Markets Initiative which targeted distressed communities. 
Although the territories were eventually included in the 
conference report for this initiative, the policy struggle we 
faced throughout the process is emblematic of how we are 
treated by Federal policymakers in the executive branch or in 
the Congress on a daily basis.
    The President has proposed $9.8 billion for the Department 
of Interior, which is a 4 percent reduction from last year. The 
Department's budget includes the Office of Insular Affairs, 
which covers U.S. territories and Freely-Associated States. I 
strongly believe that the funding for the Office of Insular 
Affairs should not be cut, and as a matter of fact, it should 
probably be increased, particularly in the areas of technical 
assistance, in order to be able to allow the territories to 
find ways toward economic recovery.
    An important funding issue facing Guam, more than any other 
territory or State, involves the unmonitored migration to Guam 
by citizens of the Freely-Associated States and Micronesia. 
These are three newly created nations in our region. According 
to their Compacts of Free Association, they are allowed free 
migration into the United States without any quotas and just 
simply show their passport.
    The July 2000 report by the Department of the Interior 
Office of Insular Affairs on the compact-impact costs on Guam 
cited an Ernst & Young analysis which showed total costs for 
1997 in Guam between $16 million and $17 million. Since the 
Compacts of Free Association were established in 1986, Guam 
only started to receive compact-impact aid in 1996, 10 years 
later. During this time, we have received $4.58 million from 
the Department of Interior's Office of Insular Affairs budget.
    In fiscal years 2000 and 2001, Guam received $7.5 and $9.58 
million respectively. The Government of Guam continues to 
expend between $15 and $20 million annually to provide 
education and social services for migrants from the Freely-
Associated States under compact agreements with the U.S. We are 
also proposing the consideration of raising the Medicaid caps 
for the U.S. territories and also asking that we think about 
what impact this newly implemented welfare reform legislation 
is going to have when the time comes up.
    In welfare reform in Guam, it will have a dramatic impact 
on our economy. There are 11,000 people on welfare currently as 
a result of our economic downturn out of a total population of 
150,000. We need to examine how the welfare reform initiative 
is implemented in economically distressed and geographically 
isolated areas.
    The privatization of former military jobs on Guam has 
already impacted hundreds of families, who have been forced to 
move to Hawaii or the U.S. mainland for employment 
opportunities. Should Guam's economy continue to stagnate, I am 
concerned that the number of individuals who will be coming off 
of welfare will be unable to find employment opportunities on 
Guam. This is why I believe that Federal assistance in the form 
of economic and tax incentives and job training programs will 
be necessary to mitigate these circumstances.
    Thank you very much.
    Chairman Nussle. Thank you very much.
    [The prepared statement of Robert Underwood follows:]

Prepared Statement of Hon. Robert A. Underwood, a Delegate in Congress 
                       From the Territory of Guam

    Mr. Chairman, I appreciate being given the opportunity to present 
my views on the FY 2002 Budget.
    I think it is ironic that as the House considers the President's 
tax plan on the floor today, the Budget Committee is holding hearings 
on the President's budget, because it would be through these hearings 
that the Administration would have a better idea of how to gauge the 
views of the Congress on these important matters.
    The Federal budget affects all Americans, no matter where they 
reside under U.S. jurisdiction. So as Congress continues to debate 
deficit reduction, the size of our nation's surplus, and the level of 
tax relief for U.S. taxpayers, I feel compelled to speak up for my home 
island--the territory of Guam--and the other U.S. insular areas.

                       BUDGET/TAX IMPACT ON GUAM
    I am very concerned about the President's proposed budget on the 
U.S. territories. Unbeknownst to most Americans, while the nation as a 
whole has experienced economic growth over the last several years, the 
U.S. territories have not fared as well and continue to face staggering 
double digit unemployment rates and dismal economic conditions. We do 
not have the luxury of talking about what portion of the national 
surplus should be used for tax relief like the states. While I support 
the concept of a tax cut for the people of Guam and hard working 
taxpayers across the country, especially for middle- and low-income 
families, the President's tax plan in the budget does not take into 
account the budgetary shortfall it will have on the U.S. territories, 
particularly Guam and the U.S. Virgin Islands.
    Unlike the rest of the nation, Guam and the Virgin Islands are the 
only two U.S. jurisdictions which have tax systems which ``mirror'' the 
U.S. Internal Revenue Code. That means that Guam's tax law ``mirrors'' 
the Internal Revenue Code as required under Guam's Organic Act of 1950. 
Whatever tax policies are implemented at the Federal level will take 
effect at the local level without input from the people of Guam or the 
Government of Guam. Unlike the states, however, the tax cuts for Guam 
will come from the Government of Guam, not the Federal Government since 
the Federal revenues collected remain in Guam. This will greatly 
disrupt the revenue stream for the Government of Guam, since the 
territorial government has no surplus, and will affect government 
services and the local economy.
    The Government of Guam anticipates a $30-$50 million reduction in 
revenues from the President's tax plan. Considering that the Government 
of Guam is projecting $243 million in income tax revenue for 2001, such 
a decrease in revenue will greatly impact Guam's economy. Guam's 
economy is still rebounding by the Asian financial crisis, particularly 
since our tourism industry heavily relies on tourists from Japan and 
other Asian countries. Guam's unemployment rate is a reported 15 
percent, more than three times the national average.
    Due to these circumstances, I am asking that special consideration 
be given to Guam and other affected territories for the FY 2002 Budget. 
I have already requested White House and Treasury officials, and the 
appropriate Congressional tax committees, to find ways to ameliorate 
the effects of the President's tax plan on the territories through 
actual offsets or through proposals that deal with tax equity for Guam, 
Federal obligations to Guam that have not been fully paid, or other 
important issues that affect our federal-territorial relationship like 
the Child Tax Credit and the Earned Income Tax Credit.
    On the budgetary front, I urge the U.S. government to start 
targeting some of its surplus toward economically distressed areas, 
including the U.S. territories, through economic incentives or recovery 
plans similar to those devised for rural areas and American Indian 
communities. As an example of how hard it is for the territories to get 
anyone to pay attention to them, last Congress the territories had to 
fight continuously to be included in the President's New Markets 
Initiative which targeted distressed communities. Although the 
territories were eventually included in the conference report for this 
Initiative, the policy struggle we faced throughout the process is 
emblematic of how we are treated by Federal policymakers in the 
Executive Branch or the Congress on a daily basis. Federal and 
budgetary policy should simply not be developed in this fashion.

            DEPARTMENT OF INTERIOR OFFICE OF INSULAR AFFAIRS
    The President has proposed $9.8 billion for the Department of 
Interior for FY 2002, a 4-percent reduction from FY 2001. The 
Department's budget includes the Office of Insular Affairs which covers 
the U.S. territories and the freely associated states. I strongly 
believe that funding for the Office of Insular Affairs should not be 
cut. Funding for the Office of Insular Affairs has seen a dramatic 
decline in funding over the past 10 years despite the increased 
responsibilities that the office has incurred and the anticipated 
accountability role it expects to play as a result of the U.S. Compact 
negotiations with the Federated States of Micronesia and the Republic 
of the Marshall Islands. Moreover, it makes logical sense for the 
Technical Assistance Program in this office, whose job it is to address 
economic and fiscal conditions in the territories, to actually see an 
increase in funding. It is cost efficient and promotes economic self-
sufficiency.
    An important funding issue facing Guam, more than any other 
territory or state, involves the unmonitored migration to Guam by 
citizens of the Freely Associated States in Micronesia that continues 
to have significant financial and social impacts on our island. A July 
2000 report by the Department of the Interior Office of Insular Affairs 
on the Compact Impact costs on Guam cited an Ernst & Young analysis 
which showed total costs for 1997 in Guam between $16.1 million to 
$17.7 million.
    Since the Compact of Free Association was established in 1986, Guam 
only started to receive Compact Impact Aid in FY 1996. During the FY 
1996-FY 1999 period, Guam received $4.58 million annually from the 
Department of Interior's Office of Insular Affairs budget. In FY 2000 
and FY 2001, Guam received $7.58 million, and $9.58, respectively. 
However, the Government of Guam expends between $15-$20 million 
annually to provide educational and social services for migrants from 
the Freely Associated States under the Compact agreements. I request 
that Guam be adequately reimbursed by the Federal Government for the 
actual costs incurred under the Compact of Free Association for FY 
2002.

           RAISING THE MEDICAID CAPS FOR THE U.S. TERRITORIES
    I also request support for legislation to provide Medicaid relief 
to the territories by removing the Medicaid caps imposed on the 
territories and adjusting the Federal matching rate, tying it to that 
of the poorest state.
    As part of the 1997 Balanced Budget Act negotiations, the previous 
Administration proposed a phase out of the caps. While Congress 
appropriated the initial increase of 20 percent for FY 1997, no other 
increases were appropriated in the following years. I request that we 
follow through with this phase out.
    The territories have the highest unemployment rates, the highest 
poverty levels and the lowest per capita incomes in our nation. Their 
ability to meet the Medicaid needs of their residents is further 
constrained by their economic situation. Faced with depressed economic 
conditions and rising health needs of growing indigent populations, the 
reliance on Medicaid assistance has grown beyond the Federal caps and 
beyond the territorial governments' abilities to match the funds. 
Lifting the cap or even following up on the FY 1997 commitment to raise 
the Medicaid caps for the territories by 20 percent each year until all 
achieve parity with the rest of the nation is vital to insuring that 
all American citizens and children who depend on Medicaid support are 
not limited by geography when it comes to meeting basic health care 
needs.

                        WELFARE TO WORK IN GUAM
    Lastly, welfare reform in Guam will have a dramatic impact on our 
economy. There are 11,000 people, out of a total population of 150,000, 
who are on welfare. We need to reexamine how the welfare reform 
initiative is implemented in economically distressed and geographically 
isolated areas. The privatization of former military jobs through the 
Navy's A-76 Program on Guam has already impacted hundreds of families 
on the island who have been forced to move to Hawaii or the U.S. 
mainland for employment opportunities. Should Guam's economy continue 
to stagnate, I am concerned that the number of individuals who will be 
coming off of welfare will be unable to find employment opportunities 
on Guam. That is why I believe that Federal intervention in the form of 
economic and tax incentives and job training programs will be necessary 
to mitigate these circumstances.
    I appreciate the opportunity to present my views today.

    Chairman Nussle. Thank you to all the Members who have 
testified. We hope that this budget is a much more realistic 
product than what we have seen in the last couple of years and 
it can be enforced. We look forward to your continued 
involvement in that process as it goes through.
    Are there questions for the panel?
    Thank you very much for coming.
    Mr. Akin, Mr. Castle, Mr. Hoyer, Mr. Cummings, Mr. Baird 
and Mr. Clement. We realize because the of the votes we are 
taking this a little out of order and hopefully not too far out 
of context. We want to accommodate those of you who have shown 
an interest to come, so we welcome you.
    Mr. Hoyer, would you begin? We appreciate all of you 
coming, and you have certainly been involved in this process 
many times in many ways. We appreciate your continued 
involvement, and welcome, and we would be pleased to receive 
your testimony.
    All Members, by the way, your testimony is in the record. 
We would invite you to summarize during the 5 minutes. Thank 
you.

  STATEMENT OF HON. STENY HOYER, A REPRESENTATIVE IN CONGRESS 
                   FROM THE STATE OF MARYLAND

    Mr. Hoyer. Thank you very much, Mr. Chairman. I appreciate 
this opportunity. I am pleased that my full statement will be 
included in the record.
    Let me focus on five issues, if I can: First, budget 
reality; second, Federal employees; third, election reform; 
fourth, education reform; and last, but certainly not least, 
Treasury-Postal appropriations. As you know, I am the Ranking 
Member on the appropriations subcommittee and used to chair 
that subcommittee.
    First, Mr. Chairman, we are involved in a debate about a 
tax cut. Some of us lament the fact that we are involved in 
that debate prior to the adoption of a budget plan where we are 
going fiscally. On top of that, many of us believe the tax cuts 
we are debating will not leave necessary funding for national 
priorities such as defense, prescription drug coverage for 
seniors, education, and debt reduction.
    The President's budget provides growth for 4 percent, much 
lower than CBO deemed necessary to maintain purchasing power. 
Frankly, Mr. Chairman, from the perspective of many, it is hard 
to figure out how the budget will accommodate increases for 
prescription drugs, defense, education, conservation, and law 
enforcement.
    I would urge the committee, as you and I have done 
privately in discussions, Mr. Chairman, to come up with a 
budget that is realistic so the Appropriations Committee can 
realistically implement that budget. We will have disagreements 
on the numbers, but at least if we believe they are real, and 
asset parameters that can, in fact, be adopted, then I think 
the appropriations process as well as the budget process will 
be more real.
    Secondly, Federal employees. Recruitment and retention is a 
serious issue, Mr. Chairman, for both the military and civilian 
employees. The pay gap between the military and the private 
sector is estimated to be 10 percent by the Bureau of Labor 
Statistics. That is between the military and the private 
sector. The pay gap between the Federal civilian work force and 
the private sector is estimated by the BLS to be 32 percent. 
Human capital is the latest buzzword in government. Fifty-three 
percent of the Federal work force will be eligible to retire by 
2004. We need to be able to recruit and retain our most 
valuable employees.
    Therefore, Mr. Chairman and Mr. Spratt, I would urge you to 
focus on the provision for Federal pay. The President's budget 
includes funding for 4.6 percent for the military and 3.6 
percent for civilians. For the most part, we have achieved 
parity in pay adjustments between the military and civilian 
work force, and I would hope we would do the same in 2002. We 
will not be able to, in either the military or the civilian, 
eliminate the gap.
    Frankly, under the Federal Employee Pay Comparability Act, 
which I sponsored and added to the Treasury-Postal bill in 
1990, and which President George Bush signed, after working 
with his administration to get it, we have not cut the gap. We 
must continue to do that, and I would ask your committee to pay 
very close attention to that and hopefully come up with a 
recommendation for parity between the military and the 
civilians at the 4.6 percent level. That is not what it ought 
to be, but parity is what I think realistically can become.
    Thirdly, election reform. Mr. Chairman, I think this is a 
critical issue. It affects the budget as well. I might say that 
many of your committee members are on a bill I am sponsoring, 
the Voter Improvement Act, introduced last week. We need 
election reform. We need it now; not in 2004, 2006, or 2008, 
but by 2002.
    Last week Congressman Horn and I introduced, along with 
many others, over 66 cosponsors, the Voter Improvement Act.This 
legislation would provide up to $6,000 per precinct to replace 
punch card systems. This would be, if every precinct that has 
punch cards was replaced, $432 million. Thirty percent of the 
voters in America use punch cards, so it is not a problem of 
Florida, it is a problem that we is have nationally. As a 
matter of fact, California and New York, two of our biggest 
States, use the punch card system.
    In addition, the bill that I have sponsored would provide 
$150 million in annual grants for voter education, poll worker 
training, equipment purchases and R&D, and would establish a 
bipartisan election reform commission. I think this is 
critically needed.
    The President has observed that every American has the 
right to vote. That, of course, I think, is without 
disagreement. But the fact of the matter is every American also 
has the right to have their vote counted properly. I don't 
perceive this as a partisan issue, I perceive it as an issue 
for our entire democracy in a bipartisan fashion.
    Fourthly, education reform. I applaud the President and all 
who are proposing that all States develop comprehensive systems 
of standards and accountability. That is needed. We must also 
ensure that our school systems have the capacity to provide 
effective teachers, a strong curriculum and swift academic 
intervention. Once a school has been identified as failing, we 
must have interventions in place to improve schools' outcomes.
    Soon I will introduce the Full Service School Act of 2001, 
a bill that will provide support for our children in many 
different disciplines, including, but not limited to, 
education. The Full Service School Act will create a $200 
million annual grant program for States and local education 
agencies to encourage community organizations to coordinate 
their services within a school setting.
    We spend a lot of capital money on schools. They ought to 
be utilized fully not only for education, but for health, 
recreation, before- and after-school care, kindergarten, Head 
Start, all sorts of programs that can be school-based and 
cited. I urge you to consider this important legislation.
    Lastly, Mr. Chairman, within the limited time frame, let me 
speak about the Treasury-Postal appropriations bill. I am 
concerned the level of funding included in the President's 
budget for the Department of Treasury is not adequate. It 
provides for $700 million over a $14 billion budget, 
approximately 5 percent. Included is $325 million for IRS's 
Information Technology Investment Account. There is bipartisan 
agreement on the fact that we need that.
    Let me speak briefly, because I see my time is running out, 
on courthouse construction. Mr. Chairman, that is looked at by 
some as a pork-barrel project. I look at it as a law 
enforcement-justice challenge. We have a tremendous backlog. 
Jim Kolbe, the Chairman of the Treasury-Postal Committee, led 
us in going strictly by the Administrative Office of the 
Courts' and GSA's recommendation. There were no political 
favors done. We went by the book, but we created a big backlog.
    The President has not included sufficient funds in the 
budget; he is about one-third low. GSA says we need about $665 
million to keep even with the need. This is the Administrative 
Office of the Courts and GSA, not any of the Members who are 
saying this. It is the people who have the responsibility of 
daily providing for the administration of justice.
    Mr. Chairman, my time has expired. My full statement is in 
the record. I look forward to working with you. I would 
emphasize at the end I would hope that this committee would not 
simply expect agencies to absorb pay raises, but would look at 
that as a cost that ought to be set aside and identified in an 
honest way to reflect what we need to have to pay our people 
properly.
    Thank you, sir.
    Chairman Nussle. Thank you very much.
    [The prepared statement of Steny Hoyer follows:]

Prepared Statement of Hon. Steny H. Hoyer, a Representative in Congress 
                       From the State of Maryland

    Mr. Chairman, and Members of the Committee: I would like to thank 
you for the invitation to appear before the committee this afternoon to 
discuss several critically important issues related to the Federal 
budget for fiscal year 2002.
    I would like to focus on five important subjects: Budget reality; 
Federal employees; election reform; education reform; and Treasury-

Postal appropriations.
                             BUDGET REALITY
    The budget for the next fiscal year, in my opinion, should continue 
the fiscal framework that this Congress and the previous Administration 
established over the last 8 years. The American people deserve a budget 
that incorporates a balanced and responsible approach to meeting those 
needs. We can give the American people a sizable and affordable tax 
cut, and still have surplus funds to pay down the debt; invest in 
priorities such as education and a prescription drug benefit under 
Medicare; modernize our national defenses; and extend the solvency of 
Social Security and Medicare.
    The Administration is unfortunately taking a different course. 
President Bush wants us to enact a $1.6 trillion tax cut, but the 
numbers just don't add up. When you factor in the higher interest cost 
associated with the revenue reduction and changes to the Alternative 
Minimum Tax, the cost increases to $2.3 trillion.
    Practically the entire non-Social Security and non-Medicare surplus 
will be allocated to tax cuts, leaving next to nothing for crucial 
national priorities such as defense, prescription drug coverage for 
seniors, education and debt reduction.
    In the President's budget ``Blueprint,'' he calls for growth of 
non-defense programs that is lower than the amount the Congressional 
Budget Office has deemed necessary to maintain purchasing power. In 
light of this fact, I am at a loss as to where the funding is going to 
come from to pay for programs that the American people demand.
    Mr. Chairman, your counterpart on the other side of the Capitol, 
Senator Pete Domenici has said that ``It will be very hard to live on 4 
percent with all the priority items that our president wants.'' I hope 
that this Committee will construct a budget framework that is 
responsible, realistic, and workable for the American people.

                           FEDERAL EMPLOYEES
    The next issue that I would like to address, Mr. Chairman, is pay 
for Federal employees.
    The recruitment and retention issues in the military that have 
received so much attention are also occurring in the Federal civilian 
sector. The pay gap between the military and the private sector is 
approximately 10 percent, according the Bureau of Labor Statistics. The 
same survey estimates that the Federal civilian workforce and the 
private sector gap has grown to 32 percent. If our civilian workforce 
is going to be successful in the future they, just like the military, 
will have to compete for talent in a competitive market.
    Frankly speaking, we will not be able to recruit, much less retain, 
the best and most valuable employees if we pay them one third less than 
they can make in the private sector. No successful fortune 500 company 
would stand for this and I don't think we should either.
    In 1990, I worked to enact the Federal Employee Pay Comparability 
Act which was intended to reduce the pay gap between the private sector 
and Federal employees to 5 percent. Unfortunately, that disparity has 
not been reduced.
    This year, the administration has proposed only a 3.6 percent 
adjustment for the civilian workforce. This is far less than they are 
entitled to under the Federal Employee Pay Comparability Act and lower 
than the 4.6 percent estimated for the military.
    In 1967, Public Law 90-207 required that military pay be increased 
by the same proportion as pay for Federal employees. For the most part, 
we have historically achieved parity between the military and civilian 
workforce and we should continue that trend in 2002. Given this 
historic parity and the widening pay gap I ask that when you draft the 
budget resolution you include 4.6 percent for the Federal civilian 
workforce.

                            ELECTION REFORM
    Mr. Chairman, another issue that clearly affects our budget but has 
far broader implications for the integrity of our political system and 
democracy itself is the national imperative of election reform.
    I don't intend to revisit last November's election debacle here. 
But I feel compelled to note that an estimated 2 million votes 
nationwide went uncounted last November. That's 2 million voices 
silenced. That's 2 million Americans essentially disenfranchised.
    That's totally unacceptable in the greatest democracy the world has 
ever known. And it cries out for a remedy that includes the infusion of 
Federal assistance to the States to ensure that it never ever happens 
again.
    Practically every Member and citizen that I have spoken with on 
this topic over the last few months agrees: We need election reform and 
we need it now not four, six, or 8 years from now.
    To that end, let me add that last week I introduced the ``Voting 
Improvement Act of 2001,'' with Congressman Horn. This is a bipartisan 
election reform bill that currently has 66 co-sponsors in the House, 
including several Members of this Committee. Unlike any other Federal 
legislation introduced to date, this bill proposes a Federal buyout of 
all punch-card voting systems nationwide. Punch cards, which gained so 
much notoriety in Florida, have proven particularly prone to error and 
must be replaced by more reliable equipment.
    The Voting Improvement Act would provide up to $6,000 per precinct 
to replace punch-card systems. If every precinct in America that 
currently uses punch cards took advantage of this Federal buyout, the 
total cost would be approximately $432 million.
    In addition, the bill would provide $150 million in annual grants 
for voter education, poll worker training, equipment purchases, and 
research and development. It also would establish a bipartisan Election 
Reform Commission that would study and make recommendations on 
improvements to our election system.
    Mr. Chairman, I know that budgeting is all about setting 
priorities. And I know that this is far from easy because there are so 
many worthy endeavors that deserve Federal funding.
    However, election reform strikes at the core of our political 
system and our democratic values. Whether or not it's the Voting 
Improvement Act or other election reform legislation, I urge you and 
the Members of this Committee to do all that you can to address this 
issue.

                 EDUCATION REFORM: FULL-SERVICE SCHOOLS
    Improving education is the top priority in America today. 
Educators, parents, students, elected officials, community 
organizations, the private sector and others are all searching for ways 
to ensure excellence in our schools. I applaud the President for 
proposing that all states develop comprehensive systems of standards 
and accountability. However, it is not enough to set high standards and 
then measure students' progress toward them. We must ensure that our 
school systems have the capacity to provide effective teachers, a 
strong curriculum, and swift academic interventions. And most 
importantly, once a school has been identified as failing, we must have 
interventions in place to improve the school's outcomes.
    Soon, I will introduce the Full-Service Schools Act of 2001, a bill 
that will provide the support our children need to be successful in 
school. A Full-Service school actively partners with community 
organizations and agencies to create a united movement for our schools. 
The Full-Service Schools Act will bring services such as after-school 
care, head start, health care, job training, and juvenile justice right 
into our schools, so that when our children first sit down at a desk, 
they are ready to learn. We cannot expect our children to achieve high 
academic standards if they do not have their basic needs met. The Full-
Service Schools Act will create a $200 million annual grant program for 
states and local education agencies to encourage community 
organizations to coordinate their services within a school setting. I 
urge you to consider this important legislation when determining the 
budget for the Departments of Education and Health and Human Services.

                     TREASURY-POSTAL APPROPRIATIONS
    Finally, Mr. Chairman, I am concerned with the level of funding 
included in the President's budget for the Department of Treasury. The 
budget includes a $700 million increase over fiscal year 2001 spending. 
Of that amount, $325 million is for the Internal Revenue Service's 
(IRS) Information Technology Investment Account. I am pleased to see 
that this Administration is committed to modernizing the IRS, which is 
an essential effort mandated by Congress and one that must continue. 
However, the rest of the Treasury Department would be required to 
operate under a 2.67 percent increase for fiscal year 2002, well below 
the amount the Congressional Budget Office identifies as necessary to 
maintain purchasing power for current programs. It is hard to envision 
how this meager increase could possibly support the essential Treasury 
law enforcement programs that make up one third of all Federal law 
enforcement.
    In particular, the U.S. Customs Service must continue to modernize 
their import processing system, called the Automated Commercial 
Environment, or ``ACE.'' This is a $1.3 billion, 5-year effort, which 
Congress appropriated $130 million for in FY 2001, yet the 
Administration's budget does not appear to provide an increase to meet 
the 5-year development plan.
    It does not appear that the Secret Service will have the resources 
to continue an essential recruitment and retention effort that is 
necessary to reduce overtime levels among agents that have reached as 
high as 90 hours per month or to provide security support for the 2002 
Winter Olympics.
    Mr. Chairman, we depend on the Department of Treasury to be a tax 
administrator, a revenue collector, a law enforcer, and a financial 
manager. They deserve a budget that appropriately reflects these 
priorities.
    Finally, the President's budget includes $500 million for the 
Federal Courthouse Construction program, which is funded under the 
General Services Administration. This number includes approximately 
$276 million in advanced appropriations, so the new funding level for 
courthouse projects is $224 million. What is worrisome is that the 
request made by the Administrative Office of the Courts totals $665 
million, a $441 million difference. We have a serious crisis going on 
across the country in terms of adequate Federal courthouses. Congress 
has spent billions of dollars over the last 10-15 years on the war 
against drugs and crime. This has resulted in an enormous increase in 
the judiciary's caseload. Over the past 5 years for example, the number 
of appeals filed per authorized three-judge appellate panel increased 5 
percent; criminal case filings grew 30 percent and bankruptcy filings 
rose 14 percent. I am a strong supporter of the Courthouse Construction 
program and hope that this committee will recognize the need to provide 
sufficient funding to meet the demand for Federal courthouses.
    Mr. Chairman, this concludes my statement. I would be happy to 
answer any questions at this time.

    Chairman Nussle. I also understand you have a time 
constraint, so if we have further things to discuss, I am sure 
we will have that opportunity.
    Mr. Hoyer. I look forward to it.
    Chairman Nussle. My understanding is that Mr. Baird and Mr. 
Clement, a member of the committee, would like to testify 
together today. I welcome you both. As I said, your testimony 
is in the record, and you may proceed.

  STATEMENT OF HON. BRIAN BAIRD, A REPRESENTATIVE IN CONGRESS 
                  FROM THE STATE OF WASHINGTON

    Mr. Baird. Thank you, Mr. Chairman, and Ranking Member 
Spratt and Members. We are here today to speak about a simple 
matter of fairness that involves the Tax Code. Seven States in 
our Nation have no income tax, but pay their States' taxes 
through sales tax. The challenge is that the Tax Code currently 
disadvantages those States in a manner we consider unfair and 
quite costly. States under the Tax Code--residents of States 
with income taxes are allowed to deduct their State income 
taxes from their Federal returns, but those with State sales 
taxes are not allowed to do so.
    We have drafted a simple and fair bill which would allow 
residents to elect to deduct either their State income tax or 
their State sales tax. This has recently been scored, a fairly 
modest cost over 10 years of about $23 billion. It would be a 
simple reform; it would not complicate the Tax Code. What we 
have proposed is to ask the IRS to develop a simple table for 
each State.
    Taxpayers would look at the total income for the family, 
the family size, find the column on the proper chart, insert 
that number on their return, and that would be their deduction. 
It would add about 60 seconds at most, I would think, to 
preparing a tax return. We would encourage this committee to 
include that in their budgetary plans.
    I want to commend my good friend Bob Clement for his great 
leadership and work on this. The seven States directly involved 
are Florida, Texas, Tennessee, South Dakota, Wyoming, Nevada, 
and did I leave any out----
    Mr. Clement. Did you mention your State?
    Mr. Baird. Washington State. Thank you.
    It is about fairness. There is no reason if we are looking 
at restoring or correcting fundamental inequities and saying 
you shouldn't penalize someone for getting married, my 
goodness, we shouldn't penalize people for living in those 
seven states I identified.
    [The prepared statement of Brian Baird follows:]

 Prepared Statement of Hon. Brian Baird, a Representative in Congress 
                      From the State of Washington

    Mr. Chairman and members of the Committee, I'm honored to be here 
today with my good friend Representative Bob Clement for this extremely 
important hearing, and I truly appreciate the opportunity to share some 
specific tax and budgetary concerns that have put a strain on my 
constituents in the state of Washington and in Bob's home state of 
Tennessee.
    In principle, Mr. Chairman, I believe that the Federal Government 
must strive to avoid budgetary policies that favor residents of some 
states over others. Unfortunately, I believe that one egregious failure 
to adhere to this principle is found in the manner in which the Federal 
Government allows taxpayers to deduct state and local taxes.
    I'm sure, Mr. Chairman and members of the Committee, that you are 
well aware of the problem. Simply put, residents of states with income 
taxes can take a deduction on their Federal taxes. Residents of states 
with sales taxes and no income tax cannot. That differential treatment 
of taxpayers is a profound inequity that this Congress should rectify.
    The repeal of the sales tax deduction in 1986, although well 
intended, resulted in a significant disparity between states. By 
disallowing state sales tax deductions, but retaining state income tax 
deductions in the Federal code, we now have a system in which one 
individual with an income and financial profile that is identical to 
another person may pay higher taxes to the same Federal Government 
simply because they live in different states. As a result, residents of 
states such as Texas, Florida, Washington, Tennessee, South Dakota, 
Nevada, and Wyoming, pay more in Federal taxes than residents of equal 
income in other states. In effect, residents of states without income 
taxes are underwriting a disproportionate share of the Federal budget.
    It's not that Washingtonians pay less in taxes. On the contrary, 
we're in the top quarter of states in amount of our personal income 
that goes to taxes. The question becomes, should residents of my state 
pay hundreds more dollars per year to the Federal treasury for nothing 
more in return, than those individuals living across the river in 
another state. I believe that they should not.
    To remedy this situation, I have proposed H.R. 322, the Tax 
Deduction Fairness Act of 2001, along with about 50 cosponsors, 
including several members of this committee, that will restore the 
sales tax deduction for taxpayers in states that do not have an income 
tax. My measure would allow taxpayers to deduct either their state 
income tax or state sales taxes paid in a given year. By giving a 
choice of deducting either sales or income tax, the budgetary scoring 
is kept to a minimum, but equity and fairness are restored across 
states.
    To keep the sales tax deduction simple for taxpayers, under this 
legislation the Internal Revenue Service would be directed to develop 
standard tables for taxpayers to use in determining their average sales 
tax deduction. Such tables, similar to those used by taxpayers prior to 
1986, would include average calculations, based upon income and 
household size, for a taxpayer in a given state. The bill does not 
restore the itemized deduction of individual purchases; it only allows 
taxpayers to deduct an averaged amount based on income level and family 
size.
    I, like all of my colleagues in this body, am committed to 
maintaining a balanced budget, and I am also committed to the principle 
of equal taxation as dictated by the Constitution. But, as we wrestle 
with the options for spending projected budget surpluses in the 
foreseeable future, I ask my colleagues to put themselves in the 
position of more than 50 million taxpayers who live in sates with no 
income tax and no means of deducting sales taxes; and I ask that we 
prioritize the restoration of fairness for taxpayers nationwide.
    So, as you review the many proposals before you today and as the 
committee develops a budget resolution, I strongly encourage you to 
consider this common-sense proposal, for the simple reason that it is 
the right thing to do.
    Again, I want to thank you, and members of the committee for 
graciously granting me this opportunity, and I yield back the balance 
of my time.

    Mr. Baird. I would like to yield time to my good friend Bob 
Clement from Tennessee.

  STATEMENT OF HON. BOB CLEMENT, A REPRESENTATIVE IN CONGRESS 
                  FROM THE STATE OF TENNESSEE

    Mr. Clement. Thank you, Mr. Baird, and thank you, Mr. 
Chairman and Mr. Spratt. It is a great honor to say a few words 
before my committee, the Budget Committee, which I think a lot 
of and its various members.
    What Mr. Baird said is true. You do have about 50 million 
people that are really being penalized today that live in those 
seven States that have already been mentioned, and it is a 
fairness issue, but it is also a States rights issue. We 
shouldn't be forced to enact a State income tax in those seven 
States if we don't want a State income tax, if we want to have 
some other type tax structure. But in 1986, because of the 1986 
tax reform, we no longer can deduct our State sales tax from 
our Federal income tax return.
    If you happen to live in a State with a State income tax; 
you can deduct that from your Federal income tax. It was an 
oversight. It should have been a technical correction over 
these years, yet it has not been corrected yet, and it should 
be now.
    Tennessee, as well as the other States, really wants this 
corrected as soon as possible. We have a golden opportunity in 
the 107th Congress to accomplish that goal and objective. I 
would like to see it in the Bush tax plan. I would like to--I 
know that in this last session of Congress, in the 106th 
Congress, it was in the Democratic substitute. It is becoming 
more and more of a political issue in the various States. We 
have already been over to the White House. We have had the 
opportunity to speak with Dr. Larry Lindsey, the chief economic 
officer. We have had the opportunity to speak with the Vice 
President Dick Cheney. We have also had the opportunity to talk 
with the Secretary of the Treasury as well as the Director of 
OMB.
    This is a serious matter. I hope that the 107th Congress in 
its wisdom will look at this very seriously and act on it, 
because it is tax fairness, it is a States rights issue, and we 
need to face up to it once and for all. And as a matter of 
fact, we have had it scored as well, and it is $23 billion over 
a 10-year period of time. Surely in a $1.6 trillion tax cut 
proposal that is before Congress now, we can find a place for 
this $23 billion to bring about tax fairness once and for all.
    Thank you, Mr. Chairman.
    [The prepared statement of Bob Clement follows:]

 Prepared Statement of Hon. Bob Clement, a Representative in Congress 
                      From the State of Tennessee

    Thank you, Mr. Chairman. It is a privilege for me to testify before 
this Committee today with my colleague, Congressman Brian Baird from 
the state of Washington.
    I am here today to urge you to include in this year's budget 
resolution an issue of tax fairness and tax equity. Congressman Baird 
and I have introduced H.R. 322 which would restore the sales tax 
deduction to the Federal income tax code. This is an issue of tax 
fairness that has been wrongly denied to the citizens of Tennessee and 
six other states for 15 years. I am pleased that about 50 of my 
colleagues--including several members of this Committee and the entire 
Tennessee delegation--have joined us in cosponsoring this bill.
    In 1986, the state sales tax deduction was eliminated from the 
Federal tax code in an effort to expand the tax base. While probably 
well-intentioned, the elimination of the sales tax deduction is not 
well-received by my fellow Tennesseans who continue to be unfairly 
taxed. This poorly evaluated change in the tax code created a 
fundamental inequity between those states that have instituted a state 
income tax and those that have not. This is because, under the current 
tax code, taxpayers living in states that have an income tax can deduct 
their state taxes from their Federal tax bill. However, the 50 million 
Americans living in states without an income tax, such as Texas, 
Florida, Wyoming, Washington, South Dakota, Nevada and Tennessee, do 
not have an equivalent tax deduction. As a result, they end up paying 
significantly more in taxes to the Federal Government than a taxpayer 
with an identical profile in a different state.
    Mr. Chairman, like many of my colleagues on this panel, in this era 
of unprecedented budget surpluses, I support tax cuts. I think it is 
only fair that we return some hard-earned money to our hard working 
Americans. However, I think we must prioritize tax fairness. Sales tax 
deduction is an issue of tax fairness.
    In 2000, the citizens of Tennessee paid an average of $730 in state 
sales taxes, but could not deduct one dollar of it from their Federal 
income tax returns. So, basically, Tennesseans are being forced to pay 
taxes on their taxes. This is not right! It is unfair, it is unjust and 
it must be corrected here in the 107th Congress! The citizens of 
Tennessee and Washington and the other states are being discriminated 
against simply because they live in a state that has chosen not to 
enact a state income tax.
    Mr. Chairman, I think we all agree here, that the Federal 
Government should treat all taxpayers equally, regardless of the system 
of taxation that their state employs. I have some friends back home in 
Nashville who just had two beautiful twin daughters who I know would 
agree. With a combined income right around fifty thousand dollars, they 
would save $358 with the passage of this tax equality bill. That, Mr. 
Chairman, is a lot of diapers.
    This bill is very simple. It would allow taxpayers to deduct their 
state income tax returns from their Federal income tax returns. Those 
living in a state that has an income tax would still be able to take an 
income deduction as they do today. However, residents of states that do 
not have an income tax would be provided with the opportunity to take a 
similar deduction.
    We, as Federal officials, have no right to suggest to a state how 
best to tax its citizens. H.R. 322 is an opportunity to limit the 
Federal Government's influence on the methods of taxation across this 
country. It does so by taking away the incentive for a state to impose 
a state income tax on its citizens. Regardless of your views on income 
taxes, sales taxes or some alternate tax structures, I'm sure my 
colleagues on both sides of the aisle would agree that states should 
have the right to decide for themselves how they want to collect their 
revenues without interference from the Federal Government.
    In closing, I would like to thank my friend, Congressman Brian 
Baird, for his hard work on this issue that we have been working years 
to enact. We have an opportunity to restore fairness and equity to the 
tax code in this Congress without making the tax code more complex and 
without abandoning our fiscal discipline.
    I urge my colleagues to support the inclusion of this provision in 
the budget resolution and reinstate the sales tax deduction.

    Mr. Baird. If I might, I would just like to add that this 
proposal has been endorsed by the National Council of State 
Legislators. They emphasize there are even States that are not 
directly affected which have endorsed the proposal, largely on 
the grounds that my colleague Mr. Clement mentioned, that it is 
a States rights issue. It should not be left to the Federal Tax 
Code to dictate to local States the manner in which they should 
choose to tax their citizens. Neither should residents of one 
State be unfairly disadvantaged in comparison to residents of 
other States.
    Again, let me just reiterate finally, it is fair, it is 
simple, it is affordable, and its time has come. We appreciate 
this committee's support, and we continue to lobby vigorously 
on behalf of what we think is a common-sense tax reform.
    Chairman Nussle. Thank you very much for your testimony. We 
appreciate both of you testifying. We will take it under 
advisement.
    Mr. Baird. Thank you, Mr. Chairman, Ranking Member Spratt.
    Chairman Nussle. If the other Members, Mr. Gonzalez and Mr. 
Pascrell, if you would like to come up to the table.
    Mr. Castle, you may proceed while they are joining us as 
well.

STATEMENT OF HON. MICHAEL CASTLE, A REPRESENTATIVE IN CONGRESS 
                   FROM THE STATE OF DELAWARE

    Mr. Castle. Thank you very much, Mr. Chairman. I feel sort 
of like a broken record. You have heard what I am going to say 
before, and Mr. Spratt and Mr. Holt probably have heard it 
before also. In some ways I wish I were testifying before the 
Appropriations Committee instead of the Budget Committee, 
because I think they are the ones to listen to the message 
which I am trying to convey since I have been in the Congress 
of the United States.
    But I believe very strongly we need a budget reserve 
account each year to properly plan for and pay for natural 
disasters and other emergencies. I will introduce my budget 
reserve account legislation, which I had in the 106th Congress, 
again shortly. Basically to boil it down, it really has the 
Federal Government prepare for emergencies in the same manner 
as practically every State and local government, which I know 
now does by basically budgeting for them.
    Under current law, emergency spending is not subject to 
annual budget limits and deficit reduction requirements. When a 
disaster strikes, Congress simply appropriates emergency funds, 
which are most times not covered by offsets and other cuts, and 
thereby we are adding to the debt or spending the surplus. In 
addition, as we all know, that is a perfect opportunity for 
Members to add unrelated nonemergency pork-barrel projects. It 
is probably the single best opportunity to add such that we 
have in the Congress of the United States.
    This practice adds up to more money each year than probably 
most Members realize, which obviously erodes the work of this 
committee, which pays a lot of attention to every dollar which 
is spent. In fact, according to the Congressional Research 
Service, the average cost of emergency appropriations bills 
from 1991 to 1999 was $9 billion a year. It excludes special 
significant items such as the Persian Gulf War, but for the 
basic emergencies we have.
    The legislation would require the President to submit a 
budget and Congress to appropriate these average funds annually 
in a budget reserve account to offset the costs of natural 
disasters or other emergencies. These funds would be included 
under the annual discretionary spending cap set by the budget 
resolution, and if it is not used during a particular year, it 
would be used for debt reduction.
    Finally, the Office of Management and Budget would be 
required to report to Congress each year on how the emergency 
funds from the reserve account were spent, which is not 
insignificant because of the pork-barrel spending that goes on 
now.
    I was pleased to work with you, Mr. Chairman, and I cannot 
thank you enough for the work you have done on this, and 
Representative Cardin, in the 106th Congress to include a 
budget reserve account in your omnibus budget process reform 
bill. As you know, this committee supported its passage, but we 
were unable to secure the support of the full House of 
Representatives.
    Now we have a new ally, now that the 107th Congress has 
begun. OMB Director Mitch Daniels has indicated to me his 
interest in a budget reserve account. On February 22nd of this 
year, I sent President Bush and carbon copied Director Daniels 
a letter requesting that he include a budget reserve account in 
the fiscal year 2002 budget proposal. I would, with your 
permission, like to submit a copy along with my statement here 
today.
    Chairman Nussle. Without objection.
    [The information referred to follows:]

                                 Michael N. Castle,
                                  House of Representatives,
                                 Washington, DC, February 22, 2001.
President George W. Bush,
The White House, Washington, DC.
    Dear President Bush: I am writing to request your support for 
setting aside funds in your Fiscal Year 2002 Budget for emergencies, 
particularly natural disasters. Although the timing and circumstances 
of natural disasters cannot be predicted, our government must respond 
to disasters and other emergencies on an annual basis. We should plan 
for these inevitable expenses by setting aside funding within the 
budget to respond in a timely and fiscally responsible manner.
    As you know from your service as Governor of Texas, many states set 
aside funds in preparation for natural disasters in a ``rainy day'' or 
``budget reserve'' account. Many families budget a percentage of their 
income for family emergencies. In sharp contrast, the Federal 
Government does not set money aside before hand, but simply 
appropriates emergency funds above and beyond annual budget limits. In 
times of budget surpluses, this erodes the surplus that could be used 
for tax cuts, debt reduction, education, and defense priorities. From 
1991 to 1999, emergency funding averaged $9 billion a year. Setting 
aside that figure within the budget each year would be a common-sense 
budget reform and go a long way toward paying for the natural disasters 
that are bound to occur.
    Last year, I introduced legislation, H.R. 537, to create a budget 
reserve account, which passed the House Budget Committee as part of a 
package of reforms. New legislation will be introduced again this year. 
To aid in this effort to bring more fiscal discipline to the Federal 
budgeting process, we respectfully request that the White House provide 
leadership by setting aside funds for emergencies in the Fiscal Year 
2002 Budget. It is not only common-sense budgeting, but it will help 
clarify the level of funds available for surplus-related initiatives.
    Again, your leadership on this important issue would go a long way 
in bringing Washington, D.C. budgeting in line with the common-sense 
budgeting followed by most state governments and many family budgets. I 
hope you will include this reform in your Fiscal Year 2002 Budget 
proposal.
            Sincerely,
                                         Michael N. Castle,
                                                Member of Congress.

    Mr. Castle. Thank you, sir. I am hopeful when the President 
submits his detailed budget proposal, he will take a step 
toward reserving funds for annual emergencies.
    Again, thank you, Mr. Chairman. You have been supportive of 
this from the very beginning. I know you have been advocating 
similar reforms ever since you have been here as well, and I am 
pleased to work with you again this year.
    I would say in closing, most families, most States, most 
local governments, practically all of them, including my State 
of Delaware, set aside funds for emergencies. It is time for 
the Federal Government to join them.
    [The prepared statement of Michael Castle follows:]

   Prepared Statement of Hon. Michael N. Castle, a Representative in 
                  Congress From the State of Delaware

    Chairman Nussle and respected members of the House Budget 
Committee, thank you for giving me this opportunity to testify on the 
need to create a budget reserve account in order to plan for natural 
disasters and other emergencies.
    Shortly, I will reintroduce my ``Budget Reserve Account'' 
legislation from the 106th Congress (H.R. 537). It would require the 
Federal Government to prepare for emergencies in the same manner state 
and local governments do--by budgeting for them. Briefly, here is how 
the account would work:
     Under current law, ``emergency'' spending is not subject 
to annual budget limits and deficit reduction requirements. When a 
disaster strikes, Congress simply appropriates emergency funds which 
are often not offset by other cuts, thereby adding to the debt and 
spending the surplus. In addition, funds are often added for unrelated, 
non-emergency ``pork-barrel'' projects.
     This practice adds up to a significant amount of money 
each year, thus eroding the discipline of this committee's budget plan. 
According to the Congressional Research Service, the average cost of 
emergency appropriations bills from 1991 to 1999 was $9 billion a year 
(excluding the Persian Gulf War).
     My legislation would require the President to submit a 
budget and Congress to appropriate these average funds annually in a 
budget reserve account to offset the costs of natural disasters or 
other emergencies.
     These funds would be included under the annual 
discretionary spending caps set by the Budget Resolution.
     If the reserve funds are not used during a particular 
year, they would be used for debt reduction.
     Finally, the Office of Management and Budget (OMB) would 
be required to report to Congress each year on how the emergency funds 
from the reserve account were spent.
    In the 106th Congress, I was pleased to work with Chairman Nussle 
and Representative Cardin to include a budget reserve account in their 
omnibus budget process reform bill (H.R. 853). As you know, this 
committee supported its passage, but we were not able to secure the 
support of the full House of Representatives.
    However, as the 107th Congress begins, we have a new ally. OMB 
Director Mitch Daniels has indicated to me his interest in a budget 
reserve account. On February 22, 2001, I sent President Bush (and 
carbon copied Director Daniels) a letter requesting that he include a 
budget reserve account in the Fiscal Year 2002 Budget Proposal. With 
your permission, I would like to submit a copy of this letter into the 
committee record. I am hopeful that when the President submits his 
detailed budget proposal, he will take a step toward reserving the 
funds for annual emergencies.
    Chairman Nussle, I thank you for your past support on this issue. I 
know you have been advocating this reform since you first came to 
Congress in 1991. I would be pleased to work with you again this year 
to develop strategies for enacting this common-sense reform to our 
emergency spending process. Many families and States, including my 
state of Delaware, set aside funds for emergencies. The Federal 
Government should join them.

    Chairman Nussle. Mr. Castle, you have been carrying this 
ball longer than anybody else, and I appreciate your advocacy. 
We do have a new ally in all of this with the President being 
on board. This is a bipartisan issue. We have a number of 
members on this committee that will be very interested in that. 
I believe the time has come, and I believe this will be part of 
this budget.
    One thing I would request is in the next couple of weeks as 
we are trying to put that budget together, we may need your 
help to work on some of the definitions and mechanisms to make 
sure we do it right. But I think you will find bipartisan 
agreement, one of the areas we might not have any disagreement 
on in the budget, and that is to plan for the rainy day as we 
both discussed. Thank you very much for your work. We finally 
got to the goal line.
    Mr. Castle. I stand ready to help. I hope we can put the 
points up on the scoreboard.
    Chairman Nussle. I hope so. Thank you very much.
    Mr. Pascrell.

 STATEMENT OF HON. BILL PASCRELL, A REPRESENTATIVE IN CONGRESS 
                  FROM THE STATE OF NEW JERSEY

    Mr. Pascrell. Mr. Chairman, Mr. Spratt, Mr. Holt, et al.
    Chairman Nussle. Just so Members know, your entire 
statement will be made part of the record, and you may 
summarize during the 5 minutes, please.
    Mr. Pascrell. Mr. Chairman, also Congressman McGovern is 
here to talk on one of the things I am going to be talking 
about. I want to bring that to your attention.
    Last week the President delivered his Blueprint for a New 
Beginning. There are several aspects of this blueprint that 
compelled me to come here today, Mr. Chairman.
    First I would like to speak to you about the importance of 
an appropriation for the second year for the Firefighter 
Assistance Grant Program. Last year we succeeded in adding this 
legislation, the Firefighters Investment and Response 
Enhancement Act, the FIRE Act, to the Department of Defense 
appropriations bill.
    I say ``we,'' because two-thirds of the members who were on 
this committee last year signed that legislation, signed on to 
that legislation, including the Chair, and the Ranking Member, 
who both supported this bipartisan legislation.
    The legislation established a program through the Federal 
Emergency Management Agency, because we thought this was the 
least bureaucratic of the agencies, that could run it and 
provide dollars directly to the municipalities and not to the 
States. It is authorized for fiscal years 2001-2002, in the 
amounts of $100 million and $300 million respectively.
    Delightedly, we received funding for the first year of the 
program, $100 million, and are seeking $300 million for the 
second year in the fiscal year 2002 appropriations cycle. It 
provides grants for purchasing new and modernized equipment, 
fire prevention and education programs, wellness programs for 
our firefighters, modifying outdated fire stations, et cetera. 
These grants go directly to paid departments, as well as part-
paid and volunteer departments and emergency medical 
technicians.
    These days I have been busy fielding many phone calls from 
excited firemen and from fire departments all over America 
asking when the applications for the program will be available, 
and we have been speaking to FEMA every day to monitor its 
progress in getting the necessary program up and running.
    This program has been endorsed by the seven major fire 
service organizations in the Nation, and the supporting 
legislation had 285 bipartisan cosponsors in the House and 33 
cosponsors in the Senate. It was comprehensive legislation long 
overdue.
    When firefighters go into a burning building, Mr. Chairman, 
you know just as well as I do they don't ask folks inside 
whether they are Democrats or Republicans. They just do their 
job. In light of the overwhelming support, I was shocked when I 
saw that the President, his blueprint, includes the explicit 
cut of this critical new program. President Bush thinks that 
this program does not, quote/unquote, represent an appropriate 
responsibility of the Federal Government, on page 153 of the 
blueprint. With all due respect to the President, Mr. Chairman, 
I am here today to make it clear why it does.
    First of all, there is a tremendous need for additional 
funding for fire departments around the country. Mr. Chairman, 
when we first went into this legislation, the beginning of this 
attempt 2-1/2 years ago, my position was this is either needed 
or it is not needed. My position has always been, and 
particularly when we look at the budget where there is over $11 
billion for one-half of the public safety equation, that it is 
our police officers which we all support here, and very, very 
little on the other side for our firefighters in the 31,000 
fire departments throughout America, almost 1 million 
firefighters.
    In my district we found that 75 percent of the departments 
were understaffed, some terribly understaffed, by as many as 40 
firefighters in the bigger cities in my district. Jersey City, 
right on the coast of New Jersey, has 100 less firefighters 
than they had a decade ago, and yet they have six new tall 
office buildings. Many departments in cities and suburbs and 
rural areas all over America, we have done our homework, as you 
know, simply cannot afford even the most basic equipment 
upgrade because of funding shortfalls.
    Secondly, I challenge the President's assertion that 
supporting our firefighters is not an appropriate use of 
Federal funds. I strongly believe that there is a Federal role 
here. Current spending for fire services is $40 million in the 
Federal budget. The level of funding for Firefighters 
Assistance Grant Program is appropriate. The funding is an 
investment in the safety of our firefighters and confirmation 
to the communities across America that the Federal Government 
will work to provide our fire service personnel with the best 
equipment and resources available.
    We know that this is primarily a local decision, a local 
responsibility, but, as in so many other appropriate areas, the 
Federal Government should have a role. There is no selective 
assistance here. Every fire department imaginable was in here, 
except, of course, Federal firefighters.
    Let me also remind colleagues that the role of firefighters 
is expanding and has changed over the past 20 to 30 years. 
Several fire departments in this Nation reach across the State, 
their counties, their city lines, to assist each other with 
natural disasters and incidents of domestic terrorism.
    As you know, there are two fire search and rescue units 
that have responded to international disasters on behalf of the 
United States. The Miami-Dade Fire Rescue Department and the 
Fairfax County Search and Rescue teams have traveled to several 
countries, Colombia, Turkey, Mexico, Mozambique, and provided 
disaster relief. Natural and manmade disasters do not 
discriminate when and where they arise. Proudly, the 
firefighters of this great Nation do not discriminate when and 
where they provide help.
    This Congress spends billions and billions on law 
enforcement. We support that critically needed investment. But 
this is a minuscule amount of money for our firefighters. When 
six firefighters died in Worcester, Massachusetts, which my 
good friend and colleague Congressman McGovern will address, 
this tragedy highlighted the need for more funding for our fire 
services. For these fallen heroes, we owe this grant program, 
Mr. Chairman, so that one more unnecessary death can be 
prevented. We should fund the Firefighters Assistance Grant 
Program for fiscal year 2002 and demonstrate that the Congress 
is fully committed.
    Very briefly, Mr. Chairman, I know my time is up, I wanted 
to bring to your attention the fact that in that same 
blueprint, in the Small Business Administration, it was cut 43 
percent.
    We worked hard over the last 4 years on a bipartisan basis 
to bring programs that are productive and, where we can, 
monitor where those dollars are being spent. We ask you to 
please examine that draconian cut in the Small Business 
Administration. Is the idea to make up for these monies through 
fees? I would question that. We opposed it 4 years in a row, 
Democrats and Republicans. As you remember, the Clinton 
administration wanted to propose fees in order to relieve some 
of the dollars that the Federal Government was putting up. We 
opposed it then, we oppose it on a bipartisan level now, and we 
can't allow the SBA to fall apart. It has provided such a 
tremendous amount of help to our work force in America. Whether 
it is the New Markets Program, or whether we are talking about 
the loan programs, these are dollars that have gone to 
worthwhile situations.
    Finally, just one other thing, I want to commend the 
budget, and you folks on the Budget Committee and the 
President, for leaving in the budget the dollars to support the 
newly authorized sewer overflow control grants. Our communities 
cannot afford, in terms of the CSOs, what is going on in 
America. I really commend you for that. It was based upon H.R. 
828, which I worked on with Congressman Barcia and Congressman 
LaTourette, and we had passed last year. It is so helpful in 
trying to really support and uphold the Clean Water Act.
    Mr. Chairman, thank you so much for your time. I am 
available for questions. I feel this in my bones about our 
firefighters. I hope you do, too.
    Chairman Nussle. As a former volunteer firefighter, I do. I 
appreciate your advocacy.
    [The prepared statement of Bill Pascrell follows:]

  Prepared Statement of Hon. Bill Pascrell, Jr., a Representative in 
                 Congress From the State of New Jersey

    Thank you Chairman Nussle and the entire Budget Committee for 
allowing me to speak with you today. Last week President Bush delivered 
his ``Blueprint for a New Beginning'' to our offices. There were 
several aspects of this budget proposal that compelled me to come 
before you today.
    First, I would like to speak to you about the importance of an 
appropriation for the second year of the Firefighter Assistance Grant 
Program.
    Last year, we succeeded in adding my legislation, the Firefighters 
Investment and Response Enhancement Act or ``FIRE'' Act to the 
Department of Defense Authorization bill. This legislation established 
the Firefighters Assistance Grant Program that is now administered 
through the Federal Emergency Management Agency.
    The program is authorized for fiscal years 2001 and 2002 in the 
amounts of $100 million and $300 million respectively. Delightedly, we 
received funding for the first year of the program--$100 million--and 
are seeking $300 million for the second year in the fiscal year 2002 
appropriations cycle.
    This program will provide grants for purchasing new and modernized 
equipment, fire prevention and education programs, wellness programs 
for our firefighters, modifying outdated fire stations, and more. These 
grants will go directly to paid departments as well as part-paid and 
volunteer departments and emergency medical technicians as well.
    I am busy these days fielding phone calls from excited fire 
departments around the country asking when the applications for this 
program will be available. I am also speaking with FEMA every day to 
monitor its progress in getting this necessary program up and running 
successfully.
    This program has been endorsed by seven major fire service 
organizations in the nation, and the supporting legislation had 285 
bipartisan cosponsors in the House and 33 cosponsors from both parties 
in the Senate.
    I am very encouraged that Members have supported this legislation 
on its merits and have refused to make this a political or partisan 
issue. After all, when fire fighters go into a burning building they do 
not ask the inhabitants whether they are Democrats or Republicans.
    In light of this overwhelming support, I was shocked when I saw 
that President Bush's ``Blueprint'' includes the explicit cut of this 
critical new program. President Bush thinks that this program does not, 
``represent an appropriate responsibility of the Federal Government.'' 
(p.153)
    With all due respect to the President, I am here today to make it 
clear why it does. First of all, there is a tremendous need for 
additional funding for fire departments around the country.
    A fire department in this country responds to a fire every 18 
seconds. And there is a civilian fire death every 2 hours. A survey I 
did in my district found that 75 percent of departments are 
understaffed--some terribly understaffed by as many as 40 firefighters 
in the bigger cities.
    Our state's second largest city--Jersey City--has seen its fire 
personnel be reduced by 200 in just the last decade. And many 
departments--in cities and suburbs alike--simply cannot afford even the 
most basic equipment upgrade because of funding shortfalls.
    Secondly, I challenge the President's assertion that supporting our 
firefighters is not an appropriate use of Federal funds. I strongly 
believe that the Federal role in the fire fighting service can and 
should be increased. Current spending for fire services is roughly $40 
million, which is dreadfully inadequate.
    The level of funding for the firefighters assistance grant program, 
however, is appropriate. This funding is an investment in the safety of 
our fire fighters and confirmation to our communities that the Federal 
Government will work to provide our fire service personnel with the 
best equipment and resources available in order to ensure public 
safety.
    Furthermore, there is no selective assistance in this bill--all 
31,000 plus departments are recognized and included. And, it sends the 
dollars directly to the departments to the communities in need through 
competitive grants, therefore bypassing potential red tape at the state 
level.
    Let me also remind colleagues that the role of fire fighters is 
expanding. Several fire departments in this nation reach across state, 
county and city lines to assist each other with natural disasters and 
incidents of domestic terrorism. For instance, Oklahoma City.
    As you know, there are two fire search and rescue units that have 
responded to international disasters on behalf of the United States. 
Collectively, the Miami-Dade Fire Rescue Department and the Fairfax 
County Search and Rescue teams (SAR) have traveled to several 
countries--including Colombia, Turkey, Mexico City and Mozambique--in 
order to help with disaster relief.
    Natural and man made disasters do not discriminate when and where 
they arise; proudly, the fire fighters of the United States do not 
discriminate when or where they provide help. The role of our fire 
fighters is ever changing, and it is my belief that the role that the 
Federal Government plays during these changes must be commensurate.
    This Congress spends billions and billions on law enforcement in 
our communities. And we all support that critically needed investment. 
It has helped to foster crime reduction year after year.
    We don't ask communities to go it alone for their law enforcement 
needs, and we shouldn't do it for their fire safety needs either.
    When six firefighters died in Wooster, Massachusetts in 1999--this 
tragedy highlighted the need for more funding for our fire services. 
These deaths could have been prevented if the Wooster firefighters had 
been using certain fire-fighting protection equipment. Unfortunately, 
their department could not afford the equipment that could have saved 
their lives.
    For these fallen heroes--and all those who lost their lives in the 
pursuit of our safety--we owe this grant program. So that one more 
unnecessary death can be prevented.
    We should fund the firefighters assistance grant program for Fiscal 
Year 2002 and demonstrate that the Congress is fully committed to fire 
safety in America. Our firefighters--and the communities we represent 
here--deserve nothing less.
    Next, I'd like to talk to you about the proposed cuts to the Small 
Business Administration that President Bush included in his 
``Blueprint.'' We all know how important small businesses are 
throughout America. But we sometimes forget that small business 
accounts for 99.7 percent of America's employers and employs 52 percent 
of the private work force. Small companies account for 47 percent of 
all the nation's sales.
    Over the last decade, America has experienced a period of growth 
unprecedented in our history. We reached all time highs in small 
business growth, job creation and all-time lows in loan interest rates 
and unemployment. But the economic boom is slowing down.
    Financial losses for many companies are mounting and job cuts are 
affecting every industry in America. As a result, the need to help our 
communities deal with these signs of economic slowdown are more 
critical than ever.
    Unfortunately, President Bush's proposed budget goes against all 
these signs with a slap in the face to the Small Business 
Administration and its critical programs. President Bush has announced 
a budget that will cut the Small Business Administration's budget from 
$900 million to $540 million. This represents a 43 percent cut!
    This budget pushes aside the collective futures of women-owned and 
minority owned small businesses while at the same time assuring that 
other small businesses will lose access to vital capitol resources 
offered by the agency. Much of the shortfall will be through 
terminating programs serving low-income areas and by charging fees.
    Not only do small businesses get no tax break in the Bush plan, 
they will be taxed to pay for tax cuts that go mainly to the wealthiest 
of the nation. Small businesses will pay for the President's tax cuts 
through higher loan costs and newer taxes designed as fees, while 
critical programs spurring investment in low and moderate income areas 
and helping minority businesses will be eliminated.
    For example: The ``New Markets Venture Capital'' program, which 
provided technical assistance and financing to businesses in low-income 
areas will be zeroed out. As well as the ``PRIME'' program, which 
provided seed capitol to the absolute smallest of small businesses.
    The 7(a) loan program will now be totally fee funded. This will 
make the cost of a loan to businesses much higher. Even though the 
administration acknowledges that some small businesses will have 
trouble accessing private capital in the absence of a Government 
guarantee, it still doesn't want the Government to subsidize the cost 
of borrowing.
    This is unfortunate in my view. I think the Bush administration is 
sending the wrong message to our nation's small businesses. If the 
President insists on these cuts, small businesses will no longer have a 
real voice or champion to protect their interests.
    And finally, one segment of the proposed budget I was pleased with 
was where the President expressed his support for the newly authorized 
sewer overflow control grants. Through the important Clean Water Act, 
the Federal Government mandates that municipalities address large 
wastewater projects to ensure clean water.
    As part of the Omnibus appropriations bill last year, Congress 
passed H.R. 828, a bill that combined legislation by my friend Mr. 
Barcia from Michigan with legislation introduced by Mr. LaTorrette and 
myself. HR 828 authorized $750 million in fiscal years 2002 and 2003 
for a grant program to states to address combined sewer overflow (CSO) 
systems.
    The bill also codified the U.S. Environmental Protection Agency's 
policy on Combined Sewer Overflows (CSOs), requiring the development 
and implementation of long-term control plans to meet applicable water 
quality standards. Pending appropriations are set to start this year, 
and the President's support has given us a boost. Hopefully, the grant 
funds will be issued to the states and passed onto municipalities for 
the development of treatment systems that will lessen the mixing of 
untreated wastes with stormwater.
    This grant program gives cities and towns the resources they need 
to clean up their sewers and comply with the Clean Water Act. It also 
authorizes $45 million in grants for demonstration projects on the use 
of watershed management for wet weather control in urban areas and to 
determine the most cost-effective management practices for wet weather 
flows. This additional money will allow cities and towns to 
comprehensively address the complex issue of stormwater runoff.
    I appreciate the opportunity the Committee has given me to express 
both my concerns and support of the President's proposals for the 
upcoming budget. Thank you.

    Chairman Nussle. Mr. McGovern.

STATEMENT OF HON. JAMES McGOVERN, A REPRESENTATIVE IN CONGRESS 
                FROM THE STATE OF MASSACHUSETTS

    Mr. McGovern. Mr. Chairman, speaking of firefighters----
    Chairman Nussle. Is that the reinforcements you are calling 
for? You are good.
    Mr. McGovern. Mr. Chairman, I appreciate the opportunity to 
testify today. I am not going to take up the full 5 minutes, 
and I am going to submit my statement for the record.
    I just want to associate myself with the remarks of my 
classmate from New Jersey Mr. Pascrell and thank him for his 
leadership on the FIRE Act, which really is very important to 
our fire departments all across the country.
    As he mentioned in his statement, I am from Worcester, 
Massachusetts, and in December 1999, we lost six brave 
firefighters who were fighting a fire in an abandoned building 
and looking for homeless people. They lost their lives, and 
many of their colleagues believe that with better equipment, 
the loss of life would not have been so great.
    I don't know whether we can predict that with any accuracy 
or not, but the fact of the matter is that our fire departments 
are lacking in the state-of-the-art equipment, much of what is 
available right now on the market, because of lack of resources 
and lack of funding, and it just seems to me if we expect them 
to protect our communities and to save lives, that we need to 
make sure they have the resources to do their job.
    I know that, speaking for the firefighters in Worcester who 
came down here and lobbied very hard for Bill Pascrell's bill, 
that they were somewhat disappointed to say the least when they 
saw the budget blueprint and saw that future monies for this 
program were basically eliminated. It was determined in his 
budget blueprint this was not an effective use of Federal 
resources. Well, you know, protecting our communities is an 
effective use of Federal, State and local resources. We are all 
in this together.
    I think that we need to do more to support our firefighters 
in the same spirit we have done more to support our police 
officers, which I think has been a great success story. Our 
police departments all across the country have benefited from 
the Federal resources we have funneled back home.
    In addition, in the budget blueprint, the administration 
also eliminated funds for this program called Project Impact, 
which is another program which is part of FEMA. Project Impact 
has saved many lives and billions of dollars by ensuring that 
communities all across the Nation are as resistant to disaster 
as possible, from earthquakes in California, to hurricanes in 
South Carolina, to the tragic fires that plagued my home State 
of Massachusetts.
    Ironically, on the same day that this budget blueprint was 
published, we had a massive earthquake in Seattle, Washington, 
in a city that has benefited greatly from Project Impact, and 
Washington Governor Gary Locke has said that as a result of 
Project Impact dollars, earthquake preparedness offered by FEMA 
had a tremendous amount to do with minimizing the damage and 
injury of that recent earthquake.
    You know, both of these programs, I think, are vitally 
important for the safety of our communities, and I am hoping 
that what was printed in the budget blueprint of this 
administration was basically a recommendation that maybe wasn't 
very well researched, and people maybe thought that these were 
programs that were expendable. What I am hoping is that this 
committee will make it clear that these are priorities of the 
Congress, that they deserve to be funded, that this is in part 
a responsibility of the Federal Government, and we need to do 
much more, much more than, quite frankly, has been allocated 
for these programs to help our firefighters and to protect our 
communities.
    With that, I will submit the rest of my testimony for the 
record. But, again, I urge that you listen to Mr. Pascrell's 
words and that we reinstate these programs.
    [The prepared statement of James McGovern follows:]

   Prepared Statement of Hon. James P. McGovern, a Representative in 
                Congress From the State of Massachusetts

    Thank you for allowing me to testify here today. I am here today to 
strongly urge this committee to reinstate full funding for the FIRE act 
and FEMA's Project Impact in the FY 2002 budget. Every year, across 
this nation, over 100 fire fighters are killed in the line of duty. In 
1999, the number of fire fighter deaths was up by over 20 percent. The 
time to address the nationwide lack of proper funding for fire 
personnel and facilities is NOW. Just as important, Project Impact has 
saved dozens of lives and billions of dollars, by ensuring that 
communities all across the nation are as resistant to disaster as 
possible, from earthquakes in California, to Hurricanes in South 
Carolina, to tragic fires in my home state of Massachusetts.
    Despite their proven effectiveness, these two programs were 
summarily dismissed in President Bush's FY 2002 budget blueprint. 
Ironically enough, the proposed FEMA cuts were printed in the Budget 
Blueprint the same day a massive earthquake hit Seattle, Washington--a 
city that has benefited greatly from Project Impact. Washington Gov. 
Gary Locke has said that as a result of Project Impact dollars, 
earthquake preparedness offered by FEMA had a tremendous amount to do 
with minimizing damage and injury in the recent quake. Project Impact 
is more than just money, it brings communities together. As former 
Director James Lee Witt said recently, `` The big thing is that it gets 
people in the community involved in eliminating the risks themselves.''
    The FIRE Act is equally important. Last year, 285 members of 
congress co-sponsored the FIRE Act before it was added to the FY 2001 
Department of Defense Appropriations Bill. This tremendous outpouring 
of bipartisan support for one piece of legislation is proof of the 
importance of this issue. Fire departments all over this nation, and in 
each one of our districts, are in dire need of updated equipment, 
increased safety measures, and heightened training. In December 1999, 
my hometown of Worcester lost 6 brave fire fighters in a tragic blaze 
in an abandoned cold-storage warehouse. The city of Worcester is 
currently applying for a FIRE Act Grant to build a new fire training 
facility to better train our fire fighters in dealing with on the job 
conditions. In an effort to avoid similar tragedies in the future, FEMA 
Director James Lee Witt visited Worcester and granted the city $100,000 
in Project Impact funding to kick off a pilot program to deal with the 
problem of abandoned buildings, a problem that is plaguing many of this 
country's cities and towns. From Boston to Los Angeles, abandoned 
buildings across America are creating death traps for fire fighters and 
homeless citizens in urban areas. The Worcester pilot program, funded 
by Project Impact dollars, will be a national model for the handling of 
these dangerous structures. In President Bush's budget blueprint, both 
the Fire Act and Project Impact are dismissed as inneffective, and 
beyond the scope of the Federal Government. As the Worcester experience 
shows, nothing could be further from the truth. Tragedies can be 
prevented, but not if vital FEMA programs such as these are eliminated 
in the name of a huge tax cut. We must learn from the past, so that we 
are not condemned to repeat it.
    I strongly urge each of you to reconsider this dangerous 
elimination of vital FEMA funding. Both Project Impact and the FIRE Act 
are crucial to safety of our citizens across the nation, and their 
complete elimination from the budget do nothing but make our 
communities more dangerous places to live.

    Chairman Nussle. I appreciate the advocacy of both of you 
on this. Regardless of whether somebody may believe it is a 
Federal function or not, I think we all know that--and I 
supported your FIRE Act--that there are unfunded mandates that 
also go back; that in part this was an attempt to try and meet 
that obligation as well, and that needs to be responded to. If, 
in fact, it is not a Federal responsibility, then why do we 
have all of the mandates and regulations that come down from 
our all-knowing bodies that seem to know quite a bit about it, 
even though it is not a Federal function?
    So I think you have a powerful argument, and we will 
certainly take a look at it.
    Mr. McGovern. Thank you very much.
    Chairman Nussle. Mr. Gonzales.

    STATEMENT OF HON. CHARLES GONZALEZ, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF TEXAS

    Mr. Gonzalez. Good afternoon, Mr. Chairman. Thank you very 
much, and to Ranking Member Spratt. It is a real pleasure to 
appear before you this afternoon and discuss some of the budget 
priorities for my district, which is half of San Antonio, the 
eighth largest city in the Nation, as well as the impact for 
all of south Texas.
    I will briefly go over the six points I was going to cover 
and that are covered in more detail in the paper, in the 
statements that I have presented formally. Please do not 
interpret the brevity of my summary with the importance of the 
matters.
    First is Kelly Air Force Base. You would wonder, how could 
one Air Force base loom so large in a city's future? Kelly Air 
Force Base in the first round of BRAC has been scheduled for 
formal closing this coming July. We will realize a loss of 
19,000 jobs. At the present time we have a nonprofit entity 
that is attempting to redevelop Kelly and has been able to 
recapture about 4,000 of those jobs.
    The problem with the BRAC process has been--and I think 
other bases which have been closed have also encountered--is 
that those promises have not really been kept, and that is 
there has not been the kind of support that the Federal 
Government indicated would be there for the redevelopment of 
these bases.
    Much of the prime equipment has been removed from the base. 
You are left with some of the older buildings, which require 
either demolition or vast improvement. Even the runway, which 
we have been guaranteed the private sector's joint use with the 
military, has been co-opted to some extent and really deprives 
us of a valuable asset. The infrastructure and the 
environmental remediation that is necessary is immense, as I 
have told you about the buildings.
    But I need to tell you about a serious and pressing problem 
for a large section of my district, and that is the 
environmental damage left behind by the military after years of 
use. As you understand and everyone would know, Air Force bases 
did not have to comply with certain State and Federal mandates 
and regulations, and therefore today we have pollution that 
extends far beyond the base. It now has a tremendous impact on 
our local health services in San Antonio, and the Federal 
Government definitely has a responsibility.
    Priority number two is the infrastructure needs arising out 
of increased trade with Mexico. I am a supporter of NAFTA, and 
I welcome it and the great opportunities it poses for the 
entire State and the Nation. Cross-border trucking will soon be 
a reality. That means there is no doubt we will have increased 
accidents and more air pollution, along with all its benefits. 
More roads will need to be constructed. We will need more 
safety personnel and inspection stations, and the State will 
require some assistance from the Federal Government. We will 
also have the tremendous impact on Customs resources.
    Number three, increased law enforcement and judicial 
resources in the south Texas border area. Because of NAFTA and 
the increased traffic, you would have to be there to believe 
the tremendous increase in traffic, we will need more judges 
along our border States, and especially in the Laredo and Del 
Rio areas of Texas, for the drug-related and immigration cases 
which currently are backlogging all of the dockets. We will 
need more Customs agents for all of the obvious reasons and a 
tremendous investment in technology when it comes to the 
Customs outposts throughout the border areas.
    Number four is school construction. San Antonio may be the 
eighth largest city in the United States, but it also happens 
to be the second poorest large city in the United States. Where 
you have a school system district that relies on property 
taxes, you have serious problems where you have a very poor tax 
base.
    We are talking about school construction. There is not a 
school district in San Antonio among the poorer ones that have 
not had a recent bond election for school construction. We know 
of past plans regarding the Federal assistance with those 
endeavors, and I think it is important for us to step up to the 
plate and do our part.
    Number five, increased needs of veterans. As indicated, 
Kelly may be closing, but we still have four other bases. Along 
with that means we have a tremendous number of retired military 
personnel in the area, and with their increasing age comes 
increasing needs, and they must be addressed immediately.
    Number six, increased needs of active duty military 
personnel. We still have those four bases which we are very 
grateful for, but we have neglected those buildings and the 
facilities. What we are talking are quality-of-life issues for 
the personnel, the Armed Forces as well as their families.
    We have base schools--we have three base schools in San 
Antonio. That means we have schools that are contained within 
the confines of a base. These are independent school districts 
which rely on Department of Education funds for funding because 
they do not have a property tax base like other school 
districts.
    We now have buildings that have been in existence for a 
period of 50 years, when truly they were only planned to serve 
their purposes for 30 years. We are talking about the education 
of the children of our men and women in uniform.
    I have gone over briefly and summarized important issues, 
but truly they are not unique to San Antonio, and there are 
many Members in the House of Representatives that will face the 
same dilemma with the other round of BRAC closings or have 
already been the targets of closing.
    Also, please note that five of the six areas I have covered 
are all a direct result of Federal Government activities in my 
District. We are grateful for the Federal Government's 
activities and the benefits that it produces, but the Federal 
Government also has a responsibility to assist the local 
government and the State governments in making sure that we can 
adjust and do the necessary repairs, remediation and make sure 
that when the military leaves that they do leave it in better 
shape than they found it.
    Thank you very much, and I appreciate your consideration.
    Chairman Nussle. Thank you very much for your testimony.
    [The prepared statement of Charles Gonzalez follows:]

  Prepared Statement of Hon. Charles A. Gonzalez, a Representative in 
                    Congress From the State of Texas

    Mr. Chairman, Ranking Member and members of the Budget Committee, 
thank you for giving me this opportunity to present to you the budget 
priorities for San Antonio the nation's 8th largest city, my 
constituents and many of the citizens of South Texas. First let me 
outline the basic issues we are facing in my part of the country, 
namely: (1) Kelly AFB closure and the subsequent redevelopment and 
environmental contamination issues; (2) Infrastructure needs arising 
out of increased trade with Mexico; (3) Increased law enforcement and 
judicial resources in the South Texas border area; (4) School 
construction and teacher retention in the region; (5) Increased needs 
of veterans living in this area; (6) Increased needs of active duty 
military personnel living on the remaining bases in the area, 
especially, housing and base schools. I should begin by pointing out 
that all of these issues are interrelated and have a direct effect on 
the economic development of our region.
    1. Kelly AFB Issues. In the first round of BRAC, Kelly AFB in San 
Antonio was slated for closure. This closure will take place this 
coming July. There has been a great deal of redevelopment activity that 
has taken place over the last few years as the city prepares for the 
economic fallout from the closure. The city has formed a non-profit 
entity to oversee the development, and to date about 4,000 jobs have 
been created, but the job loss from the base closure will be closer to 
19,000.
    When BRAC was originally presented to Congress there were promises 
made, especially with regards to the closure of Kelly, that led the 
people to believe there would be a substantial amount of assistance in 
the redevelopment process. For Kelly this has not been the case, and as 
far as I can tell, it has not been the case for the other closed bases. 
Kelly is not necessarily asking for more money, but in this case the 
military has chosen to keep most of the prime equipment and transfer it 
to an adjoining base, leaving Kelly with only the older equipment and 
buildings. In addition, Kelly is guaranteed joint use of the runway, 
but the military needs have impacted the private sector's ability to 
fully utilize this valuable asset.
    The military has also left Kelly with huge infrastructure and 
environmental remediation needs, to the tune of some $100 + million. 
Roads need to be built, old buildings need to be demolished, noise 
abatement work needs to be done to comply with local and Federal laws, 
and a new hangar needs to be built.
    Added to this is the tremendous amount of environmental damage left 
behind by the military after decades of use. The pollution extends far 
beyond the base. With this pollution comes the incumbent health 
concerns, meaning the city has to provide screenings for individuals 
who may have been affected by contaminants.
    2. Infrastructure Needs Arising Out of Increased Trade With Mexico. 
With the impending implementation of the cross border trucking 
provisions of NAFTA over the next few months, South Texas will feel the 
full brunt of the increased traffic that accompanies the increased 
trade promised by NAFTA.
    The infrastructure needs stemming from this increased traffic are 
tremendous. San Antonio, Laredo, and many other cities along the border 
are already facing huge traffic problems, increased accidents and more 
air pollution. More roads need to be built and truck checkpoints need 
to be established to help control traffic, ensure safety regulatory 
compliance and preserve the integrity of our roadways.
    3. Increased Law Enforcement and Judicial Resources in the South 
Texas Border Area. Another NAFTA related need is increased law 
enforcement resources for the border. We need more judges, because our 
courts are overrun with immigration and drug-related cases as well as 
other issues arising out of the increased traffic along the border.
    In addition, to keep traffic flowing, more customs agents are 
needed to inspect trucks more quickly and keep them from backing up at 
the customs check points. From the standpoint of Customs, adding the 
latest technology is also vital to this mission. Finally, we also need 
additional public safety officers on the highways looking out for 
potential hazards.
    4. School Construction. As one of the poorest regions in Texas, the 
border area has many educational issues to contend with, chief among 
these is school construction. As with most other localities, school 
funding is based solely on property taxes, meaning poorer school 
districts often lack the resources to make needed repairs or to build 
new schools. San Antonio, like many other cities, has not built many 
new schools in the last 30+ years. But, unlike many other parts of the 
country, San Antonio's population has grown exponentially due to 
immigration, causing our schools to be severely overcrowded. Almost 
every school district in San Antonio has issued a bond to construct new 
schools. Any significant Federal help is greatly needed in these 
poorer, property tax based school districts.
    5. Increased Needs of Veterans. As with most other cities San 
Antonio has many veteran issues. But unlike most other cities, San 
Antonio has five military bases, meaning the number of retired military 
personnel in our area is greater than most other cities. We need 
additional funding to meet the ever increasing needs of the veterans 
living in San Antonio.
    6. Increased Needs of Active Duty Military Personnel. With our now 
four remaining bases, San Antonio has a large active duty military 
population, including dependents. Due to the severe neglect they have 
faced over the last 30 to 40 years, there are tremendous needs that 
must be met. The first and most important of these are the conterminous 
school districts. These are base schools that serve military 
dependents, but are independent of the military. They receive their 
funding from the Department of Education, but get little in the way of 
funding. Consequently, the schools which were built to last 30 years 
are now in their 50th year of service. This is no way to treat our 
military personnel and their families.
    Finally, I want to add that we must address the military housing 
crisis that exists on our bases. Just as with the schools, we must 
ensure that our service men and women have decent accommodations for 
them and their families.
    I know I have given you a lot to think about and I know not 
everything will be able to be fully funded, but as you prepare your 
outline of budget priorities, I hope you will give these issues serious 
consideration. I have also included recent news articles discussing 
these issues to further help you understand some of our problems.
    Thank you.

    Chairman Nussle. Ms. DeLauro, we don't mean to stick you 
behind the corner there. If you would like to move over.
    Ms. DeLauro. All right. Let me do that.
    Chairman Nussle. It is just such a big table that that ends 
up happening.
    Welcome. Your full testimony will be made a part of the 
record, and you may summarize.

    STATEMENT OF THE HON. ROSA DELAURO, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CONNECTICUT

    Ms. DeLauro. Thank you so very much, Mr. Chairman.
    I appreciate the opportunity to testify this afternoon, and 
I thank you for the invitation. I thank the ranking member, Mr. 
Spratt. It is always a pleasure to work at your side. And I am 
delighted to be here with my colleague, Rush Holt.
    I think that this is a critical turning point for this 
Nation, and I believe that the budget resolution that we adopt 
for this fiscal year can either start us on the road back to 
past failures or on to a successful future.
    When the President presented his budget to the Congress 
last week, I applauded him for setting a positive tone for the 
country, for trying to find areas of agreement----
    Mr. Spratt. Could you pull the mike a little closer?
    Ms. DeLauro [continuing]. And where we can make--I usually 
have a very loud voice, John--so, anyway, areas of common 
ground, if you will, and areas of agreement where we can make 
progress.
    While I agree with many of the President's priorities, I am 
concerned about the overall budget and, quite frankly, the lack 
of detail provided so far. I am also concerned about the fiscal 
discipline that is potentially at risk because this has been so 
important to our strong economy and the need to make 
investments for our families.
    Just one point, and I won't belabor this because there is 
agreement and disagreement, I am concerned that the tax plan 
that has been presented doesn't provide tax cuts for those who 
need it the most and crowds out areas where we need to make a 
real investment.
    Since I came to the Congress, I have spent a lot of time 
trying to advance two critical areas, child care and 
development and women's health; and I think that this is where 
the budget raises a number of serious concerns.
    Consider that more than five million American children 
under the age of 3 are in the care of other adults while their 
parents work outside of the home; 25 percent of these children, 
three million, are living below the poverty line. These are 
children who are too often left behind. They are less likely to 
receive the care that they need from parents or other child 
care providers to be able to grow and develop as healthy and 
thriving youngsters; and by the time they get to school, they 
are disadvantaged.
    Head Start and the Child Care and Development Block Grant 
Program are critical parts of the solution. Last year, Head 
Start received a boost of about $1 billion. Yet Head Start 
serves currently little more than half of the 4-year-old 
children that are eligible for the program. A similar increase 
this year would allow for the enrollment of another 82,000 
children.
    The budget outline, however, does not address future 
funding for Head Start. In fact, the words ``Head Start'' do 
not appear in this budget blueprint at all. Quite frankly, that 
is not exactly reassuring; and I urge the committee to make 
room in its budget resolution for this critical program.
    Access to child care is critical for low-income families 
who are struggling to make ends meet. The Child Care and 
Development Block Grant Program focuses on improving child care 
quality and access for those families who need it to work and 
to remain self-sufficient. While the President's budget claims 
to increase the block grant program by $200 million this year, 
it actually creates a set-aside within the program of $400 
million for a new after-school care initiative. So this 
``increase'' is, in fact, a $200 million cut below last year's 
level. I support after-school programs, but it should not come 
at the expense of the core mission of the Child Care and 
Development Block Grant Program.
    We need to focus in on child care from zero to three. The 
President's blueprint is so general it doesn't focus in on this 
area. We have so many studies on when kids are learning. It is 
zero to three, zero to five. I truly do believe that we are 
criminally at fault, given the amount of information that we 
have about when youngsters are learning and what our mission 
needs to be in terms of doing something for them.
    Let me just quickly mention the area of women's health 
research. There is nothing by way of detail in this area in the 
President's budget plan. Again, significant cause for concern 
due to the lower than needed increase in the budget for meeting 
what is a bipartisan goal of doubling the National Institutes 
of Health budget. By including only a $2.8 billion increase in 
this year, a $4.2 billion jump would be required the meet the 
goal in 2003. This is a massive budgetary hurdle that will be 
difficult to clear in a single year.
    Let me just mention one or two items that are specifically 
of concern to the challenges in my community. This has to do 
with defense policy and, again, I think some flawed direction 
in terms of the kind of commitment we are trying to make to 
missile defense which puts in jeopardy important weapons 
programs such as the F-22 and the Joint Strike Fighter. These 
are systems that are--do look to the future and look to the 
future both in terms of our needs and in terms of our threats.
    Let me just conclude by just thanking you again for the 
opportunity to be here. I am hopeful that we can come together 
on a fiscally responsible budget that does cut taxes for all 
families, that it does invest in education and Social Security 
and Medicare, as we have been talking about, and keeps us on 
track to paying off the debt.
    I think we have a chance to work together to put together a 
blueprint that sets us on the right course for this fiscal year 
and that takes into consideration some of the issues that are 
so critical to our families today. I believe that government 
has an obligation to reflect what is going on in the lives of 
families today, and the public policy that we engage in needs 
to reflect that. I think in terms of where families are working 
today, two people in the workplace, everybody giving it their 
all, that our public policy has--in terms of families today has 
lagged behind their needs and their efforts.
    Again, thank you for letting me come before you this 
afternoon.
    Chairman Nussle. Thank you. And, as a classmate, I have 
always appreciated your passion that you bring to the 
arguments; and we appreciate that.
    Ms. DeLauro. Thanks so very much.
    [The prepared statement of Rosa DeLauro follows:]

    Prepared Statement of Hon. Rosa L. DeLauro, a Representative in 
                 Congress From the State of Connecticut

    Good afternoon. I would like to thank Chairman Nussle for extending 
an invitation to Members to come before the Committee to share their 
thoughts and views on the Budget Resolution for Fiscal Year 2002. I 
believe we stand at a critical juncture in the debate over fiscal 
policy in America and I am grateful the Chairman has made this time 
available.
    Let me also thank Ranking Member John Spratt, a good friend and one 
of the most thoughtful Members of the House. Members of the Democratic 
Caucus know they can count on John Spratt's insightful advice and 
candid counsel on so many issues related to the nation's budget. It is 
always a pleasure to work by his side.
    As I stated, I do feel that we are at a critical turning point for 
the nation, and given the scope of the changes in spending and tax 
policy that are being debated, there is a great deal at stake. The 
Budget Resolution adopted for this fiscal year can either start us on a 
road back to past failures or on to a successful future.
    When the president presented his budget to Congress last week, I 
applauded him for setting a positive tone for the country and for 
trying to find areas of agreement where we can make progress.
    While I agree with many of the priorities that the president 
outlined, I am very concerned about his overall budget and the lack of 
detail he has provided thus far. It risks the fiscal discipline that 
has been important to our strong economy. And it fails to make the 
investments that our families need.
    The president's tax plan could weaken our economy and fails to 
provide fair and significant tax cuts for those who need it the most. 
Instead of cutting taxes for working and middle class families, the 
president's budget gives 43 percent of the benefit of his tax cut to 
just the top 1 percent of earners.
    If we act responsibly, we can have significant tax cuts for all 
Americans and still meet the nation's other pressing needs, such as 
education, Social Security, a Medicare prescription drug benefit, and 
national defense. Yet by pressing forward with such a large, 
inequitable tax cut, the president makes it impossible to meet these 
other priorities.
    The president's budget will put American families in double 
jeopardy. If his tax cut should pass, the president must either dip 
into Social Security funds to pay for his other stated priorities or 
begin deficit spending, returning us to the days of higher interest 
rates and slow growth.
    Not only would the president's budget fail to provide tax cuts for 
all American families, it increases the chance for higher interest 
rates and an economic slowdown that would hit working families the 
hardest. The president's plan provides the least benefit for working 
families, but leaves them the most at risk.
    Additionally, and contrary to the president's statement, his tax 
cut would not provide any immediate stimulus to spur our economy. The 
majority of the tax cuts do not go into effect for years. In fact, 
seventy-one percent of the tax cuts would occur after 2006.
    This fact represents a critical misstep if the tax cut's intent is 
to provide economic stimulus. Even Alan Greenspan has agreed that the 
president's tax plan provides little or nothing in the way of a boost 
for our economy. We would do better to provide greater relief, faster, 
and make sure that it helps working and middle class families.
    I also strongly agree with the position of my Blue Dog colleagues 
that we should act on a budget resolution before voting on tax or 
spending legislation. No family or business would make a decision that 
would have a major impact on their finances for the next 10 years 
without first sitting down and working out a budget to figure out what 
they can afford. It would be like writing checks without balancing your 
checkbook.
    This is not just an argument about process or arcane budget rules, 
although these processes and the work of this committee are a vitally 
important part of how the Congress accomplishes its work. This is about 
an important principle about acting responsibly to balance priorities 
important to our constituents. It is impossible to balance these needs 
unless we see the big picture.
    In the remaining time I have, I would also like to briefly present 
my concerns about how this year's budget could affect a number of 
programs that I believe are important nationally, as well as in my own 
district.
    Since I came to the Congress, I have spent a great deal of time and 
effort trying to advance proposals in two critical areas: child care 
and development and women's health. The president's budget raises a 
number of serious concerns about the president's commitment to these 
two critical issues.
    Consider this: more than 5 million American children under the age 
of 3 are in the care of other adults while their parents work outside 
of the home. Twenty-five percent of these children--3 million 
nationwide--are living below the poverty line. These are the children 
who are too often left behind. They are less likely to receive the care 
they need from parents or other child care providers to grow and 
develop heathy and thriving. By the time they arrive in school, they 
are already at a monumental disadvantage.
    Head Start and the Child Care and Development Block Grant Program 
are critical parts of the solution. Last year, Head Start received a 
big boost with a one billion dollar increase. Yet Head Start currently 
serves only a little more than half of the 4 year old children eligible 
for the program. A similar increase this year would allow for the 
enrollment of another 82,000 children.
    The president's budget outline, however, does not address future 
funding for Head Start. In fact, the words ``Head Start'' do not appear 
in his budget blueprint at all; not exactly a reassuring development. I 
urge the Committee to make room in its budget resolution for this 
critical program.
    Access to child care is critical for low-income families struggling 
to make ends meet. The Child Care and Development Block Grant program 
focuses on improving child care quality and access for those families 
who need it to work and remain self-sufficient. While the president's 
budget claims to increase CCDBG by $200 million this year, it actually 
creates a set-aside within the program of $400 million for a new after-
school care initiative. For CCDBG, this `increase' is in fact a $200 
million cut below last year's levels. While I support after-school 
care, it should not come at the expense of the core mission of CCDBG.
    In the area of women's health research, the president has thus far 
provided nothing in the way of detail. There is, however, significant 
cause for concern due to the lower than needed increase his budget 
provides to meet the bipartisan goal of doubling the National 
Institutes of Health budget. By including only a $2.8 billion increase 
this year, a $4.2 billion jump would be required to meet the goal in 
2003. That is a massive budgetary hurdle that will be difficult to 
clear in a single year.
    In addition to these critical national needs, my constituents are 
also concerned about what the president's budget will mean for a number 
of critical challenges our community faces.
    Defense policy and spending is also a critical priority. While I 
was pleased with the president's stance during the recent campaign, I 
was very disappointed that his budget failed to make necessary 
investments. In recent years, we have worked on a bipartisan basis to 
address quality of life issues for men and women in uniform. I am 
pleased that the president seeks to continue this commitment. However, 
our budget resolution must address what I see as critical shortcomings 
in the president's plan.
    The president's desire to continue to pursue a flawed missile 
defense policy would require cuts of important weapons programs such as 
the F-22 and Joint Strike Fighter (JSF).
    The F-22 is the Air Force's fighter for the next century. This 
stealth aircraft is designed to penetrate enemy airspace, and achieve 
first-look/first-kill capability against multiple targets. The JSF is 
being developed to be an affordable, lightweight, stealth fighter/
attack plane for the Navy, the Marines, and the Air Force. Both 
programs are vital if we are to address the threats of the near future.
    Let me once again thank Chairman Nussle and Ranking Member Spratt 
for providing me with the opportunity to speak with you. I am hopeful 
that we can come together on a fiscally responsible budget that cuts 
taxes for all families, that invests in education, Social Security and 
Medicare, and keeps us on track to paying off the debt. While I was 
disappointed with the budget outline the president provided, we have a 
chance now to work together to craft a bipartisan budget roadmap that 
sets us on the right course for the coming fiscal year and those that 
follow. Thank you.

    Chairman Nussle. Ms. Pelosi, welcome. Your testimony will 
be made part of the record, and you may summarize.

    STATEMENT OF THE HON. NANCY PELOSI, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Ms. Pelosi. Thank you, Mr. Chairman, Mr. Spratt, Mr. Holt. 
Thank you for the opportunity to testify this afternoon.
    Before I begin my testimony, though, I want to thank this 
committee for early recognizing the challenge that AIDS would 
be presenting to our society. That is where I am focusing my 
testimony today.
    As a member of the Subcommittee on Appropriations with 
Congresswoman DeLauro, I fully support all the priorities she 
talked about and hope that the--we are anxiously awaiting the 
budget resolution and hope that it would provide us with the 
resources necessary to meet the priorities of all of America's 
families. As I said, though, today I will focus on the AIDS 
epidemic.
    To define the problem, for over a decade new HIV infection 
in our Nation has remained steady at approximately 40,000 each 
year. It is estimated that of these new infections half occur 
in young people under the age of 25. In addition, people of 
color now represent a majority of new AIDS cases; and the 
proportion of new AIDS cases among women has grown from 11 
percent in 1990 to 23 percent in most recent statistics.
    Internationally, the extent of the AIDS-HIV epidemic is 
staggering. In 2000, an estimated 5.3 million were newly 
infected; and three million people died of AIDS, the highest 
annual AIDS death total ever.
    I won't read my entire testimony, Mr. Chairman and members 
of the committee, Ranking Member Spratt and members of the 
committee, but I will walk through it with you.
    The recent investments that have been made domestically and 
internationally in HIV care treatment and prevention and 
research have significantly strengthened our ability to combat 
this global pandemic and dramatically improve the lives of 
millions of people who are living with HIV and AIDS. It is 
imperative that we do not abandon this important commitment 
that this Budget Committee made so many years ago at the start 
of the AIDS epidemic.
    Domestically, basically, we talk about AIDS and HIV in 
three categories, research, care and prevention. Domestically, 
the substantial increase in funding of the National Institutes 
of Health contained in the President's budget outline is an 
important part of the research investment. By advancing 
scientific knowledge of the immune system and viral infections, 
HIV and AIDS research has also yielded significant benefit s 
for people living with other diseases such as cancer and 
hepatitis, indeed any disease that is related to the immune 
system.
    Research is a good investment. We received estimates, 
however, that nonNIH discretionary health spending will need to 
be cut by 5.4 percent to account for the President's tax cut 
and other spending priorities in the Bush outline. Given the 
significant level of unmet needs in HIV-AIDS treatment, 
prevention and housing, cuts of this magnitude would be 
disastrous.
    Some of the ways that we invest in our research must be 
matched with a commitment to our public health infrastructure 
in order to ensure that the knowledge that we gain through 
research is translated into improved health care for people 
living with HIV-AIDS and stronger HIV prevention. So I would 
hope that we would include substantial increases for these 
programs in the budget resolution.
    Among them are--and turning to care, the Ryan White Care 
Act administered by HRSA was modelled on a system of community-
based care that San Francisco developed to face the AIDS crisis 
in the '80's. I want to address the changing nature of the HIV-
AIDS epidemic along with the continuing impact of HIV-AIDS in 
traditionally affected communities, that has created new 
challenges. So we have to address the research and the care in 
ways that recognize the changing faces of AIDS.
    But most important in that is prevention. Prevention is 
important not only from a public health perspective but also 
from an economic perspective. The CDC estimates that there are 
6 to 700,000 people living with HIV in the U.S. Lifetime 
treatment for these people is $155,000. So from a strictly 
financial standpoint it saves lives, but it also saves money to 
prevent. And how we deal with that is to prevent, obviously, 
transmission.
    CDC programs are reaching individuals and helping them 
change risky behaviors. We also see a risk significant link 
between substance abuse and the HIV epidemic. Therefore, 
funding for the Substance Abuse and Mental Health Services 
Administration, SAMHSA, is very important. Numerous studies 
have demonstrated the effectiveness of drug and alcohol 
treatment and education in relationship to this.
    I want to call your attention to the Minority HIV-AIDS 
Initiative, because significant progress must and has and must 
continue to be made to develop the capacity to combat HIV-AIDS 
within communities of colors.
    My statement goes into further detail there, but in the 
interest of the committee's time I will proceed to talk about 
another area of concern in terms of AIDS, and that is AIDS 
housing for people living with HIV and AIDS. The Department of 
Housing and Urban Development's OPWA program, the needs are 
greater now than ever; and my statement goes into detail there. 
I am hoping that as I keep my comments shorter the budget 
allocation will be larger.
    I would like to also just talk--spend a moment to talk 
about Medicaid expansion for HIV positive A systematic 
individuals as the next critical step in meeting the needs of 
communities that are disproportionately impacted by this 
epidemic.
    Mr. Chairman, Ranking Member Spratt and Mr. Holt, right 
now, in order to go on to Medicaid, you have to have a full-
blown case of AIDS. The science tells us that you can save 
lives, improve the quality of life if you intervene sooner when 
somebody has HIV. So it is very important to get people with 
HIV onto Medicaid and not wait until they are full-blown case 
of AIDS. That is what Mr. Gephardt and I are proposing in our 
legislation, and we are asking for funding in this bill for 
HIV-infected people to be on Medicaid. It is a savings even in 
the short but certainly the long run.
    I just want to turn to internationally for a moment. We 
hope that we can double to $465 million our international 
funding for HIV-AIDS. The figure we really need is $7 billion, 
just to give you a perspective on far we have to go. We also 
must develop a vaccine.
    The international is part of our conscience that we should 
do this. We have the resources here in terms of research, care 
and treatment but--and prevention, but the fact is, members of 
the committee, it is in our interest to prevent the spread of 
AIDS internationally for economic reasons, for national 
security reasons and in terms of research. We cannot do the 
research effectively unless we have this broader base.
    My time has expired, so I will thank you for the 
opportunity to testify today. I thought I was reducing my 
statement down, but it is a big issue, a big problem. This 
committee has been there from day one. I am grateful for that. 
Again, thank you for the opportunity to testify today.
    Chairman Nussle. Ms. Pelosi, this is a very important area. 
We may be able to find an opportunity later on this year--I 
mentioned it to Ranking Member Spratt--to have a hearing to 
discuss this in a little bit more detail.
    Ms. Pelosi. Wonderful.
    Chairman Nussle. But it probably could or should include a 
number of infectious diseases, that maybe--Mr. Spratt informed 
me that possibly hepatitis C is another area of concern that we 
need to keep an eye on; and it may have some very dramatic 
budgetary and fiscal impact as the years go on. So I would be 
interested in working with you to see if--how we might 
facilitate something like that.
    Ms. Pelosi. Thank you Mr. Nussle. All of these are 
connected--hepatitis C, tuberculosis. All of the infectious 
disease issues are connected. I appreciate your comments and 
Mr. Spratt's input into that. His leadership over the years has 
been magnificent. And thank you, Mr. Holt, for your courtesy 
today.
    Chairman Nussle. Thank you.
    [The prepared statement of Nancy Pelosi follows:]

 Prepared Statement of Hon. Nancy Pelosi, a Representative in Congress 
                      From the State of California

    Mr, Chairman, Ranking Member Spratt, thank you for this opportunity 
to testify today. As a Member of the Appropriations Committee, I will 
be closely following the development of the Budget Resolution in the 
hope that we will be provided with the resources necessary to meet the 
priorities of all American families. Today, I will focus on the AIDS 
epidemic.
    For nearly a decade, new HIV infections in our nation have remained 
steady at approximately 40,000 each year. It is estimated that of these 
new infections, half occur in young people under the age of 25. In 
addition, people of color now represent the majority of new AIDS cases 
and the proportion of new AIDS cases among women has grown from 11 
percent in 1990 to 23 percent in the most recent statistics. 
Internationally, the extent of the HIV/AIDS epidemic is staggering. In 
2000, an estimated 5.3 million were newly infected and 3 million people 
died from AIDS, the highest annual total of AIDS deaths ever.
    The recent investments that have been made, domestically and 
internationally, in HIV care, treatment, prevention, and research have 
significantly strengthened our ability to combat this global pandemic 
and dramatically improved the lives of the millions of people who are 
living with HIV and AIDS. It is imperative that we do not abandon this 
important commitment.
    Domestically, the substantial increase in funding for the National 
Institutes of Health (NIH) contained in the President's budget outline 
is an important part of that investment. Research at the National 
Institutes of Health (NIH) has yielded great results. AIDS research has 
doubled the survival time of a person with AIDS and vastly improved the 
quality of life for thousands of Americans and their families. By 
advancing scientific knowledge of the immune system and viral 
infections, HIV/AIDS research has also yielded significant benefits for 
people living with other diseases such as cancer and hepatitis.
    Research is a good investment. However, we have received estimates 
from Mr. Spratt that non-NIH discretionary health spending will need to 
be cut by 5.4 percent to account for President Bush's tax cut and the 
other spending priorities that are presented in the Bush budget 
outline. Given the significant level of unmet need in the areas of HIV/
AIDS care, treatment, prevention, and housing, cuts of this magnitude--
in fact, any cuts at all--would be disastrous.
    The investment in NIH research must be matched with a similar 
investment in our nation's public health infrastructure in order to 
ensure that the knowledge that we gain through NIH research is 
translated into improved health care for people living with HIV/AIDS 
and stronger HIV prevention efforts. The Health Resources and Services 
Administration and the Centers for Disease Control and Prevention are 
the NIH's essential public health partners in the effort to combat HIV/
AIDS. Unfortunately, President Bush's budget outline did not emphasize 
the need for strong investments in the HIV/AIDS programs administered 
by HRSA and the CDC. These investments are a vital complement to NIH 
research, and I urge my colleagues on the Budget Committee to include 
substantial increases for these programs in the budget resolution.
    The Ryan White CARE Act, administered by HRSA, was modeled on the 
system of community-based care that San Francisco developed to face the 
AIDS crisis in the 1980's. Today, CARE Act programs provide the 
foundation for care and treatment for low income individuals with HIV 
and AIDS. The recent declines we have seen in AIDS deaths are a direct 
result of the therapies and services that have been made more widely 
available through the CARE Act to large numbers of uninsured and under-
insured people with HIV and AIDS.
    Although great strides have been made, there is much more to be 
done. The combination therapies that have brought so much hope are 
still not reaching all of those in need. And the changing nature of the 
HIV/AIDS epidemic, along with the continuing impact of HIV/AIDS in 
traditionally affected communities, has created new challenges for the 
CARE Act.
    In addition, new HIV infections have remained constant at 40,000 
per year. These new infections combined with the decline in AIDS deaths 
means that more individuals than ever before are living with HIV and in 
need of treatment regimens that are costly, complicated and lifelong. 
As a result, the demands on HIV care providers have grown.
    The changing nature of the HIV/AIDS epidemic, along with the 
continuing impact of HIV/AIDS in traditionally affected communities, 
has created new challenges for our HIV prevention efforts. And 
increases in the number of people living with HIV/AIDS mean that there 
are more opportunities for transmission of the virus. Although we have 
made HIV/AIDS research a high priority in recent years, a cure or 
vaccine is still many years away. As a result, HIV prevention efforts 
take on an even greater importance for helping stem the tide of this 
epidemic.
    Prevention is important not only from a public health perspective, 
but also from an economic perspective. The CDC estimates that there are 
600,000-900,000 people living with HIV in the US. The lifetime medical 
cost of treating each person infected with HIV is estimated at 
$155,000. So each HIV infection that we prevent saves our health care 
system a great deal of money, in addition to preventing other costs 
including loss of earnings due to premature death from AIDS. Prevention 
is clearly a cost-effective investment.
    HIV transmission, like many health problems, is the product of many 
factors. In order to reach as many people at-risk as possible, HIV 
prevention programs at the CDC are addressing these factors through a 
community planning process that allows localities to guide HIV 
prevention efforts in their neighborhoods and communities.
    CDC programs are reaching individuals and helping them change risky 
behaviors. Studies have shown that the availability of counseling and 
testing has a direct impact on the spread of this epidemic, 
particularly among young people. The CDC recently reported that 90 
percent of young people changed their sexual behaviors after 
discovering they had HIV. When HIV is diagnosed, people do take action 
to protect themselves and others. Unfortunately, current resources do 
not allow counseling and testing programs to reach all those in need, 
and one-third of the HIV infections in this country still go 
undiagnosed.
    There is also a significant link between substance abuse and the 
HIV epidemic. Over two-thirds of all reported AIDS cases among women, 
nearly two-thirds of the cases among children, and nearly one-third of 
all cases among men are associated with substance abuse. In addition to 
the dangers associated with needle sharing and injection drug use, 
individuals who abuse alcohol, cocaine, or other non-injected drugs are 
more likely to contract HIV than the general population because of the 
link between drug use and unprotected sex.
    The Substance Abuse and Mental Health Services Administration 
(SAMHSA) supports HIV/AIDS prevention and outreach through 
demonstration programs and the HIV/AIDS set-aside in the Substance 
Abuse Prevention and Treatment Block Grant. Numerous studies have 
demonstrated the effectiveness of drug and alcohol treatment and 
education. SAMHSA's HIV programs must be strengthened in order to 
address the dual epidemics of AIDS and substance abuse found in many 
communities.
    Significant progress has been made in the effort to develop the 
capacity to combat HIV/AIDS within communities of color through the 
Minority HIV/AIDS Initiative. While African Americans make up 
approximately 12 percent of the total U.S. population, they account for 
nearly 37 percent of AIDS cases. In addition, nearly two-thirds of all 
women living with AIDS are African American. Hispanic Americans are 
also disproportionately impacted. Hispanic Americans represent 13 
percent of the total U.S. population, but account for 20 percent of all 
new AIDS cases.
    These demographic changes have created many challenges for our 
nation's response to the epidemic. The Minority HIV/AIDS Initiative 
provides the funding needed to enhance existing systems of HIV/AIDS 
care in communities of color and to develop the service and 
infrastructure capacity that these communities need to effectively 
fight AIDS. Nearly all of the areas that I have discussed today are 
impacted by the resources provided to this important initiative because 
we must strengthen all aspects of HIV/AIDS programs in communities of 
color, including prevention, care, and substance abuse treatment.
    The need for housing assistance for people living with HIV/AIDS 
through the Department of Housing and Urban Development's Housing 
Opportunities for People with AIDS (HOPWA) program is greater now than 
ever. The new treatments that are extending so many lives involve a 
complicated regimen of medications, requiring certain medications to be 
taken at certain times, certain medications to be taken after eating, 
and still others on an empty stomach. This makes adherence very 
difficult, and nearly impossible without stable housing.
    As the number of people living with HIV/AIDS increases, so do the 
number of cities and states qualifying for HOPWA formula grants. At the 
same time, the rising costs of housing across the country, particularly 
in urban areas where a large proportion of people living with HIV/AIDS 
live, make it difficult for HOPWA to maintain current services without 
funding increases. Increases in the number of eligible jurisdictions 
means that without a significant increase in HOPWA funds, the funding 
available for each HOPWA jurisdiction will be cut. I urge the Budget 
Committee to include the resources necessary to meet this growing need 
in the budget resolution.
    I would also like to add that Medicaid expansion for HIV positive 
asymptomatic individuals is the next critical step in meeting the 
treatment needs of the communities that are disproportionately impacted 
by this epidemic. Medicaid must play an expanded role in HIV care. With 
the advent of powerful new therapies, it is unconscionable that people 
cannot become eligible for Medicaid until they have lost the 
opportunity for early and effective treatment of HIV. Representative 
Gephardt and I introduced the Early Treatment for HIV Act in the last 
Congress, and CBO estimated a first year implementation cost of $100 
million. I urge you to include funding for this expansion of Medicaid 
to include people with HIV in the budget resolution.
    Now, to turn to the global epidemic. Over the course of the past 
year, the world has finally, albeit belatedly, started taking notice of 
the global AIDS pandemic and the havoc it is creating in the developing 
world. I respectfully urge the Members of the Budget Committee to 
provide the highest possible funding levels to combat global HIV/AIDS, 
which is the world's most deadly infectious disease ever. The social, 
economic, security and human costs of this crisis are devastating 
entire nations. Increased funding for global AIDS programs must be 
provided as part of a renewed commitment to a comprehensive and 
adequately funded development assistance strategy addressing the new 
challenges facing the developing world as a result of HIV/AIDS.
    The United States must take the lead. Our investment in the fight 
against the global AIDS pandemic not only has a direct impact, but it 
also leverages significant funds from other countries and multilateral 
institutions. Non-governmental organizations working to fight global 
AIDS believe that the U.S. funding for global AIDS programs should be 
doubled this year, to a total across all U.S. agencies and programs of 
$464.5 million. Just to put this number in perspective for you, the 
Joint United Nations Programme on HIV/AIDS (UNAIDS) estimates that $3 
BILLION is needed annually for Africa alone to provide minimal care, 
anti-viral drugs, and HIV prevention. Estimates of costs for an 
effective response to the epidemic worldwide start at $7 BILLION 
annually.
    In FY 2001, Congress and the Administration significantly expanded 
funding for global HIV/AIDS efforts with the LIFE (Leadership and 
Investment in Fighting an Epidemic) initiative. The Foreign Operations 
Appropriations Subcommittee, on which I have served as the Ranking 
Democrat, succeeded in our effort to dramatically increase funding for 
global AIDS at the United States Agency for International Development. 
Programs which last year received $190 million for international 
prevention, care, and education efforts, including programs to prevent 
mother-to-child transmission and address the needs of the growing 
population of AIDS orphans, will receive $315 million in the current 
fiscal year.
    So much more needs to be done.
    Comprehensive prevention efforts have turned around HIV epidemics 
in Uganda and Thailand, and averted an epidemic in Senegal. We know 
that prevention and education programs work. The United States must now 
demonstrate leadership in providing needed funding so that effective 
programs can be expanded and replicated.
    We must also invest in the efforts to develop a vaccine. Vaccines 
are our best hope to bring this epidemic under control, and we must do 
all we can to facilitate cooperation between the public and private 
sectors in order to bring together the necessary resources and 
expertise.
    Unfortunately, these challenges are only the beginning. India 
already has more infected people than any other nation, over 3.5 
million. Experts are predicting that without significant efforts to 
treat those with HIV and prevent new infections the number of people 
living with HIV/AIDS in India could surpass the combined number of 
cases in all African countries within two decades. Asia already 
accounts for one out of every four infections worldwide. The Newly 
Independent States in the former Soviet Union are also seeing 
significant increases in their HIV infection rates. There has been a 
six-fold increase in the number of HIV infections in Eastern Europe and 
Central Asia in the last 4 years.
    Developing nations will be unable to turn the tide on this epidemic 
if even the most basic health care is unavailable or out of reach for 
most of their citizens. Yet despite such scarcity, community-based 
organizations in villages are doing much with little. People must be 
educated about HIV and how to prevent its spread. Increased testing and 
counseling opportunities are desperately needed. Basic care and 
treatment that can be delivered in homes or makeshift clinics is 
essential. And the need for support for the growing number of children 
orphaned by AIDS looms large.
    We are attacking HIV on many fronts: primary prevention and 
surveillance through the CDC, strengthened health infrastructure in 
developing countries through USAID, care and treatment provided through 
the Ryan White CARE Act, adequate housing through HOPWA, a strong 
commitment to research at the NIH, and substance abuse treatment 
programs through SAMHSA. I hope that the budget resolution will include 
adequate funding for each of these vital areas of public health.
    Thank you again for the opportunity to testify today. I look 
forward to working with you as the Budget process moves forward to 
provide sufficient resources to move quickly toward the ultimate goal 
that we all share, the end of the AIDS epidemic.

    Chairman Nussle. Mr. Meeks, welcome to the committee. Your 
testimony will be made part of the record, and you may 
summarize.

STATEMENT OF THE HON. GREG MEEKS, A REPRESENTATIVE IN CONGRESS 
                   FROM THE STATE OF NEW YORK

    Mr. Meeks. Thank you, Mr. Chairman and Ranking Member 
Spratt. I thank you for the opportunity to testify before the 
committee today.
    I must say at the outset that I do testify somewhat out of 
frustration. Given the process that we are currently engaged 
in, the setting of budget priorities, I don't know if making a 
priority of tax cuts first without having set the budget 
follows our process. As a result, I have some problems with 
reference to how we set what our priorities are, but I will 
talk about that when I submit my statement.
    You know I support the proposal to revive the American 
people with a hard-earned tax cut, but I am equally concerned 
about the established spending process which has to be governed 
by this body for many years.
    Today we are engaged with each other on the floor of the 
House about the merits of a tax cut and which group of 
taxpayers stand to benefit the most. We have wholly ignore d a 
most vital part of our democratic system. We have completely 
overlooked the people's agreed upon process by selecting 
representatives to set budgetary parameters and priorities. My 
concern about the process represents my first thoughts in 
reference to current fiscal issues before the House. However, I 
am equally concerned about other budgetary issuance I would 
like to present to the committee and hopefully get some clarity 
on how we as a body will approach them.
    Many issues relate directly to the current administration's 
budget, and this far-reaching tax cut essentially relies on far 
too many uncertainties and projections. I am concerned, Mr. 
Chairman, about the extent to which we rely on the CBO 
projections as a basis for projected surplus. Forecast of 
economic performance is risky at best as a planning tool and is 
subjected to constant revisions, and even the best market 
prognosticator already with estimates of over $2 trillion are 
floating as well as a result of the Ways and Means Committee's 
decision to accelerate the proposed 10 percent bracket ahead of 
the President's own timetable. I feel that the Congressional 
Budget Act will result in tax cuts at the expense of every 
other potential priority we may identify as we conduct the 
normal budgetary process in the House of Representatives.
    Our foremost concern has been and must be to retain the 
sanctity of the Social Security and Medicare surpluses. The 
baby boomer generation is rapidly becoming our next wave of 
Social Security recipients, and we must protect the surpluses 
which rightfully belong to them.
    The Congressional Budget Act grants the right and privilege 
of the Congress to use the budget process to set the 
priorities. In the absence of that process we are merely 
responding or reacting to established parameters which have 
little or nothing to do with the priorities established by the 
process itself.
    The tax cuts as well as the repayment in nondiscretionary 
spending must be part of a greater inclusive budget process. 
Whether or not we agree on some of the established priorities, 
is hardly the issue. The issue is that we have a process in 
place, and the American people deserve the benefit of full and 
inclusive debate about U.S. budget priorities.
    The helping hand program for prescription drugs is a 
valuable component. Medicare reform is beneficial to all, and 
tax cuts are the legitimate award of a fiscally responsible 
Nation. But I submit to you, Mr. Chairman, they, too, must take 
their rightful place in the context of all of our national 
priorities.
    I join my colleague, Nancy Pelosi, in talking about HIV-
AIDS. I think that is a priority that we need to make sure that 
is included in the budget.
    When I look at public housing and economic development and 
saving section 8s so more people in this country can benefit 
from the great surpluses that we have, I think that needs to be 
a budget priority that this committee should consider when we 
move forward.
    When we talk about school construction and an additional 
hundred thousand teachers or more in technology so that our 
students and our young people are able to keep up, that should 
be a budget priority, and I think all of that has to be taken 
in context. We should not just have tax cuts as our only budget 
priority, but these other items need to be considered. I think 
rightfully they stand side by side with a tax cut priority, and 
they need to be done proportionately.
    I just think that the process is flawed because we are 
doing tax cuts without looking at the other priorities; and 
this committee has to do it after the fact, as opposed to doing 
it alongside with the other priorities that the committee 
should be able to set and put in place.
    I thank the chairman for the time. I yield back the rest of 
my time.
    Chairman Nussle. Thank you very much for coming and 
testifying.
    [The prepared statement of Greg Meeks follows:]

   Prepared Statement of Hon. Gregory W. Meeks, a Representative in 
                  Congress From the State of New York

    Mr. Chairman, I welcome the opportunity to offer testimony before 
your Committee today. I would like to extend appreciation and 
commendation to the distinguished ranking member, Congressman John 
Spratt, Jr. of South Carolina, for his diligent and consistent work 
toward a sound and bi-partisan approach to setting budget priorities 
for the 107th Congress.
    Mr. Chairman, it is with great concern for process and convention 
that I address you today. The House is scheduled to begin debate on 
perhaps the most broad sweeping and profound tax rate reduction measure 
since the creation of the current tax structure. To even consider a tax 
cut prior to setting budget priorities and budget parameters is 
philosophically adolescent and risky at best.
    While I support the proposal to provide the American people with a 
hard earned tax cut, I am equally concerned about the established 
spending process which has governed this body for many many years. 
Today, as we engage each other on the floor of the House about the 
merits of a tax cut and which group of taxpayers stand to benefit the 
most, we have wholly ignored a most vital part of our democratic 
system. We have completely overlooked the people's agreed upon process 
by its elected representatives to set budgetary parameters and 
priorities.
    Mr. Chairman, my concerns about the process represent my first 
thoughts on the current fiscal issues before the House, however, I am 
equally concerned about other budgetary issues, and I would like to 
present those to the Committee and hopefully get some clarity on how 
we, as a body, will approach them.
    Having addressed the lack of process, I would like to outline 
budget priorities:
    Mr. Chairman, as we continue to strive toward urban revitalization, 
economic development has become the cornerstone of the recovery of the 
most depressed areas in the country. We must support and increase 
empowerment zones. Community Development Financial Institutions, The 
Prime Act and other programs contribute to our ability to foster 
economic development in areas of greatest need. We must continue to 
support the entrepreneurs who are willing to invest their time, energy 
and expertise in urban America. We must target funds to expand those 
opportunities and make it possible for the nation's community economic 
revitalization to flourish.
    When I think of the devastating AIDS epidemic and the impact it is 
having on the economy; the family; the health care system; and the very 
fibers of our nation, I am humbled by the task before us. We must 
devote resources to the education, prevention and cure of AIDS. The 
rise in the infection rate among teenagers is calamitous . We must 
remember that the youth are our future. No greater investment or return 
can we find than in the youth of today. The amount of funds devoted to 
youth AIDS is inadequate. Faced with statistics which suggest that 
almost half of new infections occur in Americans under the age of 25, 
we must meet this challenge head on.
    The majority of new cases of AIDS infection is among people of 
color. AIDS cases among women have reputedly doubled in the last 10 
years. The AIDS epidemic has cast a wide net internationally and that 
is of paramount concern to the United States. There are many community 
based, direct care programs helping to improve the lives of those 
living with AIDS who receive the bulk of or their total funding from 
Federal programs. Title I and Title III program must not be neglected 
or reduced in this effort. They must receive our greatest support and 
funding in order that we can continue to improve the quality of life 
for those living with AIDS. Making our ``War on AIDS'' a budget 
priority is in the best interest of this country. Mr. Chairman, we must 
support and fund the NIH initiatives to expand and strengthen science-
based HIV prevention research for African-Americans, Latinos, Native 
Americans, Asian Americans, Native Hawaiians and Pacific Islanders.
    I cannot begin to highlight each and every aspect of the AIDS 
crisis to which we must devote both our time and resources. I can only 
say that as we look around us and see an entire generation of young 
people succumb to this disease we know it is a priority. As we watch 
scores of minority women and men leave children, families and jobs, we 
know it is a priority. Our commitment to this plague-like malaise must 
be met with due diligence.
    On education, Mr. Chairman, the current administration's budget, 
while representing an increase, does not go far enough. We must not 
abandon the nation's public schools because we say we cannot afford to 
improve them. We must reward the nation's teachers commensurate with 
the job they are doing. Mr. Chairman, I am not making a case for merit 
based teaching . I am making a case for making teaching a meritorious 
and financially rewarding occupation. We are a nation where ball 
players are paid one quarter of a billion dollars and we squawk at a 10 
percent raise for teachers. I take my hat off to the agent who secures 
the high salaries for athletes, however, as the agent and caretaker of 
the nation's education system, we must do a better job by the dedicated 
men and women playing in our education field. I am proposing an 
increase in the education budget and a real commitment to the nation's 
public school system.
    As we move through the digital age, many small businesses are 
playing catch up. I am convinced that our economic future is linked to 
the prosperity of the nation's small businesses. The techno-revolution 
cannot pass by the small business community. We must invest in their 
dream and make it our dream. We must set a standard for providing start 
up capital to the nation's small business community not to make them 
competitive with the giants, but rather to provide a complement to the 
giants. Mr. Chairman, we must increase the funds available to the small 
business community.
    I believe that we, as a nation, must seek to make adequate and 
available housing a major priority. Too many Americans wait far too 
long before they can find the right help, funding, or units in our 
communities. Housing spans the spectrum of our national neglect. 
Impoverished families living on the street have become more prevalent; 
AIDS patients who can no longer sustain employment and must live in 
inadequate situations makes our requested funding level of $300 million 
dollars for the Housing Opportunities for Persons with AIDS (HOPWA) 
program a national priority. The issue of homelessness has far reaching 
implications for an individual's employability. As the richest nation 
in the world, we must lend Federal support to communities trying to 
build on vacant lots; trying to revitalize retailers; and improve the 
nation's infrastructure.
    In the area of health and social services, we must respect and 
reserve the hard earned surplus in Social Security and Medicare. The 
medically under-served in the United States benefit from many Federal 
programs. We must exercise compassion and caution as we try to trim 
spending. There are children in this country who would live without 
health care but for the largess of Federal programs. Mr. Chairman, in 
my District, we strive to maintain those programs providing direct 
health care services to children. Our national list of priorities must 
include keeping children healthy as well as making preventative care 
available, accessible and affordable; if we can do this, Mr. Chairman 
our Federal dollars will be well spent.
    I would be remiss, Mr. Chairman, if I did not include on my list of 
budget priorities, a tax cut. The people of this country have earned 
and deserve a tax cut and I am convinced that in the grand scheme of 
things, we can give them one. I believe that fiscally sound policy, 
based on real numbers will show that a tax cut is plausible and 
expected.
    On the international front, our commitment to global peace and 
cooperation should be reflected in our allocations to the 150 account. 
As the world's leading industrialized nation, we commit less than 1 
percent of our GNP to our foreign policy agenda. We are often time 
viewed as stingy to the rest of the world when it comes to fulfilling 
our obligation as international partners in world affairs. We, however, 
wield a great deal of power and influence in the resolution of conflict 
around the world. We must resolve, once and for all, our level of 
commitment to the international peacekeeping effort and support that 
commitment with the appropriate resources. It is imperative that we 
continue to encourage and implement debt relief programs so that our 
global partners can begin to restore their internal fiscal mechanisms.
    Mr. Chairman, as we look toward spending patterns which reflect our 
national priorities, we must include the repayment of the national 
debt. This body has been a willing partner in the budget development 
which has lead to the comfort we now enjoy. We must continue to service 
our debt repayment scheme in a timely and satisfactory manner.
    I have listed for you, Mr. Chairman, those issues I believe to be 
paramount on our list of priorities for this year's budget. It is my 
hope that in your attempt to proceed with this budget process, we have 
the opportunity to weigh all of our concerns. I ask that we are given 
the opportunity to decipher what our coffers contain and then decide 
where the funds will go. We may not see eye to eye on all issues. 
However, at least we will have an open, honest and inclusive debate on 
those items on the table.
    Many issues relate directly to the Bush Administration budget and 
this far reaching tax cut essentially relies on far too many 
uncertainties and projections.
    I am concerned , Mr. Chairman, about the extent to which we rely on 
CBO projections as a basis for projected surplus. Forecast of economic 
performance is risky at best as a planning tool, and is subjected to 
constant revisions with even the best market predictors. Already, 
estimates of over $2 trillion are floating as a result of the Ways and 
Means Committee's decision to accelerate the proposed 10 percent 
bracket ahead of the President's own time table.
    Mr. Chairman, I fear that this attack on the Congressional Budget 
Act will result in tax cuts at the expense of every other potential 
priority we may identify as we conduct the normal budgetary process in 
the House of Representatives. Our foremost concern has been and must 
remain the sanctity of the Social Security and Medicare surpluses. The 
baby boomer generation is rapidly becoming our next wave of Social 
Security recipients and we must protect the surpluses which rightfully 
belong to them. The Congressional Budget Act grants the right and 
privilege of the Congress to use the budget process to set the 
priorities. In the absence of that process, we are merely responding or 
reacting to established parameters which have little or nothing to do 
with the priorities established by the process itself.
    Tax cuts, as well as debt repayment and non-discretionary spending 
must be a part of a greater inclusive budget process. Whether or not we 
agree on some of his established priorities is hardly the issue. The 
issue is that we have a process in place. The American people deserve 
the benefit of a full and inclusive debate about US budget priorities. 
The ``Helping Hand'' program for prescription drugs is a valuable 
component; Medicare reform is beneficial to all; tax cuts are the 
legitimate reward of a fiscally responsible nation; but I submit to you 
Mr. Chairman that they too must take their rightful place in the 
context of all of our national priorities. We must make those decision 
in a bi-partisan, compassionate and fiscally responsible way.
    Mr. Chairman, as we speak, the hospital industry in New York is 
still reeling from a 1997 Balanced Budget Act provision which was based 
in part on predictions, projections and forecasting. While some of the 
impact has been remedied by a partial restoration of funds, it is an 
ideal example of what happens when we make predictions. It should be a 
lesson about what can happen when we abrogate process and turn our 
backs on the tried and tested.
    I am encouraged by the fact that we are engaging the budget process 
and hopefully we can catch up to the tax cut process before it becomes 
an Achilles heel for years to come. It is my sincere wish, as the voice 
of the people, that we restore order, balance and legitimacy to our 
proceedings. Then and only then can we really set our budget priorities 
in a fair and inclusive way.

    Chairman Nussle. Mr. Weldon.

STATEMENT OF THE HON. CURT WELDON, A REPRESENTATIVE IN CONGRESS 
                 FROM THE STATE OF PENNSYLVANIA

    Mr. Weldon. Thank you, Mr. Chairman.
    Chairman Nussle. We heard a siren a little while ago, and 
we were all speculating that it was you arriving to talk about 
what Mr. Pascrell and Mr. McGovern were here to talk about 
earlier. So we kind of heard you coming, I guess is what we are 
saying.
    Mr. Weldon. Well, you heard us coming long before we got to 
this hearing, because we all know that your background was in 
the fire service, and you are one of us, and we appreciate that 
personal relationship you have had with the fire service of 
this country.
    Mr. Spratt has been equally supportive. He has a strong 
fire service community in his State. I have spoken to them 
numerous times, and they have nothing but solid praise for the 
work he has done in supporting their efforts in the State.
    I am here to basically support--and I could come for many 
issues, as you all know, but I am coming for one and one only, 
and that is for a modest amount of money to provide assistance 
for our domestic defenders. We are asking these people--32,000 
departments across the country representing 1.2 million people, 
85 percent of whom are volunteers, we are asking these people 
to do more and more in the way of protecting our homeland. It 
is not just fighting fires. They are now being trained to 
handle chemical and biological incidents. They are the first in 
on floods, hurricanes, tornadoes. They are the first to respond 
to HAZMAT incidents. They are the first to be called, not FEMA, 
not the National Guard, not the Marine Corps sea berth teams. 
They are the first to be called to respond in every incident in 
America involving terrorism.
    The problem is that with all of these new responsibilities 
and with the pressures, especially with the volunteers, they 
are spending more and more of their time raising money to buy 
very expensive equipment, which means they can't do the job of 
protecting the communities. If we don't help these people out, 
especially the volunteers, you are going to see more and more 
communities go to the paid departments, which is going to cause 
a huge problem for the taxpayers of this country.
    What we are trying to do is not to federalize the Nation's 
domestic defenders. We are trying to give them the basic tools 
and equipment they need with matching funds that they provide 
to buy equipment, turn out gear, to do training, to do the 
kinds of things that they need to do to protect their 
communities.
    Now, some say--when we had the initiative that we 
successfully added on to our defense bill last year, the 
appropriation for that which I opened up on the House floor in 
the form of $100 million passed by a vote of 386 to 28. There 
was hardly anybody who opposed it.
    Those who opposed it said, well, wait a minute. You know, 
this is not the role of the Federal Government. This is the 
role of local government.
    I don't disagree with that as a former mayor and a county 
commissioner, but wait a minute. We spend over $3 billion--it 
is going to be in your budget this year, for police--we paid 
for half the cost of police vests.
    We want to put 100,000 teachers on the street. Well, the 
last time I checked there weren't a hundred teachers killed 
every year in the line of duty.
    Every year in Evansburg at the national Fallen Firefighters 
Memorial we pay special recognition to over 100 fire and 
emergency services personnel who give their lives in protecting 
their communities. We don't have anywhere near that number in 
teachers. It is very close to what we have in police, and they 
are all fully paid, and yet we do nothing at the Federal level 
except this last year in providing support and assistance to 
them.
    What we propose is a modest program. It was authorized at 
$100 million the first year, and we appropriated. In the second 
year, we are asking for $300 million to be matched with local 
dollars from local communities to buy equipment and resources 
to assist these domestic defenders in meeting the challenges 
that they are being asked to provide for our country. It is not 
out of line.
    Again, I don't want to create a national Federal Emergency 
Response Force. I am simply asking the Budget Committee to 
recognize these important people and to allow us to try to 
provide some assistance and incentives for the States to do 
more.
    In my State of Pennsylvania, we have a great program, which 
is currently at $25 million. That money is used to buy every 
piece of fire equipment in the State. The firefighters pay off 
the loan, but they get a low interest rate. We have another 
grant program. We need to encourage the States and local 
governments to do more in this area, and some small amount of 
Federal funds will help this happen. There could be no better 
return on our dollar than to help the domestic defenders of 
America by providing a small amount--a relatively small amount 
of funds.
    So I plead with you, in your budget deliberations, as tight 
as things are, to assist us in recognizing this vital need. We 
have organized this group of people nationwide. They are ready 
to go. They were grossly disappointed that the President's 
budget did not include a request for funding here.
    I am meeting with the budget director next week, and I will 
personally convey to him, along with a number of my colleagues, 
our concern with the President's request.
    I introduced President Bush in a fire house. He spoke about 
the need of these people. And for the budget to come out and 
not have any money in the budget to me was not only 
shortsighted, it was contradictory. We are going to work with 
the administration and attempt to change that and get their 
support, but the Budget Committee can really kind of lead the 
path here in terms of providing some suggestions to Congress 
that this is an area we should in fact be supportive of.
    So I would ask my colleagues to assist us in this effort. I 
know you have a very difficult time in all the numbers you have 
to crunch to come up with a budget on defense issues, health 
care issues--but I can tell you this. This is an area where the 
money will be well spent and in the end will save taxpayers 
money. Because most of these people are volunteers. I mean, I 
would love to see our police Departments go out and run tag 
days and chicken dinners to buy police cars. I would love to 
see that day. That ain't going to happen. Fire companies do it 
every day across America, tag days and chicken dinners, to pay 
off loans to buy $500,000 fire trucks. The least we can do is 
help them afford to buy those pieces of equipment to continue 
to serve their communities.
    You also mentioned the issue of hepatitis C. Last year, I 
included a package in the defense bill of a series of bills to 
help the fire and emergency service people. Bob Brady had 
legislation, which I was the original co-sponsor of, to 
authorize a $10 million pilot program dealing with hepatitis C 
as it relates to emergency responders. That is now law.
    So if you want to do something in that area, you could 
simply request the $10 million that has already been authorized 
to implement the $10 million initial program as a pilot program 
in looking at hepatitis C and how emergency responders in this 
country were suspected of being afflicted with this because of 
the incidents where they have to go into unknown situations and 
rescue people, whether it is in a hostile environment, a fire, 
a HAZMAT incident or whether it is in an accident on the street 
corner.
    So I would ask you to consider this, both the general 
funding and the hepatitis C program.
    Thank you for your support. I thank both of you for your 
sensitivity to the domestic defenses of this country and look 
forward to working with you as you unfold your process. Thank 
you.
    [The prepared statement of Curt Weldon follows:]

 Prepared Statement of Hon. Curt Weldon, a Representative in Congress 
                     From the State of Pennsylvania

               crucial funding for america's firefighters
    First of all, I would like to thank Chairman Nussle for allowing me 
to speak today. The chairman, like me, is a former firefighter, and I 
know him to be an individual who is deeply committed to providing our 
nation's first responders with the means necessary to do their job. And 
their job is, of course, to protect us all, at great risk to 
themselves.
    Chairman Nussle's leadership this year will be critical to the 
success of the fire service. I look forward to working with him in the 
future on this issue.
    Last year, Congress passed unprecedented legislation designed to 
help needy local fire departments. Attached to the FY2001 Defense 
Authorization bill, this legislation established a grant program to be 
administered by FEMA. These grants would be awarded based on need, and 
would go directly to local departments, bypassing intermediate 
beauracracies. The grant program was authorized at $100 million for 
FY2001 and $300 million for FY2002. Another major victory was had when 
we achieved the full $100 million appropriation last year, and cash-
starved fire departments nationwide are eagerly awaiting FEMA's 
implementation of the program. The application process is expected to 
begin in April.
    Unfortunately, President Bush's recently released budget blueprint 
did not include funding for the program in FY2002. It based this 
decision on the rationale that this is a local responsibility, not a 
Federal one. While there was a time that this may have been true, such 
is no longer the case. Fire companies are becoming increasingly 
involved in the planned response to terrorist attacks and potential 
events involving weapons of mass destruction. Our brave firefighters 
are referred to as first responders for a reason, whether it be a fire 
or an earthquake, a terrorist attack or a rescue operation, 
firefighters, often volunteers, are the first on the scene. The 
situations to which they respond are often federally managed, and yet 
fire departments have been neglected by the Federal Government. Last 
year we changed that. This year, as we anticipate massive spending 
increases in traditionally local matters such as education, let us not 
turn our backs on the 32,000 fire departments nationwide, and 1 million 
firefighters who serve them. Let us not forget the 100 people every 
year who suit up in their firefighting gear, and never come home. They 
are our responsibility.
    There can be no doubt that our nation's first responders are in 
dire need of help. Many volunteer fire departments face a manpower 
crisis. Even worse, declining budgets force many firefighters to put 
their lives on the line with aging and outdated equipment. New 
responsibilities and larger populations mean that we are asking them to 
do more with less. At the same time, fire service personnel have to 
hold pot-luck dinners to pay for equipment, or have to stand on street 
corners holding the donation boot to keep fire trucks running. This 
simply is not right. Would we ask the police or the military to submit 
to this?
    I am proud to support the grant program for our local fire 
companies, and my discussions with other members lead me to believe 
that this support is very widespread. This is not a partisan matter. 
Republicans and Democrats alike contributed to this program's 
realization. My good friend Steny Hoyer has been a great partner over 
the years in helping to promote congressional awareness of the needs of 
the fire service, and Members on both sides helped us achieve victory 
last year.
    Local fire departments serve every town in every congressional 
district in America. In many communities, the fire station is the 
center of civic participation. I urge all members of this committee to 
support full funding for the firefighter assistance program. It's time 
to answer our firefighters' call for help, as they have done for us for 
so long.
    Mr. Chairman, thank you for letting me appear before you today.

    Chairman Nussle. Would you let me know what you hear back 
from Mr. Daniels? Because I would be interested in talking to 
him about this as well.
    Mr. Weldon. I will absolutely let you know. We are planning 
a major parade, as we did once before, down Capitol Street to 
the White House; and we are going to surround the White House 
with fire trucks. So I am sure he is going to get the word one 
way or the other.
    Mr. Spratt. Take it all the way down to the executive 
offices.
    Mr. Weldon. We already did the Capitol Building, and the 
Congress responded. Thank you.
    Chairman Nussle. Thank you for your advocacy.
    I ask unanimous consent that members have 7 legislative 
days to submit statements. The statements that we have already 
received from members who have not testified will be made part 
of the record, and we will continue to accept statements for 7 
more legislative days.
    [The information referred to follows:]

Prepared Statement of Hon. Todd Akin, a Representative in Congress From 
                         the State of Missouri

    Chairman, ranking member, members of this committee, I want to 
thank you for the opportunity to share my budget priorities.
    I know this committee and this Congress must balance many competing 
priorities. However, there are two top priorities--taxes and national 
security--that I believe must receive our highest attention.
    America has a tax surplus. The tax surplus comes from a direct tax 
rate on the average American family greater than the cost of food, 
clothing, shelter and transportation combined! We have a tax surplus; 
it is time to give the money back to where it belongs--to the people!
    At the same time, the American economy is in need of immediate 
attention. Our economy reacts to a number of forces, including high 
taxes, a non-existent energy policy and a troubled stock market.
    The solution is simple: return the money back to the people in 
order to jump-start our slowing economy.
    Through Republican leadership, Congress now has a standard 
operating procedure to balance the budget and lockbox Social Security 
and Medicare revenues. With those safeguards in place, Congress must 
return the tax surplus to the people to stimulate critical sectors of 
the economy.
    I fully support President Bush's modest $1.6 trillion tax cut over 
the next 10 years, but I feel we can do more. There are six steps I 
believe this Congress must take to provide meaningful tax relief and 
aid our slumping economy.
    First, spending must come under control. In developing the budget, 
we must target a few crucial trouble areas--particularly the need for a 
tax cut and increased defense spending.
    Second, I support eliminating the marriage penalty altogether, 
which will cost $250 billion over the next 10 years.
    Third, the capital gains tax must be greatly reduced to encourage, 
not penalize, free enterprise and savings.
    Fourth, the 1993 Clinton Tax on Social Security must be repealed, 
which will cost $45 billion over the next 5 years.
    Fifth, the U.S. tax code must be simplified so more individuals and 
families can file their own tax returns.
    Sixth, the contribution limit on Individual Retirement Accounts 
must be increased to $5,000 and indexed to inflation. Furthermore, 401 
(k) plans must be expanded to encourage individual retirement savings. 
These two retirement savings steps will cost $55 billion.
    With the Congressional Budget Office (CBO) projecting a $5.6 
trillion surplus over the next 10 years, it is unconscionable for the 
government to deny a tax cut to taxpayers. The government is collecting 
more than it needs, while the average taxpayer is giving over one-
quarter of all of their earnings to the government. This is absolutely 
the right time to return our constituents' hard-earned money.
    A robust economy sets the stage for the proper funding for our 
armed forces.
    And just as we have a debt to pay down regarding taxes, we have 
both a moral and ethical obligation to pay down the debt we have 
accumulated in terms of worn out and outdated military equipment, 
research and development that never took place, and rigorous field 
training that took place too infrequently over the past 8 years.
    It is imperative that we accomplish the following:
    We must pass a Fiscal Year 2001 Supplemental Appropriations bill 
this spring to address the most pressing shortfalls in the current 
year's budget. While I much appreciate the political difficulties 
associated with such legislation, I think it essential that we make 
good on our responsibilities to our service men and women. Should we 
fail to do so, our Service Chiefs, as they reported only a few days 
ago, will have to cut deeply into third and fourth fiscal quarter 
operating budgets in order to fund current operations and programs.
    Contrary to what you may have heard, there are countless readiness-
related programs that require funding immediately. Seemingly mundane, 
but vitally important, programs that fund training and procure spare 
parts do not require the completion of a strategic review.
    In addition, we must pass a Fiscal Year 2002 Budget Resolution that 
fully meets our national security requirements. While Budget 
Resolutions typically deal only with aggregate sums rather than 
specific programs, we should keep in mind that defense spending must 
address both our immediate requirements relating to readiness, or 
combat preparedness, and quality-of-life issues--and our longer-term 
modernization, and research and development.
    Despite talk of a ``strategic pause,'' or a ``threat trough,'' 
extending out over the next 10 to 15 years, the fact is that our 
Services must be ready today, tomorrow, next year and beyond. As former 
Army Chief of Staff, General Gordon Sullivan, stated a few weeks ago, 
``We can not take a pass on readiness.''
    We have, however, 'taken a pass on readiness' over much of our 
nation's history. Unfortunately, we have a nearly perfect record of not 
being prepared for military conflict--from the War of Independence and 
War of 1812, all the way to the Korean and Vietnam wars. In an era of 
increasingly deadly weapons, and with conflicts more likely to be come-
as-you-are affairs, a lack of preparedness could come at a tragically 
high cost.
    Therefore, we must do the following:
    First, we must fully fund our training accounts, which directly 
support our ability to execute our national military strategy. Absent 
robust and ongoing training programs--there is no readiness. Readiness 
should be increased by $5 billion per year.
    Second, we must properly fund modernization. Even former President 
Clinton's Secretary of Defense, William Perry, testified before the 
House Armed Services Committee last year, stating that we are 
underfunding procurement by $20 billion per year. His testimony, in 
fact, represents the low end of the spectrum. We should, at a minimum, 
increase procurement by $20 billion per year.
    Third, long-term military readiness is maintained through adequate 
research and development. This portion of the defense budget could 
quite easily and responsibly utilize an additional $5 billion per year.
    Fourth, our military construction accounts have been underfunded 
for years. Many of our facilities, to include much of our housing 
stock, should have been replaced years ago. Our service men and women 
put up with substandard housing because they love what they do. We 
should increase military construction by nearly a $1 billion per year.
    Finally, the President's personnel and quality-of-life package will 
require approximately $5.7 billion. If we are to close the pay gap in a 
timely manner and address health care concerns--and we must do both--
then this must be part of the mix.
    We should, therefore, pass a Fiscal Year 2002 Budget Resolution 
that increases defense spending by at least $40 billion per year over 
current spending levels.

 Prepared Statement of Hon. Judy Biggert, a Representative in Congress 
                       From the State of Illinois

    Mr. Chairman, Members of the Budget Committee, I appreciate this 
opportunity to testify on the fiscal year 2002 budget.
    I am here today to urge you to maintain the Federal Government's 
commitment to scientific research and development by increasing funding 
for the Department of Energy's (DOE) Office of Science. Scientific 
research may not be as politically popular as health care and education 
right now, but science is as important to progress in these two areas 
as it is to America's continued economic growth and national security. 
I hope my testimony today can shed some light on this fact.
    Economic experts maintain that today's unprecedented economic 
growth would not have been possible were it not for the substantial 
investment in research made by the public and private sectors over the 
past several decades. For America to continue to benefit from this kind 
of investment, we must provide strong financial support for basic 
research across all of the scientific disciplines - including the DOE's 
Office of Science.
    The Office of Science is the nation's primary supporter of the 
physical sciences, providing an important partner and key user 
facilities in the areas of physics, mathematics and advanced computing, 
chemistry, geology, biology, environmental sciences, and engineering. 
The Office of Science supports a unique system of programs based on 
large-scale, specialized user facilities and large teams of scientists 
focused on national priorities.
    This makes the Office of Science unique among, and complementary 
to, the scientific programs of many other Federal science agencies, 
including the National Institutes of Health (NIH) and the National 
Science Foundation (NSF). I applaud the strong support shown by 
Congress in recent years for research conducted within the NIH and NSF, 
and I commend President Bush for supporting efforts to double NIH 
funding by 2003.
    This level of support should be extended to DOE's Office of Science 
because future medical breakthroughs depend on fundamental advances in 
the physical sciences and other research conducted by the Office of 
Science. One recent example is the Human Genome Project, which 
progressed so rapidly because of advanced computing technology and 
biological technology pioneered by the DOE Office of Science. Harold 
Varmus, former director of the NIH, said, and I quote, ``Medical 
advances may seem like wizardry. But pull back the curtain, and sitting 
at the lever is a high-energy physicist, a combinational chemist, or an 
engineer.''
    Unfortunately, the reality of the situation is that while federally 
supported medical research like that conducted by NIH has skyrocketed, 
funding for research in the physical sciences has remained stagnant. 
During the past decade, funding in constant dollars for the DOE Office 
of Science was reduced by approximately 13 percent.
    It is the research itself that has been most significantly 
impacted, since the costs of maintaining existing facilities and their 
associated staffs continue to rise with inflation. This has prevented 
the Office of Science from fully participating in technical areas 
important to DOE's statutory mission, such as high performance 
computing and nanotechnology.
    This erosion of resources has also reduced the number of scientists 
and students conducting physical science research at DOE's national 
user facilities and America's colleges and universities. This aspect 
alone could have a disastrous long-term effect.
    Already, doctoral candidates are choosing life sciences over 
physical sciences. In 1999, the number of doctorates awarded in science 
and engineering was the lowest figure in 6 years. This trend is 
reflected in undergraduate degrees as well, which over the past decade 
have declined significantly.
    Doubtless this exacerbates a shortage of highly skilled labor, 
posing a serious dilemma for academia, business, and government leaders 
alike because of the potential effect it could have on America's 
continued economic growth.
    This shift in human capital and resources to the life sciences has 
had a dramatic impact on America's ability to engage in cutting edge 
physical sciences research. It also poses a threat to our national 
security, but you don't have to take my word for it.
    According to the Hart-Rudman Report on National Security, and I 
quote ``* * * the U.S. government has seriously underfunded basic 
scientific research in recent years. The quality of the U.S. education 
system, too, has fallen well behind those of scores of other nations. * 
* * the inadequacies of our systems of research and education pose a 
greater threat to U.S. national security over the next quarter century 
than any potential conventional war that we might imagine.''
    The report goes on to recommend doubling the Federal Government's 
investment in science and technology research and development by 2010. 
While I understand that it may not be practical to double the Federal 
research and development budget this year, I believe Congress should 
take the necessary steps to move in that direction. One of the first 
steps should be to increase Federal funding for the research and 
development conducted by the DOE Office of Science.
    This Committee is the key to taking that first step forward. By 
recommending that the Office of Science receive a substantial FY 2002 
budget increase, this Committee can begin to reverse this troubling 
situation and help the DOE attract the best minds, support the 
maintenance and construction of modern facilities, and continue to 
provide the quality of scientific research that has been its trademark 
for so many years. As Congress continues to work through the budget 
process, I encourage you to support the research that has been crucial 
to America's economic success and national security.
    Thank you again for this opportunity to testify.

   Prepared Statement of Hon. Michael Bilirakis, a Representative in 
                   Congress From the State of Florida

    As you begin work on the Budget Resolution for Fiscal Year 2002, I 
urge the Budget Committee to include budgetary authority sufficient to 
remedy the inequitable offset of military retirement pay and VA 
disability compensation.
    As you may know, some military retirees--individuals who are 
eligible for military retirement benefits as a result of a full service 
career--are also eligible for disability compensation from the VA based 
on a medical problem they incurred while in the service. Under present 
law which dates back to the 19th century, these service-disabled 
retirees must surrender a portion of their retired pay if they want to 
receive the disability compensation to which they are entitled.
    Think of two soldiers who joined the Army together and were wounded 
in the same battle. Joe left the Army after his 4-year stint and joined 
the Department of Justice as a civilian employee. Jim stayed on and 
made a career in the military. Thirty years later, both men are 
receiving Federal longevity retired pay based on their careers. Both 
are also eligible for VA disability compensation as a result of the 
injuries they sustained while in the Army. The difference is that in 
order to get his disability compensation, Jim must forfeit an equal 
amount of his retired pay, while Joe collects the full amount of both 
benefits without a deduction in either.
    Why should the individual who chose a military career be penalized? 
One benefit is based on longevity in a career, the other on an injury 
sustained while in the service. Joe in our example can even receive 
civil service retirement credit for his 4 years in the military. Yet, 
Jim is branded a ``double dipper.'' This simply is not fair.
    Nationwide, more than 400,000 disabled military retirees must give 
up their retired pay in order to receive their VA disability 
compensation. In effect, they must pay for their VA disability out of 
their military retirement--something no other Federal retiree must do. 
How can we possibly expect to maintain a viable national defense if 
service members realize that if they experience a service-connected 
disability, they cannot receive both VA disability compensation and 
military retired pay?
    I have once again introduced legislation, H.R. 303, to eliminate 
this inequitable offset. My legislation has already received strong 
bipartisan support with over 200 cosponsors in the House of 
Representatives. I am pleased to report that 18 members of the Budget 
Committee are cosponsors of H.R. 303. In the 106th Congress, 31 members 
of the Committee cosponsored my legislation.
    H.R. 303 is also strongly supported by the American Legion, the 
Disabled American Veterans, the Veterans of Foreign Wars, the Retired 
Officers Association, the Retired Enlisted Association, Uniformed 
Services Disabled Retirees, the Military Order of the Purple Heart, the 
Non-commissioned Officers Association, the Reserve Officers 
Association, the Fleet Reserve Association, the Air Force Sergeants 
Association, the National Military Family Association, the National 
Association for Uniformed Services, AMVETS, and the Jewish War 
Veterans.
    Retirement pay is based on the number of years a servicemember has 
on active duty service and is earned for 20 years or more of faithful 
service. VA disability compensation was established to replace the loss 
of earnings attributable to a service-connected or service aggravated 
injury. Disability compensation also serves to compensate the disabled 
veteran for reduced ability to compete for civilian employment. 
Clearly, DOD retirement pay and VA disability benefits are vastly 
different. Yet, current law ignores any distinction.
    The 106th Congress took the first steps toward addressing this 
inequity by authorizing the military to pay a monthly allowance to 
military retirees with severe service-connected disabilities rated by 
the Department of Veterans Affairs at 70 percent or greater. In this 
era of dramatic surplus projections, it would be unjust not to seize 
the opportunity to end the unfair practice of offsetting military 
retirement pay and VA disability compensation once and for all. We have 
a unique opportunity to show our gratitude to the men and women who 
have sacrificed so much for this great country of ours, and we must not 
squander it.
    As the sponsor of H.R. 303, I strongly urge your Committee to 
include the budgetary authority necessary to remedy the inequitable 
offset of military retirement pay and VA disability compensation in the 
Fiscal Year 2002 Budget Resolution.

Prepared Statement of Hon. William Lacy Clay, Jr., a Representative in 
                  Congress From the State of Missouri

    Chairman Nussle and Congressman Spratt, thank you for the 
opportunity to come before your committee today to offer my thoughts on 
the Administration's budget proposals.
    I would like to specifically address a number of President Bush's 
HUD proposals, which I believe are fundamentally flawed and critically 
under-funded.
    The Administration would have Americans believe that its overall 
HUD spending proposals will actually increase that department's budget 
by $1.9 billion. But in real terms, if you do not count the 
Administration's $3.63 billion increase in technical budget authority--
increases that have virtually no impact on outlays or on assisting 
families--the Bush Administration's HUD budget actually cuts spending 
in fiscal year 2002 by $1.3 billion. And when adjusted for inflation, 
these cuts total $2.2 billion, which represents an 8 percent cut in the 
total HUD budget.
    The fact is, President Bush's proposed funding levels for HUD 
housing programs are so regressive, they are actually $1.8 billion 
below HUD housing funding levels for Fiscal Year 1995.
    These severe cuts encompass housing and economic development 
programs that are vital to senior citizens and low-income families 
struggling to find safe and affordable housing. As an example, the 
Administration proposes cutting $700 million from the Capital Fund, a 
program that provides critical housing resources for the repair and 
rehabilitation of homes in depressed communities. Additionally, the 
President's budget calls for a dramatic 11 percent percent cut in the 
HOME affordable housing program.
    The Administration also proposes cutting $422 million from the 
Community Development Block Grant Program, and terminating the $309 
million Drug Elimination program. Both programs provide cities with 
important resources for revitalizing communities, combating crime, and 
for providing needed job training skills.
    And just as critical is the Administration's proposal to cut $640 
million in Section 8 housing reserves and limit the number of new 
Section 8 vouchers to 34,000 nationwide.
    These cuts, if approved, would have a devastating effect on my own 
District. The Administration's proposed housing cuts would in effect 
``turn back the clock'' on my District's efforts to expand access to 
affordable housing for seniors and low-income families. In both the 
City of St. Louis and in St. Louis County, we have made great strides 
over the last decade to increase affordable housing in the area, but we 
are still far from resolving the problem.
    Five years ago, we had over 10,000 people in both the county and 
the city on Section 8 voucher waiting lists. Today, those numbers stand 
at 5,600 and 2,500 respectively. However, if the Administration's 
Section 8 voucher limit of 34,000 nationwide is allowed to stand, 
cities like St. Louis will see an immediate and dramatic increase in 
the number of people forced to wait for Section 8 housing. In New York 
City alone, over 215,000 families are currently on waiting lists for 
Section 8 vouchers.
    In an era of record budget surpluses and shrinking affordable 
housing options, we should be increasing--not cutting--our investments 
in affordable housing. The Administration's HUD budget proposals would 
deny millions of families any hope of finding safe and affordable 
housing in the near future and make it even more difficult for us to 
effectively address our nation's growing affordable housing needs. 
Given that fact, I believe the Administration's HUD budget is wholly 
inadequate and must be rejected.

Prepared Statement of Hon. Baron P. Hill, a Representative in Congress 
                       From the State of Indiana

    The annual Budget Resolution is Congress' opportunity to present to 
the American taxpayers its version of the ``big picture.'' It is the 
moment when Congress looks at all the competing interests in our nation 
and our Federal Government and decides what is really important.
    Without a budget framework, we politicians can remain detached from 
financial realities and promise everything to everybody. The budget 
resolution forces us to make the difficult choices we always have to 
make when there are not enough resources to satisfy everybody's needs. 
It requires us to acknowledge that governing involves tough choices. We 
politicians do not like saying no to anybody, but it is part of our 
job. I commend all of the members of this committee for the hard work 
they do to produce the budget resolution. I look forward to studying 
this committee's view of the ``big picture.''
    Unfortunately, the leadership of the House of Representatives 
appears to have decided that it would rather put off the tough choices 
for a later time. They have decided to eat their dessert before their 
dinner. This week they are sending to the House floor a bill involving 
almost one trillion dollars of current and projected future tax 
revenues, but have not shown the American people how this bill will 
affect our other priorities, such as eliminating the marriage penalty 
and the estate tax, protecting the surpluses in the Social Security and 
Medicare HI Trust Funds, and paying down the national debt.
    Politics always has been and always will be part of the budget 
process, but unfortunately it looks as though this year politics has 
completely replaced the budget process. The leaders of the House have 
decided to go out and buy a fancy new car without first figuring out if 
they can afford one. Responsible American businesses and families would 
never do what House leaders are doing this week. I urge them to restore 
``regular order'' to our budget process and allow your committee to do 
its important work.
    President Bush has acted more responsibly. He sent us his budget 
framework just 1 month after he took office. The President's 
``Blueprint for New Beginnings'' is a very admirable first effort at 
laying out the new Administration's budget priorities. Although I can 
find places in President Bush's 200-page document where I disagree with 
him and see places where we he will have to produce more details in a 
later budget submission, I share most of President Bush's priorities. I 
believe the Federal Government should give Americans significant tax 
relief, it should continue paying off the national debt, it should take 
steps to strengthen the Social Security and Medicare programs, and it 
should commit more resources to important national priorities such as 
our armed forces and our schools.
    I believe this year's budget framework should commit to both short-
term and long-term tax relief. We can help today's families and 
businesses by devoting some of our budget surpluses to tax cuts, and we 
can help our children's families and businesses by devoting a 
significant amount of our surpluses to paying down the national debt. 
Paying off the national debt helps lower long-term interest rates and 
eliminates the billions of dollars the government spends every year to 
service the debt.
    I support the Blue Dog Democrats' ``50-25-25'' budget plan, which 
makes a greater commitment to debt reduction than President Bush's 
budget. It reserves all of the Social Security and Medicare HI Trust 
Funds for debt reduction, and devotes one-half of all remaining 
surpluses to debt reduction. As USA Today pointed out in a March 2nd 
editorial, President Bush's budget would slow down debt repayment by 
$590 billion over the next 5 years.
    This year's budget framework should also recognize the uncertain 
nature of 10-year budget estimates. In its most recent budget outlook, 
the Congressional Budget Office (CBO) offered a harsh critique of its 
own estimates. It projected that its fiscal year 2002 surplus estimate 
has a 50 percent chance of being wrong by more than $97 billion and 
that its 2006 estimate has a 50 percent chance of being off by more 
than $245 billion. It also said its estimates for the sixth through the 
tenth years are likely to be even more inaccurate.
    Our budget framework should acknowledge that the projected $5.6 
trillion 10-year surplus is a highly speculative forecast and is likely 
to be wrong. It should take into account that two-thirds of the 
projected surplus ($3.68 trillion) would occur in the second 5 years, 
the period for which CBO admits it can do little more than guess what 
will happen to our economy and our budget.
    I believe your committee and all Members of Congress should not act 
as if the projected surpluses are already in the bank. We should create 
a budget framework that commits the budget surpluses that materialize 
over the next 10 years to our important priorities, but does not lock 
us in to policies that depend on speculative 10-year budget estimates. 
Writing a budget this year that depends on revenue that we may or may 
not have in future years is not responsible fiscal policy and risks 
taking us back to the era of deficit spending and accumulating national 
debt.

 Prepared Statement of Hon. Eddie Bernice Johnson, a Representative in 
                    Congress From the State of Texas

    Chairman Nussle and Ranking Member Spratt, I want to thank you for 
the opportunity to speak today to express my principal interests 
regarding the Budget Resolution for FY2002.
    First, I need to express my deep concern about the President's 
decision to hold the rate of growth in discretionary programs to 4 
percent . I must align myself with the concerns expressed by Senate 
Budget Chairman Pete Domenici who has repeatedly stated that a 4 
percent rate of growth is not enough. These discretionary programs 
represent many of the government programs which people relied upon in 
their everyday lives. When the rate of growth for those who need the 
services provided by a program is greater than the rate of growth in 
program funding, there is a reduction in the amount and type of 
services. A failure to keep pace with growth means that someone will 
not be served or will receive far less than they need. We must stop 
engaging in ``fuzzy math.'' These are not mere numbers. These are real 
people. And as their elected representatives we have a duty to ensure 
their well-being. We fail in that duty if we do not provide the 
resources they need.
    Now with that general overview, let me share my specific concerns 
with you:
    The priorities of the Administration include several proposals 
concerning the National Science Foundation (NSF). Chairman Greenspan 
stated that ``On the issue of research, there is just no question that 
if you're going to have technology as the base of your economy, which 
we do, research is crucial.'' We simply cannot expect our Nation to 
continue on its path of superiority if we do not provide the proper 
tools for our students to do so. These include a Math and Science 
Partnership Initiative, a study of the effect of NSF grant size and 
duration on possibly creating inefficiencies in the academic research 
enterprise, language requiring NSF to develop improved procedures for 
managing large facility projects and language to set up a blue ribbon 
panel to determine the pros and cons of transferring all of NSF's 
astronomy programs to NASA. These proposed initiatives have so much to 
do with increasing the present budget of the National Science 
Foundation (NSF).
    To succeed in this effort, it is necessary that we pass a budget 
that provides at least a 15 percent increase for the NSF. The present 
increase of 1.3 percent by the Administration is inadequate. The 
Administration has requested a 20 percent increase for NIH, while 
providing so little for NSF, its fellow science entity. The current 
proposal suggested by the Administration cuts programs such as basic 
science, renewable energy and oil and gas research and development by 
about $1 billion.
    Second, I have a great concern about education funding. It is clear 
that America needs to increase its efforts to improve the competence of 
our students. Such an initiative is said to cost the nation around $200 
million ($1 billion over 5 years). Unfortunately, the Administration 
has not included this in its budget. It is impossible for NSF to 
continue its work if it is unable to increase the number of grants 
across the nation.
    Further, an increase in education funding must include additional 
funding for Historically Black Colleges and University and Hispanic 
Serving Institutions. If this nation is truly supposed to provide 
opportunity for all people, we must adequately fund the academic, 
research and capitol projects of these institutions.
    Thirdly, we must assure that our veterans receive competent care in 
sound facilities. That is why I believe we must increase funding for 
the Veteran's Administration's capital construction projects in the 
areas with greatest demographic growth. As we all know, Texas and other 
areas of the South and West are experiencing phenomenal population 
growth. We must have enough forethought to dedicate resources for 
capital funding to those areas of growth.
    Fourth, we cannot forget the important role played by 
transportation in the commerce of this nation and our obligation to 
assure that travel by air and road is safe. Therefore, we must assure 
full funding for Aviation programs consistent with AIR-21 and 
especially FAA's Facilities and Equipment Account which would permit 
air traffic control modernization. I can assure you that every member 
of the traveling public would consider this money well spent.
    Fifth, we cannot forget the necessity to engage in responsible 
conservation and infrastructure improvement. We should fund the Land 
Conservation, Preservation, and Infrastructure Improvement Program and 
$1.76 billion and full funding for the Land and Water Conservation Fund 
at $900 million (consistent with last year's agreement in the interior 
appropriations bill).
    Finally, we must assure an across the board increase in funding of 
at least 10 percent for the U.S. Civil Rights Commission, and all 
Federal agencies which handle discrimination issues, including the 
EEOC; OFCCP and the Offices of Civil Rights in each Federal agency and 
department. These agencies have not had an increase in funding for 6 
years. We must assure that the agencies which investigate, monitor and 
remedy the evil of discrimination have adequate funds to do the job. 
Each person who lives and works in this country should have the 
assurance that they will not be denied opportunity based on race, 
gender, religion and national origin. If discriminatory activities 
occur, we must assure that people have access to a remedy. We must put 
our money where our rhetoric is. If we hate discrimination, we must 
fund those agencies charged with protecting its victims.
    Again, Chairman Nussle, Ranking Member Spratt and Members of the 
Committee, I thank you for this opportunity. I want to place my 
complete statement in the record and would be happy to answer any 
questions.

  Prepared Statement of Hon. Dennis J. Kucinich, a Representative in 
                    Congress From the State of Ohio

    Our country is facing a crisis in our infrastructure. It is 
something we see every day when we sit in traffic bound by orange 
barrels that line our highways. It is something that schoolchildren 
experience at their desks, crowded together under leaking roofs. Right 
here in Washington, municipal sewer systems overflowed last year, 
washing millions of gallons of raw sewage into the Potomac and 
Anacostia rivers into the Chesapeake Bay. These incidents happen every 
year and happen with increasing regularity as systems age. 
Infrastructure problems threaten our productivity, our economy, our 
environment and our health.
    What will it take to fix these problems? Nationally, it would take 
more than $1 trillion to bring our country's roadways up to speed 
according to a report released yesterday by the American Society for 
Civil Engineers. It would take $127 billion to repair and renovate our 
schools according to the National Center for Education Statistics. And 
in a recent study completed by the Water Infrastructure Network, it 
would take $1.3 trillion over 20 years to build, operate and maintain 
drinking water and wastewater facilities.
    With these kinds of extraordinary needs, it is no wonder that 
municipalities have not been able to make up the difference as the 
Federal Government has gradually decreased infrastructure support. 
Current Federal water and wastewater funding is about $3 billion per 
year, and TEA-21, which passed in the 105th Congress to fund surface 
transportation, did not meet half of the funding needs.
    My bill would create a low-cost Federal financing mechanism to 
administer $50 billion in zero-interest loans every year to localities 
for infrastructure projects for 10 years. Twenty percent of these funds 
would be targeted for school construction and repair. States would be 
totally responsible for choosing which projects to fund with the loans 
according to their specific needs.
    This bill would create the Federal Bank for Infrastructure 
Modernization (FBIM). The bank, as an extension of the Federal 
Financing bank under the Treasury, would administer the loans. The 
loans would bear a small fee of one-quarter of 1 percent of the loan 
principle to cover the administrative costs of the FBIM.
    In order to provide the money for the loans, the FBIM would hold a 
portion of the Treasury securities that the Federal Reserve normally 
holds. The Fed currently holds about $300 billion in Treasury 
securities. By transferring about $50 billion annually to the FBIM, it 
would still allow the Fed to operate as it does now to add liquidity to 
the system. The Fed, instead of buying securities, would buy the 
mortgage loans of the states. This way, the FBIM's finances would be 
integrated by the Federal Open Market Committee so as not to disrupt 
its ability to promote economic stability.
    In his February testimony, Fed Chairman Alan Greenspan supported a 
very similar type of transaction. Already, the Open Market Committee 
conducts repurchase agreements in mortgage-backed securities guaranteed 
by the agencies. Greenspan stated: ``the FOMC asked the staff to 
explore the possible mechanisms for backing our usual repurchase 
operations with the collateral of certain debt obligations of U.S. 
States and foreign governments.'' This bill would follow this advice by 
providing the tool for the FOMC to integrate the mortgage loans of the 
states from the FBIM.
    This amount could be varied so these funds could be used as a tool 
to foster stable economic growth. During times of economic slowdown, 
the FBIM could make more loans available to spur investment. During 
times of economic boom, the FBIM could make fewer loans available.
    The needs are so great that our old ideas just won't work. If we 
talk about the hundreds of billions of dollars needed to make 
infrastructure a workable, productive system, it overwhelms nearly 
every idea we've had in the past. The President's non-defense 
discretionary budget is $338.7 billion. The needs are much greater than 
that. Even for certain needs, like school construction, we would have 
to spend one-third of his budget. To repair structurally deficient 
bridges, we would have to spend one-fourth of his budget. It is 
unimaginable that we will fully address even one of these areas.
    We must be creative. We must think of ways of solving problems that 
are outside-the-box. That is exactly what this proposal is and why it 
needs the support of the Budget Committee. The Committee's backing of 
this bill reflects an understanding that our nation is asking for 
innovative, bipartisan solutions.
    The Federal Bank for Infrastructure Modernization is a tool for 
leveraging the necessary funds. Cities and states would still be 
responsible for paying the net cost of the project, but by making the 
loans zero-interest, it cuts the overall cost of the project in half. 
This is a workable solution that goes a long way in addressing 
infrastructure needs.
    I come here today to seek the support of the Budget Committee. With 
your leadership, this bill could provide the ingenuity, the essential 
boost that projects need.

    Prepared Statement of Hon. John J. LaFalce, a Representative in 
                  Congress From the State of New York

    Mr. Chairman, Ranking Member Spratt, and Members of the Committee: 
As Ranking Member of the Committee on Financial Services, I am pleased 
to have the opportunity to present my views on the President's FY 2002 
budget. I am particularly pleased to have this opportunity in light of 
last week's floor consideration of the President's tax package, which I 
strongly oppose.
    The American people do not support a massive tax cut that would 
jeopardize Federal spending priorities and our efforts to reduce the 
national debt, nor should we. Our Republican colleagues know this. But 
they nevertheless rushed to put the cart before the horse by passing 
the President's tax plan before we even know what our budget will be 
for the year.
    We have tried this approach before, and it was a disaster. In 1981, 
President Reagan assured us that we could first pass a massive tax cut 
and then meet Federal spending priorities, all the while keeping the 
Federal deficit in check. In reality, the 1981 tax cut plunged us into 
a decade of mounting debt, while putting the squeeze on important 
Federal programs.
    This experience should have taught us that we cannot rely on magic 
asterisks and vague promises to meet Federal budget priorities. It is 
critical that we consider tax cuts after we give serious consideration 
to a detailed budget for the year. It is the fiscally responsible thing 
to do and the American people expect this from us.
    In adopting the Republicans' plan, we would be turning the 
President's message on its head. He has told the American public time 
and again that tax cuts would be paid for by what was ``left over'' 
after budget priorities and debt reduction goals were met. But instead 
we are moving headlong into a fiscal plan that will pay for all of the 
Federal Government's spending obligations, as well as debt reduction, 
out of what is left over from a massive tax cut. We cannot afford to 
play fiscal games with our nation's economic future.
    The price tag on the Administration's tax cut and the rest of the 
Administration's tax plan will crowd out all other Federal priorities. 
The budget blueprint the Bush Administration has submitted is driven by 
the President's tax cut. To make room for that cut, it assumes a number 
of dangerous cuts for important Federal agencies and programs: a 46 
percent cut for the Small Business Administration, a 20 percent cut for 
Federal Emergency Management Agency, a 17 percent cut for the 
Environmental Protection Agency, an 8 percent cut for the Department of 
Housing and Urban Development (HUD), a 15 percent cut for the 
Department of Transportation, and the list goes on. The 
Administration's tax cut effectively slashes important Federal programs 
that serve the American people, raids the Social Security and Medicare 
trust funds, and reverses progress toward eliminating the national 
debt.
    Let me address several specific items in the budget of particular 
significance to the jurisdiction of the Committee on Financial 
Services.

                   HOUSING AND COMMUNITY DEVELOPMENT
    I take strong issue with the Administration's characterization of 
the budget for HUD. The Administration claims that it is increasing 
funding for housing programs, but, in reality, many key programs are 
being subjected to significant budget cuts.
    The Administration's budget blueprint purports to increase HUD's 
budget by $1.9 billion, almost 7 percent. However, a careful 
examination of the numbers reveals that spending is not increased by a 
single dollar. Through creative budget gimmickry, the Administration 
counts as spending increases some $3.6 billion in existing budget 
authority that do not actually raise spending. When you factor out 
these phantom increases, the reality is that the Administration's 
budget cuts housing programs by $1.3 billion, or 5 percent. When 
adjusted for inflation, this cut increases to $2.2 billion, an 8 
percent budget reduction.
    A detailed analysis of HUD budget cuts undermines the specious 
argument that spending on domestic needs is not being sacrificed in 
order to pay for the tax cut. The public housing budget is cut by $859 
million, on a net basis. The list of specific program cuts is long. The 
Community Development Block Grant (CDBG) program is cut by $422 
million. The HOME Investment Partnership affordable housing block grant 
program is cut by $200 million, an 11 percent cut. The Rural Housing 
and Economic Development program is terminated. The reserves that 
Section 8 administrators keep on hand are cut from 2 months to 1 month 
(a cut of $640 million), a dangerous reduction which could jeopardize 
timely payments to low-income tenants should payments from HUD lag. 
Empowerment zone funding is cut by $35 million.
    But perhaps the most telling criticism of the HUD budget is that, 
instead of cutting funding for affordable housing, we should be 
increasing it. At its heart, the Administration's budget represents 
missed opportunities to address our growing affordable housing needs--
including over 5 million families with worst-case housing needs and 
almost a million homeless on any given night.
    At a time of record budget surpluses we should be reinvesting at 
least some of those surpluses in a housing production program to build 
more affordable housing units. There is a growing bi-partisan consensus 
that such a program is needed, especially given the loss of our housing 
stock through opt-outs and prepayments, and the difficulty of using 
vouchers in strong rental markets.
    At a time when Republicans in Congress are about to pass a $2 
trillion tax cut, predominately tilted to our nation's most affluent, 
we should not ignore the needs of our nation's homeless, as the 
Administration's budget blueprint does. The estate tax break 
Republicans are seeking to pass will ultimately save any one of the 
richest ten Americans enough money to provide housing for our nation's 
almost one million homeless for an entire year. That is certainly a 
misplaced priority.
    At a time when we have just begun to make progress over the last 
few years in assisting some of our nation's 5 million families with 
worst-case housing needs, this Administration proposes to cut in half 
the number of annual incremental Section 8 vouchers that we have funded 
over the last few years.
    Moreover, at a time when the economic expansion has passed some of 
our communities by, and signs of recession loom, we ought not to be 
cutting the CDBG community development budget by over $400 million, 
terminating the rural economic development program, and reducing 
funding for Empowerment Zones. But that's what the Bush budget 
blueprint assumes.
    Put simply, the program cuts underlying the Administration's budget 
blueprint reverses the progress we have made in recent years in 
increasing resources to address our growing housing needs. At a time of 
budget deficits, this budget blueprint would be unacceptable. At a time 
of record surpluses, it is simply incomprehensible. It reflects a set 
of priorities we absolutely cannot accept.

     COMMUNITY DEVELOPMENT FINANCIAL INSTITUTIONS FUND (CDFI FUND)
    I am disappointed to see that the President's budget blueprint 
states the Administration's intention to reduce funding for this vital 
program. Although the blueprint indicates that the Treasury Department 
will continue its efforts to promote financial services in low-income 
communities through the CDFI Fund, the blueprint points out that the 
Administration will reduce the CDFI budget request by an unspecified 
amount, but at levels below the FY 2001 appropriation of $118 million.
    However, it has come to my attention that the Administration's 
request for FY 2002 may be only $68 million, a cut of $50 million, or 
42 percent from FY 2001. This massive reduction, if indeed the 
Administration follows through with it, is absolutely unacceptable, and 
directly contradicts, in spirit and in substance, the compassionate 
conservatism that the Bush Administration so often touts.
    As significant a cut as that contemplated for the CDFI Fund--a 
program that helps so many of our communities across America, and whose 
contribution to the expansion of financial services in low-income 
communities is unquestioned--sends precisely the wrong signal. In 
essence, that policy choice says that America's low-income communities, 
unlike the rest of the country, do not deserve ready and equal access 
to mainstream financial services. We must not forget that many of 
America's low-income communities have long been forgotten by mainstream 
financial institutions, many of whom refuse to serve the entirety of 
the communities from which they so richly profit. Unfortunately, these 
are the same communities that were overlooked by the nation's economic 
boom of the last decade.
    Since its inception, the CDFI Fund has made significant strides in 
accomplishing its goals of expanding the availability of financial 
services to America's low-income communities. Overall, the Fund's 
efforts have supported an increasing number of CDFIs and other 
financial services providers in distressed communities across America. 
The efforts of the Fund have led to increased access to capital in 
these communities, with significant multiplier effects: increased 
employment, more affordable housing, revitalized neighborhoods, and 
strengthened local communities.
    For example, in FY 1996 and 1997, 72 institutions received $68 
million in assistance from the Fund. Between the time they received 
their awards and 1999, these institutions doubled their annual lending 
and investing, which went from $529 million in the year of award 
notification to over $1 billion in FY 1999. During the same time 
period, these institutions increased their combined total assets from 
$1.6 billion to $2.6 billion.
    Moreover, there is clear evidence that demand for this program 
increases significantly every year. For example, between 1998 and 1999, 
the total number of applicants for all components of the CDFI Fund 
increased from 347 to 459, an increase of one-third. Similarly, between 
1999 and 2000, the number of applicants increased from 459 to 536, a 17 
percent increase. In FY 2000 alone, the CDFI Fund announced that it 
would make $50 million available for the CDFI Fund's core component, 
the program's single largest element. The Fund ended up receiving $264 
million in requests.
    Mr. Chairman, I do not understand how this kind of obvious need and 
related program growth can justify a 42 percent decrease in the CDFI 
Fund's budget, as the Administration is likely to soon propose. In 
light of the growth in demand for the program's resources, we should 
continue to increase the CDFI Fund's budget, as we have done over the 
last few years. I would propose that the Administration fund this 
program at $125 million in FY 2002. Full funding will assist the Fund 
in meeting the significant demand that the program so clearly continues 
to face.

                         THE PRIME ACT OF 1999
    The Program for Investment in Microentrepreneurs Act of 1999 was 
included as part of landmark legislation to modernize the laws 
governing our nation's financial services industry. The legislation 
authorizes the PRIME Act for 4 years at $15 million each year. The 
Small Business Administration is responsible for awarding PRIME funds 
to qualified organizations to:
     Provide training and technical assistance to low-income 
and disadvantaged entrepreneurs interested in starting or expanding 
their own business;
     Engage in capacity building activities targeted to 
microenterprise development organizations that serve low income and 
disadvantaged entrepreneurs; and
     Support research and development activities aimed at 
identifying and promoting entrepreneurial training and technical 
assistance programs that effectively serve low income and disadvantaged 
entrepreneurs.
    The legislation authorized the program at $15 million for 4 years, 
from FY 2000 to FY 2003. The FY 2001 budget funded the program at its 
authorized level of $15 million. Although the President's budget 
blueprint does not mention funding for PRIME, I strongly support 
continued funding of this initiative at the authorized level of $15 
million for both upcoming fiscal years.

                       INTERNATIONAL DEBT RELIEF
    On international debt relief, it is not yet clear if the new 
Administration will maintain the schedule for the U.S. commitment to 
the World Bank HIPC Trust Fund, a multi-lateral initiative to reduce 
the debt burden carried by the world's poorest countries. Funding for 
this initiative was authorized in legislation reported out of the 
Banking Committee in the 106th Congress (H.R. 1095), parts of which 
were incorporated into two successive omnibus appropriations packages. 
Although the Administration's blueprint pledges to fully fund ``all 
2002 scheduled payments to the Multilateral Development Banks (MDBs),'' 
in the case of the HIPC Initiative, staying current with this 
commitment would entail a $240 million appropriation in this year's 
budget, as well as a $135 million appropriation for bilateral debt 
relief. In light of tremendous economic and humanitarian benefits 
resulting from this initiative, the Committee believes that it is 
essential to adhere to our committed schedule for debt relief and to 
provide the necessary funding in a timely manner. Last year, Congress 
made substantial progress toward fulfilling the U.S. commitment to the 
HIPC Initiative, and I am hopeful that we can continue along the same 
path in the 107th Congress.

                      INTERNATIONAL MONETARY FUND
    In 1998, Congress increased the U.S. quota of the International 
Monetary Fund by $18 billion. As a condition of this funding, P.L. 105-
277 established a number of conditions and requirements to ensure that 
the IMF mission is appropriately defined and its functions are carried 
out effectively. Congress has an obligation to oversee IMF progress in 
various areas of reform, given the claim that IMF funding places on the 
Federal budget. In particular, I would urge the Budget Committee to 
carefully review IMF progress toward: strengthening financial crisis 
prevention measures; adopting policies that promote workers' rights and 
environmental considerations; adopting policies that improve 
international cooperation in the supervision and regulation of 
financial institutions and markets; and promoting policies that 
strengthen the financial sector in emerging economies.

                       WORLD BANK AIDS TRUST FUND
    In the 106th Congress, the Banking Committee passed, and the 
President signed, important legislation establishing a trust fund at 
the World Bank for the purpose of tackling the HIV/AIDS epidemic, 
especially in Sub-Saharan Africa. This region has 10 percent of the 
world's population but accounts for 80 percent of global AIDS deaths 
and 70 percent of the world's 30 million cases of HIV infection. 
Because the HIV/AIDS crisis dwarfs any other human health epidemic in 
recorded history, former Chairman Jim Leach and Reps. Barbara Lee and 
Maxine Waters worked tirelessly in the last Congress to shepherd 
legislation to address the problem under the auspices of the World 
Bank.
    The World Bank AIDS Prevention Trust Fund Act calls on the Treasury 
Secretary to negotiate a trust fund at the World Bank that provides 
grants to HIV/AIDS-affected countries for the implementation of HIV/
AIDS prevention, education, treatment, and care activities. The fund 
will be financed by contributions from governments as well as private 
donors, and the U.S. is authorized to make annual contributions of $100 
million for 5 years.
    In FY 2001, the Congress appropriated $20 million for the trust 
fund, which is $80 million short of the authorized level. I also note 
with concern that the President's budget is silent on FY 2002 funding 
for this important trust fund. If we are to help impoverished and cash-
strapped nations deal with the scourge of HIV/AIDS, the Congress must 
appropriate the full $100 million authorized in the legislation for FY 
2002, and make up the $80 million shortfall from the FY 2001 
appropriation. I also strongly urge the President to make funding for 
this trust fund a priority in his budget.
    Mr. Chairman, Ranking Member Spratt, and Members of the Committee, 
again, thank you for allowing me the opportunity to submit these views.

Prepared Statement of Hon. Carrie P. Meek, a Representative in Congress 
                       From the State of Florida

    Good afternoon, Chairman Nussle, Ranking Member Spratt, and Members 
of the Committee. Thank you for inviting me to testify before the 
Committee.
    There are many important issues that you must address in order to 
put together a responsible budget resolution. You must ensure that the 
budget provides sufficient resources to improve education, provide a 
prescription drug benefit, protect the solvency of Social Security, 
improve the solvency of Medicare, and pay down the national debt.
    As you work toward meeting these important responsibilities, I urge 
all of you to focus your attention on the impact that your decisions 
will have on the lives of people in communities throughout America. 
Your actions (and failures to act) have enormous consequences for my 
District and communities throughout America.
    I think that it's especially important in your work to use 
terminology fairly and accurately so that your resolution reflects not 
only what you propose to fund, but also what that funding will 
purchase. I am very concerned that all too often the numbers and 
percentages that all of us use do not fairly reflect the reality of 
what is happening in our communities. We need to do more to consider 
the real costs of dealing with the problems that the Federal budget is 
supposed to address. Let me offer just a few examples concerning 
housing and community development, an issue of particular importance to 
me.
    Currently, there is a crisis in the Section 8 housing program 
because of rising utility costs which usually must be borne by the 
tenants. The Administration is proposing a $150 million increase in 
HUD's operating subsidy to fund the difference between rent and 
expenses. That number sounds pretty impressive until you focus on the 
fact that, currently, the operating subsidy fund has a $260 million 
shortfall because of those rising utility costs.
    Similarly, the Administration claims that they are increasing the 
HUD budget by $1.9 billion, a 7 percent increase. Again, while that 
number sounds impressive, when you take out the phantom increases in 
the budget arising simply from accounting changes that do not increase 
the resources available for spending, the reality is that the proposed 
HUD budget is $1.2 billion below the amount required to fund a 
``freeze'', that is, a current services budget. $2.2 billion more would 
be required simply to keep pace with inflation.
    An equally sorry story exists when you look at the proposed funding 
for the Community Development Block Grant program (a $422 million cut); 
for Empowerment Zones ($35 million cut); and for Rural Housing and 
Economic Development.
    Mr. Chairman, it's not enough simply to have a function or a line 
item in your resolution entitled Education or Prescription Drug Benefit 
or Public Housing if the amounts that you allocate bear no actual 
relation to the needs that exist in our communities. For example, if 
your resolution funds a prescription drug benefit but it excludes 
coverage for anyone who earns more than $13,000 a year, then it's a 
misnomer to speak of providing a prescription drug benefit. You are 
only funding a prescription drug benefit for the poorest of the poor, 
and millions of middle-income Americans still will lack prescription 
drug coverage.
    One of my highest priorities is to promote economic development and 
community revitalization. Thus, it is tremendously discouraging to me 
to see how the Administration is proposing to cut the HUD budget.
    The Administration's $700 million cut to HUD's Public Housing 
Capital Fund program, a 25 percent cut, will have a devastating impact 
on the 3 million low-income residents of public housing throughout 
America.
    Scores of capital improvement items included in the 5 year plans of 
public housing authorities simply will not move forward this year 
despite the fact that a HUD study last year identified $22.5 billion in 
existing modernization needs in public housing. More public housing 
facilities will fail their inspections as fewer funds will be available 
to fund repairs to building systems and other aspects of the physical 
plant. In the absence of an increase to the Hope VI program, a 
reduction in the Public Housing Capital Fund will diminish 
revitalization of our affordable housing stock since the Capital Fund 
has often been used with Hope VI funding to encourage public/private 
partnerships.
    Incredibly, despite its rhetoric about fighting drugs, the 
Administration also proposes to terminate the Public Housing Drug 
Elimination Program, a program presently funded at over $300 million.
    This is clearly a large step in the wrong direction. The residents 
in public housing face lots of challenges in their lives. Why in the 
world would we want to discontinue a program which has proven 
successful in protecting children and the community at large from drugs 
and drug-related crime?
    I have just touched the surface of some of the many issues within 
your Committee's jurisdiction. You have a big task. Please step up to 
your responsibilities by producing a budget that fairly reflects the 
scope of the problems that the Federal Government must address, a 
budget with sufficient resources for the Federal Government to meet the 
needs of our people. Thanks again for inviting me to appear before you. 
I look forward to seeing the Committee's resolution.

   Prepared Statement of Hon. John E. Peterson, a Representative in 
                Congress From the State of Pennsylvania

                          A RURAL PERSPECTIVE
    Chairman Nussle, Ranking Member Spratt, distinguished colleagues, I 
come before you today to present a perspective that used to be the 
predominant one, a perspective that focuses on simplicity and 
community, one that is a way of life. That perspective is from rural 
America.
    I represent one of the largest rural districts east of the 
Mississippi River. In addition, the Commonwealth of Pennsylvania has 
more towns with a population of 2,500 or less than any other state in 
the Union. If one traveled through my district, they would find a 
multitude of manufacturing processes including timber and paper, 
powdered metals, steel products, plastics, and hi-end technology 
products. In addition, one would come across agriculture, as well as 
oil and gas. In fact, the Drake well sight, the first successful oil 
drilling site, is located in my district, as is one of the largest gas 
storage facilities in the northeast.
    Rural America is no longer the agrarian culture it once was and I 
highlight the multi-faceted nature of my district because rural America 
is slowly transforming into a society that does not rely on agriculture 
as heavily as in the past. Farming is still a strong component of life 
in rural America, but as that industry is faced with numerous 
challenges, the rural economy will continue to slowly transform. The 
demand for other jobs is growing and it is time to focus on ensuring 
that quality opportunities continue to exist in rural areas.
    It is on this transformation that I ask you, my colleagues, to 
engage and focus. In order to assist you, I will emphasize the 
following issues: education, economic development, energy, and health. 
As we begin this discussion, it is important to remember that rural 
communities are the first to feel any economic downturn and the last to 
realize the benefits of a robust economy. It is my hope that many of 
the topics mentioned will eventually help to minimize these economic 
effects on rural regions.
    Since education is one of the most important subjects for 
Americans, it seems like an appropriate one on which to focus first. 
Rural education systems face the same demands, challenges, and hurdles 
that plague many urban and suburban schools. School modernization 
efforts, academic performance issues, and drug-related problems are 
just as prevalent, if not more so in rural communities. Schools must 
rely on local taxes that come from a very limited base. As such, the 
ability to pursue other avenues of funding is greatly hindered. While 
many urban and suburban districts have significant administrative 
personnel, entire rural school districts rely on one, possibly two 
individuals to manage day to day operations and pursue both state and 
Federal dollars.
    That is why I wholeheartedly agree with the President's focus of 
providing more flexibility in Federal funding to the educational 
community by pursuing a block grant proposal. Recently, I asked the 
Pennsylvania Education Department for a list of every school district 
showing the amount of federal, state and local funds relied upon by 
each school district. You may be interested to learn that nearly all of 
the schools in my district receive roughly 1-percent from the Federal 
Government. In contrast, schools in urban areas receive on average 
about 7-percent of their funds from the Federal Government with one as 
high as twelve-percent. This is simply not fair. While this issue must 
be addressed in the context of reauthorizing the Elementary and 
Secondary Education Act, it is imperative that the Committee provide 
sufficient funds for reforms that address the rural funding inequity 
issue.
    I have often said that in the 21st Century, business and industry 
will locate in areas where there is a quality-trained workforce. One 
tremendous deficiency in ensuring the existence of a well-trained 
workforce is the lack of classrooms able to support emerging 
technologies. In order to address this shortcoming, I will be 
introducing legislation in the near future that will provide matching 
grants in order to provide more classroom opportunities. However, 
economic development money can be utilized to help create new and 
enhance existing technical centers. The President's overview budget 
discusses economic development accounts. I am a little dismayed it 
hints at following the advice of those that argue for the elimination 
of the various economic development accounts.
    The main thrust of the argument opposing economic development 
accounts centers around the duplicity of the various programs. While 
such duplicity may exist, certain proposals call for the total 
elimination of every program. This is simply irresponsible. In 
addition, opponents argue that funds are not targeted to those areas 
with the most need. When Congress reauthorized the Economic Development 
Agency a few years ago, one of the main tenants of that measure was 
focused on assuring that funds were directed to areas most in need.
    Rural communities are desperately in need of continued economic 
development funds. In fact, over the past 3 months, four companies in 
my district have either announced significant lay-offs or have 
completely shut down plants. With this decreasing tax base, it is 
imperative that communities have access to resources that will attract 
new business providing similar or better quality jobs while maintaining 
a quality of life. I can personally attest to the success of these 
funds, as I have been heavily involved in helping communities utilize 
them to attract business.
    Another issue that has been thrust into the forefront of today's 
priorities is energy. As I mentioned, I represent an area that has been 
heavily influenced by the oil industry. In addition, nearly all the 
natural gas destined for New England is stored or travels through my 
district. Our country is facing a crossroads in the arena of energy 
policy. The current Administration is taking steps to determine how to 
focus our efforts. One point that will almost definitely be addressed 
is the issue of increased domestic reliability. A continued drastic 
decline in domestic production will lead us toward a national security 
crisis. Right now we are seeing the beginnings of a domestic crisis, 
which if not addressed, will lead to one involving national security.
    As such, it is important to recognize that the current sources of 
energy, namely fossil fuels, will not be overtaken in the near future 
by any alternative energy source. That does not mean we should stop 
pursuing research in alternatives. What it does mean, however, is that 
we should not abandon these resources. New technologies are being 
discovered at an incredible rate that provide cleaner use of 
traditional fuels. This is a tremendous step toward ensuring that our 
economies continue without feeling any negative impact. In order to 
assist in this effort, we must continue to support research efforts in 
the fossil fuel sector that will bring these technologies to the 
forefront and eventually to the market place.
    As I mentioned, we should also be exploring alternative sources for 
energy production. There are a number of suggested alternatives that 
continue to manifest and others that have been at the forefront for a 
number of years. Many of these have been explored and researched to the 
point that viability is not a foreseeable option. The emphasis on the 
research and pursuit of alternative options should be heavily focused 
on those that are viable. For example, wind is an alternative that has 
been explored and, while applicable in some local situations, will not 
become a viable alternative for the entire nation. Furthermore, little 
progress has been achieved recently in improving wind toward becoming a 
more viable source. However, there are other sources that show great 
promise and have several applications that must receive more emphasis. 
I encourage you to highlight viable alternatives in the pursuit of 
energy policy funding.
    Finally, I would like to close on an issue that Chairman Nussle and 
I have worked very closely on and that is healthcare. In many respects, 
I am addressing a responsive audience interested in preserving a health 
care system in rural America, but I would like to take the opportunity 
to highlight a few areas.
    The debate on healthcare over the coming years will focus on our 
baby boom population as more and more Americans become reliant upon 
private and public sources of health care assistance. By and large, 
this aging population lives outside of urban settings, mandating our 
commitment to a vibrant, growing rural health care delivery system.
    Simply stated, rural health care is the most cost-effective health 
care delivery system in the country. However, federal, state, and 
private reimbursements for care provided in urban/suburban settings 
disproportionately out paces that provided to their rural counterparts 
compared to their respective costs. This payment variance can often be 
nearly as much as two-to-one, as exemplified in managed care 
reimbursement rates. I often say that while urban America enjoys access 
to Medicare Plus, rural America must make the most of Medicare 
``Lite''. But whether it is managed care organizations, hospitals, home 
health agencies, nursing homes, assisted living facilities, or 
ambulance service providers, rural caregivers are dealing with an 
uneven playing field. We must work diligently to right this wrong.
    Federal policy must serve to strengthen the viability of our rural 
providers. The alternative forces patients to travel long distances 
away from friends and family to more costly urban and suburban 
settings--both to them and to taxpayers. As such, I am pleased to hear 
of the President's budget priority to invest in a safety net by 
strengthening Community Health Centers that provide care for our low-
income, uninsured and underinsured rural populations. However, I worry 
that this initiative alone will not reach all of rural America, and ask 
you to also support other vehicles to assist in meeting this need. Such 
vehicles may emerge from a higher funded National Health Service Corps 
that would encourage greater practice in rural areas, an enhanced 
budget for the Office Of Rural Health Policy to boost research 
capabilities or increased funding to the Prospective Payment System 
Grant created in the 1999 BBRA, but never funded.
    Regardless of the details, the overall mission must be to not only 
preserve rural health care, but to ensure that it thrives in every 
rural community across the Nation. While our rural providers serve as 
the most cost-effective deliverer of care, their viability also serves 
as an integral part of their community's economic engine, as one of--if 
not the--largest employer in the area, and as a needed incentive to 
attract new residents, businesses, and opportunities for economic 
growth.
    In closing, I would like to thank the Committee for the opportunity 
to present the picture of rural America. We are the heart and soul of 
much that is good in this country. It is essential that rural 
communities remain vibrant and can continue to contribute to the 
economic prosperity of this country. When these communities begin to 
fail, the impact and burdens are soon felt by the entire country. Thank 
you for keeping the rural perspective in mind as you work toward 
finalizing a budget outline for fiscal year 2002.

  Prepared Statement of Hon. Charles W. Stenholm, a Representative in 
                    Congress From the State of Texas

    I appreciate the opportunity to appear before the House Budget 
Committee to offer my views on the fiscal year 2002 budget resolution. 
The consideration of the budget resolution is perhaps the most 
important debate Congress has each year because the budget establishes 
our priorities for the rest of the year. The opportunities presented by 
the projected budget surplus will make the budget debate even more 
important this year. The manner in which we proceed with the budget 
process over the next few weeks will set the tenor and tone for the 
remainder of the year.
    Last week, President Bush submitted a budget blueprint outlining 
how he proposes to fit his tax and spending priorities into an overall 
budget framework. We welcome this proposal as the first step in the 
budget process. Now it is our responsibility and we look forward to 
working with the president and the Congressional leadership to develop 
a budget resolution.
    Unfortunately, the Congressional leadership has chosen to 
shortcircuit the budget process by bringing legislation to the House 
floor implementing part of the tax cuts before Congress has had an 
opportunity to consider the entire budget. It is ironic and 
disappointing that at the very time that Members of this House are 
being given our first opportunity to offer our input into the 
priorities for our nation's budget on behalf of the people we 
represent, we are being asked to vote on a major portion of the 
President's budget. Those of us in the Blue Dog Coalition believe that 
considering tax cuts before Congress has put in place a budget 
resolution is a tremendous mistake that could jeopardize the fiscal 
discipline that has produced record surpluses and will put at ask risk 
of returning to the era of deficit spending.
    No family or business would make a decision that would have a major 
impact on their finances for the next 10 years without first sitting 
down and working out a budget to figure out what they can afford. We 
owe it to our constituents to apply that same common sense principle to 
the nation's budget. It would be a disservice to our constituents to 
pass these tax cuts before we know if there will be enough money left 
to fund other priorities.
    The Blue Dogs have repeatedly called for the largest possible tax 
cut that fits within the context of a fiscally responsible long-term 
budget framework that balances other priorities. Tax cuts must be part 
of a responsible budget with realistic spending levels and a serious 
commitment to paying down the national debt and strengthening Social 
Security and Medicare.
    The projections of a budget surplus provide us with a tremendous 
opportunity to pay down our national debt, strengthen Social Security 
and Medicare for future generations, address unmet needs in defense, 
education, health care and other areas and provide substantial tax 
relief to all Americans. If we are not careful and manage the budget 
surplus responsibly, we will squander this opportunity and return to 
deficit spending.
    The American people have repeatedly told us that their top priority 
for the surplus is paying down our national debt and strengthening 
Social Security and Medicare. We should decide how much of the surplus 
we will need to strengthen Social Security and Medicare and establish a 
plan to pay down our national debt before we consider tax cuts.
    In 1981, Congress passed a large tax cut before agreeing on the 
spending cuts to pay for the tax cut. The result was a $4 trillion 
increase in our national debt. We cannot afford to repeat the mistake 
of rushing to cut taxes before first considering how they will fit 
within a fiscally responsible budget. I lived through that experience 
20 years ago where we allowed ourselves to believe words that sounded 
too good to be true. It breaks my heart to think that we may have 
learned nothing from our mistakes.
    Financial markets will look beyond the short-term impact of fiscal 
policy to evaluate the long term consequences of our actions. Policies 
that signal to the financial markets a credible long-term commitment to 
fiscal discipline will have a positive impact on both short- and long-
term interest rates.
    Any benefits from the short-term stimulative effect of a tax cut 
will be eliminated if financial markets lose confidence in our 
commitment to long-term fiscal discipline. It is critical that any tax 
cuts be made in the context of a budget framework that financial 
markets view as a serious commitment to fiscal discipline over the 
long-term.

              RECOGNIZE UNCERTAINTY OF BUDGET PROJECTIONS
    Enacting a large tax cut based on 10-year surplus projections that 
may not materialize puts us at risk of returning to the days of deficit 
spending. We are concerned that the President is placing too much 
emphasis on 10-year forecasts that may not come to fruition in order to 
justify the size of his tax cut and downplay the amount of debt 
reduction that is prudent in the short-term.
    Over 70 percent of the projected on-budget surplus over the next 10 
years will occur in the second 5 years, when projections are especially 
uncertain. It is extremely dangerous to enact tax cuts now based on 
projections about the budget and the economy 6 years from now and 
beyond.
    In 1993, the budget projections for 2001 were approximately 800 
billion dollars off the mark. The Congressional Budget Office warned in 
their report about the new surplus projections that if today's 
estimates are as inaccurate by the average amount they have been off in 
the past, then within 5 years our surplus could easily be short $400 
billion in 1 year alone.

                             DEBT REDUCTION
    The economic prosperity of recent years was due, in large part, to 
the conservative budget policies which turned deficits to surpluses and 
allowed us to begin to pay down some of our staggering $5.7 trillion 
national debt. By using these surpluses to pay down some of the 
national debt and reducing the $240 billion in annual interest paid on 
the national debt, we were able to keep individual interest rates low, 
saving Americans thousands of dollars annually on mortgage, car loans, 
credit cards and college loans--what we consider to be the ultimate tax 
cut. Moreover, by paying down the debt, we were able to get the 
government out of the credit markets, making capital more accessible 
and affordable for American businesses, allowing them to continue to 
grow and prosper.
    Federal Reserve Chairman Alan Greenspan has repeatedly reported to 
Congress that devoting budget surpluses to paying down the debt held by 
the public is the most important action we could take to maintain a 
strong and growing economy. There is a broad consensus among economists 
increasing national savings by reducing the national debt continues to 
be the best long-term strategy for the U.S. economy. Reducing our 
national debt will provide an immediate tax cut for millions of 
Americans by restraining interest rates which will reduce the cost of 
home, student or business loans and other capital goods, while 
protecting our children and grandchildren from bearing the burden of 
the debts we have incurred.
    We were pleased to see that President Bush emphasized the 
importance of debt reduction, which he has not done in the past. His 
emphasis on debt reduction is further evidence of the wisdom of the 
Blue Dog message of debt reduction. However, we were disappointed that 
the President's plan would only pay off slightly more than $2 trillion 
of the $3.4 trillion debt held by the public over the next 10 years, 
leaving more than $1.2 trillion in debt outstanding. The administration 
believes that it is not possible to pay off any more debt than that.
    Only in Washington would people be worried about paying off the 
$3.4 trillion debt held by the public too quickly. Having ``too much'' 
money available from the budget surplus is a ``problem'' that we would 
like to have.
    Independent experts believe we can go much further in paying off 
the debt than the President proposes if we use prudent debt management 
tools to maximize debt reduction. Estimates prepared by the non-
partisan Congressional Budget Office and General Accounting Office 
indicate that the debt could be reduced by $400 billion more than the 
Bush administration claims, for a minimum of $818 billion in 2011 
through prudent debt management such as not issuing any new ten and 
thirty year Treasury notes. Federal Reserve Board Chairman Alan 
Greenspan estimated that the debt held by the public could be reduced 
to $750 billion without creating any problems. Former Treasury 
Undersecretary Gary Gensler estimates that a concerted effort to 
eliminate the debt could bring it down below $500 billion in 10 years. 
That is more than $700 billion lower than the amount of debt reduction 
proposed by the President.
    It will be easier for a future Congress to reduce future surpluses 
if we end up paying off the debt too quickly than it would be to change 
policies to put the budget back on a debt reduction glidepath if the 
surpluses are not as large as projected.
    Congress should take time to make sure we are doing everything we 
can to use our current surpluses to pay off the debt as aggressively as 
possible before accepting the position that reducing the publicly held 
debt to $1.2 trillion is the best we can do.
      protecting medicare and social security trust fund surpluses
    The President's budget does not set aside the Medicare trust fund 
surplus, despite the fact that the House overwhelmingly passed a 
Medicare lockbox which would require the entire Medicare HI trust fund 
surplus be set aside just 3 weeks ago. In fact, the Medicare trust fund 
surplus makes up half of the so-called ``contingency fund'' that is 
available to meet other needs.

      PROVIDE RESOURCES TO STRENGTHEN SOCIAL SECURITY AND MEDICARE
    The Congressional Budget Office has warned that, while the budget 
outlook is positive over the next 10 years, demographic tensions will 
begin after 2011 with the retirement of baby boomers that will create 
``budgetary pressures . . . (which) can easily reverse the favorable 
fiscal forces that are operating today.'' In particular, there is a 
bipartisan recognition that Social Security and Medicare will face 
serious financial challenges in the near future.
    The budget surplus provides us with the opportunity to make sure 
those programs continue to be strong for current and future 
generations. If we squander this opportunity, we run the risk of having 
to dramatically cut benefits or raise payroll taxes in order to keep 
the programs solvent.
    I commend the President for making reforms to deal with the long-
term problems facing the Social Security and Medicare programs a 
priority for your administration, and look forward to working with you 
to achieve this goal. Although the Blue Dogs have not proposed specific 
Social Security or Medicare reforms, we have taken the position in our 
budgets and elsewhere that dealing with the long-term challenges facing 
these two programs should be our first priority in allocating the 
projected surplus. While there are differences about specific Social 
Security and Medicare reform proposals, there is a widespread 
recognition that any Social Security or Medicare reform package will 
need to rely on some additional resources from the on-budget surplus.
    I personally agree with the President that we should allow 
individuals to invest a portion of their payroll taxes in individual 
accounts. Having worked on this issue for several years, I realize that 
creating individual accounts while meeting the President's goal of not 
reducing benefits for those currently retired or approaching retirement 
will result in transition costs that will require additional resources 
from general revenues in order to keep the program solvent until the 
benefits of individual accounts begin to accrue.
    Prudence dictates that we set aside a significant portion of the 
on-budget surplus for Social Security and Medicare reform until 
Congress and the President have reached agreement on legislation to 
strengthen these programs and we know how much of the surplus will be 
needed to make those reforms succeed.

                      MEDICARE PRESCRIPTION DRUGS
    There is a bipartisan commitment to enacting a meaningful 
prescription drug benefit for all seniors. Congress should enact a 
Medicare prescription drug benefit that is available, affordable, 
dependable and voluntary for all beneficiaries. I strongly encourage 
this committee to take time to seriously consider how much money we 
need to set aside in the budget in order to put in place a meaningful 
Medicare prescription drug benefit.
    New estimates from the Congressional Budget Office suggest that 
drug spending for the elderly and the disabled in the next decade will 
be much higher--perhaps 33 percent higher--than the agency predicted 
just 10 months ago. The Republican Chairman of the Senate Finance 
Committee, which will have responsibility for putting together a 
Medicare prescription drug plan, has indicated that as a result of 
these new estimates Congress will have to put more money into the 
budget for prescription drug coverage than the President proposed.

               STRENGTHENING THE AGRICULTURAL SAFETY NET
    American farmers continue to face tremendous economic problems. 
Members on both sides of the aisle agree that we need to strengthen our 
farm programs to deal with the crisis facing rural America instead of 
resorting to ad hoc emergency packages each year.
    As you know, a coalition of groups representing a cross-section of 
agricultural groups wrote to this Committee stressing the importance of 
including additional agricultural budget authority for each of the 
years remaining in the Budget Resolution (FY2003-FY2011) to avoid 
continued requests for ad hoc assistance packages. They suggested that 
we consider at least $12 billion per year in additional funding needs 
for each of the remaining years of the Budget Resolution. Such a 
commitment would provide the necessary funds to cover the options 
currently being evaluated by the Senate and House Agriculture 
Committees as essential elements of the new Farm Bill.

ESTABLISH REALISTIC SPENDING CAPS THAT PROVIDE ROOM TO RESPONSIBLY FUND 
                         BIPARTISAN PRIORITIES
    A responsible budget framework must check the growth in spending 
while providing room to meet these priorities without relying on 
unspecified or unrealistic spending cuts that may not materialize. 
Unrealistic spending levels in recent budget resolutions have resulted 
in a chaotic process that dragged on well beyond established deadlines 
and produced irresponsibly high spending. The President talked about 
the areas where he proposes to increase spending at great length, but 
did not provide much information about where he would reduce spending 
in order to pay for these initiatives as well as his tax cut.
    We share the President's commitment to restraining government 
spending. We are willing to work with the administration and this 
committee to address excessive or wasteful spending. We encourage the 
President to submit to Congress recommendations to eliminate specific 
areas of waste, fraud, abuse or pork within the current budget which 
might reduce the overall spending levels in the future. A budget which 
controls spending will restore sorely needed budgetary discipline. If 
we can reach agreement on tough but realistic spending levels, the Blue 
Dogs are committed to help you hold the line against additional 
spending.
    At the same time, we also share the President's support for 
investing in priority areas such as defense, education, health care and 
other areas. We are very interested in working with the new 
administration on issues such as education reform and strengthening our 
military. It is critical that we ensure that there will be resources 
available this year and in the future to back up our rhetoric with 
funding to accomplish these goals without relying on promises of 
unrealistic spending cuts that may never materialize. Promises about 
reforming education and strengthening our military will be hollow if we 
enact large tax cuts that don't leave room to fund these areas.
    The President has proposed education reforms to improve our 
nation's educational system and establish greater accountability for 
public schools. Calling on our schools to meet increased standards 
without providing resources to help schools meet these standards will 
result in another unfunded mandate.
    The budget blueprint submitted by the President did not include 
increased funding to address our unmet needs in national defense. The 
President has indicated that he will wait until the Department of 
Defense has completed a strategic review before proposing more money 
for defense. However, there may not be money left to increase defense 
spending when the review is completed if we enact tax cuts without 
putting together a budget that leaves room for increased defense 
spending.

                               CONCLUSION
    Budgeting requires making choices. This Committee faces some tough 
choices in balancing several worthwhile priorities within a fiscally 
responsible budget framework. We should create a budget framework that 
commits the budget surpluses that materialize over the next 10 years to 
our important priorities, but does not lock us in to policies that 
depend on uncertain 10-year budget estimates.

    Chairman Nussle. We appreciate people's attendance here 
today, and we are adjourned.
    [Whereupon, at 3:40 p.m., the committee was adjourned.]
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