[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

                             SECOND SESSION
                               __________

           HEARING HELD IN WASHINGTON, DC, February 14, 2002
                               __________

                           Serial No. 107-24
                               __________

           Printed for the use of the Committee on the Budget










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


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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, February 14, 2002................     1
Statement of:
    Hon. Steny H. Hoyer, a Representative in Congress from the 
      State of Maryland..........................................    13
    Hon. Ike Skelton, a Representative in Congress from the State 
      of Missouri................................................    18
    Hon. Jim McDermott, a Representative in Congress from the 
      State of Washington........................................    21
    Hon. Barney Frank, a Representative in Congress from the 
      State of Massachusetts.....................................    28
    Hon. Thomas H. Allen, a Representative in Congress from the 
      State of Maine.............................................    33
    Hon. Tom Udall, a Representative in Congress from the State 
      of New Mexico..............................................    36
    Hon. Tom Osborne, a Representative in Congress from the State 
      of Nebraska................................................    38
    Hon. Dennis J. Kucinich, a Representative in Congress from 
      the State of Ohio..........................................    41
    Hon. George W. Gekas, a Representative in Congress from the 
      State of Pennsylvania......................................    47
    Hon. Bill Pascrell Jr., a Representative in Congress from the 
      State of New Jersey........................................    49
    Hon. Mike Pence, a Representative in Congress from the State 
      of Indiana.................................................    52
    Hon. Mark R. Kennedy, a Representative in Congress from the 
      State of Minnesota.........................................    57
    Hon. George Miller, a Representative in Congress from the 
      State of California........................................    59
    Hon. Vernon J. Ehlers, a Representative in Congress from the 
      State of Michigan..........................................    62
    Hon. Donna M. Christensen, a Delegate in Congress from the 
      Territory of the Virgin Islands............................    65
    Hon. Michael Bilirakis, a Representative in Congress from the 
      State of Florida...........................................    69
    Hon. Duncan Hunter, a Representative in Congress from the 
      State of California........................................    73
Prepared statement and additional submissions of:
    Hon. Jo Ann Davis, a Representative in Congress from the 
      State of Virginia..........................................     2
    Hon. Rosa L. DeLauro, a Representative in Congress from the 
      State of Connecticut.......................................     2
    Hon. Phil English, a Representative in Congress from the 
      State of Pennsylvania......................................     4
    Hon. Lane Evans, a Representative in Congress from the State 
      of Illinois................................................     5
    Hon. Paul E. Kanjorski, a Representative in Congress from the 
      State of Pennsylvania......................................     5
    Hon. Jim Langevin, a Representative in Congress from the 
      State of Rhode Island......................................     7
    Hon. John Linder, a Representative in Congress from the State 
      of Georgia.................................................     8
    Hon. Nita M. Lowey, a Representative in Congress from the 
      State of New York..........................................     9
    Hon. Carolyn B. Maloney, a Representative in Congress from 
      the State of New York......................................    10
    Hon. Nancy Pelosi, a Representative in Congress from the 
      State of California........................................    11
    Hon. Adam B. Schiff, a Representative in Congress from the 
      State of California........................................    12
    Mr. Hoyer....................................................    17
    Mr. Skelton..................................................    20
    Mr. McDermott:
        Constituent letter No. 1.................................    24
        Constituent letter No. 2.................................    25
        Prepared statement.......................................    25
    Mr. Frank:
        List of organizations....................................    31
    Mr. Allen....................................................    35
    Mr. Udall....................................................    37
    Mr. Osborne..................................................    39
    Mr. Kucinich.................................................    45
    Mr. Gekas....................................................    48
    Mr. Pascrell.................................................    51
    Mr. Pence....................................................    54
    Mr. Kennedy..................................................    58
    Mr. Miller...................................................    61
    Mrs. Christensen.............................................    68
    Mr. Bilirakis................................................    72











                              MEMBERS' DAY

                              ----------                              


                      THURSDAY, FEBRUARY 14, 2002

                          House of Representatives,
                                   Committee on the Budget,
                                                    Washington, DC.
    The committee met, pursuant to call, at 10 a.m. in room 
210, Cannon House Office Building, Hon. Jim Nussle (chairman of 
the committee) presiding.
    Members present: Representatives Nussle, Sununu, Gutknecht, 
Ryun, Collins, Fletcher, Spratt, McDermott, Hooley, Holt, 
Honda, and McCarthy.
    Chairman Nussle. Good morning and happy Valentine's Day.
    Today is an opportunity for us to listen to Members from 
both parties, from other committees of jurisdiction. We have 
Members on our list who have asked to testify. Some are former 
members of the Budget Committee, members of the leadership, 
former members of leadership, people who have been doing this 
for longer than many of us even on the panel.
    So it's always an interesting day to hear their 
perspective. Last year when we had Members' day, we decided to 
do it a little bit differently. We began with the freshman 
class, thought we would listen to the freshmen fresh out of the 
field at that point in time, what their thoughts were. Today 
we're back to a little bit more traditional, whoever can show 
up, kind of schedule. And especially after last night, to have 
the very distinguished gentleman from Maryland here, bright and 
early, is amazing. Because you were certainly one of the 
leaders last night in the debate, and we appreciate that you 
would keep your commitment and come today to visit with us.
    If I could also say parenthetically, thank you on behalf of 
the committee, for your assistance with our committee and so 
many others in helping us upgrade equipment from the House 
Administration Committee. You're getting to see some of the 
things today. We can give you a little tour. You've probably 
had enough of these. But we worked with your committee, as you 
know, over the last three budget cycles. We appreciate the 
assistance the House Administration Committee has given us.
    Last week we kicked off our first web cast. If I'm not 
mistaken, we had somewhere around 50-different people across 
the country who--without any advertising at all that we were 
even doing this--had already started to tune in to what we were 
doing. Maybe that's not a lot, but without any notice at all, 
to have 50-more Americans be able to take a look at what's 
happening here in this committee and in Congress I think is at 
least a good start. We'll get the word out about that.
    Without any further ado, we welcome you to the committee. 
We look forward to your testimony. If you have a written 
statement, it will be submitted for the record and you may 
summarize as you see fit. All other members on the committee 
certainly are welcome to submit a statement for the record at 
this point.
    [The prepared statements of Representatives: JoAnn Davis of 
Virginia, Delauro, English, Evans, Kanjorski, Langevin, Linder, 
Lowey, Maloney of New York, Pelosi, and Schiff.]

 Prepared Statement of Hon. Jo Ann Davis, a Representative in Congress 
                       From the State of Virginia

    Mr. Chairman, members of the committee, I want to thank you for the 
opportunity to testify before the House Budget Committee today on the 
important issue of budgeting for the Maritime Administration's (MARAD) 
ship disposal program. This is an important program for not only 
certain districts, but exists to protect both the environment for, and 
health of, all Americans.
    As I am sure you are aware, the National Defense Authorization Act 
of 2001 (P.L. 106-398) requires MARAD to dispose of all vessels in the 
National Defense Reserve Fleet (NDRF) by September 30, 2006 that are 
not administered by the Ready Reserve Force or designated for another 
specific purpose. To this end, MARAD has attempted to implement their 
disposal mandate. However, they have not received the requisite amount 
of funding for this initiative.
    Mr. Chairman, I wanted to bring this to the attention of the House 
Budget Committee, because the situation with respect to the MARAD ships 
is time critical. In January of 2001, the General Accounting Office 
(GAO) issued a report titled, Major Management Challenges and Program 
Risks: Department of Transportation (GAO-01-253 January 1, 2001). This 
report explored in some depth the problems associated with MARAD's 
administration of its ship disposal program. I have attached the 
requisite pages as part of my testimony for your consideration (pgs. 
Cover, 32-35).
    Mr. Chairman, in the course of the committee's consideration of the 
budget, I would ask that you give full consideration to the effects on 
the environment an underfunded ship disposal account could have. The 
results could be potentially disastrous. As the photo on page 33 
indicates, the ''Ghost Fleet'' located on the James River in Virginia 
is particularly vulnerable to environmental disaster. However, the 
picture really cannot do complete service to the facts of the case.
    On the James River alone, of the 74 ships in the ''Ghost Fleet,'' 
16 are considered at ``high-risk'' for environmental disaster. On April 
30, 2001, the Maritime Administration in A Report to Congress on the 
Program for Scrapping Obsolete National Defense Reserve Fleet Vessel 
noted,
    ``The urgency to remove obsolete ships from MARAD's NDRF 
anchorages, especially many in the JRRF [James River Reserve Fleet] in 
Virginia, has been documented by the Department of Transportation (DOT) 
Inspector General Audit Report (March 2000) and the General Accounting 
Offices Report to Congress on Major Management Challenges and Program 
Risks in DOT (January 2001). Public attention has been recently 
elevated by recent news publications (National Geographic Discovery 
series and ABC Nightline News). The urgency is in part due to the 
location of the three fleet sites in areas bordering on sensitive 
estuarial wetlands where the release of petroleum products or hazardous 
materials could generate significant clean up costs and have lasting 
negative environmental impact'' (pg. 21) [Italics and bold not in 
original].
    Mr. Chairman, after you consider the facts, I genuinely believe 
that you will agree with me that the United States must do better in 
funding our ship disposal needs.
    I appreciate the consideration you have given to me today and look 
forward to answering any further questions you may have regarding this 
topic. Mr. Chairman, members of the committee, thank you.



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

    Mr. Chairman, Mr. Ranking Member, thank you for the opportunity to 
testify before this committee today.
    The Nation's budget is a blueprint not just for spending, but for 
where we are going as a Nation and how we will address our priorities. 
The events of September 11 changed that blueprint in ways none of us 
could have imagined before that tragic day. We urgenty need to act to 
fund the war on terrorism and to promote homeland security so to 
prevent any future attacks. The threat is still there, and we must act 
now.
    Toward that end, the President's budget has proposed $48 billion in 
new military spending. We all stand four-square behind the President in 
this war on terrorism and we'll examine the spending proposal in that 
light. Of course, we must provide all the tools needed to pursue that 
fight and protect American citizens.
    I am proud that citizens in my own State have played a leading role 
in that effort. In Connecticut, we build the Blackhawk helicopter and 
have employees whose years of dedicated hard work have ensured our 
country's safety. As our men and women in the military serve on the 
front lines of the war against terrorism, it is vital that we maintain, 
if not improve the current production level of Blackhawks. Currently 
these helicopters are playing an important role in the war against 
terrorism by transporting troops and equipment. Blackhawks are also 
used to perform search and rescue operations and bring the wounded to 
safety. I am proud that the people of my own district in Connecticut 
have been able to participate in this effort.
    Clearly, the economy, the budget fiscal and tax policy and the 
related issue of military spending and how to provide all the necessary 
resources to fight the war on terrorism will remain front and center 
issues in the months ahead.
    But while the war demands significant resources, there is no 
evidence that it must come at the expense of other priorities. The 
biggest drain on our resources is not the war, but $600 billion in new 
tax cuts. I have deep concerns that, if the President's budget is 
enacted, it will hurt people in my district and people across the 
Nation.
    The President's budget forfeits the notion of a balanced budget. In 
1 year, we've gone from a projection of $5.6 trillion surplus over 10 
years to a projection of $1.5 trillion deficit over that same time. 
That's one of the fastest budget turnarounds in recent history.
    With this budget, the administration has turned the clock back on 
everything we have accomplished over the past 5 years in reestablishing 
some semblance of sanity to our fiscal policy. It leaves us with 
nothing but deficit spending in the foreseeable future and forces us to 
use the Social Security and Medicare surpluses to finance the 
government. That means Social Security will be weakened just when baby 
boomers begin to collect their checks.
    To pay for the new tax cuts, President Bush's budget calls for cuts 
in spending, including cuts in education and in programs that he signed 
into law just a few weeks ago. His budget cuts funding for the his own 
top priority, the No Child Left Behind Act, leaving behind $90 million 
less than was authorized. And it fails to provide a Medicare-based 
prescription drug benefit for all of our seniors.
    We're in the middle of a recession yet the President's budget cuts 
job training programs by 12 percent. In my home State alone, almost 
27,000 jobs have been lost in the last year. Cutting job training at a 
time when so many are looking for new jobs seems like such an obvious 
mistake.
    And, as I said earlier, it will force cuts in other vital areas. 
For instance, the budget cuts funding for Children's Hospital Graduate 
School Medical Education (GME) by $85 million, or 29.8 percent. 
Hospitals like the Connecticut Children's Medical Center in Hartford 
depend on this funding to help pay for the higher costs of providing 
advanced training to pediatricians.
    The budget cuts funding for LIHEAP formula grants to States by $300 
million, or 17.6 percent. LIHEAP helps 4.7 million of the most 
vulnerable households in this country, including 410,270 eligible 
households in Connecticut, to pay their heating and cooling bills. Only 
68,000 Connecticut households in need were actually served in 2001, so 
additional funds are desperately needed. The President's cut would cut 
$6.289 million in LIHEAP funds from Connecticut.
    The budget freezes funding for Ryan White AIDS programs at last 
year's level. With the advent of effective therapies such as the 
``triple cocktail,'' people with HIV/AIDS are living longer, but many 
have difficulty paying for the drugs they need to stay alive. The 
number of people seeking help through the AIDS Drug Assistance Program 
(ADAP) has more than doubled since 1996. My State of Connecticut 
receives more than $26 million in Ryan White funding, and people in our 
region suffering from HIV/AIDS desperately need this funding.
    And, of course, there is the President's top legislative priority, 
education. The President's budget cuts the Federal investment in 
education in real terms. He proposes just a 2.8-percent increase (or 
$1.4 billion), the smallest in 7 years and less than the inflation 
rate. Hidden within this overall increase is $1.7 billion in cuts from 
education programs, including a net cut of $84 million from the 
bipartisan education reform law he signed just last month.
    It decreases Safe and Drug Free School Programs by 13.7 percent. 
The 21st Century Community Learning Centers after-school program was 
only able to fill 11 percent of the requests for funding in 2001. 
However, the administration budget includes no increase in this vital 
after-school program. It is funded at the fiscal year 2002 level of $1 
billion. This would actually result in 27,000 fewer children receiving 
the support they need from constructive after-school activities. After-
school programs can help to ensure that children succeed in school and 
are engaged in safe activities after school. Today, nearly 7 million 
children are home alone during some part of each week.
    Head Start funding currently reaches only three out of five 
eligible preschool-age children, and less than 5 percent of eligible 
infants and toddlers can participate in Early Head Start. The 
administration's proposed $130-million increase (2 percent) for Head 
Start means not only that no additional children can be served but also 
that programs will have to struggle to cover basic cost increases with 
no new resources to support continued efforts to strengthen the quality 
of Head Start. Head Start is crucial for preparing our children for a 
successful future.
    The Child Care Development Block Grant (CCDBG) received no increase 
for fiscal year 2003 (either in mandatory or discretionary funds). 
Instead it was funded at last year's level of $4.8 billion. This 
program provides subsidized child care services to eligible families 
through certificates or contracts with providers. This freezes the 
purchasing power of the program by $40 million. Flat funding would mean 
that at least 30,000 fewer children could receive child care assistance 
and no new investments could be made to strengthen the quality of care. 
It is estimated this would serve 2.2 million children. Currently, only 
one in seven children whose families need help in paying for child care 
receives any assistance.
    The list goes on. To cut these types of programs to pay for an 
oversized tax cut for the wealthy does not reflect the clear priorities 
of the American people. It is imperative that we stand behind the 
President on the war effort. But in doing so, we must not turn our back 
on the progress of the last few years. We made so many strides: 
investments in crucial priorities, fiscal responsibility, paying down 
the national debt, and meaningful steps toward saving Social Security 
and Medicare. We should not risk it all. We do not need to. The 
American people do not want us to.
    Thank you again for this opportunity.



 Prepared Statement of Hon. Phil English, a Representative in Congress 
                     From the State of Pennsylvania

    Chairman Nussle, Ranking Member Spratt and members of the 
committee, thank you for allowing me to present testimony to you today 
to convey what I believe should be a strong budget priority for fiscal 
year 2003.
    I urge the committee to take a careful look at funding levels for 
the Department of Transportation for fiscal year 2003. Because of a 
negative Revenue Aligned Budget Authority (RABA) calculation, a $4.39 
billion short fall is expected for Federal highway funds in 2003. The 
administration's overall transportation request is $8.5-billion less 
than fiscal year 2002.
    If these cuts to Federal highway funding proceed, it will be 
difficult for States including Pennsylvania to continue forward with 
their planned highway programs. Because of the reduction in funds, 
States will be forced to re-examine their priorities statewide until 
additional Federal funds for highway construction can be allocated. 
This will cost Pennsylvania an estimated 14,536 good-paying jobs.
    Last week, I met with the Pennsylvania Secretary of Transportation 
Brad Mallory to talk with him about the impact of any decrease in 
Federal funding. Secretary Mallory assured me that a decrease in 
Federal funding would have a huge impact on many of Pennsylvania's 
highway projects. And it will happen all over the United States.
    While it's too early to say that projects are on the chopping 
block, allow me to provide you with one example of a crucial project 
that could be facing the axe. Erie's eastside access highway is a 6.2-
mile long stretch that will link Erie's Bayfront Parkway to Interstate 
90.
    While that may not mean much to you, let me tell you what it means 
to the people of Erie. It means easy access to an area of the city 
primed for economic development. It means good-paying jobs as 
businesses choose to locate in Erie because it is directly linked to a 
major interstate. It means a return to economic security on Erie's east 
side and the entire community as a whole. This is a fundamental 
economic development priority for the area. But if the Federal funding 
falls short, the project faces an uncertain future. And so do the 
people of Erie.
    Looking beyond Erie, the impact of cutting highway funding would 
further devastate our already struggling national economy. Cutting 
funding means States cut projects. Cutting projects means ending 
construction contracts, ending the jobs for thousands of road 
construction crews. Ending jobs means more and more people are out of 
work and struggling to support their families.
    Ironically, this decrease in spending would impose significant 
costs on Federal Government. Unpaid taxes, and unemployment 
compensation would represent a $513 million loss for the Federal 
Government.
    During the weeks and months ahead, your committee will take on the 
monumental task of establishing a budget. With so many pots to fill and 
only so much to fill them with, I urge the committee to fully fund the 
Federal Highway Fund. We must preserve the Federal funding that will 
allow us to continue with vital highway projects in order to provide 
economic stability throughout the country. Thank you.



  Prepared Statement of Hon. Lane Evans, a Representative in Congress 
                       From the State of Illinois

    Thank you Mr. Chairman and members of the committee for the 
opportunity to submit testimony on the Department of Veterans Affairs 
budget for fiscal year 2003.
    My testimony and request are simple. I recommend the Budget 
Committee support a $26 billion appropriation to fully fund veterans' 
medical care in fiscal year 2003. The budget is about numbers. In this 
case, the numbers speak for themselves. In support of my 
recommendation, I have prepared a chart explaining my request. I 
believe you will find this information useful.
    Mr. Chairman, $21.3 billion was provided to VA to furnish medical 
care to veterans in fiscal year 2002. This amount has proven inadequate 
and more veterans have come to VA for medical care than were expected. 
The cost of this unanticipated increase in VA medical care workload is 
$1.34 billion this fiscal year. When these costs are included, the 
adjusted baseline for VA medical care in fiscal year 2002 is $22.64 
billion. From this baseline, VA needs $3-billion more to fully fund 
veterans' medical care in fiscal year 2003. The details of this needed 
additional funding are provided in the attached chart.
    Some will say an appropriation of $26 billion to fully fund 
veterans medical care in 2003 will increase the deficit. It will--the 
increase is \8/10\ or 1 percent. We can afford to fully fund veterans' 
medical care. We must fully fund veterans' medical care.
    Mr. Chairman, we honor and appreciate the service and sacrifice of 
America's veterans. The budget I am recommending does.



   Prepared Statement of Hon. Paul E. Kanjorski, a Representative in 
                 Congres From the State of Pennsylvania

    Mr. Chairman, thank you for allowing me to come before the Budget 
Committee to express my concerns about some of the Bush 
administration's budgetary priorities. I would like to call the 
committee's attention to a few specific issues that are very important 
to the people I represent in Northeastern and Central Pennsylvania.
    While I certainly understand the need to strengthen our military 
and homeland security, this budget shortchanges the Federal 
Government's responsibility to future Medicare and Social Security 
beneficiaries and provides inadequate funding for important 
environmental restoration programs. Senior citizens in Northeastern and 
Central Pennsylvania count on Medicare and Social Security as anchors 
of their retirement security. The health of Medicare is also crucial 
for our region's overall health care system because we have a higher-
than-average elderly population. This budget also fails to provide 
adequate funding for the reclamation of the abandoned mine lands that 
are prevalent throughout not only my congressional district but also 
across the entire Commonwealth of Pennsylvania. Moreover, the 
President's proposed funding level for our Nation's highway programs 
could, if enacted, result in job losses and postponement of current and 
future highway projects, thereby impeding economic growth and 
development. In one way or another, these issues affect all of my 
constituents and I hope that the committee will give these matters the 
full and fair attention that they deserve in the coming weeks and 
months.
    The President's budget desperately underfunds Federal abandoned 
mine land cleanup programs. The fiscal 2002 Department of the Interior 
appropriations legislation provided only a 0.5-percent increase for the 
Abandoned Mine Land Fund over fiscal 2001, not even enough to keep up 
with inflation. That was bad enough. This year, the administration's 
budget proposal of $175.5 million for the Abandoned Mine Reclamation 
Fund is almost $30-million less than last year. This decrease is 
devastating to the communities across the Nation that desperately need 
their abandoned mine lands economically and environmentally 
rehabilitated. I represent a number of these communities in 
Northeastern and Central Pennsylvania and, on their behalf, I urge you 
to fully fund these vital programs as you work on the 2003 budget. From 
my perspective, environmental restoration is a necessary precursor to 
economic revitalization. Without programs like the Abandoned Mine 
Reclamation Fund that help communities recover from environmental 
devastation, areas like Northeastern Pennsylvania will face great 
difficulties in realizing its full economic potential.
    Further, millions of dollars dedicated for the clean up of 
abandoned coal mine sites now available for reclamation throughout the 
United States sit unappropriated in the Abandoned Mine Land Trust Fund. 
Important reclamation work, including the cleanup of 12,000 miles of 
streams polluted by acid mine drainage, is being needlessly postponed 
in an effort to offset other expenditures from the Federal budget.
    This situation must be corrected. As you may know, the Abandoned 
Mine Land program receives the largest percentage of its funding from a 
fee paid by current coal producers on each ton of coal produced in the 
United States. This money paid by coal producers for the reclamation of 
abandoned coal lands should be used for its intended purpose and not as 
a convenient bookkeeping tool. Because this fee is dedicated for a 
specific purpose, it should be taken off budget rather than allowing a 
surplus to accumulate to offset the budget deficit.
    Furthermore, Mr. Chairman, I have genuine concerns about the 
priorities set forth in the administration's budget in terms of our 
Nation's elderly retirement programs. This budget proposal 
unfortunately marks the return to deficit spending for the first time 
since 1997, which means that our Nation could end up using surplus 
Social Security money to pay for other Federal programs. Although this 
budget will provide adequate funding for seniors currently receiving 
Social Security benefits, I have sincere concerns about the effects 
that budgetary deficits will have on the Federal Government's ability 
to meet its other responsibilities to the residents of Northeastern and 
Central Pennsylvania.
    The return to budget deficits also means that we no longer have the 
resources needed to strengthen Social Security and Medicare for current 
and future generations. For example, we now lack the funding needed to 
increase the Social Security payments made to those Americans born 
between 1916 and 1926 who are commonly known as ``notch'' babies.
    The Bush budget plan additionally fails to fulfill a commitment to 
provide meaningful and affordable prescription drug coverage for our 
Nation's seniors. Rather than creating a guaranteed prescription drug 
benefit within Medicare, the President recommends a patchwork quilt of 
state-based reforms that will at best help just 3 million individuals, 
according to the President's estimates. The remaining 37 million 
Medicare recipients--including the majority of senior citizens living 
in Northeastern and Central Pennsylvania--would receive no help.
    At a time when the cost of prescriptions continues to rise 
dramatically, we should work in Washington to include a voluntary 
defined benefit package for those seniors who want to purchase 
prescription drug coverage through Medicare. Offering this coverage 
directly through Medicare ensures that no private plan can one day 
abandon the program and leave participating seniors without 
prescription drug benefits, as was the case with the HMOs that recently 
left the Medicare program in Northeastern and Central Pennsylvania.
    Furthermore, the Bush budget request fails to provide sufficient 
funding for other desirable Medicare reforms. We need to expand 
preventive screening exams and provide new health services through 
Medicare. We also need to increase reimbursements for the health care 
providers in the Scranton/Wilkes-Barre/Hazleton Metropolitan 
Statistical Area. Because of a glitch in the Medicare reimbursement 
formula, these professionals receive significantly less than medical 
providers in other regions of our State. We need to fix this problem.
    Finally, Mr. Chairman, cutting highway funding would require 
Pennsylvania to postpone numerous planned highway projects and cost 
thousands of jobs at a time when the economy is struggling at the 
regional and national levels. This cut would be particularly 
devastating for communities that are counting on highway projects to 
spur economic development.
    While highway funding is primarily based on fuel tax collections, 
it would be shortsighted to halt or delay planned highway projects 
based on a temporary drop in collections. This proposed cut is 
especially shortsighted when there is a balance of $18.5 billion in the 
Federal highway trust fund. Both this fund and the mine reclamation 
fund should be used for their intended purposes.
    In closing, Mr. Chairman, I look forward to working with my 
colleagues on both sides of the aisle in developing a budgetary 
framework that preserves Social Security, protects Medicare, promotes 
homeland security, lowers the national debt, and invests in our future 
prudently. Moreover, I urge the committee and the entire Congress to 
restore funding for environmental-friendly and economically justified 
programs like the Abandoned Mine Land Fund. Accordingly, I look forward 
to hearing from each of the committee members and yield back the 
balance of my time.



Prepared Statement of Hon. Jim Langevin, a Represenatative in Congress 
                     From the State of Rhode Island

    Mr. Chairman, Ranking Member Spratt and members of the committee, 
thank you for giving me and my colleagues the opportunity to testify 
before you today. I am honored to be here. As you know, the budget 
decisions we make this session will have an enormous impact on the 
lives of Americans for years to come, and I am grateful for the 
committee's efforts to solicit input from other Members of the House 
during this critical process.
    Let me begin by saying that I stand united with the President and 
my colleagues on both sides of the aisle in our commitment to defeat 
terrorism and to do what is necessary to preserve national security 
both at home and abroad. However, in light of the many new security and 
economic challenges confronting us, our homeland protection efforts and 
fiscal policies should not shortchange Social Security and other 
national priorities. We can win the war against terrorism without 
raiding the Social Security and Medicare Trust Funds and without 
increasing the national debt.
    Earlier this month, the Congressional Budget Office (CBO) confirmed 
that in less than a year the 10-year projected surplus declined by $4 
trillion. While portions of this decline are a result of the war, the 
depletion of the surplus to date was also largely caused by last year's 
fiscally irresponsible policies. The additional $800 billion in tax 
cuts proposed in this year's budget would only worsen our current 
situation and lead us further down the path of mounting deficits and 
escalating public debt. To pay for the additional tax cuts, this budget 
would raid more than $2 trillion from the Social Security and Medicare 
Trust Funds to cover deficits in the rest of the Federal budget over 
the next 10 years. We need a wartime freeze on tax cuts to avoid 
deficit spending.
    When I was elected to Congress, I promised my constituents that I 
would protect the Social Security and Medicare Trust Funds. And I was 
not alone. Over one hundred of my colleagues have co-sponsored 
legislation to prevent Congress from spending the Social Security and 
Medicare surpluses, and the House of Representatives has voted seven 
times in the past 3 years to establish lockboxes for these funds.
    The current administration made the very same pledge to not touch 
these vital trust funds. This budget breaks that promise. It is time to 
honor our commitments by acknowledging our current situation and work 
together to craft a budget that is fair and fiscally responsible.
    Moreover, the projections used to frame this budget are optimistic. 
They do not include the administration's budget request for an 
additional $48 billion for the military and homeland security, which I 
support but needs to be included in the budget projections. Further, 
they do not include a Medicare prescription drug plan, which was also 
promised by both the administration and Congress. The projections also 
leave out an assessment of the lost revenue resulting from extending 
expiring tax credits and modifying the individual alternative minimum 
tax that will impact millions of middle-income taxpayers over the next 
10 years. And they rest on the smoke-and-mirrors premise that all of 
the tax cuts enacted last year will be rescinded in 2010. A more 
realistic set of assumptions would show that the 10-year budget surplus 
has already vanished.
    The disappearance of the 10-year surplus compels us to consider not 
just a 1-year but also a long-term budget plan. Congress and the 
American people have the right to know how the administration proposes 
to restore fiscal discipline while enacting additional tax cuts, 
boosting spending for the military, and meeting commitments to a 
growing number of retirees. The administration and Congress should 
devise budgetary rules that make tax cuts and spending contingent on 
the realization of specified targets for the budget surplus and the 
Federal debt. Unfortunately, this budget fails on all those accounts.
    I am also deeply concerned about the draconian cuts to the Small 
Business Administration. The budget proposes cutting the funding for 
the 7(a) loan program in half. Last year, this loan program provided 
over $94 million in assistance to Rhode Island's small business 
community. Additionally, the administration proposes cutting funding 
for employment and training programs by $686 million. With more than 
1.4 million workers laid off over the last year, we need this funding 
now more than ever. The budget would also slash the Low-Income Heating 
and Energy Assistance Program (LIHEAP) by $300 million. This program is 
crucial for all New England States and particularly for our seniors, 
who are often forced to choose food over heat. Finally, the budget 
would cut $417 million from the Public Housing Capital Fund, which 
helps provide 1.2 million families nationwide--40 percent of whom are 
elderly or disabled--with affordable housing. Housing needs are 
especially acute in Rhode Island, where 38 percent of renter households 
pay more than 30 percent of their income for rent.
    In closing, I would like to thank the Chairman and Ranking Member 
for allowing me to take part in this important discussion. There are 
many tough choices ahead, but I believe that with cooperation and an 
eye toward operating within a responsible framework, this Congress can 
develop a budget that will ensure security at home and abroad, without 
dramatically increasing our debt, borrowing against Social Security and 
Medicare, or abandoning our commitments to children, workers, senior 
citizens and all Americans.



  Prepared Statement of Hon. John Linder, a Represenative in Congress 
                       From the State of Georgia

    Mr. Chairman, in both his State of the Union Address and his fiscal 
year 2003 budget request, President Bush outlined his spending 
priorities for the coming fiscal year. Among the most significant and 
pressing of his priorities was bioterrorism preparedness. 
Unfortunately, the organization that is our first line of defense in 
bioterrorism attacks has not been sufficiently equipped with the 
resources needed to adequately respond in the event of a crisis.
    The Centers for Disease Control and Prevention (CDC) is 
headquartered in Atlanta, Georgia, has facilities in 10 major cities 
nationwide, controls 11 centers and institutes on public health, and 
employees nearly 9,000 people. Yet, the CDC operates in some of the 
most deplorable buildings imaginable. In fact, when I visit the CDC, I 
am always struck by the fact that we have first-class scientists 
working in third-world facilities.
    In 1958, then-Congressman John Fogarty wrote to President 
Eisenhower explaining his views on the condition of the CDC. In his 
letter, he wrote, ``When I say that conditions are deplorable I have in 
mind the dilapidated wood frame structures occupied at Chamblee * * * 
originally constructed as temporary buildings for the old Lawson 
General Hospital. That Federal employees are required to work in such 
firetraps is, in my opinion, inexcusable.'' These working conditions 
proved unacceptable over 40 years ago, yet these same facilities have 
not been renovated or replaced, and due to age, these building are now 
significantly worse.
    Allow me to present a few examples of the appalling scenario with 
which we are dealing. At the main environmental health lab, plastic 
sheeting is used to cover a $500,000 mass spectrometer in order to 
prevent water damage. At the Chamblee campus, a main loading dock, 
normally a high-traffic structure, is comprised of rotting wood and 
rust-covered pipes. Moreover, countless electrical shortages have 
delayed and damaged a number of crucial health-related experiments. 
Unfortunately, this decrepitude is not isolated to these areas alone; 
they are commonplace in all of the CDC's facilities.
    In addition, the safety standard for CDC infectious disease lab 
space is 420 square feet per laboratorian. In 1997, the average lab 
space was a paltry 300 square feet per laboratorian. In fact, over 15 
percent of the CDC's assigned lab space has to be used for office space 
due to overcrowding. The hallways house laboratory support equipment 
for biological labs, and lab support and lab space is often compressed 
into a single room.
    One of the most disturbing problems faced by CDC is the complete 
lack of security for the campus itself. The CDC in Atlanta is one of 
only eight institutions in the world to have the highest level of 
containment, called ``Biosafety Level 4,'' for storing and handling the 
most dangerous known microbes, such as the viruses that cause Ebola, 
Lassa, Marburg and Machupo fever. Yet these containment facilities, 
with their deadly diseases, are located merely feet from a campus 
loading dock. It should be shocking to every Member in this room to 
know that a simple car bomb can wreak havoc not only at CDC, but on 
approximately 4 million Americans in the greater Atlanta metropolitan 
area. We cannot ignore this danger.
    In the days following the breakout of anthrax on the Capitol 
grounds last October, this government immediately turned to the CDC for 
assistance. Yet, Mr. Chairman, I find it ironic that the facilities on 
which we rely so heavily for the safety of our own health, are 
themselves a major health hazard. We would certainly not require the 
U.S. Army to engage in a massive ground campaign using horses, so we 
should ask ourselves, how can we expect the CDC to perform research and 
formulate solutions for 21st century problems, while forcing it to use 
facilities that were inadequate in the 20th century?
    The next question, Mr. Chairman, is what can we do to avoid a 
disaster? The answer is simple: give the CDC enough support to prevent 
such a nightmare from becoming a reality. Two years ago, the CDC 
implemented a master plan to redesign, renovate, and strengthen its 
facilities over a 10-year period. However, I believe it is imperative 
that we act to hasten completion of that modernization and bring the 
CDC into the 21st century. Last year, I introduced legislation in the 
House to authorize the appropriation of $1.5 billion over 5 years for 
critical CDC construction and renovation projects. This legislation 
would allow the CDC to fully complete its plans on only half the time.
    This House understood the pressing need for CDC improvements and 
authorized $300 million spending for CDC construction and renovation, 
and appropriated $250 million of these authorized funds. In order to 
keep the CDC on track for completion of its priorities by 2006, it is 
important that we budget for and appropriate the full $300 million each 
year until these projects are completed.
    Mr. Chairman and members of the committee, I come before you today 
not only as a colleague and Member of this House, but also as an 
American who truly believes that if we are to take terrorism head-on, 
both here and abroad, that we should be fully prepared to efficiently 
and effectively win this battle. The anthrax scare of last October can 
most certainly happen again, however, we have the opportunity to do 
what we can to ensure that an attack of this nature has little or no 
effect on the people of this country. As such, I would encourage the 
members of this committee to budget full funding of CDC's modernization 
and security plans during deliberations on the fiscal year 2003 budget 
resolution. I truly believe this short-term expenditure to be an 
important long-term investment. I am hopeful that this committee will 
take an active lead in ensuring the health and safety of Americans, and 
help solidify the CDC's position as a world leader in biological, 
bacterial, and viral research.



  Prepared Statement Hon. Nita M. Lowey, a Representative in Congress 
                       From the State of New York

    Mr. Chairman, I am here today to ask that this committee include in 
the fiscal year 2003 Budget Resolution a demonstration of Congressional 
intent to provide New York with the funding we promised last year.
    The attacks on the World Trade Center may seem to have occurred a 
long time ago, but a scant 5 months has passed. Unfortunately, the 
administration seems to have forgotten. There is not one mention in the 
fiscal year 2003 budget request of the rest of the $20 billion the 
administration promised for New York last year. The head of the Office 
of Management and Budget (OMB) referred to the New York Congressional 
delegation as ``money-grubbers'' and announced that he would consider 
the Victims Compensation Fund as part of the $20 billion.
    The President continues to promise that New York will receive the 
full $20 billion. I am cautiously optimistic that the President will 
keep his promise. Unfortunately, his budget doesn't back up his words.
    The events of September 11 have devastated New York. Over 100,000 
New Yorkers lost their jobs in the wake of the attacks. The State's 
unemployment fund is bankrupt. Families have lost their health 
insurance and are forced to do without. Many have turned to part-time 
work, if they can find it, just to provide for their families. We need 
job training and assistance to get people back to work. These families 
need health insurance. They need help to pay the bills and put food on 
their tables.
    The damage does not stop there. Schools were shut down and damaged. 
Hospitals provided care for anyone who walked in the door, no questions 
asked. One hospital close to the World Trade Center site operated with 
no running water and on backup generators. Despite this, they treated 
the most seriously injured and even brought food to elderly residents 
trapped in an apartment building across the street. They still need to 
be compensated for their efforts.
    The attacks shattered the financial heart of New York and the 
United States. Hundreds of firms lost office space. Most of them will 
not return to lower Manhattan. Instead, many firms opted to reopen 
their offices in other areas. We will need to find a way to bring 
business back to lower Manhattan.
    Mr. Chairman, the city's economy and the State's economy are in 
tatters. Necessary cuts in services due to drastically reduced revenue 
will only add to New York's considerable pain.
    It is essential that Congress express its full support for 
rebuilding New York. I respectfully request that the fiscal year 2003 
Budget Resolution include a provision ensuring that the remainder of 
the $20 billion promised to New York will be included in a supplemental 
appropriations bill for fiscal year 2002.
    The men and women who responded to the attacks of September 11 did 
not hesitate in their actions. These heroes deserve the same from the 
Federal Government. Let's show them that Congress will keep its promise 
to rescue New York.



  Prepared Statement of Hon. Carolyn B. Maloney, a Representative in 
                  Congress From the State of New York

    Good afternoon Chairman Nussle, Ranking Member Spratt and members 
of the committee. Thank you for the opportunity to testify on the 
fiscal year 2003 budget resolution.
    I have never been so proud to be a Member of Congress as I was in 
the wake of the September 11 attacks. This Congress came together 
across party and regional difference and demonstrated to the world that 
our country will always prevail over terror. I am especially grateful 
to all my colleagues for making the important down payment on the 
recovery in New York City, pledging $20 billion in aid to the city in 
the wake of the attack.
    Unfortunately, 5 months and 3 days later, this commitment to New 
York has yet to be fulfilled. Just days after 9/11, the President made 
a decisive promise to help New York recover. His pledge of $20 billion, 
along with the immediate act by Congress to authorize the funds lifted 
the city and signaled to New York that the country was committed to 
helping us come back.
    While we assumed that these disaster-recovery funds would come to 
New York immediately the administration has yet to deliver on its 
commitment. The $20 billion that was understood as a minimum in Federal 
aid quickly became a maximum that would take ``years'' to actually 
arrive, according to White House budget director Mitch Daniels.
    While the White House has insisted that the money will eventually 
get to New York, I can assure you that the needs are immediate, the 
city cannot wait, and aid to New York must be included in the budget 
resolution.
    In addition to pure disaster cleanup, businesses large and small, 
hospitals, utilities, and schools have all suffered huge economic 
losses and are in need of Federal assistance. All through the winter, 
New Yorkers who lost jobs due to the terrorist attack have struggled. 
Many cannot afford health care coverage while their unemployment 
insurance is due to run out in weeks. Now concerns are mounting over 
the health of the rescue workers and residents downtown. Schools are 
grappling with the cost of make-up days for thousands of lost hours in 
instructional time.
    Everyday businesses are making long-term decisions about whether 
they can stay in the city and a significant number have already left. 
Many have been unable to get a single penny in aid because they don't 
fit FEMA's guidelines. Losses from 9/11 do not fit past paradigms for 
disaster cleanup and New Yorkers need the resources to respond to the 
city's varied needs.
    The entire city and State are facing huge deficits from revenue 
shortfalls directly attributable to the 9/11 attack forcing cuts in 
services to the people of New York at exactly the time they need more 
help.
    These are the problems I confront as I travel around my district 
and New York City. Accordingly, we were extremely disappointed that the 
President failed to mention any aid to New York in his State of the 
Union address. The last week's voluminous administration budget 
document again neglected significant detail about additional aid to New 
York. Part of the problem may be that while we know Donald Rumsfeld is 
in charge of the war and Tom Ridge is in charge of homeland security, 
it is not clear who at the White House is in charge of making sure New 
York recovers.
    Mr. Chairman and members of the committee, New Yorkers are not 
``money grubbers'' as Mitch Daniels called us a week ago. Our city has 
simply suffered a terrible tragedy merely because it is a symbol of the 
greatness of our country.
    As elected representatives we are all closer to our constituents 
than any administration can be. As Members, we all know the terrorist 
threat is far from over and that the next attack could be in any of our 
districts. Please take this into account the commitment Congress made 
last year as you work on the budget resolution and do not make the same 
oversight as the administration.



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

    Mr. Chairman and Ranking Member Spratt, thank you for the 
opportunity to testify before your committee and for your continued 
leadership on budgetary issues. The world has changed a great deal 
since we debated last year's budget resolution. Unfortunately, our 
Nation's fiscal outlook has changed a great deal as well. After 
building the largest surpluses ever, we now face deficits as far as the 
eye can see. The budget submitted by President Bush properly devotes 
substantial resources to the war on terrorism and homeland security, 
but it fails to put us back on the course of fiscal strength. Instead, 
his proposal returns our Nation to deficit spending, raids the Social 
Security and Medicare trust fund surpluses, and fails to promote 
economic growth.
    Last year, Democrats argued that sacrificing needed investments in 
children and families in order to pay for a tax cut for the wealthy 
would harm our economy. Now, despite evidence that the policies of the 
Bush administration have not promoted economic growth, the President's 
budget contains more of the same.
    The President has proposed to cut education, health care, job 
training, and transportation funding, yet still managed to provide 
nearly $600 billion in tax cuts. In total, his budget cuts funding for 
programs outside of defense and homeland security by $4.3 billion from 
last year's level. This will result in a shortfall of $15.8 billion 
below the level necessary to maintain current services. Once again, 
these sacrifices are requested in order to pay for tax cuts for those 
who don't need them. When we have surpluses, the administration's 
solution is to cut taxes. When we have deficits, the administration's 
solution is to cut taxes.
    I have often said that our Nation's budget is a statement of our 
values. When we fail to invest in children and families, we fail to 
reflect our true values. That failure has a particularly strong impact 
on women and children.
    By freezing funds for child care and after school programs, this 
budget makes it harder to balance work and family responsibilities. By 
freezing funding for domestic violence programs, this budget makes it 
harder for victims to break free from an abusive relationship. By 
freezing funding for birth control and essential reproductive health 
services, this budget does not support responsible choices and 
disproportionately hurts low-income women.
                       the consequences are real
    Reducing funding for Safe and Drug Free Schools weakens efforts to 
prevent school-based violence and illegal drug, alcohol, and tobacco 
use, jeopardizing the health and safety of our children. Decreasing 
funds to reduce infant mortality and strengthen maternal and child 
health programs hurts kids' chances of growing up to be healthy adults.
    Women still earn an average of 76 cents for every dollar earned by 
men, and the wage gap increased between 1995 and 2000 in many 
industries. Slashing the resources available to agencies that support 
working women not only fails to respond to this inequity, but it also 
makes it much more difficult for women to support their families. We 
should be supporting equal pay for equal work, not undermining the 
agencies that work toward that goal.
    These sacrifices do not reflect our values, yet the President's 
budget asks Americans to trade these investments for tax cuts. We all 
want to do our part to make our homeland secure and defeat terrorism, 
and I look forward to working with the President on those areas where 
we have common ground, but we need to do better in the budget 
resolution. We need a budget with a strategy to climb out of deficits 
and help the economy recover, and we need a budget that reflects our 
values by investing in children and families. Thank you again for this 
opportunity to testify.



Prepared Statement of Hon. Adam B. Schiff, a Representative in Congress 
                      From the State of California

    Today, I come before my colleagues to express my concerns about the 
President's budget proposal. I applaud the President for outlining 
priorities of beefing up homeland security and strengthening national 
defense. But he has also proposed new levels of domestic spending and 
additional tax cuts. And one critical issue has been left out: How do 
we pay for all this?
    So many American families are facing the challenge of making ends 
meet, especially during this recession. American families are 
struggling to live within their means. It is our responsibility as the 
Federal Government to do the same. We owe it to the American people to 
balance our books. If a balanced budget is unattainable at the present 
time due to war efforts and the recession, I believe we must have a 
long-term plan that ensures a return to fiscal discipline.
    The new budget reports indicate that the government will return to 
deficit spending and raid the entire Medicare surplus and further raid 
the Social Security trust fund by more than $1.5 trillion over the next 
10 years. This should be cause for great concern for our Nation's long-
term economic well-being.
    We are, I fear, at risk of making the same mistakes we made two 
decades ago when we began a vicious cycle of deficit spending and 
burdened ourselves with terrible debt and crushing debt service. We are 
at risk of ignoring the lessons of our protracted climb out of debt 
during the 1980's and 1990's, and of the enormous economic benefits a 
return to fiscal responsibility brought this Nation. Having failed to 
learn from history, we are perilously close to repeating it. Even now, 
credible voices within the administration are saying debt simply 
doesn't matter. How soon we forget.
    During the debate last year, Congress and the President agreed that 
the Social Security trust fund surplus would be put in a lockbox and 
saved to prepare for the retirement of the baby boomers. The new 
projections show that this promise will not be kept. Unfortunately, the 
new projections show a return of budget deficits, borrowing from Social 
Security and a rapidly increasing national debt.
    Soon, the administration will be before the Congress asking to 
raise the limit on the national debt for permission, in effect, to open 
the Social Security lockbox and throw away the key, until one day, far 
off in our future, when we may find that key again.
    It is reasonable and appropriate to run temporary deficits during a 
recession and war, and we all support the President's efforts in the 
war on terrorism. However, under a responsible fiscal policy, the 
temporary deficits incurred during a period of economic weakness and 
war must be offset by a return to budget surpluses when conditions 
improve.
    The government is projected to run on-budget deficits that will 
require the government to raid the Social Security and Medicare trust 
fund surpluses for rest of the decade, even before additional spending 
increases for defense and homeland security are counted.
    We need a plan for the long-term budget that brings us back to a 
time of fiscal responsibility. We're spending money now faster than 
it's coming in, and in doing so, we are risking the long-term solvency 
of the Federal budget. And more, we are mortgaging our children's 
future.
    Because our great Nation is faced with the challenges of protecting 
our national security both at home and abroad during this time of war, 
we need to make tough choices in addressing the budget outlook. We need 
a wartime budget. One that meets our national defense and homeland 
security needs. One, like in past wars, that asks Americans for 
something they are willing to give if asked, something they yearn to be 
asked for in plain and candid terms, and that is ``sacrifice.''
    Yet this administration and this Congress have not called on the 
American people for sacrifice. Instead, we have a budget proposal that 
says you can have your cake and eat it too.
    We must keep our Nation strong and we will, but we should not force 
our children to pay for it. ``The price of freedom is high,'' as 
President John F. Kennedy once said, ``and Americans have always 
paid.'' We pay it still. We must sacrifice now, so our children's 
future is not mortgaged for our security.
    While we stand in support of the President's efforts in the war on 
terrorism, we must also challenge our colleagues in Congress and the 
administration to address effectively our present circumstances, and 
work together in a bipartisan way to return to a balanced budget and 
responsible fiscal discipline, without using the Social Security 
surplus.

    Are there Members on the Democratic side who wish to say 
anything before we begin? Mr. McDermott.
    Mr. McDermott. Mr. Chairman, I welcome to the opportunity 
to sit and hear from other Members. I think that we ought to 
just go to testimony.
    Chairman Nussle. Thank you.
    Our first witness is the very distinguished gentleman from 
Maryland, Mr. Hoyer. We welcome you to the committee. Your 
statement will be in the record, and you may summarize.

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

    Mr. Hoyer. Thank you very much, Mr. Chairman. It's 8 
minutes in length, but I will go through it rapidly and try to 
make a sum of the points which I think are, important.
    My testimony will focus on three areas. Mr. Chairman and 
members of the committee, I want to say that I'm pleased at the 
technology upgrades that the committees are receiving. They 
will not only assist the committee members, which is important, 
but also, as you pointed out, will help the public follow what 
we do. Because after all, as Woodrow Wilson observed, the work 
of Congress is in committees. Frankly, the more collegial work 
is in committees. We see the confrontation too often on the 
floor, and Americans think that's how we work. But in fact, we 
really do work in committees like this. The technology 
advantages that we are able to bring to committees are very 
important. Bob Ney is an extraordinarily positive individual 
with whom to work, and is doing a great job. I think we've 
probably had as positive a committee budget session in our 
resolution this year as we've had since I've been in Congress, 
largely due to Mr. Ney's work and the committee chair's work in 
working in a bipartisan fashion across the aisle to assure 
fairness on both sides, and I thank you for that.
    As I said, my focus will be on three areas, the President's 
budget request, pay for Federal employees and election reform. 
Mr. Chairman, I think Ranking Member Spratt hit it right on 
last week when he said that the President's budget reverses a 
decade of fiscal progress and takes the country back down a 
perilous path of unending deficits. Obviously we have 
differences on why that's happened. But the surplus has 
dwindled, we've gone from a $5.6-trillion down to a $1.6 
trillion surplus projection. The tax cuts obviously are a 
component of that. September 11 is a component of that. The 
economic downturn is a component of that as well.
    Those of us who were here in 1981 experienced a similar 
phenomenon. That is, large cuts, increases in defense, economic 
slowdown in the early 1980's, then a speedup in the middle 
1980's, resulting in a very substantial deficit picture with 
which this committee has had to grapple over the last 10 years. 
There is no doubt that we need to beef up defense, Mr. 
Chairman, and I support that. My colleague Mr. Skelton is here, 
on our side of the aisle, working in a bipartisan fashion. He 
has done so much to accomplish that end. There is no doubt we 
need to enhance our homeland security. We're likely to support 
that.
    But at the same time, we must keep our promises to preserve 
Social Security and Medicare. I think all of us agree on that. 
We all made a commitment last year to preserve Social Security 
and Medicare, but now of course we're facing deficits that will 
take nearly $1.5 trillion from the Social Security and Medicare 
trust funds, something we said we would not do.
    I hope that this committee will make a strong effort to 
work with Ranking Member Spratt and Democratic Members and 
Republican Members to craft a bipartisan budget resolution. I 
don't know if that is possible, Mr. Chairman, but it certainly 
is desirable in my opinion. That budget should reflect the kind 
of fiscal responsibility of which we all desire but which 
obviously is very difficult to achieve.
    Let me focus specifically on an item that I have contiued 
to work on. Mr. Chairman, I want to thank you. I want to thank 
Ranking Member Spratt and of course Representative Moran and 
others on the Republican side of the aisle who worked on 
Federal pay parity last year. The President's budget request 
includes a 2.6-percent pay adjustment for Federal civilian 
employees and a 4.1-percent pay for military employees. It 
appears that the administration has decided not to comply with 
the parity proposition that was adopted by the Budget Committee 
last year and one that has been in law since 1967.
    Just last year, your resolution that passed the House and 
Senate included language that calls for parity in pay 
adjustments between Federal and civilian employees and military 
employees. The Treasury Postal Appropriations Bill, which I am 
the ranking member of, mandated a 4.6-percent raise for Federal 
civilian employees in fiscal year 2002. This matched the 4.6-
percent pay adjustment included in the Defense Authorization 
bill. Although as we all know, there was a bump above that, for 
certain identified sections of the military, essentially 4.6 
percent was in the ball park for both military and civilians.
    Mr. Chairman, I want you to know that I fully support the 
President's request for a 4.1-percent pay adjustment for the 
men and women of our military. They need it, it is appropriate, 
they are approximately 10-percent behind when you look at the 
pay comparisons between private and public sector. So there is 
a disparity, and this is working toward overcoming that 
disparity.
    Furthermore, Mr. Chairman, I would suggest that you not 
only look at the 4.1 percent for pay, but I would suggest, and 
Mr. Skelton is here, that you also look at the hazardous duty 
component, which may not be in base pay, but when we do, as the 
President indicated, put people at risk and in harm's way, 
clearly that is due, I think, some additional adjustment, which 
obviously civilians may not have.
    But I strongly disagree that the President has made a 
distinction between the two, that is, the civilians and the 
military. He has suggested, as you know, Mr. Chairman, 2.6 
percent for civilians, which is a full point under the ECI. The 
ECI is the litmus test for what the private sector does.
    I think this sends a very bad message to the employees of 
the Centers for Disease Control and other Federal agencies that 
are very much involved in the homeland defense, very much 
involved in the war on terrorism. To think that it is only 
people in uniform who are involved in this war on terrorism is 
to be mistaken.
    So clearly, while OMB Director Mitch Daniels talks about 
our military on the front lines, that is true. But their 
partners on the front line are people like the folks at CDC 
confronting bioterrorism, the FBI and their employees, the 
civilian employees at the Defense Department, people on the 
line at INS and Customs Service, civilians in the Coast Guard, 
you can go through almost every agency and we have civilians, 
NSA in particular. These are civilians and we need to make sure 
they are compensated properly so that we send a message of 
appreciation for their services and we remain competitive so 
that we can both retain and recruit the kind of people we need.
    The recruitment and retention issue in the military that 
has received so much attention is also occurring in the Federal 
civilian sector, and it is a critical problem. My suggestion--I 
don't know whether you've already had Kay Cole James' 
testimony, the Director of OPM, but she will tell you, this is 
a very significant challenge for the personnel policies of the 
Federal Government. The pay gap between the military and the 
private sector, as I said, is approximately 10 percent 
according to the Bureau of Labor Statistics. The same survey 
estimates that the Federal civilian work force and the private 
sector gap has grown to 32 percent.
    No business in the private sector could think that it could 
compete for the kind of talent that it needs to successfully 
operate its business and turn profits if it were 32-percent 
behind its competitors in paying its people. If our civilian 
workforce is going to be successful in the future, just like 
the military, we're going to have to compete. 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 that. I 
don't think we should either. I thank this committee for 
participating and agreeing with that premise and being an 
important element in making sure that we stay to some degree 
even and not fall behind. We're really not catching up, but 
we're staying even. We should continue the historic trend of 
providing parity between military and civilian pay. Again, with 
the understanding of the differential for those who are at 
risk, in harm's way, hazardous duty pay, which is not unknown 
either in the civilian sector.
    I respectfully ask that the members of this committee 
include sufficient funding in the budget to accommodate parity 
between our military and civilian employees. It is my intent to 
offer an amendment to remedy this on the fiscal year 2003 
Treasury Bond Bill. I want to thank Mr. Sununu in particular 
for his support over the past years for certain efforts to 
ensure that we treat the Federal civilian sector fairly and 
competitively.
    Let me turn now to another subject briefly. On the floor 
today in the Senate is election reform. As you know, 
Congressman Bob Ney and I worked throughout the year last year 
to pass the Help American Vote Act. This piece of legislation 
passed the House 362 to 63. That act is an important mixture of 
Federal assistance to States and minimum election standards. We 
passed last night campaign finance reform but a very, very 
important component, less publicized, perhaps, but equally 
important component of that, is election reform. It will 
require, not ask but require, all States to adopt a statewide 
voter registration system, link to local jurisdiction, in-
precinct provisional balloting, a system of maintaining the 
accuracy of voter registration records, uniform standards for 
defining what constitutes a vote on different types of voting 
equipment in different States and assurances that overseas 
military voters have their votes counted.
    Assurances that the voters have the right and opportunity 
to correct errors is also an important component of that piece 
of legislation. These election standards are not discretionary, 
as you know, Mr. Chairman. States must follow them.
    In addition, this legislation authorizes $2.65 billion over 
3 years. The Senate bill has approximately $3.5 billion over 4 
years. So essentially, everybody has adopted the premise that 
we're talking about $800 million to $1 billion a year over the 
next 4 years to assist States in complying with and getting up 
to speed on the technology. We talked about the technology in 
this committee to enhance our ability to do it here. We all 
know it wasn't just Florida, it was all over the country that 
we need technology upgrades.
    Let me acknowledge the presence of your ranking member, who 
in my opinion, Mr. Chairman, I know you know this, having 
worked with him closely, but I believe that John Spratt is one 
of the extraordinary Members of this House and does an--
whenever you got here I was going to say that. He's one of the 
most respected Members. I know Mr. Skelton, who works closely 
with him on defense matters, shares that view.
    Mr. Chairman, Bill Young, the chairman of the 
Appropriations Committee and Speaker Hastert have both agreed 
and are supporting, as does Bob Ney and as do I, a $650 million 
2002 supplemental appropriation. I am hopeful the 
administration will include that number in the supplemental 
appropriation bill that we expect to come down. I'm not sure 
when, but in a short period of time. As I said, Speaker Hastert 
supports that, Bill Young supports it, Bob Ney supports it.
    In addition, we're hopeful that you will include the 
sufficient resources contingent upon passage. The Senate bill 
is on the floor today as we speak. I would urge you to include 
a figure in the neighborhood of a billion dollars. That's a lot 
of money. But obviously, when you divide that between 50 States 
meeting the requirements that we have set forth in the 
legislation passed with 362 votes, it becomes a much lesser 
number for the States themselves. I think that is a critical 
element and I would ask you to include it.
    Again, Mr. Chairman, in closing, let me say I appreciate 
this opportunity to appear before the members of this 
committee. The Budget Committee obviously is a critically 
important committee in terms of an overall plan of looking at 
the big picture, long term, as to how we effect fiscal 
responsibility, pay for what we buy and provide investments in 
what we need to make this country great. We differ on that. I'm 
not a wild proponent, as some of you know, of cutting revenues 
before you cut expenditures. Some of you would say, if you 
don't cut revenues you never cut expenditures. I understand the 
tension between those two philosophies.
    But we ought not to allow that tension to result in a 
return to very high deficits and return to borrow and spend and 
pass that which we buy, the cost of, along to our children and 
grandchildren. That is neither a proper policy nor in my 
opinion is it a moral policy. I look forward, Mr. Chairman, to 
working with you and Mr. Spratt and members of this committee 
toward that objective. 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 morning to 
discuss the Federal budget for fiscal year 2003.
    My testimony will focus on the President's budget request, pay for 
Federal employees, and election reform.
                    fiscal year 2003 budget request
    Ranking Member Spratt hit it right on last week when he said that 
``the President's budget reverses a decade of fiscal progress, and 
takes the country back down a perilous path of unending deficits.'' Not 
only has the surplus dwindled by some $4 trillion over the next 10 
years, the President's budget proposes another $675 billion in tax cuts 
above the $1.7 trillion enacted last year.
    Supporting tax cuts is always easy. Explaining how you're going to 
pay for them never is. In the early 1980's, President Reagan assured 
the American people that we could have it all: huge tax cuts, a major 
defense buildup, a strong social safety net, and, yes, even a balanced 
budget by fiscal year 1984.
    Instead of producing increased revenue, the Reagan tax program 
threw our Nation into a fiscal free-fall. The budget deficit--just 
under $79 billion in 1981--exploded throughout the rest of the 80's and 
peaked at more than $290 billion in 1992. Our publicly held debt 
ballooned from $789 billion in 1981 to $3.8 trillion in 1997. It wasn't 
until the Budget agreement of 1993 and the 1997 Balanced Budget 
agreement that we straightened out our fiscal house.
    Mr. Chairman, I am a firm believer that we must pay for what we 
buy. There is no doubt that we need to beef up defense, and there is no 
doubt that we need to enhance our homeland security. But at the same 
time, we must keep our promise and preserve Social Security and 
Medicare. We all made a commitment last year to preserve Social 
Security and Medicare, but now we are facing deficits that will take 
nearly $1.5 trillion from the Social Security Trust Fund. The same fund 
that the Congress and the President claimed was off limits just last 
year.
    Mr. Chairman, I hope that this committee will make a strong effort 
to work with Ranking Member Spratt to craft a bi-partisan budget 
resolution that incorporates enough fiscal responsibility to pay for 
what we buy.
                           federal employees
    As you know Mr. Chairman, the President's budget request includes a 
2.6-percent pay adjustment for Federal civilian employees and a 4.1-
percent pay adjustment for military employees. It appears that the 
administration has turned its back on Federal employees once again. 
Just last year, the budget resolution that passed the House and Senate 
included language that calls for parity in pay adjustments between 
Federal civilian employees and military employees. The Treasury-Postal 
appropriations bill went a step further by mandating a 4.6-percent pay 
adjustment for all Federal civilian employees. This matched the 4.6-
percent pay adjustment included in the Defense Authorization bill for 
the military.
    Mr. Chairman, I fully support the President's request for a 4.1-
percent pay adjustment for the hard working men and women of our 
military. However, I strongly disagree with his proposal for our 
Federal civilian employees, most of whom are contributing to our 
homeland defense efforts. What type of message does this send to the 
employees of the Center for Disease Control, who are defending our 
country against the threat of bio-terrorism? What type of message does 
it send to the thousands of Federal Bureau of Investigation employees 
who are investigating the September 11 attacks and al Qaeda cells here 
in America? What type of message does it send to the Customs agents and 
inspectors protecting our borders and seaports from future attacks? Mr. 
Chairman, I could go on and on, but I think you get the point.
    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.
    Mr. Chairman, we should continue the historical trend of providing 
parity between military and civilian pay. For the last 14 of 16 years, 
there has been parity and we should continue that trend in 2003. I 
respectfully ask that the members of this committee include sufficient 
funding in the budget to accommodate parity between our military and 
civilian employees.
                            election reform
    Mr. Chairman, as you know, Congressman Bob Ney and I worked 
throughout the year last year to pass the ``Help America Vote Act.'' 
This bi-partisan piece of legislation passed the House by an 
overwhelming margin of 362-63.
    The Help America Vote Act is an important mixture of Federal 
assistance to States and minimum election standards. It will require, 
not ask, but require, all States to adopt a statewide voter 
registration system linked to local jurisdiction; in-precinct 
provisional balloting; a system for maintaining the accuracy of voter 
registration records; uniform standards for defining what constitutes a 
vote on different types of voting equipment in different parts of the 
States; assurances that overseas military voters have their votes 
counted; assurances that voters have the right and opportunity to 
correct errors; and practical and effective means for disabled voters 
to cast secret ballots on new voting equipment.
    These election standards are not discretionary, nor are they 
dependent on the States' receiving Federal assistance under the bill. 
States shall enact them, and they shall be enforced.
    In addition, this legislation authorizes $2.65 billion for four 
election reform grant programs between fiscal year 2002 and fiscal year 
2005. With this funding, we could immediately begin to address our 
election system deficiencies in the months before our next national 
election in November. In fact, Speaker Hastert has committed to 
including $650 million for such reforms in the fiscal year 2002 
Supplemental Appropriations Bill.
    As you know, the President's budget included $400 million annually 
over the next 3 years for a new matching grant program for State and 
local jurisdictions.
    I have every expectation that the Senate will soon pass bipartisan 
election reform, and am very hopeful that we can expeditiously resolve 
our differences in a Conference Committee.
    When we do, I urge you to support the bicameral, bipartisan 
election reform legislation that almost certainly will include a higher 
authorization for Federal election reform than that called for in the 
President's budget proposal.

    Chairman Nussle. Thank you. The next Member to testify on 
this panel is the very distinguished gentleman from Missouri, 
Mr. Skelton, who has been before this committee before. We 
welcome you back and look forward to your testimony. Your 
written statement will be made part of the record and you may 
summarize as you wish. Welcome.

  STATEMENT OF HON. IKE SKELTON, A REPRESENTATIVE IN CONGRESS 
                   FROM THE STATE OF MISSOURI

    Mr. Skelton. Thank you very much. I appreciate, Mr. 
Chairman, the opportunity to appear before you and my friend 
John Spratt. John is trying, I'm sure, to keep two balls in the 
air at the same time with a classified briefing that we are 
having over in the Armed Services Committee. I want to thank 
him for coming to hear my testimony this morning.
    I'd like to talk about the national security accounts which 
we have jurisdiction over in the Armed Services Committee. 
Overall, the total recommendation, $379 billion for budget 
authority for us, is good news. It represents a $48 billion 
increase in the defense accounts and the request is $15.6 
billion for nuclear weapons related activities which we have 
jurisdiction over, which is actually part of the Department of 
Energy. It would be a 2-plus billion dollar increase.
    Now, they are truly justified, not just because we are at 
war, and we are. Listen and watch the news media, we are truly 
at war. But also because in the past, as I pointed out and as 
you reflected, Mr. Chairman, I've been here before urging an 
increase in the top line. Last year, at my request, the members 
of the Joint Chiefs of Staff furnished a list of $32 billion of 
unfunded requirements that they had asked for, everything from 
ammunition accounts being depleted to spare parts and the like.
    So this top line is a welcome piece of news now, though 
$379 billion does sound like a lot of money. And of course, it 
is. But I have three concerns I'd like to share with you, and I 
realize the Budget Committee does not do line item request. But 
I need to tell you this, because in the administration's 
request, Mr. Chairman, is a $10 billion discretionary reserve 
fund. Now, I think there are three areas that need to be kept 
in mind: shipbuilding, military construction and end-strength. 
End-strength is, as you know, the number of troops in each of 
the four services.
    Although this year's defense budget includes some $68 
billion for a procurement account, that is, buying everything 
from trucks to tanks to airplanes and ships, the accounts 
through which we buy all these major weapons, this funding 
level has been underfunded for years.
    So let me address the very first issue. That is, of the 
shipbuilding. If we keep building ships, forget this year, at 
the rate we've been buying them and retiring them over the past 
several years, we're going to end up with a 200 or 250 ship 
Navy. That's totally inadequate for us, to coin a phrase, to 
cover the waterfront. We just can't do it. This year it's even 
worse, with the budget proposing only five Navy ships.
    We need to reverse that to buy seven this year, nine next 
year and try to increase that thereafter. The Navy secretary 
testified before our committee that he needs to build 8 to 10 
ships each year in order to sustain our fleet. We should have 
our Navy, instead of a 200-250 ship Navy, up at around 350 
ships, pushing toward 400.
    With respect to military construction, as you know, so much 
of this is not very glamorous. But it's something we need to 
do. The military construction budget has actually been cut, or 
it's a decline of $1.7 billion from last year's appropriated 
level. That includes barracks, National Guard armories, fitness 
centers, child development centers, dining halls, and other 
facilities that our troops truly need. It's an area that I 
think we need to pay attention to.
    In the third area, is that of end-strength. Last year 
before our committee, this was before September 11, the Army 
Chief of Staff and the Army Secretary testified that the United 
States Army was 40,000-troops short of what they truly needed 
to do their mission. There was a request that the Navy wanted 
an additional 3,000 this year, the Air Force wanted an 
additional 6,000 this year, Marines wanted an additional 2,400 
this year. Now, there was money authorized for, money but not 
an end-strength authorization increase, for the Navy and for 
the Marines. It comes within the permissible legal 2-percent 
flexibility as opposed to allowing an end-strength 
authorization number, and that concerns me a great deal.
    We are wearing the young people out because we don't have 
enough soldiers. We're very fortunate we're able to keep them. 
But so many captains in the Army, lieutenants in the Navy are 
walking with their feet; they're gone from home so much. The 
same is true for the non-commissioned officers. They don't have 
to be there. And I think that we have to pay more attention to 
the end-strength. I'm very disappointed that the 
recommendations did not come forward and I hope we can correct 
that.
    Now, how do we correct it? You can help us in that regard. 
The $10 billion so-called reserve fund is for unspecified 
purposes. We have a constitutional duty, a responsibility. 
Article 1, Section 8 tells us that it's the Congress that 
raises and maintains the military. We have turned down, as a 
Congress, requests for a discretionary fund with the first 
George Bush. The Congress also turned down a similar request 
for President Clinton.
    I think that this $10 billion can be used and should be 
used to rectify those three areas of which I speak. Of course, 
there are other areas, and the pay raise I personally think, 
Mr. Chairman, we should aim for a 4.6-percent raise for the 
military, which would be equal to what we had last year. But we 
can argue that out in the committee.
    In the three areas of which I speak, if you would give us 
the authority identified in the budget for this $10 billion, I 
think we can make the military all the better and also at the 
same time live up to our constitutional responsibilities. Thank 
you for this opportunity to testify before you. Mr. Spratt, 
thank you so much, too.
    [The prepared statement of Ike Skelton follows:]

 Prepared Statement of Hon. Ike Skelton, a Representative in Congress 
                       From the State of Missouri

    Mr. Chairman, Mr. Spratt, and members of the Budget Committee: 
thank you for the opportunity to present my views about the national 
security accounts of the Federal budget for fiscal year 2003.
    In many respects, the administration's defense budget this year is 
a good news story. The overall total of approximately $396 billion in 
budget authority for national security activities in fiscal year 2003 
is encouraging. The $379 billion request for the Department of Defense 
represents a $48 billion increase in the defense accounts over last 
year's total. The request of $15.6 billion for the nuclear weapons-
related activities of the Department of Energy is also an increase over 
last year's total. These funding increases are justified because we are 
truly a country at war. Candidly, I wish there were greater emphasis in 
this budget on cutting overhead costs, bureaucratic reform, and 
increasing the tooth-to-tail ratio so that more funding goes for 
warfighting activities and less for support.
    While $396 billion seems like a lot of money and it is, I have 
concerns that the budget is not adequate to meet our defense 
requirements in three key areas shipbuilding, military construction, 
and end strength the number of people who serve in our military. I 
recognize that it is not within the purview of this committee to make 
specific judgments about programmatic priorities within the defense 
budget. However, I want to touch on each of these subjects because they 
bear on the question of how Congress should respond to the 
administration's request to create a $10 billion discretionary reserve 
fund.
    Although this year's defense budget includes some $68 billion for 
procurement accounts the accounts through which we buy major weapons 
systems this funding level comes after years of underfunding those 
accounts. But the budget buys only five Navy ships. Yesterday, the Navy 
Secretary testified before our committee he needs to build 8-10 ships 
per year in order to sustain our fleet at an acceptable size. This 
budget puts us on a course toward a 200-ship Navy rather than the 350-
ship Navy that numerous studies say we need in order to meet our global 
operational requirements.
    With respect to military construction, the hard fact is that while 
the overall defense budget request adds $48 billion to last year's 
level, the budget for military construction funding to build and 
maintain the Department of Defense's installations and facilities 
actually declines by $1.7 billion from last year's appropriated level. 
Without sufficient funding for military construction, we won't be able 
to build and keep up barracks, National Guard armories, fitness 
centers, child development centers, and other facilities our troops 
need. It is incongruous for the administration to suggest that it 
supports quality of life for our service members and then not provide 
sufficient funding to make a decent quality of life possible. More 
importantly, the military construction pause reflected in this budget 
kicks down the road the Department of Defense's goal of a 67 year 
facilities-recapitalization-rate.
    Third, I want the committee to know that this budget request does 
not adequately fund end-strength the number of active duty men and 
women in the military. All the services need additional end strength in 
order to be able to perform all the missions they are assigned without 
wearing out the force. The Secretary of the Army and Army chief of 
staff have testified last year before the war on terrorism that the 
Army alone needs an additional 40,000 soldiers. Although the services 
in the coming year are increasing their numbers, they are doing so only 
through a statutory provision that permits 2-percent flexibility in 
force size and, with the exception of the Marine Corps, they are paying 
for increased end strength out of hide. You only need to think about 
the increased responsibilities of the Department of Defense in fighting 
the war on terrorism here and abroad to realize that we need more 
people to get the job done.
    Mr. Chairman, I mention these three aspects of the administration's 
defense budget shipbuilding, military construction, and end strength 
not because I want the Budget Committee to completely reprioritize that 
budget. Rather, I do so because I believe there is at least a partial 
solution at hand that is consistent with Congress' institutional 
prerogatives.
    The President's requested $10 billion reserve fund is for 
unspecified purposes. As a matter of constitutional responsibility, I 
don't think Congress should simply provide the administration with a 
blank check. I submit that it is necessary and consistent with 
Congress' constitutional responsibility to authorize programs and 
appropriate money for the purposes authorized. That $10 billion can and 
should be used to help rectify, at least in part, the shortcomings I've 
identified in the budget. I urge the Budget Committee to make this 
possible.
    Mr. Chairman, the Armed Services Committee's ability to authorize 
the programs necessary to protect our national security interests 
depends on having sufficient resources. With the caveats I just 
mentioned, the President's budget this year does a good job of enabling 
us to meet our challenges. I hope the Budget Committee will be able to 
agree to a budget resolution and allocations that provide enough 
funding for us to address our national security priorities.
    I appreciate the opportunity to express my views, and I look 
forward to working with all the members of the Budget Committee in the 
months ahead. Thank you.

    Chairman Nussle. Thank you very much for your testimony.
    Let me throw out the challenge because--oh, I'm sorry. We 
have another panelist. We'll hear from him first. Our very 
distinguished colleague from the Budget Committee, Mr. 
McDermott. We welcome you to the witness table. We have a 
number of questions ready for you. There was some thought about 
swearing you in and getting the cameras here, but we decided 
against that. [Laughter.]
    All joking aside, we're glad you are willing to give us 
your thoughts. Your statement will be made part of the record 
as well, and you may summarize.

STATEMENT OF HON. JIM MC DERMOTT, A REPRESENTATIVE IN CONGRESS 
                  FROM THE STATE OF WASHINGTON

    Mr. McDermott. Thank you, Mr. Chairman.
    Coming to testify before your own committee is a little 
like throwing a pass to yourself. But there are some areas that 
I think need to be at least mentioned here in this process. And 
I'll go over them quickly. TANF, health care access, Medicare 
and veterans issues.
    I think TANF was enacted 5 years ago and is now up for 
reauthorization. It has been a success in many ways, by many 
criteria. But in fact, there are still some problems. I think 
we will have to look at this issue as we reauthorize. The State 
of Washington, for example, last year, found that only 45 
percent of TANF leavers earned more than the Federal poverty 
level 3 years after they left the case load.
    So although people have jobs, they are still below the 
poverty level and are struggling, which adds to other problems 
that they have. For instance, the whole question of the child 
development block grant. We presently take only 2 million out 
of the 15 million who are eligible for child care. If you're 
going to have people go to work and stay at work, you're going 
to have to deal with the child care issue. It is, I think, one 
of the issues that has been addressed by a bill that Mr. Cardin 
and others members of the Human Resources Committee on the 
Democratic side and the Ways and Means Committee have already 
put in, and I think we'll consider that issue there. So, you'll 
get a second shot at looking at this issue of what we need to 
do further with TANF.
    The other thing I think we have to do is to index the TANF 
block grant for inflation, restore the TANF and SSI benefits to 
legal immigrants, and then of course increase the child 
development block grant. I think those three things, if we're 
going to make TANF work, we're really going to have to think 
about those seriously.
    What's happening in my State now is that many of the people 
we got off of welfare and onto a work program, because of the 
downturn in the economy--we're No. 2 in the United States in 
high rate of unemployment--people are now going off TANF, they 
don't have significant unemployment benefits, so they're going 
back onto welfare. So it is not an issue that's going to go 
away.
    Health care, I was pleased to see the President talking 
about access to health care. I think all of us know that one 
way or another, we've got to deal with this. Yesterday we had a 
hearing in the Ways and Means Committee on this issue. The 
whole idea of tax credits is an interesting idea that I think 
we will have to have some discussions about. Certainly without 
community rating, it's going to be very hard to put people out 
there with any kind of tax credit into the individual tax, into 
the individual insurance market, and have any real impact on 
it. I think that will be one of the issues that we deal with. 
Because the majority of the uninsured have incomes below 200 
percent of the poverty line. That means $34,000 for a family of 
four, and they're living paycheck to paycheck. A tax credit 
that pays 30, 60, whatever percent, is just sort of out of 
their reach in many instances. I think we have to recognize 
that and talk about what is a realistic plan.
    Medicare is another issue which I think we could talk 
about. There are a whole series of things which are covered in 
my remarks which I will put in the record. The whole end-stage 
renal disease issue and the cost of that and how we deal with 
that, I think is an increasing problem. We have to look at 
that, and are we doing an adequate job in dealing with people 
with the kidney dialysis questions.
    I think one of the issues this committee is going to have 
to face, certainly I think that Ways and Means is going to have 
to face, is the schedule 5.4 across the board cut in Medicare 
payments to physicians and other health care providers. Without 
sounding old, I guess, I'm 116 in seniority in this body. That 
means there are about 325 people below me. None of them have 
ever lived in a Congress when things were going down. They've 
only looked at things going up.
    Unfortunately, we tied the sustained growth rate, which is 
about the increase for doctors' payments, to the GDP. I don't 
think anybody ever thought the GDP could go down. Well, it did 
go down, and so we're going to have this cut. To suppose that 
the cost of medical services is going down is really kind of an 
interesting concept that we're going to have serious problems 
with the Medicare program if we don't correct one way or 
another in this Congress.
    Veterans benefits is the Nation's largest direct provider 
of health care services. We train professionals there. We do 
research--a major part of our research is done in our Veterans 
Administration hospitals, prosthetics research. And it's really 
a major backup to the Defense Department. It provides health 
care for about 4 million people.
    Recently, I'm not sure which year we did it, we added to 
what was already a very useful program in terms of blind 
rehabilitation and spinal cord injury care and prosthetic 
services. We said if you had a non-service connected issue, you 
could come into the Veterans. All you had to do was register 
and you could get in. They're called Category Sevens.
    Category Seven complaints now are the number one complaint 
in my office. They are bigger than immigration, they are bigger 
than Medicare, they are bigger than anything else, because we 
put this offer out and lots and lots of people said, I'm going 
down to the Veterans, because I can get a drug benefit. I think 
I skipped over my comments about drug benefit. I think that 
ultimately is one that we will have to think about.
    But as they go to the Veterans hospital, they have 
experiences which I will read a little bit of, one of my many, 
many, many letters about it. This gentleman says, I moved to 
Washington State and I was told at the time by theemergency 
clerk that Veterans would not send records, and I would have to 
have my records prepared and hand delivered to the records 
department of the VA facility here in Seattle. I did so after 
much difficulty.
    Then he went there and he was told--he went to the records 
department and they said, oh, they forward them to us all the 
time. So he says, one bad piece of information.
    Then he goes through a chronicle of the time he spent 
there. He said, I was told that unless I had all my medical 
work done through the VA I could not participate in the 
program. This is after he brought all his records, got 
everything there, all set up. I was told, I said I was the same 
as my cousin in Las Vegas and he got grandfathered in. She said 
I was changing hospitals and so she sent him down the road.
    The next clerk said to him that the previous lady was 
wrong, and that a policy change had occurred in May and that if 
I saw a doctor, I could get all of my prescriptions from the 
VA. The doctor's appointment would take 6 to 12 months before I 
could see one, although some people see them in 1 or 2 months.
    At this point, I came back home completely confused as to 
what the correct policy is and what I should do. Anything you 
can do to help would be greatly appreciated.
    Now, I'm not sure of the source of all the confusion and so 
forth, but we have a serious problem out there with veterans 
who are getting older and sicker and need prescription drugs 
and are looking to the VA as the way to do it. This guy came 
running in there because he was moving from Illinois to 
Washington State, and he wanted to get in and get his 
prescriptions taken care of. It still hasn't happened.
    I think that we must look at that or we're going to have a 
serious problem going home to our districts, talking to people 
about what's going on in health care. I recognize the things 
that I brought up all are things that cost money, but I think 
that they are things that if we're serious about what's going 
to happen to Medicare. We're going to keep people out of 
welfare, and we're going to keep people satisfied with the 
Veterans system, we're going to have to look seriously at them.
    Thank you very much. I'd like to ask unanimous consent to 
put these letters--I have two letters which I will put into the 
record so that they can be recorded.
    Chairman Nussle. Without objection, so ordered.
    [The material follows:]

              Constituent Letter Received January 22, 2002

    Dear Congressman McDermott,
    We recent moved to Washington State from Illinois, August 2, 2001 
we have both registered to vote also. For the past 3 or 4 years I have 
been a out patient of the Veterans Administration Medical Center of 
North Chicago Illinois, being a veteran of WW II, on their prescription 
plan. Since we have moved to Washington State it has been a comedy of 
errors and misinformation and stalling. I went to the V.A. Hospital 
here in Seattle in September to be registered and to receive 
prescriptions. I was told at the time by the emergency clerk that the 
V.A. Would not sent reports and that I would have to have my medical 
records prepared and hand delivered to the records department of the 
V.A. faculty here in Seattle. I did so after much difficulty and tried 
to deliver them to the V.A. records department. This way I could get 
started on my outpatient prescription program. When I arrived I was 
told by the emergency clerk to go to the records department and start 
there and the clerk would tell me what to do next. The record clerk 
looked up my records and found them without any problems as they had 
been forwarded to the V.A. facility in Seattle. He advised that they 
are sent all the time. One bad piece of information. Since I arrived at 
11 A.M. I could get started if I saw the emergency clerk. The emergency 
clerk told me that since I was out of prescription he would let me see 
a nurse and get started. I saw a nurse at 11:55 A.M., she took my 
vitals and the list of prescriptions and told me the first emergency 
medical person could see me at 1 P.M. It was now 12:20 P.M. So I 
waited. An L.P.N. called me in at 1:15 P.M. And as of October 15 the 
program was no longer in effect. I mentioned my brother-in-law in Las 
Vegas follows the same procedure. He retort was that he was that he was 
grandfathered in. Unless I had all my medical work done through the 
V.A. I could not participate in the program. I said I was the same. She 
said I was changing hospitals and could proceed. I told her I want to 
lose the Doctors I had and would do something else. The clerk I saw 
next told me that she was wrong and that a policy change had occurred 
in May and that if I saw a Doctor I could still get all of my 
prescriptions from the V.A. The Doctor could take 6 to 12 months before 
I could see one, although some people had seen one in 2 months. At this 
point I came back home completely confused as to what is the correct 
policy and what I should do. Anything you can do to help would be 
greatly appreciated. As you can see there are many errors.

              Constituent Letter Received February 5, 2002

    Dear Congressman McDermott:
    Thank you for referring my letter to the V.A. Omsbudsman. The women 
who called * * * claimed I was not eligible even though I have a VA 
Medical Center number and have received prescriptions as stated in my 
previous letter. She claimed each VA area made their own decision and 
would not honor what had been done before. The telephone call was 
obviously, not a satisfactory call. In her defense she stated she would 
send a letter stating their position. I thought congress made the 
discions and the VA followed that procedure. What does the number of 
Veterans in an area have to do with it? Either the Seattle VA Medical 
Center is adequate or it is not. The woman who called is not trying to 
cooperate. That is one of the things we learned to do in WWII. Why not 
now?
    Please see if you can help further. I have spent over $1,000.00 on 
prescriptions I use to get from the VA Medical Center in North Chicago, 
Illinois.
    Thank you.

    [The prepared statement of Jim McDermott follows:]

Prepared Statement of Hon. Jim McDermott, a Representative in Congress 
                      From the State of Washington

                                  tanf
    Five years ago, Congress enacted a sweeping overhaul to the federal 
welfare program, now called the Temporary Assistance for Needy Families 
program. What we witnessed, much due to the job-creating Clinton 
economy, is a dramatic reduction in the amount of people receiving 
welfare payments. In fact, we reduced those numbers by 50 percent.
    But despite the unprecedented economic growth of our economy, one 
out of every six children still live in poverty. Last year, for 
example, the State of Washington found that only 45 percent of its TANF 
leavers earned more than the Federal Poverty Level three years after 
they left the caseload. Sadly, these results are common throughout the 
Nation.
    A couple of weeks ago, my colleagues on the Human Resources 
Subcommittee of Ways and Means introduced legislation to reauthorize 
and improve TANF. Our bill includes features that would reward states 
that are able to assist women on welfare to find good paying jobs with 
opportunities to move up the employment ladder. We make poverty 
reduction an explicit goal of TANF and identify areas, such as wage 
progression and job retention, to achieve it. Our bill also 
significantly increases the amount of mandatory money in the Child Care 
Development Block Grant (CCDBG).
    Further, in 1996, under the guise of welfare reform, Congress 
callously deprived legal immigrants access to TANF and SSI benefits. I 
think that we are morally compelled to restore benefits to these 
people, and the democratic proposal put forward does this.
    Funding for TANF has remained flat over the last five years. So 
while general government spending has increased 5 percent annually over 
the past few years, one of the biggest weapons we have to reduce 
poverty has been functioning from a shrinking pie because the program 
was never indexed for inflation. I was saddened to see that the 
President's budget continues to flat fund TANF. The Congressional 
Research Service recently estimated that if TANF funding is not indexed 
for inflation during reauthorization that it will have effectively 22-
percent less in real dollars to help combat poverty. Any success that 
TANF has had will be stymied if we continue to diminish resources for 
the program.
    The current work-first mechanism utilized under TANF can only work 
if we provide childcare for mothers returning to the workforce. 
Unfortunately, even the department of Health and Human Services 
acknowledges that the TANF and CCDBG programs are serving only about 2 
million of the 15 million children who are eligible for childcare. That 
means that nationwide, less than 20 percent of children are receiving 
the care they are eligible for because there are not adequate funds. In 
the State of California alone, over 200,000 children are on a waiting 
list to receive childcare.
    President Bush recently espoused the ideas of President Jefferson 
by saying that it is an essential moral duty of America to defend the 
elderly, strengthen the weak, feed the hungry, and care for our 
children.
    Mr. Chairman, Congress must adequately invest in weapons of poverty 
reduction. We must index the TANF block grant to inflation, restore 
TANF and SSI benefits to legal immigrants, and significantly increase 
the Child Care Development Block Grant when we reauthorize TANF this 
spring.
                               uninsured
    While I am pleased to see the administration addressing the 
uninsured, its efforts are woefully inadequate. Previous tax credit 
proposals have failed, and the one in the President's 2003 budget will 
fail as well because the credit is targeted for the individual market, 
and the amount of the credit is inadequate.
    Without community rating, tax credits will not work. The individual 
market is extremely expensive and not efficient spending. Community 
rating provides lower prices than would occur in the individual market. 
Better prices are negotiated for large numbers of people. As 
individuals are pooled together, risk is spread across the population 
in the ``community.'' Therefore, with community rating, those with 
medical problems will be able to find affordable health insurance plans 
in the individual market.
    The majority of the uninsured have incomes below 200 percent 
Federal Poverty Line (FPL). This is approximately $34,000 for a family 
of four. These are folks living paycheck to paycheck spending their 
money on housing and food. They do not have several thousand dollars to 
spend on health insurance premiums for their family.
                                medicare
    As a former member of the National Bipartisan Commission on the 
Future of Medicare, as a member of the Ways and Means Committee Health 
Subcommittee and as a physician, I have been intimately involved with 
the debate over Medicare reform. I do not believe that the traditional 
Medicare program is fundamentally broken. I do believe that we must 
take steps to ensure the program's solvency. Our commission attempted 
to address this problem. Now we have a crisis on our hands as the 
Medicare surplus has been raided.
    Any Medicare reform proposal must ensure that beneficiaries in 
tomorrow's world have access to the same basic benefits that already 
exist in today's program. We must improve the status quo by including 
an affordable prescription drug benefit and establishing a cap on out-
of-pocket costs. I want to protect the traditional Medicare program. 
Additional revenues were needed pre-September 11, and now are urgently 
needed to meet future financial obligations.
    The President's proposal to set aside $190 billion over 10 years 
for Medicare modernization and a prescription drug benefit is woefully 
inadequate. There are no ``efficiencies'' through Medicare reform that 
can possibly create enough savings to address--the doubling of the 
number of beneficiaries by 2030, the increasing life expectancy, and 
the greater intensity of services per beneficiary, as more people have 
more services and procedures. Medical technology is a major driver of 
health care costs and it must be addressed in ways other than 
``efficiencies'' through so-called reform--while still maintaining 
traditional fee-for-service benefits.
    Patients with end stage renal disease (ESRD) are a unique segment 
of the Medicare beneficiaries, accounting for a disproportionately high 
amount of Medicare expenditures. They are a sick population, with 
multiple medical problems and a relatively poor quality of life. 
However, they have been virtually ignored since 1972, when the Medicare 
program was expanded to include ESRD patients. I have a bill, The 
Kidney Patient Daily Dialysis Quality Act of 2001 that would improve 
their quality of life and lengthen their life expectancy. I believe it 
is time we turn our attention to these Medicare beneficiaries.
    I am seriously concerned about the scheduled 5.4-percent across-
the-board cut in Medicare payments to physicians and other health care 
professionals scheduled for this year. Unlike reimbursements for most 
Medicare services, those updated for physician services are tied to a 
target for overall spending determined by the so-called sustainable 
growth rate (SGR) system. This is a completely defective system. SGR is 
based on growth in real Gross Domestic Product. In other words, when 
the economy does badly, the update for physician services is lowered.
    As concluded by the Medicare Payment Advisory Commission (MedPAC), 
this system does not adequately account for all relevant factors that 
affect the cost of providing physician services, and it cannot maintain 
payment rates at the appropriate level. In fact, MedPAC recommended 
that the Congress replace the SGR with an annual update based on 
factors influencing the costs of providing physician services. If the 
administration does not restore the proposed cuts to physicians, no one 
should be surprised when physicians drop their Medicare patients and no 
longer accept new Medicare patients.
                         veterans' health care
    The Veterans Health Administration (VHA) is the Nation's largest 
direct provider of health-care services. It has the Nation's most 
extensive training environment for health professionals--the Nation's 
most clinically focused setting for medical and prosthetics research--
and, is the Nation's primary backup to the Department of Defense in 
time of war or domestic emergency.
    VHA provides health care for 4 million veterans. The quality of 
care is equal to, or better than, care in any private or public health-
care system. VHA provides specialized health-care services--blind 
rehabilitation, spinal cord injury care, and prosthetics services--that 
are unmatched in any system anywhere in the world.
    VHA makes no profit, buys no advertising, pays no insurance 
premiums, and compensates its physicians and clinical staff 
significantly less than private-sector health-care systems. The 
population of veterans that the VA serves is older, sicker, and has a 
higher prevalence of mental and behavioral health problems. And, it is 
still a better bargain than Medicare.
    While the VHA sets the standards for quality and efficiency, 
veterans' access to health care is constrained. Consistently inadequate 
appropriations have forced the VA to ration care by lengthening waiting 
times. The annual budget shortfall translates directly into higher 
national health-care costs. When a veteran cannot get needed health-
care services from the VA, he goes elsewhere. The cost of care is 
shifted to Medicare--or a safety net hospital. Society pays more and 
the patient suffers.
    A week and a half ago, I had the pleasure of meeting with Timothy 
Williams, the CEO of VA Puget Sound Health Care System, in my Seattle 
office. His is one of the best-managed facilities of its kind in the VA 
system. This year, Puget Sound is facing a $8 million budget shortfall 
because there are so many Category 7 veterans enrolling in the VA 
system. Mr. Williams has had to defer repairs to his facility caused by 
last February's earthquake in order to maintain their high quality of 
care.
    Category 7 are veterans who have no service-connected disabilities, 
but now are accepting the invitation from Congress to use the VA 
system. The problem is, the VA budget is wholly inadequate to deal with 
this increase in numbers. They must now wait 12-18 months to see a 
primary care physician in order to access the VA. Some are vets who 
only want access to the low-cost prescription drugs; others are 
unemployed due to the current recession and must now turn to the VA for 
their health care. My office now receives more complaints about long 
waits for VA health care than we do for Medicare.
    Richard Weidman, the Director of Government Relations of the 
Vietnam Veterans of America, of which I am a member, testified before 
this committee yesterday and I would like to quote a portion of his 
testimony. ``If the administration's proposal is adopted, tens of 
thousands of veterans will effectively be priced out of health care 
altogether. Given the decline in State health care budgets, these low-
income veterans and their families will plunge straight through the 
remaining shreds of a very tattered social and economic safety net, 
perhaps to a future of homelessness and steadily declining health for 
themselves and their families.'' To let this happen to those who have 
served our Nation so valiantly and courageously would be a travesty.
    The Bush administration's proposed $1,500 per year deductible for 
``high income'' (i.e. Category 7) veterans is a thinly veiled attempt 
to force out of the VA system some of our Nation's most economically 
and socially disadvantaged citizens. The deductible was included in the 
President's recent budget proposal as a means of coping with the rapid 
increase in participation in VA health care programs. The VA has said 
that the increased usage, along with higher costs for drugs, health 
care inflation and new mandates such as emergency, mental health and 
long-term care, ``have all contributed to a financial challenge and 
hard budget decisions.'' President Bush has touted his record of 
military service during the Vietnam era and has stressed the importance 
of a sound VA health care system. But, his actions clearly betray those 
words.
    Under the administration's proposal, veterans or their insurance 
companies would pay 45 percent of charges each time they receive 
medical care until they reach the $1,500 annual ceiling. After that, 
they would continue to pay minimal co-payments for outpatient and 
inpatient care. There will be no change in care for the VA's core 
groups--the poor and those with service-related disabilities. It is 
estimated that some 121,000 higher-income veterans would instead turn 
to other health care services, but this might prove to be a hardship 
even for those veterans who could turn to Medicare, because the VA--
unlike Medicare--offers prescription drug coverage.
    Once again, America's armed forces are engaged in military action. 
The brave young men and women serving their country today are the 
veterans of tomorrow. The preamble of the Constitution states, ``We the 
People of the United States, in Order to form a more perfect Union * * 
* provide for the common defense.'' Just as we provide for the common 
defense, we must provide for those who fight today's battles. It is 
imperative that we adequately fund a Department of Veterans Affairs 
that can meet veterans' needs today while preparing for the veterans of 
the future. VA can do neither with the current budget shortfall.
    America owes its freedom to its veterans. It is time to acknowledge 
the sacrifices they made and to honor our commitment to them. Many 
answered their call to service long ago; now we must answer back by 
ensuring them a secure and stable future.

    Chairman Nussle. Thank you very much, Mr. McDermott.
    Our final witness for this panel is the distinguished 
gentleman from Massachusetts, Mr. Frank. We welcome you to the 
committee, and are pleased to receive your testimony. Your 
written statement will be made part of the record, and you may 
summarize as you wish. Welcome.

 STATEMENT OF HON. BARNEY FRANK, A REPRESENTATIVE IN CONGRESS 
                FROM THE STATE OF MASSACHUSETTS

    Mr. Frank. Thank you, Mr. Chairman. I won't have a written 
statement until after I've said it, then they'll write it down, 
then I'll have it.
    Chairman Nussle. Then we'll put it in the record.
    Mr. Frank. Thank you. Send me a copy. [Laughter.]
    First I want to comment a little on Mr. McDermott's 
testimony. I appreciate what he said about the Veterans 
Administration. We have the same Category Seven problem.
    But I want to make one point about the Veterans 
Administration. We're often told that we should not be 
involving ourselves in the provision of medical care, because 
when the government is involved in medical care, it's not going 
to be good care. In my experience, the most fiercely defended 
form of medical care from the consumer standpoint is the 
medicine given by the Veterans Affairs Department, and that is 
medicine dispensed by overnment employed doctors in Government 
owned buildings on sheets that the government bought and 
they're taking pills that the government bought. It could not 
be more governmental. The Veterans Affairs Department is the 
most totally governmentally controlled form of medicine we 
have, outside of those in the active armed services, and it's 
very popular.
    So people who rush to assume that if the government's 
involved in medical care it must be negative care are really 
discarding one of our primary examples.
    As to the budget, I have a request, first as the senior 
Democrat on the Housing Subcommittee. Last year we had hearings 
all year, and they were largely witnesses called by the 
majority, by Ms. Roukema. And almost without exception--I think 
there was literally one exception over dozens of witnesses--
they said we need to increase our housing stock, particularly 
for affordable housing for low and moderate income people.
    Prosperity does a lot, and in many cases prosperity does 
obviate the need for any kind of government action. Clearly 
nothing does better for helping people get off welfare or 
reducing unemployment than a booming economy. But no booming 
economy is going to boom equally for everybody. And if you 
happen to be a lower income individual, living in an area where 
things are going well--I see the gentleman from California, the 
gentlewoman from New York, myself, my friend from Washington--
if you happen to be in one of those metropolitan areas where 
things are going well in general, but you're in a profession 
where your income isn't going up. Maybe you're a firefighter or 
a teacher. Maybe you're a member of the clergy or a social 
worker. Maybe you are a service worker in a McDonald's or in a 
hotel.
    Prosperity can be bad news for you because the housing 
costs that you have to pay go up and you don't have the 
wherewithal to pay them. The rising tide doesn't lift all 
boats, or if it does, it makes it worse if you don't have a 
boat. The problem is that unevenly distributed prosperity, 
which is inevitable, no matter how good the economy is, 
exacerbates the housing crisis. We need to do more.
    So there was this overwhelming consensus that we should get 
back into the production business. I've been meeting with a 
very broad coalition of housing groups, and I will be 
submitting later the list of them. They include not just the 
advocacy groups, whom I respect a great deal, and I don't mean 
to denigrate, but perhaps their advocacy would be expected, but 
some of the groups not known for their low income constituency, 
people who manage housing, people who try to provide assisted 
housing for older people, etc., there's this overwhelming 
consensus that we need to do more.
    I want to submit to you the consensus figure of a $15-
billion increase in what we do put substantially into housing 
production. Without that, we have a housing situation that gets 
worse rather than better.
    Now, then, the question is, how do we pay for it. I think 
we have been too self-denying. We have justly celebrated our 
victory in the cold war. But contrary to some, I do not think 
we have in fact taken the full financial benefit of that. 
Obviously, we need to have a first rate military that is 
capable of defending ourselves. We are I think unanimously 
proud of the performance of the American armed services in 
Afghanistan. Yes, people make mistakes. Those are inevitable. 
They have been in every war.
    But the efficiency and the bravery and the success they've 
had is very impressive. I do have to note that unless I was 
missing something in May and June, I don't think so, the 
military that won that war in Afghanistan was the military that 
the Bush administration inherited from the Clinton 
administration. I think one of the great acts of resuscitation 
was that a military that had been described as weak and 
impotent and disorganized in November and December of 2000 made 
this miraculous recovery in time to win this great victory with 
flawless performance in 2001.
    But while I think we need to go forward there, and to go 
forward with those new weapons, I don't think we need to still 
worry about the Soviet Union. I'm going to make a bold 
prediction. The Soviet Union will not come back. We are not 
likely again to see the Warsaw Pact threatening us. But we have 
weapons that do that. I know we're building new attack 
submarines. They're very impressive instruments, but they do 
seem to me to have one defect. I cannot find an enemy for them.
    I think the lack of an enemy is a defect in a weapons 
system. Weapons systems can have technical defects. But 
spending tens of billions of dollars on attack submarines, when 
they are likely neither to be attacked nor have anyone to 
attack, seems to me unlikely. Certainly attack submarines would 
be of very little use in Afghanistan unless they could operate 
in melted snow.
    The fact is that we continue with stealth fighters and 
attack submarines and other weapons to spend a great deal of 
money on weapons whose purpose was to win a war against the 
Soviet Union. Now, we have very creative people in the military 
and they are able to come up with newer purposes for these 
weapons that had once been designed for the cold war period--
the F-22, the attack submarines and some others. But we're in a 
zero sum situation.
    So to be denying veterans health care, to be denying 
elderly people a prescription drug program if they are so 
munificently endowed as to be making more than $13,000 a year, 
and to make cuts in the environment and other things, which the 
budget proposes, and to continue to spend tens of billions on 
cold war weapons that are not necessary, or I think, even 
useful for the current threats that we face I think is an 
error.
    So I would hope that the committee would be tougher on some 
of those, let's raise the pay for the military personnel and 
improve their working conditions and go along with the newer 
kinds of weapons that we need and the special operations. But 
let's not continue to fight the cold war war game. In fact, I 
do think with the attack submarines, I'm told we're going to 
have 53 of them, that maybe what we should do is have 27 of 
them be red and 26 blue, because they could be on the red team 
and the blue team of the United States war games, which is 
likely to be the only action they will see.
    Thank you, Mr. Chairman.
    Chairman Nussle. I thank the gentleman from Massachusetts 
for his testimony.
    Out of respect to the Members, both on the panel as well as 
on the committee, let me make a recommendation. This is the day 
when we listen to Members. If Members----
    Mr. Frank. I certainly hope so, Mr. Chairman.
    Chairman Nussle. Thank you. This is a day when we listen to 
Members and have an opportunity to seek their advice. Let me 
suggest that if members on the dais here have any questions 
that they ask them now. Otherwise we'll go to the next panel.
    Are there members who wish to inquire or have a question? 
Mr. Gutknecht.
    Mr. Gutknecht. Mr. Chairman, if I could just make a real 
quick statement. One of the best weekends I ever spent was with 
Mr. Hoyer aboard the USS George Washington, an aircraft 
carrier.
    Chairman Nussle. I'm not sure you want to admit that here.
    Mr. Gutknecht. Oh, it was a fabulous thing. I just want to 
point this out because----
    Mr. Hoyer. I thought it was a good weekend. But I'm not 
sure I would be quite that expansive. [Laughter.]
    Mr. Gutknecht. I'll tell you, I have never been more proud 
to be an American. Those kids, and what I learned, and it 
really fits together with what Mr. Skelton is saying as well, 
it's probably the greatest bargain this country gets, is the 
young people who serve us in the military. So I think with 
regard to that, I think clearly we've got to do some things to 
make it more attractive for those kids to stay in the armed 
forces. I think that's one area where there will be no debate 
about, even on this committee.
    Chairman Nussle. Thank you.
    Mr. Frank. Mr. Chairman, could I just ask unanimous consent 
to submit a list of the organizations that are supporting that 
$15 billion housing increase later this afternoon?
    Chairman Nussle. Yes, sir.
    Mr. Frank. Thank you.
    [The material follows:]

        List of Organizations Supporting a $15 Billion Increase
                        in Housing Expenditures

    National Housing Conference
    American Association of Homes and Services for the Aging
    Public Housing Authorities Directors Association
    National Affordable Housing Management Association
    National Council of State Housing Agencies
    National Alliance to End Homelessness
    Council of Large Public Housing Authorities
    National Congress for Community Economic Development
    Citizens Housing and Planning Association (Boston, MA)
    National Housing Trust
    National Leased Housing Association
    National Low Income Housing Coalition

    Chairman Nussle. Are there other members who wish to ask a 
question? Mr. Fletcher.
    Mr. Fletcher. Let me ask Mr. McDermott a question about the 
tax credits and trying to increase availability access to 
health care. I think there's about 29 States--that may not be 
real accurate--that either have high risk pools, some of which 
are operating better than others, depending on how they're 
funded, and community rating, guaranteed issue or modified 
community rating. If you had something that encouraged and 
helped States with the high risk pool so they could have a 
stronger individual market, do you think tax credits then, if 
we took away the problem that you are concerned about, would 
you support them at that level then?
    Mr. McDermott. I was in the State legislature when we put 
our high risk pool together. I also put together the basic 
health plan. So I tried to do this stuff down at the State 
level. Certainly, one of the ways I think would be very 
effective, if we're really talking about increasing access, is 
to give money to States to let them develop their own programs.
    Although people know that I'm for a single payor system, 
that's a financing system, not a system of health care 
delivery. I think the design of local systems are much better 
done at the State level. I think that Massachusetts can do 
theirs and Maryland and Missouri and Washington. Each can do 
their own in a much better way than you can if you try to do it 
from up here.
    So I would be willing to look at that kind of possibility. 
I actually worked with Jim McCreary for quite a while trying to 
put together a tax credit operation that would actually work. I 
want it to work. I think that some of these, when you're 
looking at tax credits, when you're unemployed you haven't got 
very much money. Many of the people who are unemployed or who 
are employed are working at jobs where they don't have a whole 
lot of money.
    So, a tax credit has to be very carefully thought through 
to make it really work.
    Mr. Fletcher. I agree and appreciate that, because we 
worked in Kentucky on the high risk pool there and eventually 
got it in.
    Ms. Hooley. We talk about veterans--what's happening in 
Oregon this year, where we have to cut money from the Veterans 
Hospital. We have veterans that are Category Seven, Mr. 
McDermott, who literally won't even get an appointment in a 
year. And somehow or another, I think we need to tie these two 
pieces together in a much better way. Again, it is what people 
go into the military and their expectations and then what 
happens to them. When we've asked people to put their life on 
the line, I just think we need to do a better job of providing 
health care to our veterans.
    Mr. Skelton. Mr. Chairman, may I respond?
    Chairman Nussle. Please.
    Mr. Skelton. A major problem was with the career military 
soldiers who stay in 20 years or more. They were promised, you 
stay with us for a career of 20 years, whatever the case may 
be, some stay as long as 35 years, we will take care of your 
health needs for the rest of your life.
    Last year, well, I should say the year before last, we made 
major strides in changing the health care system, the Tri-Care 
for Life System, which originated in the House. It was changed 
somewhat in conference. But a major, major step was made in 
that direction. As a matter of fact, $8 billion of this year's 
proposed budget goes to military retiree health care. So 
insofar as that is concerned, we're on third base on helping 
them. We've done a good job on that.
    Now, we cannot really compare that to the veterans, because 
all military retirees are veterans, but all veterans of course 
are not military retirees, because many go on for 3 years, 6 
years, and then go on to pursue other activities. So, I 
understand the comments of Mr. McDermott and those who were 
speaking about the veterans as such. But regarding the military 
retirees, we've made major strides.
    Ms. Hooley. Thank you.
    Chairman Nussle. Are there other members who wish to 
inquire? Ms. McCarthy.
    Ms. McCarthy. Thank you, Mr. Chairman. I'll be very quick.
    It's kind of tough, because my colleagues are hitting all 
the things I want to talk about. But I think Barney, one of the 
things on Long Island, even though everybody thinks we're rich 
out there, we're not. If I had to try and buy my own home 
today, which was my mother's home, which they bought I think at 
$11,000, I think I bought it from them for $79,000, and from 
the last assessment, my house is worth $350,000. Now, 
obviously, when I die, my son's going to be very happy because 
he's going to have a small inheritance. But I couldn't turn 
around and buy it today.
    On Long Island, we don't have enough land, so we're looking 
at creative ways. The interesting part that I've seen is our 
local governments are trying to find housing, because they 
can't hire anyone to work in the local government. Then we're 
having our business people coming in constantly saying, we have 
to have housing for their workers, and we're talking about 
middle income.
    So if a middle income family and a middle income, well, I 
should say on Long Island, is probably $60,000. But of course, 
with everything that we pay on school taxes and everything 
else, it comes down to maybe you're living on $40,000 and try 
and pay off a mortgage on the higher end of the prices. It's a 
problem, I think probably your area, the northeast area, 
California, obviously, Oregon, Washington.
    So we have to start looking at what we're going to do. 
Because the dream of having a home for anyone, welfare, we're 
going to be adjusting that. The majority of women that I work 
with on the island, work very hard. They're off welfare. 
They're not making enough money. We have our food banks that 
can't even supply them enough food any more, because most of 
them have children.
    In the service, day care centers, we're seeing more and 
more women going into the service. They're having children, 
they want to stay in the service. My godchild is in the 
service; she's just been shipped overseas with her two 
children. She needs day care and she wants to stay in the 
service. She probably feels she can't, because she'll have to 
come out and make a better living to support her two children. 
All the things that you all brought up are going to be our big 
problem here. They're all good causes, and they are. And 
hopefully, the economy will soar.
    I'm optimistic, I think it will, so that we can find the 
funding and the money to support all the programs that are 
good. I happen to think that's the role of the Federal 
Government. That's what I've learned since I've been here. We 
are there to help all these projects. Our military needs all 
the help it can get.
    But I happen to agree with Barney, too, we have to start 
looking at the war of today, and not the cold war. We can save 
money that way, too. Thank you, Mr. Chairman.
    Chairman Nussle. Thank you.
    With that, I thank the panelists for their testimony. We 
will take your recommendations into consideration.
    The next panel, we will change slightly, and invite the 
Members that are here in the room to come up to the witness 
table. The gentlemen from Maine, from Nebraska, Ohio, New 
Mexico, we have a number of Members that have come in. Even 
though the panel is a little different than the second panel we 
had advertised, we would welcome them forward at this time.
    Yes, Mr. Gekas as well, please.
    We're keeping an eye on the floor. I think we're probably 
somewhat close to a rule vote. So why don't we begin, we'll 
just start from left to right. Mr. Allen, welcome. This is the 
Tom panel, by the way, we've got three Toms lined up right in a 
row. Mr. Allen, you're welcome to summarize your testimony. All 
witnesses' statements as written will be placed in the record. 
You may proceed.
    And we'll try to keep this, if you could, to 5 minutes at 
the most, just so we can try and get through as many as 
possible before the rule vote.

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

    Mr. Allen. Thank you, Mr. Chairman. Certainly I can do 
that.
    I appreciate the chance to be with you today to discuss 
budget priorities for fiscal year 2003. I would like to spend 
some time talking about our ability to provide our seniors with 
a way to deal with the high cost of their prescription drugs. I 
am really not here asking for money, let that be noted. I am 
here asking for language.
    But a tight budget and rapidly rising health care costs 
have really put our seniors in a terrible bind. So many of them 
can simply not afford the drugs that their doctors tell them 
they have to take. We feel like we're faced with a tradeoff. 
There is so little money available as contrasted with last year 
that we either have to provide a very small benefit for a 
larger number of beneficiaries or a larger benefit for a very 
small number. The administration's proposal is the latter, the 
$77 billion that has been designated for State sponsored 
prescription drug programs, would really cover only those 
seniors between 100 and 150 percent of the poverty level. It's 
a very limited program and it doesn't offer any significant 
help to middle income seniors in paying the high cost of their 
prescription drugs.
    The administration has designated considerably less than 
the $300 billion allocated in last year's budget resolution and 
the same number is being floated by Speaker Hastert in the 
Senate Finance Committee this year. But drug expenditures are 
going up 15 to 17 percent a year, and $300 billion would buy 
much less of a benefit now than it would a year ago. The 
underlying problem is price. You simply cannot deal with this 
problem without dealing with the issue of price. Any Medicare 
prescription drug benefit has got to include a substantive cost 
control mechanism in order to make the benefit meaningful for 
beneficiaries and also affordable to the government.
    There are several possible approaches, but I want to 
recommend the one that's in my bill, H.R. 1400, the 
Prescription Drug Fairness for Seniors Act. This bill would 
allow pharmacies to buy drugs for Medicare beneficiaries at 
what is called the average foreign price, which is the price 
that consumers pay in the six other countries of the G7: 
Canada, Japan, Germany, Italy, France and the United Kingdom. 
Now, the average foreign price in those countries is about 40-
percent below what our seniors pay here. Under this proposal, 
seniors could buy their drugs at any pharmacy. There is no 
significant cost to the Federal Government, none. It's simply a 
discount.
    It's not as if this hasn't been tried. This is what those 
other countries do. They have some mechanism for setting a 
price cap on what the pharmaceutical industry can charge. And 
for those who say, well, but the market in the United States is 
different, or we have a big Medicare market, remember the 
market in Europe alone is 330 million people for prescription 
drugs, and we have 39 million beneficiaries on Medicare.
    Under this proposal, the relief would be reliable, 
consistent, equitable, everybody would get a 35 to 40 percent 
discount, no enrollment fee, seniors in Iowa, Maine and Texas 
and every other State would get exactly the same benefit. In 
other words, Congress must address the issue of price in order 
to construct a real benefit for consumers that is affordable 
for the government. Every senior has been promised help with 
the cost of their prescription drugs. The only way to keep 
these promises is to implement effective cost containment, such 
as that provided by H.R. 1400.
    Therefore, I would urge this committee to include language 
in the budget resolution for fiscal year 2003 mandating that 
funds designated for a prescription drug benefit, any funds, 
whatever number you put in, be linked to an effective mechanism 
to ensure cost containment.
    I would just say in conclusion, particularly to my friends 
on the Republican side if the aisle, you have all voted for 
this kind of mechanism already. In the defense authorization 
bill for 2000, virtually all of us voted for a discount for 
military retirees. All we are saying is, do the same for our 
Medicare beneficiaries. Give the same prices that the 
Europeans, the Canadians and the Japanese have, and let's give 
them relief at a minor, minor cost to deal with a problem that 
is really becoming desperate.
    Mr. Chairman, I thank you very much.
    [The prepared statement of Thomas H. Allen follows:]

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

    Chairman Nussle, Congressman Spratt, distinguished Budget Committee 
members, thank you for this opportunity to discuss budget priorities 
for fiscal year 2003. I would like to speak about our promise to 
America's seniors to help them afford the high cost of their 
prescription drugs.
    Due to a tight budget and rising health care costs, providing 
America's seniors with a prescription drug benefit is a daunting 
challenge. Limited dollars forces us into a trade off--a little help 
for many seniors or more help for only a few. In its budget proposal, 
the Bush administration attempts to give a limited group of seniors 
assistance with their prescription drug costs. By the administration's 
own estimates, the $77 billion designated for State-sponsored 
prescription drug programs to cover low-income seniors will only help 3 
million Medicare beneficiaries. This plan does not offer any 
significant help to middle income seniors in paying the high cost of 
their prescription drugs. We don't have to settle for this trade-off.
    The Bush administration has designated considerably less than the 
$300 billion allocated in last year's budget resolution and in 
proposals being floated by Speaker Hastert and the Senate Finance 
Committee this year. But as drug expenditures continue to spiral 
upward, rising approximately 15 percent each year, $300 billion will 
buy much less of a benefit than it did last year. These proposals fail 
to address the underlying problem: the high price of prescription 
drugs. I believe that a Medicare prescription drug benefit must include 
a substantive cost control mechanism in order to make the benefit 
meaningful for beneficiaries and affordable to the government. The only 
way to get more benefit to more seniors is by building a baseline for 
prescription drug prices.
    There are several possible approaches, but let me recommend one. My 
bill, the Prescription Drug Fairness for Seniors Act (H.R. 1400), would 
significantly reduce prescription drug prices for all Medicare 
beneficiaries at virtually no cost to the Federal Government. The bill 
allows pharmacies to purchase drugs for Medicare beneficiaries at a 
price equivalent to the ``average foreign price,'' based on the prices 
consumers pay in six other industrialized nations: Canada, France, 
Germany, Italy, Japan, and the United Kingdom. This legislation would 
provide up to a 40 percent savings on prescription drugs. Medicare 
beneficiaries could purchase their prescription drugs at any pharmacy. 
Unlike the President's proposal, and others, H.R. 1400 would provide 
help to all seniors on the price of all drugs. They would have an 
immediate, guaranteed price reduction through Medicare--relief that is 
reliable, consistent, and equitable--with no enrollment fee. Seniors in 
Iowa would get the same price reduction as seniors in Texas, Maine, and 
every other State. My plan doesn't rely on States to implement a 
program, forcing them to come up with a 10 percent match when many are 
already in fiscal crisis. H.R. 1400 can serve as a critical cost-
containment cornerstone for a comprehensive Medicare drug benefit. We 
can implement it now.
    To summarize, Congress must address the issue of price in order to 
construct a real benefit for consumers that is affordable for the 
government. Every senior has been promised help with the cost of their 
prescription drugs. The only way to keep these promises is to implement 
effective cost containment, such as that provided by H.R. 1400. 
Therefore, I urge the Budget Committee to include language in the 
Budget Resolution for fiscal year 2003 mandating that funds designated 
for a prescription drug benefit be linked to an effective mechanism to 
ensure cost containment.
    Chairman Nussle, I again thank you for holding this hearing today. 
I look forward to working with you and our colleagues to make 
prescription drugs affordable for all of America's Medicare 
beneficiaries.

    Chairman Nussle. I thank the gentleman.
    Mr. Udall.

STATEMENT OF HON. TOM UDALL, A REPRESENTATIVE IN CONGRESS FROM 
                    THE STATE OF NEW MEXICO

    Mr. Udall. Thank you very much, Chairman Nussle. Let me say 
to you and your colleagues, it's a pleasure to be here and 
thank you for having us.
    I have no doubt that the President's call for increased 
funding for fighting terrorism and homeland security will 
receive broad bipartisan support. However, as we enter another 
era of deficits, the President and the Congress must have the 
courage to make decisions that keep our economy strong. I just 
wanted to touch briefly on a couple of the budget issues that 
are of concern to me and my State and my congressional 
district.
    First of all, nuclear cleanup. We've had a situation at the 
national laboratories where in the 1940's and 1950's they 
engaged in a number of practices which were not very good. They 
buried waste, rather than in lined trenches, they buried it in 
earthen trenches. They put barrels into the ground that they 
never expected to extract.
    We are now in this budget process slowing down that 
cleanup. We thought we were going to be able to do it in 7 to 8 
years with the budget numbers that are out there. We're 
bringing, we're extending the length of the cleanup and we're 
making it much slower. I think there are not only national 
security problems at the labs as a result of that, but there 
are environmental problems as far as water and leakage.
    Secondly, let me talk about renewable energy. It's my 
belief that we need to have a bold, new strategy for our 
national energy policy. I think we need to focus on renewables; 
I think we need to focus on fuel efficiency. I'm not sure that 
the President's budget this time around does it. I applaud the 
fact that in the area of renewable energy, he's increased the 
budget by $21 million, which is up 5.5 percent. But I must say 
that the cuts in geothermal of $1 million, the biomass cut of 
$2 million, solar research by $2 million, we need to do more in 
that area. I really hope that you take a hard look at that.
    The last area I wanted to focus on is transportation. Many 
of you that live in the east, the communities are more compact, 
your commutes are smaller. In the Intermountain West, it's not 
unheard of for people to drive and commute to work 70 miles to 
work, 70 miles back. So the transportation on those roadways is 
absolutely crucial.
    What we have seen in the budget that's been presented this 
year is an $8.6-billion decrease in transportation funds. That 
would mean a cut in New Mexico of $69 million. We're talking 
about 2,700 jobs. Many of the road projects that the State of 
New Mexico has on the books that have been planned, that are 
moving forward, are now going to have to be delayed. So, I hope 
that you can look at the areas of nuclear cleanup, energy 
efficiency and transportation.
    Let me just say as a final comment, as I've sat here and 
listened to Mr. McDermott, who I know is a good, capable 
doctor, and Barney Frank talk about medical care. The same 
thing is true that Barney Frank said about veterans, protecting 
their medical care, as the Native Americans, protecting the 
Indian Health Service, which we all fund in the budget. The 
remarkable thing is, not only do they like the health care that 
they get from the Indian Health Service, but it does, the 
Indian Health Service does a remarkable job at cutting costs 
and providing health care at a very, very cost effective level. 
If you look at what health care is provided for by Medicare to 
our population over 65, and you look at what the Indian Health 
Service does with all government doctors and nurses and 
employees and hospitals, we're talking about a third less cost.
    So I think there is an argument in the governmental sector 
where we're doing a very cost effective job, and the kinds of 
things that my colleague here, Tom Allen, is talking about. If 
we can save on prescription drugs and push the price down, and 
provide services in these other areas, I think we have some 
areas to explore to provide better health care for our 
citizens.
    With that, thank you very much. I'm happy to stay and 
answer questions.
    [The prepared statement of Mr. Udall follows:]

Prepared Statement of Hon. Tom Udall, a Representative in Congress From 
                        the State of New Mexico

    Thank you Mr. Chairman. My colleagues on the House Budget Committee 
let me begin by saying that we all have significant challenges ahead of 
us during this budget cycle. I have no doubt that the President's call 
for increased funding for fighting terrorism and homeland security will 
receive broad, bipartisan support. However, as we enter another era of 
deficits, the President and the Congress must have the courage to make 
decisions that will keep our economy strong. While I support a number 
of the initiatives that the President outlined in his fiscal year 2003 
budget, I am increasingly alarmed that his budget fails to address 
concerns that are important to those who reside in the 3rd 
Congressional District and in New Mexico.
    I appreciate your kind invitation to testify today on the fiscal 
year budget for 2003. I will be speaking about three areas that pertain 
to the budgets for Energy, Transportation, and Health & Human Services.
    The President's budget for 2003 provides $3.3 billion for energy 
related programs. However, this level is $119-million below the level 
needed, according to CBO, to maintain purchasing power at the 2002 
level. Over the next 5-year period energy programs face a $173-million 
cut. However, as the budget proposal addresses funding for key programs 
at our Nation's national laboratories and energy related programs, 
several DOE sites are slated for significant cuts in their cleanup 
budgets.
    The work of our national laboratories is important as we continue 
to assess and respond to the security and energy needs of our Nation. 
Our laboratories provide a plethora of scientific advancement 
including, as mentioned earlier, the development of our Nation's 
nuclear stockpile to enhance our domestic energy supply. But as they 
conduct this critical work, we need to ensure that the proper funding 
is available for environmental clean-up at our DOE facilities.
    The President's proposal calls for accelerating the clean-up of 
nuclear waste and advances reforms that will result--the administration 
claims--in more clean-up at less cost while protecting workers, the 
public, and the environment. My concern is that this proposal cuts the 
clean-up budgets for DOE facilities, that include Los Alamos National 
Laboratory, to implement the administration's accelerated clean-up 
proposal. With that said, I intend to work with my colleagues to see 
that we restore funding for environmental clean-up at DOE facilities to 
address current clean-up commitments.
    In the area of renewable energy, I am pleased to see that these 
programs are slated to receive $408 million for 2003 in the budget, a 
$21-million (5.5 percent) increase over the 2002 enacted level. 
Businesses and groups throughout my congressional district and New 
Mexico are working to promote renewable energy technologies such as 
solar, wind, and biomass. However, I am concerned that cuts made in the 
DOE Budget will hinder the development of these initiatives. Such as: 
geothermal cut by $1 million (2.9 percent); biomass cut by $2 million 
(2.3 percent); and solar research cut by $2 million (2.0 percent). We 
need to be more effective at being efficient and proposed cuts to most 
of the energy efficiency accounts do not help.
    For 2003, the President's budget provides $54 billion in 
appropriated budgetary resources for the Department of Transportation. 
This funding helps support programs for our highways, mass transit, 
aviation, and maritime activities. However, of great concern to me is 
the decrease of $8.6 billion in highway transportation funding from the 
fiscal year 2002 budget. This budget shortfall will have a severe 
negative impact on New Mexico and result in a decrease of $69 million 
for the New Mexico State Highway and Transportation Department. A loss 
of $69 million will cause the postponement of several important highway 
construction projects, as well as reductions in money spent on road 
maintenance. In addition, it is projected that New Mexico will lose an 
estimated 2,700 jobs as a result of the shortfall. I am therefore 
opposed to the administration's decision to cut highway spending in the 
fiscal year 2003 budget proposal and plan to work with my colleagues to 
restore this decrease in funding.
    President Bush's fiscal year 2003 budget for the Department of 
Health and Human Services is an overall increase of 9 percent from the 
last fiscal year. The increase stems primarily from the President's 
requested increase of $4.3 billion for bioterrorism protections such as 
vaccine development, lab improvements, hospital modernization and 
expansion of the National Pharmaceutical Drug Stockpile.
    However, many health programs dealing with prevention and direct 
patient services would be trimmed or would receive no increases under 
the fiscal year 2003 budget. One such program of particular importance 
to me and my constituents is the Community Access Program (CAP). This 
important program provides grants to assist Federal and State agencies 
coordinate health care services to the under and uninsured.
    The State of New Mexico ranks near the top in the number of 
individuals lacking health insurance. Therefore, programs such as CAP 
are vitally important to the State. The CAP program has provided 
funding for programs in 77 communities throughout the United States, 
including two programs in New Mexico. However, the President's budget 
eliminates funding for this critical program--a cut of $105 million.
    In addition, although the President's budget contains $89 billion 
to help the uninsured, this amount is only projected to provide 
coverage for up to 6 million of the 40 million uninsured. This amount 
is a good starting point, but I believe that Congress must work to make 
insurance more accessible and more affordable. I am committed to 
working toward this goal as the budget and appropriations process 
progresses.
    I hope that my comments will be useful as the members of this 
committee work toward a budget that benefits all Americans.

    Chairman Nussle. I thank the gentleman.
    Mr. Osborne, welcome.

  STATEMENT OF HON. TOM OSBORNE, A REPRESENTATIVE IN CONGRESS 
                   FROM THE STATE OF NEBRASKA

    Mr. Osborne. Thank you, Mr. Chairman. I appreciate the 
opportunity.
    Three or four things I'd like to mention. In H.R. 1, the 
education bill, we had mentoring for success funded at $17.5 
million for 2002. The reason this was important, I think, is 
our culture has certainly deteriorated over the last several 
years. We find that mentoring is very important, it reduces 
absenteeism from school by more than half. It reduces drug 
abuse by more than half, teenage pregnancy significantly, 
violence, and all the other issues. It's the one thing we know 
we can provide that rectifies some of the social ills that 
we're now seeing.
    Each State, under this program, would have qualified for at 
least one grant. We felt this was important to provide a 
comprehensive picture of what's going on around the country in 
mentoring. We have Big Brothers, Big Sisters, we have YMCA, we 
have church-based, school-based and so on. So nobody really 
knows what is working best and what isn't. So, we thought that 
would give us a good picture.
    Unfortunately, in the President's budget for 2003, this was 
zeroed out. A program was put in there to mentor the children 
of prisoners for $25 million. That's well and good, and I think 
that's certainly very important. It's important to remember, 
however, that the National Mentoring Partnership says that 
there are roughly 15 million children in our country who are 
greatly in need of mentors. They have one parent, no parents, 
dysfunctional situations. Currently, there 1\1/2\ million 
children of prisoners in the United States.
    We feel that somehow this needs to be rectified. Maybe it 
can be consolidated in some way, but we think that's a major 
problem.
    Rural education achievement, also part of H.R. 1., 40 
percent of our children go to small, rural schools. We find 
that often these schools do not receive their fair share of 
Federal dollars. Eisenhower grants for teacher training, other 
grants, Safe and Drug Free schools, and grants of this nature, 
often end up being very small pools of money because of the 
number of students. The problem is that these small schools do 
not have grant writers.
    Essentially what happens is that many times they don't even 
make the effort to apply. The Rural Education Initiative would 
provide at least $20,000 to each one of these schools. We feel 
that this would be more equitable. It was funded at $162 
million for 1962. In 1963, this was zeroed out.
    I think we see this trend, I don't think anybody's against 
rural schools, rural health care and so on. But a lot of times 
it's overlooked. I think that this is something we need to 
think about a little bit.
    Rural health care I mentioned just briefly. Sixty percent 
of the residents of my district are on Medicare. They're badly 
in need of telemedicine, a lot of them can't travel very well. 
Again, we've had significant reductions in rural health care 
provisions.
    The last thing that I'll mention to you, very quickly, has 
to do with veterans affairs. That is the issue that currently, 
Priority 7 veterans must pay, under new guidelines, a $1,500 
deductible policies. So most of these folks can't really afford 
this type of health care. Thirty percent of those in the third 
district of Nebraska, which is a very rural area, qualify as 
Priority 7. Many are farmers. I think this is something that we 
certainly need to take a look at as well.
    Anyway, those four or five issues summarize some of the 
needs that I would like to see addressed. I appreciate the time 
and attention of the committee. Thank you.
    [The prepared statement of Tom Osborne follows:]

 Prepared Statement of Hon. Tom Osborne, a Representatvie in Congress 
                       From the State of Nebraska

    Thank you for allowing me to come here today to share with you my 
priorities for the fiscal year 2003 budget resolution. I truly 
appreciate the opportunity to share with the committee the issues that 
are important to constituents of Nebraska's Third District.
    I have several priorities that I believe should receive attention 
and funding in the fiscal year 2003 budget:
     Mentoring programs
     Rural Education Achievement Program
     Rural health programming
     Transportation projects
     Veterans Administration funding for Priority 7 veterans.
                               mentoring
    Mentoring programs are crucial for the success of our children. 
Mentoring has been proven time and again to improve academic 
achievement, reduce violent or antisocial behavior, and lower usage 
rates of drug and alcohol. Children who have mentors are more likely to 
set goals for themselves, finish school, and pursue post-secondary 
training. However, only a fraction of the children who could use 
mentors receive them. The National Mentoring Partnership estimates that 
in the United States about 14 million youth under 18 are in need of a 
caring adult in their lives. However, today there are only 
approximately 500,000 youth in mentoring relationships because 
mentoring programs do not have the resources or capacity to serve more 
children.
    Last year, I worked to include the Mentoring for Success program in 
H.R. 1. Mentoring for Success is a new competitive grant program that 
received $17.5 million in the fiscal year 2002 appropriations process. 
This important funding would allow school districts and community-based 
organizations to apply for funding to expand or start mentoring 
programs in areas where there is high need. Under the legislative 
language, each State would receive at least one grant. Funding could be 
used to administer a program, recruit mentors (but not pay them), train 
mentors, and, importantly, pay for background checks for mentors.
    The President's fiscal year 2003 budget includes $25 million to 
establish mentoring programs only for the children of prisoners. While 
I do not question the need to assist children of prisoners, this 
funding does not address the children who may not have a parent in 
prison, but still do not have a strong, positive adult role model. For 
example, over the course of my career as a football coach, I have known 
many young people who have never known their fathers. Often, their 
fathers may leave before they are born. Raised by single mothers 
without strong male role models, many of these young men really 
struggled in life. Are children like these any less deserving of a 
mentor than a child whose parent is in prison? Do we really want to set 
up a competition between different groups of children, both deserving 
of mentors?
    Mentoring requires a small investment that ranges from a few 
hundred dollars to one thousand dollars per child. Considering the 
immense societal costs for letting even one child fall through the 
cracks, this is a tiny investment that, for the vast majority of 
children, is worth every penny. Additional Federal funds are crucial if 
mentoring programs are to meet the enormous demand for services and 
expand into new communities. The Mentoring for Success program drives 
funding directly to the local level through competitive grants. I urge 
the Budget Committee to consider including funding for various types of 
mentoring programs in the fiscal year 2003 budget.
                  rural education achievement program
    In addition to mentoring programs, a commitment to the Rural 
Education Achievement Program is critical because more than 40 percent 
of students in this country attend rural schools, but Federal education 
programs have not addressed the unique funding needs of rural 
districts. In many cases, current Federal formulas do not produce 
enough revenue to carry out the purposes the grant is intended to fund. 
The smallest districts typically receive insufficient funds to hire one 
professional, let alone undertake significant reform. Rural districts 
are no more successful in obtaining competitive grants. Without the 
professional grant writers found in most urban and suburban districts, 
rural districts just cannot compete.
    Further, new accountability and testing requirements included in 
the reauthorization of ESEA will expand the demands on local school 
administrators. The impact will be most deeply felt in rural districts, 
where the superintendent often serves as the sole administrator and 
will be responsible for implementing these reforms. Funding from the 
Rural Education Achievement Program would help rural school districts 
manage the new requirements to meet the goal of stronger 
accountability. The Rural Education Achievement Program was funded at 
$162.5 million in the fiscal year 2002 appropriations bill. Please 
include funding for this program in your budget.
                           rural health care
    Maintaining access to quality health care services and developing a 
sustainable delivery system in rural America remains a challenge. 
Ensuring Medicare beneficiaries' access to quality care in my district 
remains a high priority for me, but the economic and demographic 
conditions facing Nebraska's Third District are endangering many rural 
providers. I encourage you to help ensure that rural Medicare 
beneficiaries have access to needed health care by including adequate 
funding for rural health care in your budget.
    Telehealth and telemedicine programs are critical tools needed to 
increase access to care, particularly for isolated rural areas in 
Nebraska. Rural communities in my district are using telemedicine 
technology to improve access to specialty care, by allowing seniors to 
remain in their own communities while receiving specialty care. 
Telehealth technology is the key to providing the education necessary 
to increase the number of trained nurses and health care personnel in 
rural areas. I encourage your support of telehealth and telemedicine 
programs in your budget.
                             transportation
    I am also supportive of continuing funding for vital transportation 
projects in States like Nebraska. If funding for transportation 
projects is scaled back, Nebraska and other States will have to wait 
even longer to complete vital roads projects. Many of these roads 
projects are crucial for public safety. Nebraska needs these funds to 
help expedite the efforts to eliminate at-grade railroad crossings 
statewide. The Union Pacific Railroad corridor where these projects are 
located is identified as the busiest railroad corridor in the world. 
Nebraska receives approximately $1.3 million of Federal aid in State 
transportation program safety funds for use in railroad crossing 
elimination annually. The State of Nebraska's needs study shows $315 
million is required for this work over the next twenty years. Without 
Federal funding, these projects cannot move forward.
                        veterans administration
    In addition, I am supportive of additional funding for the Veterans 
Administration. In particular, these funds are necessary in order to 
avoid hardship that may be caused by a proposal to require Priority 7 
veterans to pay an annual deductible of $1,500 for health care 
services. Thirty percent of veterans seeking health care in Nebraska 
are Priority 7 veterans. If adequate funding is not included in the 
fiscal year 2003 budget and this proposal is implemented, many Priority 
7 veterans will be unable to afford health care. Many of the Priority 7 
veterans in my district are farmers who cannot afford medical insurance 
with the current state of the agricultural economy. I am concerned that 
the changes being proposed will have a negative effect on veterans in 
my district and urge the Budget Committee and the VA to move with 
caution on this issue.
                               conclusion
    Again, I deeply appreciate the opportunity to share with the Budget 
Committee some of the priorities of Nebraska's Third District:
     Mentoring programs
     Rural Education Achievement Program
     Rural health care
     Transportation funding
     Veterans Administration funding
    I know that the committee faces a difficult job of crafting a 
budget that meets the challenges facing our Nation. However, I feel 
that these areas are very important for the people of Nebraska and for 
all Americans. I would be happy to discuss any of these issues with the 
committee. Thank you again for this opportunity.

    Chairman Nussle. I thank the gentleman.
    Mr. Kucinich.

STATEMENT OF HON. DENNIS KUCINICH, A REPRESENTATIVE IN CONGRESS 
                     FROM THE STATE OF OHIO

    Mr. Kucinich. Thank you very much, Mr. Chairman.
    The President has requested a $45.3 billion increase in 
military spending for a total Pentagon budget of $379 billion 
and an overall defense budget, including Department of Energy 
and other programs of $396 billion. We're told this increase is 
necessary to ensure our security during these troubled times.
    But how can the Budget Committee and others in Congress 
charged with overseeing the Defense Department's utilization of 
these funds be sure that this massive sum of money will 
actually be spent to better protect Americans? This is an 
important question, given the Pentagon's management chaos. 
Consider the Department of Defense's performance. It has never 
passed the test of an independent audit.
    Defense Inspector General numbers, if you look at them, say 
the Pentagon cannot properly account for $1.2 trillion, T for 
trillion, in transactions. GAO says no less than six Pentagon 
functions, financial management infrastructure, management 
inventory, management weapons systems, acquisition contract 
management and systems modernization, are at risk, high risk, 
of waste, fraud and abuse.
    The Department of Defense could not match $22 billion worth 
of expenditures to the items it purchased, wrote off as lost 
billions of dollars of in-transit inventory and stored nearly 
$30 billion worth of spare parts it did not need.
    Now, these accounting and financial management problems 
affect military planning. Each year the Department of Defense 
produces a 5-year budget plan known as the future years defense 
plan for the various Pentagon programs and functions. These 
documents lay out projected costs over 5 years. Experts at the 
Pentagon have taken the trouble to examine whether these 
estimates have in the past actually corresponded to reality. 
The answer is, they don't.
    I have presented the committee with some charts. The first 
chart you have before you compares the Navy F-18 fighter's 
predicted cost to its actual cost. The vertical axis indicates 
average unit cost per airplane in fiscal year 2000 dollars, 
with the horizontal axis indicates the quantity of airplanes 
produced. On the graph, the heavy line depicts actual 
quantities and actual costs, while the thin lines represent the 
predictions of each successive future year defense plan since 
1979.
    Note how the Pentagon's earliest plans line up far below 
the solid black line representing reality. The Pentagon's early 
plans predicted that the 400th F-18 would cost $24 million. In 
reality, it cost $40 million, 67-percent more. This is a 
pattern. Nearly every one of the thin lines represented the 
Pentagon's anticipated cost falls below the bold line showing 
the real cost. In other words, the Pentagon routinely under-
estimated the costs associated with producing the F-18.


    Moreover, the defense experts who conducted this analysis 
found that the Pentagon understates the eventual production 
cost of nearly every major weapon by very large amounts.
    The second chart we looked to something very simple like a 
street sweeper that the Air Force uses to clean its runways. 
Again, on this one, the thin lines represent the Pentagon's 
cost predictions included in their annual future year defense 
plans and the heavy line represents the street cleaner's actual 
cost as production quantities increased. The point is made the 
Pentagon doesn't have control of cost estimates. It can't pass 
an audit and it can't properly account for its expenditures. 
It's unable and unwilling to accurately project the cost of the 
weapons it purchases.


    I don't think there can be any way of assuring that the 
extra tax dollars that are allocated to DOD are going to be 
spent appropriately and really should cause this committee to 
scrutinize very carefully the request for increased allocation. 
What's the justification for all this spending? Does the fight 
against terrorism require this type of massive defense 
investment? I would argue no. This request would be the largest 
increase in military budget authority since fiscal 1966 at the 
height of the Vietnam War. The increase alone is larger than 
the military budget of all other countries beside Japan, whose 
budget is $45.6 billion. It is also over three times the 
combined defense budgets of the so-called axis of evil states 
and all other ``states of concern.''
    As a dominating military power in the world, what threats 
are we guarding against that require such overwhelmingly large 
defense expenditures? We already spend multiple times what the 
most potent potential enemies spend on defense combined. Why do 
we need more? Now, we're told the extra money is needed to pay 
for war. But in reality, the proposed defense funds are largely 
devoted to the very same weapons acquisition programs that the 
GAO has deemed to be at high risk of waste and abuse; programs 
that are of little utility in defending the Nation against the 
sort of attack we confronted in September.
    These include the F-22, the most expensive fighter ever, 
which has racked up more than $9 billion in cost overruns, and 
the Crusader mobile howitzer artillery weapon, which is so 
immobile that the military's largest transport plane can't lift 
it without violating flight rules. The administration plans to 
spend $11 billion to purchase 480 of these. They include the B-
1 bomber which even the Secretary of Defense has said is headed 
toward obsolescence.
    The appropriate course of action for this committee I would 
recommend is to freeze defense spending at a fiscal year 2002 
level of $342 billion. This savings would enable this committee 
to help this Congress fund other priorities which I'm sure 
Members are coming to this committee about. I appreciate this 
time. Thank you.
    [The prepared statement of Dennis Kucinich follows:]

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

    Thank you, Mr. Chairman, for allowing me to testify before the 
committee today. Mr. Chairman and members of the committee, you have 
heard today from many Members seeking funding for programs that have 
been overlooked in this budget, and others seeking increased funding 
for programs that have been shortchanged.
    I come before you for a different purpose: to offer a suggestion 
for how to free up funds for all the priorities that this budget does 
not provide for.
                        dod management problems
    Mr. Chairman, the President has requested a $45.3-billion increase 
in military spending, for a total Pentagon budget of $379 billion, and 
an overall defense budget (including related Department of Energy and 
other programs) of $396.1 billion.
    We are told this increase is necessary to ensure our security 
during these troubled times. But how can the Budget Committee and 
others in Congress, charged with overseeing the Defense Department's 
utilization of these funds be sure that this massive sum of money will 
actually be spent to better protect Americans?
    This is a crucially important question, given the Pentagon's 
management chaos. Consider DOD's performance:
    It has never passed the test of an independent audit.
    According to the most recent Department of Defense Inspector 
General numbers, the Pentagon cannot properly account for $1.2 trillion 
in transactions.
    GAO says no less than six Pentagon functions: Financial Management, 
Infrastructure Management, Inventory Management, Weapon Systems 
Acquisition, Contract Management, and Systems Modernization--are at 
``high risk'' of waste, fraud and abuse and show little prospect for 
improvement. This is more than any other government agency.
    In recent years, DOD could not match $22 billion worth of 
expenditures to the items it purchased, wrote off as ``lost'' billions 
of dollars worth of in-transit inventory, and stored nearly $30 billion 
worth of spare parts it didn't need.
    These figures cast serious doubt on whether the Pentagon will spend 
its new funds appropriately.
    But the picture becomes even worse when one examines more closely 
how these accounting and financial management problems affect military 
planning.
        implication of management problems for military planners
    Each year, the Department of Defense produces a 5-year budget plan 
known as the Future Years Defense Plan (FYDP). For the various Pentagon 
programs and functions, these documents lay out projected costs over 5 
years.
    Some experts at the Pentagon have taken the trouble to examine 
whether these estimates have in the past actually corresponded to 
reality.
    The answer: they don't.
    The first chart you have before you compares the Navy F-18 
fighter's predicted costs to its actual costs. The vertical axis 
indicates average unit cost per airplane in fiscal year 2000 dollars, 
while the horizontal axis indicates the quantity of airplanes produced. 
On the graph, the heavy line depicts actual quantities and actual 
costs, while the thin lines represent the predictions of each 
successive Future Years Defense Plan since 1979.
    As you can see, the resulting picture is a mess. Note how the 
Pentagon's earliest plans line up far below the solid black line, 
representing reality. The Pentagon's early plans predicted that the 
four hundredth F-18 would cost $24 million. In reality, it cost $40 
million--67-percent more.
    Clearly, this became a pattern. Nearly every one of the thin lines, 
representing the Pentagon's anticipated costs, falls below the bold 
line, showing the real costs. In other words, the Pentagon routinely 
underestimated the costs associated with producing the F-18.
    Moreover, the defense experts who conducted this analysis found 
that the Pentagon understates the eventual production costs of nearly 
every major weapon by ``very large amounts.''
    But major weapons programs are not the only difficulty for the 
Pentagon. Even basic procurement gives Pentagon planners fits.
    The second chart you have plots in similar fashion the Pentagon's 
predicted costs for the simple street sweeper the Air Force uses to 
clean its runways against the equipment's actual costs. Again, the thin 
lines represent the Pentagon's cost predictions included in their 
annual Future Year Defense Plans, and the heavy line represents the 
street cleaner's actual costs as production quantities increased.
    I will let the chaos speak for itself.
       what does this all mean for congressional accountability?
    So, the Pentagon can not pass an audit, it can not properly account 
for its expenditures, and these problems render it unable (or simply 
unwilling) to accurately project the costs of the weapons it purchases.
    What does this mean for congressional accountability? It means that 
there simply cannot be any rhyme or reason to this defense budget 
request, and that there can be no way of ensuring that extra taxpayer 
dollars allocated to DOD are being spent appropriately.
                   this level of spending unnecessary
    Finally, we need to consider carefully: what is the justification 
for all this spending? Does the fight against terrorism require this 
type of massive defense investment?
    I would argue no. This request would be the largest increase in 
military budget authority since fiscal 1966, at the height of the 
Vietnam War. The increase alone is larger that the military budget of 
all other countries beside Japan, whose budget is $45.6 billion. It is 
also over 3 times the combined defense budgets of the ``axis of evil'' 
and all other ``states of concern''.
    The total military budget resulting from this increase would be 
more than the combined military budgets of the next 24-largest spending 
countries, more than half of whom are our allies. It would also be 15-
percent higher than the average U.S. military budget during the cold 
war for a force that it is smaller than our cold war-era military.
    As the dominating military power in the world, what threats are we 
guarding against that require such overwhelmingly large defense 
expenditures? If we already spend multiple times what our most potent 
potential enemies spend on defense combined, why do we need more?
    We are told that the extra money is needed to pay for war. But in 
reality the proposed defense funds are largely devoted to the very same 
weapons acquisition programs that the GAO has deemed to be at high risk 
of waste and abuse--programs that are of little utility in defending 
the Nation against the sort of attack we confronted in September.
    These include the F-22, the most expensive fighter ever, which has 
heard has racked up more than $9 billion in cost overruns. These 
include the Crusader ``Mobile'' Howitzer artillery weapon, which is so 
immobile that the military's largest transport plane cannot lift it 
without violating flight rules. The administration plans to spend $11 
billion to purchase 480 of these. And they include the B-1 bomber, 
which even the Secretary of Defense admits ``is headed toward expensive 
obsolescence.''
    This budget rewards our defense establishment for its fiscal 
mismanagement. And the allocation of this money follows the same 
wasteful, high-risk patterns of spending that lavish politically 
influential military contractors with large sums to produce weapons 
geared toward obsolete cold war era threats.
                            suggested action
    What, then, is the appropriate course of action for this committee 
to take with regard to the defense budget?
    The committee should simply freeze defense spending at the fiscal 
year 2002 level of $342 billion (which includes Department of Energy 
and other non-DOD defense spending but excludes the supplemental 
appropriations).
    Capping defense spending at this level would force the Pentagon to 
make choices among its many big-ticket and marginally useful weapons 
programs in order to pay for counter-terrorism and other priorities. It 
will inject some new momentum into the efforts by defense reformers to 
create a lighter, more mobile defense force. Finally, it would send a 
strong message to Pentagon officials that Congress will not approve 
increases in funding until the department cleans up its fiscal 
management problems.
    In turn, this $54 billion in savings could be used to fund the host 
of priorities that Members have come before this committee to advocate 
for. This money could fund a larger increase in education spending, 
increased job training programs, prescription drug coverage, and other 
needs.
    I hope the committee will consider my suggestion, and I thank the 
members for their time.

    Chairman Nussle. I thank the gentleman.
    Before we hear from Mr. Gekas, I'd invite Mr. Pascrell to 
the witness table, too. We're going to have a series of votes, 
as I understand it, so if we can squeeze in your testimony out 
of respect to your coming, I'd like to do that before the vote 
as well. Mr. Gekas.

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

    Mr. Gekas. Thank you very much.
    Mr. Chairman, you and the members of the committee know 
specifically and generally what I propose, because I've done it 
now for 10, 12, 14 years, with some success at one point, but 
with undaunted fervor I proceed again. My proposition is one in 
which we ought to be adopting a plan to prevent government 
shutdowns forever. How do we do that? We adopt what I call the 
instant replay concept, that at the end of the fiscal year, on 
September 30, for each of the 13 separate appropriations bills, 
that if the Congress has not adopted a new budget that the next 
day there would be an instant replay of the previous year's 
budget.
    This would, as I said, constitute an end forever of the 
dreaded government shutdown. This past session, because of the 
exigencies of September 11, may have had justification for the 
continuing resolutions, the temporary fixes we were putting in 
almost every other day, if you recall, straight into December. 
We understand that. But even in that particular year, if we had 
had the instant replay concept to prevent government shutdown 
legislation, we would have been able to work calmly and 
deliberately after September 30 to clean up whatever 
appropriations bills had not been completed without the fear of 
a shutdown and with an atmosphere that would allow the 
appropriators and the White House to congeal their visions of 
what the budget items should contain.
    That is an age-old concept on my part now. We had one bit 
of success when, in 1 year, we actually passed this concept as 
part of the disaster relief supplemental of that particular 
year, only to have the President, President Clinton, veto it. 
The point is, that at some point in history, this concept, 
which I bring to your attention again, did find a wide range of 
acceptability in the Congress and House of Representatives, and 
in the Senate. So I ask you to consider it.
    There's one other added impetus this time that has not 
appeared before. The President of the United States, during the 
campaign of 2000 and thereafter in one of his budget 
pronouncements, put his imprimatur on the concept of the 
instant replay, the end government shutdown syndrome which I 
present to you. He did so, and then Mitch Daniels, the budget 
director himself, in several different constellations and in 
perhaps testimony before this committee, I'm not certain, also 
advocated and endorsed the concept of ending government 
shutdown through this type of legislation.
    So I plead with you to help Mitch Daniels, to help the 
President, to help this Member of Congress and to help the 
American people prevent government shutdowns in the future. I 
thank the Chair.
    [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. 
3744, 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 17 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, Representatives 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, he 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.'' And the President has included an 
Automatic Continuing Resolution in his list of desired budget process 
reform measures. 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 19 out of the last 20 years, Congress and the 
President have not finished the budget process by the October 1 
deadline. This past year none of the 13 spending bills were finished on 
time. As a result, Congress had to pass eight separate continuing 
resolutions, extending appropriations for over three months, 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. I thank the gentleman. You have been as 
consistent a supporter of budget process reform as we have in 
the Congress, and certainly this Member appreciates that.
    Mr. Pascrell, welcome. We appreciate your coming out of 
order from that other panel, but I think this will help 
expedite the process today and allow Members to respect their 
schedules.

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

    Mr. Pascrell. Thank you, Mr. Chairman. First of all, I want 
to thank you and the members of this committee in a bipartisan 
way that supported in the past, in 2001, the Fire Act. Many of 
us were on that legislation. I was proud to sponsor it. But if 
it wasn't for the impetus from this committee, we would not be 
where we are today. I want to personally thank you and the rest 
of the committee members.
    The President, as you know, in the 2003 budget, has 
included $3.6 billion to assist our Nation's first responders. 
It's an entirely separate request from the Fire Act. This is a 
far cry from what had happened in the early part of 2001 when 
the administration was questioning whether this was an 
``appropriate use'' of Federal dollars. We agree that it all 
is, and obviously the administration does as well.
    The attacks of September 11 and the heroic deaths of 343 
firefighters who were rescuing victims within the World Trade 
Center demonstrate the important role our first responders 
play. I'm concerned with how this new program the President has 
recommended will complement the existing Fire Act. This program 
was created by the Firefighter Investment and Response 
Enhancement Act, which I sponsored and was signed and many of 
you also signed. It has total bipartisan support.
    In the first year, Mr. Chairman, of the Fire Act, 32,000 
applications, from 19,000 fire departments. Of the 32,000 fire 
departments actually made proposals. If there ever was a need, 
that's proof of it. I must compliment FEMA for putting together 
the wherewithal, as many volunteers who came forward to help us 
go through all of those applications. The need is great. It 
provides for grants to be awarded directly, directly to the 
towns. No circumventing, no going through the State where we 
can skim from the top. Whether it's volunteer, whether it's 
career, paid, the entire spectrum is included here.
    When you add up the 19,000 applications, from the 19,000 
fire departments, 32,000 applications, it comes to $3 billion 
worth of proposals. Of course, in the first year, we only had 
$100 million. Now we are looking at something very different. 
The funding we have secured for fiscal year 2002 is $360 
million. It will also include administrative costs for FEMA.
    This year the application will be available on line. We're 
going to streamline to make the process even more simple. In 
short, this is a program that is desperately needed and is 
developing an infrastructure to allow it to run smoothly and to 
thrive. The additional funds that the administration is 
proposing we deliver to first responders could be channeled 
into this existing program within the existing framework and 
provide assistance to thousands of additional firefighters.
    The program is authorized, our program, the Fire Act, is 
authorized for 2002, 2003 and 2004 for $900 million per year. 
We have $360 million for fiscal year 2002, more than the 
originally authorized amount. This demonstrates the support of 
the appropriators. I ask today that the Budget Committee show 
the same kind of support. Grant us full funding for $900 
million this year. As the recent attacks on the World Trade 
Center and the Pentagon illustrate, firefighters are our first 
responders. They need our support.
    Natural and man-made disasters do not discriminate when and 
where they arise. Proudly, the firefighters of the United 
States do not discriminate when or where they provide help. 
We're waging a war on terrorism. We still don't know exactly 
what that all means. But we know this. Wherever the evildoers 
strike next, firefighters will be the first in to save lives.
    This Congress spends billions and billions on law 
enforcement in our communities. We all support that critically 
needed investment. We don't ask communities to go it alone for 
their law enforcement needs. We shouldn't do it for their 
firefighting needs. Even without the threat of terrorism, 
there's a tremendous need for additional funding. A survey I 
did in my district found that 75 percent of the departments 
were under-staffed, some terribly under-staffed by as many as 
40 firefighters in larger cities.
    Our State's second largest city, Jersey City, has seen a 
dramatic reduction in the last decade. Yet we've seen six 
skyscrapers built in that city. Who in God's name would be able 
to put out the fire, God forbid, if that ever happened, is 
beyond me.
    With this in mind, I think it has become clear to many of 
us here in Washington that we must send these brave men and 
women into hazardous situations with the support they deserve 
from their government. We should fully fund the firefighters 
assistance grant program for fiscal year 2003 at $900 million, 
and demonstrate that the Congress is fully committed to this.
    With that, again, Mr. Chairman, I personally again want to 
thank you for your cooperation. Two-thirds of this committee 
was on the original Fire Act. I want to commend all of those 
and those who have come and joined us since. Thank you.
    [The prepared statement of Bill Pascrell, Jr. 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 Budget for fiscal year 2003 
to our offices. I am delighted that he included an additional $3.6 
billion to assist our nation's first responders in his fiscal year 2003 
budget.
    Personally, I am pleased to see that he has reconsidered his 
position of 1 year ago that assisting first responders was not an 
``appropriate use'' of Federal dollars. I think the attacks of 
September 11 and the heroic deaths of 343 firefighters who were 
rescuing victims within the World Trade Center Towers demonstrated the 
important role our first responders play in our national security.
    While I am pleased that the administration now shares my commitment 
to supporting our nation's firefighters, I am concerned with how this 
new program will compliment the existing Firefighter Assistance Grant 
Program. This program was created by ``The Firefighter Investment and 
Response Enhancement (FIRE) Act,'' which I wrote and was signed into 
law as part of the fiscal year 2001 Department of Defense Authorization 
bill. It has the support of all the major fire service organizations as 
well as a bipartisan coalition of 285 Members of Congress. In fact, 
almost \2/3\ of the members who were sitting on this committee in the 
106th Congress, including the Chairman and Ranking Member, supported my 
bipartisan legislation.
    There are 32,000 fire departments in our nation, many of which are 
understaffed, undertrained and ill equipped. The Firefighter Assistance 
Grant Program gives these departments the tools they need to 
successfully complete their vital mission. It provides for grants to be 
awarded directly to paid, part-paid and volunteer fire departments to 
hire more personnel, train them in state of the art techniques, and 
better equip them so that they can more effectively save lives and 
protect their own lives.
    In the first year of the grant program, over 19,000 fire 
departments from around the country applied for a total of $3 billion 
worth of grants. But FEMA only had $100 million in the first year to 
provide support. In the end, the $100 million was given to over 1,850 
fire departments around the country. These included urban, suburban and 
rural departments. These included career, volunteer, and combination 
departments. Nobody was left out.
    The funding we have secured for fiscal year 2002--$360 million--
will include administrative costs for FEMA. In addition, this year the 
application will be available online and will be streamlined to make 
the process even simpler. In short, this is a program that is 
desperately needed and is developing an infrastructure to allow it to 
run smoothly and to thrive.
    The additional funds that the administration is proposing we 
deliver to first responders could be channeled into this existing 
program, within the existing framework, and provide assistance to 
thousands of additional firefighters nationwide.
    The program is authorized for fiscal years 2002, 2003 and 2004 for 
$900 million per year.
    We have $360 million for fiscal year 2002, more than the originally 
authorized amount. This demonstrates the support of the Appropriators 
for our first responders.
    I ask today that the Budget Committee shows the same kind of 
support and grants us full funding for $900 million this year.
    As the recent attacks on the World Trade Center and the Pentagon 
illustrate: firefighters are our first responders to emergencies. And 
they need our support.
    Everyone here knows that over 300 firefighters ran into the burning 
World Trade Center to save lives and never returned. Their departments 
deserve our support.
    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.
    We are waging a war on terrorism here in America. We still don't 
know exactly what that will mean. But we know this--wherever the 
evildoers strike next, fire fighters will be the first on hand to save 
lives and protect victims.
    The role of fire fighters in our war on terrorism must be 
recognized by Congress, and must be supported with our dollars.
    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.
    Even without the threat of terrorism 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.
    With this in mind, I think it has become clear to many of us here 
in Washington that we must send these brave men and women into 
hazardous situations with the support they deserve from their 
government.
    It is time that we stop paying lip service to our fire fighters at 
holiday parades without putting our money where our mouth is during the 
rest of the year.
    We should fully fund the firefighters assistance grant program for 
fiscal year 2003 at $900 million and demonstrate that the Congress is 
fully committed to fire safety in America. Our firefighters and the 
communities we represent here deserve nothing less.
    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. Thank you. I didn't have much of a choice, 
I'm a volunteer fireman myself.
    Mr. Pascrell. There you go, very good.
    Chairman Nussle. So it's kind of hard to argue with that.
    Mr. Pence, we welcome you to the committee and we're 
pleased to receive your testimony at this time.

STATEMENT OF HON. MIKE PENCE, A REPRESENTATIVE IN CONGRESS FROM 
                      THE STATE OF INDIANA

    Mr. Pence. Mr. Chairman, thank you for this opportunity to 
come before your committee, for the second year in a row, to 
take an opportunity as a non-member of the Budget Committee to 
offer some thoughts as you begin this process of formulating 
the budget that will be the outline for our approach to 
spending over the balance of the 107th Congress.
    Last year, I came before this committee and called for a 
budget resolution, Mr. Chairman, that principally focused on 
tax relief. I was pleased to be a part of a Congress that 
followed through on that commitment and sped the tax relief to 
working families, small businesses and family farms. The 
President signed it into law on June 7 in a memorable White 
House ceremony.
    I now believe, Mr. Chairman, as I come with three hours 
sleep from the House floor--I just came from a very vigorous 
debate on the House floor over an economic stimulus bill--I 
believe it's time that we once again move on economic stimulus. 
But failing that, I wanted to share with the Budget Committee 
very briefly that it is my belief that if we cannot achieve a 
meaningful stimulus bill, one that not only helps displaced 
wage earners but also sincere wage payors who would like to 
bring people back to work, that what we should do, in the 
alternative, using the broad outlines of the President's 
budget, is forego additional tax relief in any measure and 
simply balance the budget.
    I come from a part of the United States which is rightly 
described as heartland America, representing much of what is 
rural, eastern Indiana. That old proverb, if you owe debts, pay 
debts, is something that folks in eastern Indiana live day in 
and day out of their lives. As I was home in my district over 
the last several weeks, each and every occasion where I 
gathered and spoke before groups and expressed that simple 
principle, that if we cannot accomplish meaningful tax relief 
that will put Americans back to work and speed much needed 
unemployment assistance and health insurance assistance to 
Americans who, for no reason of their own, have been impacted 
by this recession, that we should forego that and balance the 
budget. It was, Mr. Chairman, greeted with applause before 
divergent groups and audiences.
    I do believe the administration's budget is a great 
starting point for this committee. It sets a clear picture for 
winning the war on terrorism, securing our economic future. I 
do support increasing funds for the military and as Mr. 
Pascrell just described, for first responders. I'm feeling very 
passionately about understanding the new America in which we 
live, having been displaced from my Congressional office here 
on Capitol Hill for three months because of the impact of 
biological hazards within the Longworth Office Building.
    But that being said, when you look at the President's 
numbers, without the $77 billion allocated for the economic 
stimulus bill, we only face a $3 billion deficit. Now, I've 
been in Washington just long enough to think that $3 billion is 
not a lot of money. But in the overall scheme of the Federal 
budget, it is \1/10\ of 1 percent of all Federal spending. 
These are not easy decisions for the Budget Committee. They 
will not be easy decisions for appropriators.
    But I do believe that if we are that close to balancing the 
budget, we should purpose to do that. I'm also concerned that 
if an economic stimulus bill does not get enacted that the 
money budgeted for its implementation could very easily be 
carved up by this institution, by Members on both sides of the 
aisle, more interested in expanding government for parochial 
reasons than in growing our economy.
    I think, Mr. Chairman, in closing, if Enron has taught us 
anything, it's that when the books don't balance, people get 
hurt. I believe that's an enduring lesson that the American 
people are taking to heart as we see this unfolding business 
scandal. I truly believe that if we don't pass an economic 
stimulus bill, we have a moral obligation to the American 
people to balance the budget during these recessionary times. 
When we balance the budget, we keep our economy strong and our 
citizens can confidently invest in the American economy. When 
we balance the budget, we keep our Nation secure as we spend 
money on the right priorities of homeland security, national 
security and first responders, while living within our means. 
When we balance the budget, we keep our promises to America's 
seniors and to the greatest generation as we preserve the 
solubility of Social Security and Medicare.
    I thank you for the opportunity to share these views, and 
for your willingness to listen to all Members of this body as 
you go about the difficult task this committee faces in 
formulating a budget resolution.
    [The prepared statement of Mike Pence follows:]

  Prepared Statement of Hon. Mike Pence, a Representative in Congress 
                       From the State of Indiana

    Thank you Chairman Nussle and Mr. Spratt for the opportunity to 
testify before the committee today. I know it can be tedious listening 
to Member after Member give their thoughts on the budget, but I truly 
believe it is important that we fully vent all ideas for something as 
large and important as the budget.
    Mr. Chairman, last year I came before the committee and called for 
a budget resolution that supported tax cuts. I am pleased that Congress 
followed through and passed tax cuts that returned historic amounts of 
money to the American people.
    I now believe that it is time we follow through on the second part 
of the equation and spend the money the people have sent us wisely and 
balance the budget. It has been said, ``When you own debts, pay debts. 
Whatever debt you owe, pay; let no debt remain outstanding.'' This is 
an appropriate reminder as we begin the budget process for fiscal year 
2003 that debt must not be taken lightly.
    Because of the war on terrorism and a lagging economy, Congress is 
faced with the prospect of deficit spending. Yet if restraint is 
exercised, it is possible to balance the budget and still fund the 
priorities of the American people.
    The administration's proposed budget sets a clear picture for 
winning the war on terrorism and securing our economic future. I 
support increasing funds for the U.S. military and ``first responders'' 
who must deal with the threat of terrorism on a daily basis. At the 
same time, the President sets reasonable controls on the growth of 
discretionary spending while providing $77 billion for an economic 
stimulus bill.
    Yet, I am concerned that if an economic stimulus bill is not 
enacted the money budgeted for its implementation would be carved up by 
those in Congress more interested in creating new programs than 
returning allowing the American people to keep their hard earned money. 
If we are presented with these two conflicting priorities, Congress 
should refrain from spending money set aside for an economic stimulus 
package and instead move to balance the budget.
    Without the $77 billion for an economic stimulus bill we are faced 
with only a $3 billion deficit, \1/10\ of 1 percent of all Federal 
spending, even Congress can make up a $3 billion deficit. If we are not 
serious about providing economic stimulus for hurting Americans, at the 
very least we can give the American people a balanced budget.
    If Enron has taught us anything; it is that when the books don't 
balance, people get hurt. I truly believe that if we do not pass an 
economic stimulus bill, then we have a moral obligation to the American 
people to balance the budget. When we balance the budget, we keep our 
economy strong, as citizens confidently invest in our future. When we 
balance the budget, we keep our Nation secure, as we spend money on the 
right priorities homeland and national security while living within our 
means. And when we balance the budget we keep our promises to American 
seniors, as we preserve the solubility of Social Security and Medicare.
    Contrary to popular opinion, we can and should balance the budget. 
I urge all of my colleagues to consider their constituents that are 
sacrificing in these difficult times. Let us exercise the same fiscal 
restraint as those we represent. Like the average American, let us live 
within our means as we prepare the Federal budget.

    Chairman Nussle. I thank the gentleman.
    Are there members who wish to inquire? Mr. Gutknecht. Mr. 
McDermott. Questions?
    Mr. McDermott. Mr. Chairman, I just have one question. I 
wanted to ask, well, first of all, Mr. Pence's confusion of you 
with the Speaker reminded me of a story about Sam Rayburn. He 
was walking down the hall with Lyndon Johnson one day and 
Lyndon Johnson said to him, ``Sam, what's the matter?'' He 
said, ``Well, these people are just talking me to death.'' 
Lyndon said, ``That's how you know what they all want.''
    I think maybe you are a little like the Speaker here, 
listening to what they all want.
    I wanted to ask Mr. Udall about the issue of cleanup. Last 
night I was talking with some people about the whole issue of 
cleanup of our waste from, or not waste, but our stashes of 
sarin gas and other things in this country. Is there a site in 
New Mexico where that is an issue? I know there is in Colorado, 
and I know that there is in Alabama. What I'm looking for is 
where else--oh, and one outside Salt Lake some place nearby. 
How about in New Mexico?
    Mr. Udall. Mr. McDermott, as far as I know, the sarin gas 
specifically is what you're talking about, right?
    Mr. McDermott. Yes.
    Mr. Udall. I don't know of any site that has large or 
medium stockpiles of sarin gas that are in New Mexico. The 
national laboratories, the Sandia National Laboratory, which is 
in Albuquerque, and the Los Alamos National Laboratory, which 
is in my district, they spend $3 billion a year and they do 
research in a number of areas. It wouldn't surprise me that 
they deal with some of these issues. But I don't think they 
would have sarin gas on the level you're talking about. So I 
don't know of any in New Mexico.
    But we also have several military bases, White Sands, 
Cannon, Holliman, and Kirkland, might have some that's, for 
some experimental or research purposes.
    Mr. McDermott. I was kind of surprised last night when 
somebody was telling me that Anniston, AL, has 3,200 tons of 
shelves filled with sarin gas in the middle of 75,000 people. 
When you're thinking about this whole business about homeland 
defense and so forth and what targets, I think it's really a 
considerable problem, the whole issue of how we protect these 
facilities that have problems, or potential problems for a 
larger population, in many instances where people don't even 
know they exist. You're right to raise the issue of cleanup, or 
the whole business about atomic energy and how we deal with 
that.
    We have those same kinds of facilities in the State of 
Washington. It's a big concern in the State of Washington, 
because Hanford sits right on the edge of the Columbia River. 
To fill the Columbia River with anything is going to wind up 
with irrigation being a problem--with salmon being a problem--
the last thing we need is more problems. So I think that the 
cleanup is a very important part of our budget and we should 
look at it carefully.
    Thank you, Mr. Chairman.
    Chairman Nussle. Thank you.
    Mr. Udall. Could I just add, when I said national security 
concerns, we have waste that we've dug up out of the ground 
that contains plutonium, thousands of 55 gallon barrels sitting 
in a plastic tent, basically, up on the surface that could be 
accessed by terrorists or others. That's the kind of thing 
that's out there at many of these laboratories and many places, 
as you've mentioned, all across the country. I think we should 
be just as aggressive about doing cleanup.
    Chairman Nussle. Mr. Gutknecht.
    Mr. Gutknecht. Thank you, Mr. Chairman. I want to come back 
and just compliment Mr. Allen especially. I want to thank all 
of you for coming, and I think the points you raised were very 
important.
    I want to thank you, Mr. Allen, because we really share 
that ultimate goal. The more we learn about what Americans pay 
for prescription drugs the more outraged I become. At the end 
of the day, I would hope we could at least include language in 
our budget resolution that does something to make certain that 
Americans have access to prescription drugs at world market 
prices. That clearly is not the case today.
    When you extrapolate what you've told us, and I believe 
it's absolutely true, it's not just senior citizens. It really 
is every American. The last year we have numbers for Americans 
who spent over $100 billion for prescription drugs. Simple 
arithmetic says we could save $30 billion to $40 billion a year 
simply by saying that we will have open markets as we do with 
virtually every other product that Americans purchase. If we 
can do that this year, we will have taken a giant step to 
solving the problems that American seniors and American 
consumers face every day.
    I want to come back to another point, real quickly if I 
could, Mr. Chairman. I don't completely share the conclusions 
that Mr. Kucinich comes to relative to the defense budget. But 
I think it is important when we look at the budget that every 
item be carefully analyzed, and even the defense request, 
because I don't think we can take this attitude that every 
other bureaucracy in Washington can waste money except the 
Pentagon. I think we have to analyze very carefully what those 
requests are, and I think we have to ultimately do our job. The 
President proposes; we dispose.
    But Mr. Kucinich, I just want to throw an idea at you, and 
you may not agree with me on this, but one of the issues that 
we're going to have to confront as well, and it does tie 
together. As you were speaking, it made me think about this, 
and that is that, when you talk about a lot of the 
consultants--let's just take the Pentagon first of all, that 
they hire--they almost have a vested interest in saying, well, 
yes, this is a good program and this will work and yes, the 
cost estimates are correct. My point is that these departments 
tend to hire consultants and other people who will tell them 
what they want to hear.
    We have the same problem. The President is going to 
announce today a global climate change initiative. If you add 
it all up, we're going to spend over $4 billion on climate 
change studies. What disturbs me is all of that money is going 
to people who want to prove one conclusion, that it really does 
exist, A, that it exists, and B, there's something we can 
really do about it. Don't you agree that if we're going to 
spend money on global climate change that some of that money 
ought to go to people who might have a different point of view?
    Mr. Kucinich. Thank you very much. I think that 
Representative Frank's comments are instructive at this moment. 
And that is that we're spending hundreds of billions of dollars 
in search of an enemy that in some cases we don't have, 
preparing for wars which history has already passed by. Now, 
when you're talking about the environment, there is such a 
thing as a change in the climate. We're seeing it. There is 
some reality there. So I wouldn't agree with your presumption 
that on one hand, the consultants that are covering the 
military are somehow of dubious value and therefore, it follows 
that the people who are studying global climate change are also 
of dubious value.
    Mr. Gutknecht. But my point is this: shouldn't some of that 
money go to scientists who may have a different point of view? 
Not everybody agrees. Everyone does agree, I think there is 
almost complete consensus now that the level of CO\2\ in the 
atmosphere is going up. There is no consensus, as far as I'm 
concerned, among weather people that I've talked to, that that 
actually proves the point that the global climate is warming.
    Now, I always say to the scientists who advanced that idea 
that on behalf of my constituents back in Minnesota, that if 
there be such a thing as global warming, let us have more of 
it. We're in favor of global warming back in Minnesota.
    But the point is, all the money is going to advance one 
point of view. I think that's wrong.
    Mr. Kucinich. My good friend, Mr. Gutknecht, and I mean my 
good friend; Mr. Gutknecht and I have a fundamental 
disagreement here. The people in the district I represent in 
Ohio do not want to begin to appreciate global climate change. 
I think that could be said for people around the globe.
    As someone who was a representative of this Congress at the 
Conference of Parties in Buenos Aires a few years ago, I can 
tell you, people all over the world are really concerned about 
it. Sea levels are rising, and there have been weather patterns 
changed. Freeways have been melting in Texas and other places 
with high temperatures that have never been anticipated. 
Hundred year storms occurring every decade. There are things 
that ought to be looked at.
    If this committee has any jurisdiction over the funding for 
looking at the issue of global climate change, it's important 
to the insurance industry, it's important to agriculture, it's 
important to construction, it's important to the long range 
future of this country and the world. So I'm not sure the same 
could be said about the Defense Department budget.
    Chairman Nussle. With that, I'll just announce that we have 
one additional Member that has joined us. I'm going to take 
your testimony now. I would say you have about 5 minutes, so 
that we can catch these votes. But I am interested in hearing, 
since you did come before the vote. So if you would like to 
proceed, your written statement will be in the record, and you 
may proceed as you wish.
    There are two votes after this testimony, we will recess 
until after the second vote. Mr. Kennedy.

STATEMENT OF HON. MARK R. KENNEDY, A REPRESENTATIVE IN CONGRESS 
                  FROM THE STATE OF MINNESOTA

    Mr. Kennedy. Thank you, Mr. Chairman and Ranking Member, 
for holding these hearings. Thanks for giving me an opportunity 
to speak.
    I will submit my statement for the record. We're also very 
pleased to have a fellow Minnesotan, Gil Gutknecht, watching 
over the budget. That does give us comfort, indeed.
    I did want to speak on behalf of two programs, two areas 
that are vitally important to my part of the world, and I think 
to our country, and that is, the agriculture budget. As you 
know, we're working hard toward getting a farm bill in place. 
We're very pleased that the Budget Committee provided $73.5 
billion in their budget last year. The President has committed 
to support that and has it in his budget this year. That's 
critically important to my district that is No. 2 out of 435 
Congressional districts in soybean, No. 3 in corn. I encourage 
you to continue to include that in the budget coming up.
    Secondly, as you know, roads are vitally important to our 
communities in terms of keeping us connected with each other in 
rural communities as well as not being stuck in traffic and 
away from our families. We have a situation that is not a 
result of the administration. This isn't the administration 
taking money out of roads to pay for defense, but a reduction 
in the formula that's determining what we're receiving. I think 
it's absolutely critical at a time like this when the economy 
is soft, that we do not reduce road funding. It could cost 
4,300 jobs over 5 years in our State.
    I'm very pleased to be on a bill that restores up to the 
minimum levels committed in our prior road funding. I would 
encourage the Budget Committee to strongly consider that. I 
join with you in working with the President and the Budget 
Committee to keep our spending constrained so that our 
deficits, if any, are small and short term.
    Again, I thank you for your great work, and I appreciate 
the good work you do on the committee.
    [The prepared statement of Mark Kennedy follows:]

 Prepared Statement of Hon. Mark Kennedy, a Representative in Congress 
                      From the State of Minnesota

    Thank you Mr. Chairman and Ranking Member for holding these 
hearings and for allowing me to voice my thoughts about President 
Bush's fiscal year 2003 budget request. You have a lot of work ahead of 
you to present a Budget Resolution to the House of Representatives for 
a vote, and I am grateful that you are letting me take a few minutes to 
share my thoughts. It is also nice to know that Minnesota is well 
represented on this committee by my neighbor; Mr. Gutknecht.
    As a member of both of the House Agriculture committee and the 
Transportation and Infrastructure Committee, funding for our Nation's 
farms and roads is very important to me.
    In Southwestern Minnesota, we export one out of every three rows of 
corn and one out of every four rows of soybeans. President Bush has 
committed to funding the farm bill at $73.5 billion. The Farm Security 
Act of 2001 provides an improved safety net for farmers. It is a 
balanced farm bill with market-responsive commodity support and 
increased opportunity for conservation on America's farmland. Our 
farmers deserve full funding. I come from a district that is No. 2 in 
soybeans and No. 3 in corn. Our farmers have waited long enough. Now is 
the time to finish a farm bill, get it to conference committee and 
ensure its funding. We owe it to this Nation's great farmers.
    Furthermore, funding is also critical to our Nation's roads. 
Without safe and adequate roads, the goods produced in Southwest 
Minnesota cannot get to the market. In Minnesota, and especially in my 
Southwest Minnesota district our roads keep our rural communities 
connected to the larger cities. I believe that one of the core 
responsibilities of the Federal Government is to maintain our Nation's 
infrastructure. As a member of the Transportation and Infrastructure 
Committee, I am focused on relieving congestion so we are not stuck in 
traffic and away from our families.
    Let me be clear, I am not blaming the administration for this 
downturn in funding for transportation, nor will I blame this 
committee. It is a function of a formula established by a previous 
Congress to distribute road funds from the Highway Trust Fund. However, 
I must reiterate how critical it is to maintain transportation funding 
when our economy is sluggish. Providing funding for roads creates jobs, 
which are so critical to our economic health. The Minnesota Department 
of Transportation has said that not addressing these funding shortfalls 
could result in the loss of 4,300 jobs over 5 years. And that is only 
in Minnesota. Nationwide that number would be in the tens of thousands. 
I urge your committee to fund both our farmers and our roads. In our 
economy we cannot afford to lose any more jobs. That is why I joined 74 
out of the 75 members of my committee in cosponsoring legislation to 
restore funding for our roads.
    I am commited to working with President Bush to restrain spending 
so that the resulting budget deficits are small and short-term and we 
return to surpluses as soon as possible.
    Chairman Nussle, Ranking Member Spratt, thank you again for the 
opportunity to testify before your committee. You have a challenge 
ahead of you and I want you to know that this Member appreciates the 
hard work you've done and the hard work you will do to present this 
body with a responsible budget resolution. I look forward to working 
with you.
    Thank you.

    Chairman Nussle. I thank the gentleman, and I apologize if 
this seemed rushed. Your entire testimony will be made part of 
the record, and we do appreciate your coming to speak to us 
today.
    Mr. Kennedy. We appreciate it very much. Thank you.
    Chairman Nussle. Thank you. With that, we will adjourn, or 
recess until after the second vote, and my understanding is 
there will be more Members at that time that are interested in 
coming forward and submitting their testimony.
    [Recess.]
    Chairman Nussle. This is a continuation of the Member's Day 
Hearing.
    We welcome to the committee the third panel. We will begin 
with the very distinguished gentleman from California, the 
ranking member of the Education Committee. We welcome him back. 
He has been here before to talk to us about very important 
issues, education and others. Your entire testimony, as all 
witnesses' testimony, will be made part of the record in its 
entirety and you may summarize.
    Welcome, Mr. Miller.

 STATEMENT OF HON. GEORGE MILLER, A REPRESENTATIVE IN CONGRESS 
                  FROM THE STATE OF CALIFORNIA

    Mr. Miller. Mr. Chairman, thank you very much, and Mr. 
Spratt. Thank you for allowing the Members the opportunity to 
testify and to comment on the budget. I will submit my full 
testimony for the record.
    I want to begin by saying that I am very proud of the 
effort that we made last year to pass the No Child Left Behind 
Act, which was a bipartisan effort to dramatically reform the 
Elementary and Secondary Education Act. The bedrock of this 
agreement between Republicans and Democrats, and between the 
Congress and the administration was that it would marry high 
expectations and accountability with additional resources.
    My concern now, as I look now at the President's budget, is 
that I believe it starts to break that promise. It breaks the 
promise of results and it breaks the promise of accountability. 
And I am concerned that it will start to break the promise of 
high expectations that we want our school districts to have for 
each and every child enrolled in our public school system.
    Just when we are asking much more of our schools, the 
budget provides the smallest increase in education in 7 years. 
It actually cuts $90 million from the new education reform law. 
My concern is that when we see the choices made in the 
administration's budget we find out that in fact what we have 
is a budget where 'no money is left behind for education. That 
is because of the choices of large tax cuts and the dramatic 
increases in military spending.
    We also see that some $4 billion over the next 5 years that 
could be committed to the kinds of reforms that are outlined in 
H.R.1 in the public school system are now intended in this 
budget to be diverted through a tax credit voucher system to 
the private school system in this country. I think that is an 
arrangement that the American public most vehemently said, in 
actually voting on initiatives and in the polling, that they do 
not want a diversion of money that is available for the public 
schools to the private school system for vouchers or for other 
such schemes. And I am very concerned that that money could be 
used to help keep current with the targets for Title I, which 
is really the cornerstone of this legislation.
    This President made a remarkable change in this program 
when he stated that he wanted the resources from the Federal 
Government targeted on the neediest children in the poorest 
performing schools. That is a dramatic change from where we 
were over the last 10 or 15 years. But in order to carry out 
and to get the results that we need to fix those public schools 
over the 5 year plan that has been put together by the 
administration and Congress in this legislation, or over the 12 
year period when we are looking forward to having 100 percent 
of our children proficient in reading, writing, and 
mathematics, that there is the failure to provide the resources 
to do that.
    It is quite correct that we have spent a lot of money in 
the past and we have not gotten the results that we would like. 
But the fact of the matter is that in this legislation we asked 
for the most extensive reforms and hold schools more 
accountable, hold States more accountable, and school districts 
more accountable than at any time in the past 30 years. The 
reason we want to do that is because, what the President 
recognized when he was Governor in Texas, what we have 
recognized here in the Congress, poor children are falling 
further behind.
    In 1965, when we passed this legislation, the idea was to 
close the gap between majority and minority children, between 
rich and poor children in this country. That simply has not 
happened. That is why in this legislation we disaggregate the 
data and we are going to hold schools, school districts, and 
States accountable for the performance of each and every child. 
That is a revolutionary idea in education, that we would hold 
the beneficiaries of the Federal payments accountable for 
performance and for accountability for those performances.
    At the same time, we recognize that with the addition of 
the reading programs, with the early childhood programs, with 
the Title I programs, with even extending into the Pell 
programs, additional resources have got to be made. That 
blueprint is laid out in H.R. 1, which the President signed, 
which so many Members of the Congress voted for and which I 
believe, and I hope, continue to be proud of, because it is the 
right blueprint in terms of policy.
    Now we have got to get the financial blueprint to match the 
requirements of this legislation. If we do not, I hate to say 
this, but most educational systems are very resistant to 
change, and my concern is we need fundamental and major change 
within the education systems to get the results that you and I 
have asked for for a number of years and that are now embodied 
in this legislation.
    We have told them that the resources are coming; that the 
resources will be there for Title I, that the resources will be 
there for bilingual education, that the resources will be there 
for children with special needs. But what we now see in this 
legislation is we fall far short and we start to fall behind 
now on providing the resources over the next 5 years that are 
necessary for a doubling of the Title I legislation.
    At a time when we see our resource commitment falling off, 
the number of children eligible for Title I is expected to 
increase because of the economy and other factors. In fact, 
under the President's budget, at the end of next year we will 
be serving a smaller percentage of children in the program than 
we are currently serving. The whole point of H.R. 1 was to gain 
on that population, according to both the Congress and the 
administration.
    So I would just say in conclusion, I would hope that this 
committee would scrutinize this budget to see what additional 
resources could be placed in furthering the purposes and the 
policy, the accountability and the responsibility of H.R. 1. I 
do not pretend that is an easy job. I come here understanding 
the kinds of problems that we have for a whole series of events 
that really were not anticipated just a few months ago. Whether 
it was September 11, the recession, or the ''dot com'' bust, 
all of these things have impacted that.
    But we cannot fall back on this march toward reform, this 
march toward performance by millions of America's children who 
have simply been left behind to date. I believe that this bill 
can provide us the means to achieve that goal. I would just 
hope that this committee would be able to find the funding to 
make sure that it in fact happens and it happens on a timely 
basis. Thank you so much for the opportunity to testify before 
the committee.
    [The prepared statement of George Miller follows:]

Prepared Statement of Hon. George Miller, a Representative in Congress 
                      From the State of California

    Thank you, Chairman Nussle, Ranking Member Spratt, and members of 
the committee. I am very proud of the bipartisan effort that led to the 
No Child Left Behind Act last year. This new law heralds the beginning 
of an unprecedented national campaign to erase decades of neglect of 
our poorest and most needy children.
    Education reform will work if it marries high expectations with 
additional resources. The new law emphasizes accountability for student 
achievement. In exchange for high standards, we--from the President on 
down--promised America's students, teachers and schools the money 
necessary to implement proven strategies to raise achievement.
    The President's budget breaks this promise. The budget President 
Bush requested for education is totally inadequate. Just when we are 
asking much more of our schools, the budget provides the smallest 
increase for education in 7 years. It actually cuts $90 million from 
the new education reform law.
    This is really the ''No Money Left Behind for Education'' budget. 
It funds the wrong priorities for America.
    For example, the President's main education initiative is an 
expensive and controversial tuition voucher for private schools. Last 
year, this concept was rejected by the House, rejected by the Senate, 
and excluded from the reform law. It is a wrong-headed idea that eats 
up $4 billion we need to honor the promises of education reform. The 
President's budget also spends more than 50-times more on an additional 
tax cut for the top 1 percent of taxpayers than on education reform.
    I urge this committee to provide significantly more resources for 
education. At a minimum, the following priorities merit additional 
funding.
    The Title I program for disadvantaged school children is the 
cornerstone of reform. Under the President's budget, the number of poor 
children left behind by Title I would grow by 250,000.
    The Bush budget freezes priorities like teacher quality, after-
school, and bilingual education. Due to inflation, this plan is a 
disguised budget cut. It will deny teacher training to 18,000 teachers; 
deny after-school programs to 33,000 students; and deny extra help to 
25,000 students with limited English proficiency.
    The Federal Government still falls far short of its commitment to 
children with special needs. We are making progress, but are not yet on 
track to fully fund the Special Education program in time to help this 
generation of students.
    The Bush budget includes not one penny to modernize schools.
    The proposed budget freezes the size of Pell scholarships, letting 
aid for low-income college students shrink in real terms. It eliminates 
support for State scholarship programs and provides only 3.6-percent 
increases for historically black colleges and Hispanic-serving 
institutions.
    Particularly in this difficult economy, we need to invest more in 
the skills of America's workers. The Bush budget cuts Youth Opportunity 
training grants by $180 million, Youth Activities by $127 million, 
Adult Employment by $50 million, and other employment and training 
programs by $184 million.
    Finally, the President's budget freezes the Child Care and 
Development Block Grant, cutting aid to 30,000 families. Affordable 
high-quality child care is critical, particularly in hard economic 
times, to help working families to remain employed and off welfare and 
children enter school ready to learn.
    Mr. Chairman, we have just demanded more accountability, more 
testing, and more results from our schools. If we start to renege on 
the money in the first year, what message are we sending to these 
school districts about the seriousness of these reforms?
    If one is truly committed to upgrading America's schools, there can 
be no recesses. We need a day-to-day, year-to-year fight to make the 
resources available and achieve the reforms.
    I look forward to working with the members of this committee to 
substantially increase funds for education above the level recommended 
by the President.

    Chairman Nussle. I thank the gentleman. I appreciate, as 
the entire Congress and Nation does, your leadership in a 
bipartisan way on H.R. 1 and on so many other education 
reforms. I think you have seen this committee respond to some 
of your requests in the past, and I think you will see that 
again.
    Mr. Miller. I hope so.
    Chairman Nussle. You are right, we are balancing a number 
of old priorities and new priorities. But I do believe that 
this is one that we need to continue.
    With that, we now turn to Mr. Ehlers. Let me begin by 
thanking the gentleman for his leadership in moving this 
Congress forward in a high-tech information age. He led that 
effort on our side. And from the House Administration 
Committee, he helped us to complete the project that he is now 
going to be the first user. It is going to take a rocket 
scientist to use this system and so we have got a good one to 
lead off. We have not had a witness actually test this system 
from the chair in which you are sitting. So, we welcome you. We 
are anxiously awaiting your presentation because it is a maiden 
voyage for our system from the witness chair. Welcome.

    STATEMENT OF HON. VERNON J. EHLERS, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MICHIGAN

    Mr. Ehlers. Thank you very much. I appreciate the 
opportunity to testify. If I may take just a few seconds to 
reinforce what Congressman Miller just said and add to it 
science. He spoke about reading and math, but H.R. 1 addresses 
all three. The House bill as it left the House, on which I 
worked with Mr. Holt from New Jersey on the Education 
Committee, was in grand shape in terms of reading, math, and 
science. Unfortunately, the Senate changed the bill and, 
furthermore, they established a separate fund for Math and 
Science Partnerships and then did not fund it appropriately. I 
hope that between your work and the appropriators this year we 
can get it all straightened out and get a reasonable amount. I 
will depend on Mr. Holt to carry the ball on that issue in this 
committee.
    Let me now go to my comments. I wish to discuss funding of 
science in the United States, and particularly by the United 
States Government. I am offering my opinion as a scientist, but 
I want to make it clear, I am not here representing or speaking 
as a member of a special interest group. Scientists, as you 
know, are notoriously poor at representing themselves and they 
cannot be called a special interest group. Furthermore, any 
additional funding that goes to science is not likely to 
benefit any individual scientist in any way. They will still 
get paid the same. They will have better equipment perhaps, and 
there may be a few more of them. I want to make that clear 
because I am sure you hear constantly from people that have 
special concerns, special interests that might benefit a 
particular group. This will benefit our Nation.
    President Bush's priorities, as outlined in his budget 
document, primarily are threefold: national security, homeland 
security, and economic security. Science undergirds every 
single one of those priorities. If you want to talk about 
national security, most of the advances in our Armed Forces' 
ability to respond have come from scientific and engineering 
research many, many years before it is actually used.
    We tend to be ga-ga today about laser-guided bombs and the 
fact that we were able to do so much in Afghanistan with so 
little loss of American troops. But if you ask where the laser-
guided bombs came from, they were not developed by the 
military, certainly the laser was not. The first ideas for 
stimulated emission of radiation were developed before World 
War II by a physicist sitting at his desk working out some 
problems on the properties of light. The laser itself was 
developed when I was still a graduate student in the 1950's.
    In other words, the developments that science make, may not 
really bear fruit for decades after that. I could give other 
examples. The nuclear weapons that ended World War II arose out 
of Einstein's work in 1907. The point is, simply, we have to 
keep scientific research going to provide the national 
security, the homeland security, and the economic security for 
the future, because, in fact, the economy itself now depends on 
the work that we do in science.
    What concerns me is the funding trends. If I could show the 
first chart, it shows non-defense research and development as a 
percentage of GDP for various nations. If you look at that, the 
United States, the one remaining Superpower, you might expect 
to be first. It is not. Japan is on top, they do the best job; 
Germany is next; USA next; then we have the U.K., and below 
that Italy. We are average among the leading developed 
countries. What I do not have on this chart because I could not 
get the up-to-date data but I saw it on a chart 3 years ago, 
South Korea is very rapidly overtaking the United States in 
terms of research per dollar of gross domestic product. When 
South Korea begins surpassing us, we should be worried.
    If we look at the next chart which shows Federal R&D 
funding for the larger Federal research enterprises, you will 
notice most of them just meander across the page. These are in 
constant dollars. Notice NIH is the only one that is increasing 
appreciably. NASA is going down. DOE has gone down 
considerably, it is beginning to come back. NSF is the only one 
that has climbed steadily and that is a very, very slow rate of 
climb.
    If we go to the next chart, you will see it for the smaller 
research entities. I will not go through all the labs, but 
again the same trend appears.
    We are roughly spending the same amount of constant dollars 
every year on non-defense R&D. And at the same time, we are 
rapidly increasing our defense spending, which, in turn, 
depends on the results of science. If we do not continue the 
scientific effort and increase our spending there, we are going 
to be going to the well to try to develop new techniques in 
national security, homeland security, new economic means, and 
we will find the well has run dry because we are not funding 
the research effort.
    In my opinion, we have done very well at NIH, as you can 
see. It is practically exponential when you look at the chart. 
It is certainly a very good thing to do. And the reason it has 
so much congressional support is because we all support health 
research. We want to cure diseases.
    What many people do not realize is the utter dependence of 
the NIH on the basic research done in physics, chemistry, 
biology, and so forth. Where did we get these marvelous 
diagnostic instruments that we have for health improvement? X-
rays were developed by a physicist over a century ago. CAT 
Scans were developed by a physicist. The MRI was developed by a 
physicist. In fact, the original research was done on that in 
the 1950's. We cannot continue to pour money into NIH and have 
it bear fruit unless we also improve the research funding of 
the other sciences that undergird the work at NIH.
    Now, as budgeteers, your first question is, where will the 
money come from? And I would hope, with the many billions of 
dollars that are being put into national security and homeland 
security, we should recognize our responsibility to use a 
substantial portion of that to increase the funding for 
research. So I hope that would be the first course of action 
you would take.
    I would also offer a second alternative, which may gain me 
some enemies at the NIH. But recognize that we are in the last 
year of the 5-year doubling sequence. Notice the exponential 
increase of NIH in the last few years. That is not going to 
continue. Are we going to just simply flatten it off next year, 
have it remain the same, which would be a real shock to their 
system given the way it has been funded in the past? Or, one 
other option would be to phase-in the termination of this over 
a 2-year period which would give you greater funding this year 
to put into the other research enterprises and start building 
them up.
    My request to you; I think NSF is the most important agency 
to increase. We definitely should get a doubling funding track 
for NSF as soon as possible. In fact, former Speaker Gingrich 
has stated publicly a number of times that he believes the 
greatest single mistake he made in his speakership was not 
pursuing the doubling of NSF at the same time we doubled NIH. 
And I firmly believe we have to put NSF on a doubling track. If 
you are worried about this costing a huge amount of money, I 
would point out to you that just the increase alone in NIH 
projected this year in the President's budget is greater than 
the total research budget of NSF. We can double NSF with modest 
increases, less than $500 million per year to start with, and 
in seven years have it doubled with very modest increases but 
having a huge impact on our Nation.
    I thank you for your attention and your time. Oh, let me 
mention one other problem, if I may. Go to the last figure 
here. This is something I am sure is dear to your heart and to 
mine. You may recall when the Republicans took over in 1994 in 
the House we were very proud that we were going to eliminate 
earmarks. I want to show you what has happened in earmarks in 
research and development this past fiscal year. The House, far 
from being pure, has put in substantial earmarks. And these are 
just the earmarks within the budgets of the scientific agencies 
telling scientists specifically what should be done. The Senate 
increased it even more. You add the two together and you see 
about $1.5 billion of earmarks in science out of a not very 
large budget.
    Now let me point out something that is even worse. A very 
important enterprise is to improve the buildings of NIST and 
NOAA out in Boulder, CO, a high priority. Money was put in the 
budget for it last year. Money was appropriated for it. Forty 
million dollars of that was earmarked for totally non-
scientific processes and purposes, including a law library at a 
college in the boundaries of one of the Senate appropriators. I 
think we have to be very diligent to try to reduce the 
earmarking in the science enterprise. I do not believe in 
general that Congress is very well qualified to decide the 
priorities of science, other than perhaps from Mr. Holt on this 
committee. And I urge us as a body to try to reduce the 
earmarking of scientific funds, either within science and 
especially prevent it from flowing out to other areas.
    I thank you very much. I would be happy to answer 
questions.
    Chairman Nussle. We thank you for your continued and very 
consistent advocacy on these issues.
    Mrs. Christensen, welcome to the committee. We are pleased 
to put your statement in the record and you may summarize as 
you wish. Thank you.

STATEMENT OF HON. DONNA M. CHRISTENSEN, A DELEGATE IN CONGRESS 
             FROM THE TERRITORY OF THE U.S. VIRGIN
                            ISLANDS

    Mrs. Christensen. Thank you, Mr. Chairman. Chairman Nussle, 
Ranking Member Spratt, Mr. Holt, other members of the 
committee, I want to thank you for this opportunity to testify 
today. It is my first time before the Budget Committee. I want 
to testify on two issues of great importance to my community--
Medicaid and Social Security Supplemental Income. But before I 
go into the specific issues, I would like to make a few 
observations as chair of the Health Brain Trust of the 
Congressional Black Caucus on the budget in general for fiscal 
year 2003.
    Last year when the tax cut was passed, we who opposed it 
knew then that the funds needed to invest in both the fiscal 
and the human infrastructure needs of this country would be 
short-changed. No one could have ever predicted back then that 
terrorists would hate this country so much that they would plot 
and carry out the horrific events of September 11. They did. 
And we have and must respond, as well as ensure the protection 
of the people of this country from future similar attacks 
insofar as is humanly possible. So we fully support a budget 
which contains the large increases for defense, new funding to 
meet our homeland security needs.
    But I would submit that the circumstances have changed as a 
result of September 11 and what was a bad idea then, the $1.6 
trillion tax cut, is a much worse one now. At the very least, 
it ought to be put on hold, and the proposed repeal of the 
Alternative Minimum Tax should not be enacted.
    We cannot possibly fairly address the needs of all of the 
people of this country, many of whom have waited for their turn 
a long time, given the new expenditures for defense and 
homeland security that must take place if we continue to 
implement the planned cuts in taxes. To do so would put true 
homeland security far beyond our reach not only for the short-
term, but a long time into the future. And just to underscore 
what the two Members who spoke before me said, in order to 
adequately respond, we need to ensure that we have a large 
cadre of individuals who are well educated and healthy. The 
grave disparities that now exist for people of color, those in 
poverty, and those who live in our rural areas of all racial 
and ethnic backgrounds must be closed or we will never be 
secure from within or without.
    As we move from surpluses to deficits and mortgage the 
future generations, we would also threaten the security of our 
elderly as well as our own, because I will be 65 in 2010, if we 
pass a budget that takes the Social Security and Medicare Trust 
Funds into deficits, as the President's budget would do if 
passed. This we must not do.
    As you may know, Mr. Chairman, I am a family physician. I 
wanted to just add something on behalf of my family physicians. 
Although I do not practice, I am concerned about the continuing 
assaults on payments to my colleagues as well as to other 
health care providers. I am therefore asking the committee to 
have the fiscal year 2003 budget reflect support for the 
legislation to revise the Medicare physician payment schedule 
which is based on a faulty formula. I would further ask that 
the committee move to stop the process in this year.
    The schedule is tied to the U.S. Gross Domestic Product. 
However, there is no relationship between GDP and the cost of 
health care services. The Medicare Payment Advisory Commission 
has recognized that this system of automatically reducing 
payments with no regard to factors directly affecting medical 
practices is flawed and has recommended, and we agree, that it 
should be replaced.
    I also want to urge your continued support for the Health 
Professions Training Programs, which are administered by the 
Health Resources and Services Administration, which have been 
effective in addressing many of the challenges of the current 
shortages and the geographic misdistribution of health 
professionals in the Nation. The President's budget shows a 75-
percent reduction in Title VII and completely zeroes out 
programs for the training of who I think are the most important 
physicians of all--family physicians like myself. You have 
recognized the importance of restoring this funding in the 
past, and we look once again to this committee for help.
    The two specific issues that I would like to turn to now 
that I ask that you include in this budget are Medicaid and 
Social Security Supplemental Income funding for the U.S. 
insular areas. This issue has been before this body in many 
prior Congresses, without success. As we in the Territories 
step up our efforts to bring these important benefits to our 
communities, it is important that I bring the issue of 
extending these benefits to the committee before the budget 
limits are set.
    SSI is not available to American citizens living in the 
Territories, with the exception of the Northern Mariana 
Islands. Yet, and rightly so, it is available to non-citizens 
who are legal residents of the 50 States. Right now there are 
Virgin Islanders--and I am sure there are people from the other 
Territories--who remain as residents of one of the 50 States 
rather than return home because it is too difficult for persons 
with disabilities who require that extra income to meet just 
their daily activity needs to return home without having the 
benefit of SSI. Not even our veterans who served our Nation 
faithfully, selflessly, and honorably are covered. We feel that 
this inequity needs to be corrected.
    Likewise, there exists another inequity in access to health 
care for those of us who live in the U.S. insular areas. It is 
one which annually results in deaths and disability which could 
otherwise be prevented. I am speaking about the cap on Medicaid 
payments to the Territories. We are asking that the cap, which 
for the Virgin Islands and Guam is about $5.6 million annually, 
be lifted and that we be treated like States under this 
important program.
    Under the cap and a match, which is not indexed for average 
income level, both of which are congressionally set, we are 
unable to cover individuals even up to 100 percent of poverty 
level. We cover more like 70 percent or 60 percent of poverty. 
Under the cap, spending per recipient is, at best, \1/5\ of the 
national average.
    Our hospitals are struggling because the cap prevents them 
from collecting full payments for the services they provide. 
They are also unable to collect disproportionate share payments 
despite the fact that about 60 percent of their inpatients are 
below the poverty level. Long-term care is limited and thus 
unavailable to persons and their families who need it, not 
because the rooms are not there, but because we do not have 
enough Medicaid dollars to pay for them even though the Federal 
funds are matched about 2-to-1 by local dollars, far above our 
match requirement. While many States are covering women and 
their minor children well above 100 percent of poverty, we 
cannot even come close.
    This country is the only one in the world which does not 
provide universal health care, and that is a shame. However, it 
has made a commitment to provide coverage for the poor and 
disabled. Mr. Chairman and colleagues, it is not meeting that 
commitment in the off-shore areas. This committee can begin to 
correct that with this budget.
    I thank you again for the opportunity to testify.
    [The prepared statement of Donna M. Christensen follows:]

 Prepared Statement of Hon. Donna Christensen, a Delegate in Congress 
             From the Territory of the U.S. Virgin Islands

    Thank you, Mr. Chairman, Ranking Member and members of the Budget 
Committee for this opportunity to testify today on two issues of great 
importance to my community, Medicaid and Social Security Supplemental 
Income. Before I go to our specific issues, please permit me to make a 
few observations on the fiscal year 2003 budget in general.
    Last year when the tax cut was passed, we who opposed it, knew then 
that the funds needed to invest in both the physical and human 
infrastructure needs of this country would be greatly shortchanged. No 
one could have ever predicted back then, that terrorists would hate 
this country so much that they would plot and carry out the horrific 
events of September 11. They did, and we have and must respond, as well 
as ensure the protection of the people of this country from future 
similar attacks, in so far as is humanly possible.
    And so, we fully support a budget, which contains large increases 
for defense, and new funding to meet our homeland security needs. But I 
would submit, that circumstances have changed as a result of September 
11, and what was a bad idea before the $1.6 trillion tax cut, is a much 
worse one now. At the very least it ought to be put on hold, and the 
proposed repeal of the alternate minimum tax must not be enacted.
    We cannot fairly address the needs of all of the people of this 
country, many of whom have waited long for their turn, given the new 
expenditures for defense and homeland security that must take place, if 
we continue to implement the planned cuts in taxes. To do so, would put 
true homeland security far beyond our reach, in the short term and for 
a long time into the future.
    If we just look at what it will take to secure the homeland, 
including preventing and responding to bio-terrorism as well as 
providing for an adequate and well equipped defense force here and 
overseas, we need to ensure that we have a large cadre of individuals 
who are well educated and healthy. The grave disparities that now exist 
for people of color, those in poverty and in our rural areas of all 
racial and ethnic backgrounds, must be closed or we will never be 
secure, from within or without.
    As we move from surpluses to deficits, and mortgage future 
generations, we would also threaten the security of our elderly, as 
well as, our own if we pass a budget that takes the Social Security and 
Medicare Trust funds into deficits, as the President's budget would do 
if passed. This we must not do.
    I also want to ask the committee to have the fiscal year 2003 
budget reflect support for legislation to revise the Medicare physician 
payment schedule, which is based on a faulty formula. The schedule is 
tied to the US gross domestic product (GDP). However there is no 
relationship between the GDP and the cost of health care services.
    The Medicare payment Advisory Commission (MedPAC) has recognized 
that this system of automatically reducing payments with no regard for 
factors directly affecting medical practice is flawed and recommended 
that it be replaced. The commission has registered their concern for 
the adequacy of physician payments and believes as I do, that if the 
5.4-percent cut goes into effect, could result in some serious access 
to care problems.
    Likewise, I also want to urge support for the health professions 
training programs which are administered by the Health Resources and 
Services Administration which have been effective in addressing many of 
the challenges of the current shortages and the geographic 
misdistribution of health professionals in the Nation.
    The two specific issues I ask that you include in this budget are 
Medicaid and SSI funding for the U.S. Insular areas. These issues have 
been before this body in many prior Congresses without success. As we 
step up our efforts to bring these important benefits to our 
communities on the mainland, it is important that I bring the issue of 
extending these benefits to the offshore areas before this Committee 
before the budget limits are set.
    SSI is not available to American citizens living in the 
territories, with the exception of the Northern Mariana Islands. Yet, 
and rightly so, it is available to non-citizens who are legal residents 
of the fifty states. Right now there are Virgin Islanders--and I am 
sure Americans from the other Territories--who have to remain a 
resident of one of the 50 states, rather than return home to their 
families, because the high cost of living makes it prohibitive for 
someone who needs additional help just to get through activities that 
most of us take for granted. Not even our veterans, who served our 
Nation faithfully and selflessly, are covered. This inequity needs to 
be corrected.
    Similarly, there exists another inequity in access to health care 
for those of us who live in U.S. insular areas, and one which annually 
results in preventable deaths; I am speaking of the cap on MEDICAID 
payments to the Territories.
    We are asking that the cap, which for the Virgin Islands and Guam 
is under $6 million be lifted and we be treated like States under this 
important program.
    Under the cap, and a match that is not indexed for average income 
level, both which are Congressionally set, we are unable to cover 
individuals at 100 percent of poverty--for the Virgin Islands it is 
closer to 30-percent below that income level. Under the cap, spending 
per recipient is at best \1/5\ of the national average.
    Our hospitals are struggling, because the cap prevents them from 
collecting full payments for the services they provide, and they are 
also unable to collect Disproportionate Share payments, despite the 
fact that about 60 percent of their inpatients are below the poverty 
level. About \1/3\ of these qualify for MEDICAID, which as I indicted 
before, never fully reimburses them. The rest of their patients have no 
coverage whatsoever.
    Long-term care is limited, and thus unavailable to persons and 
their families who need it, not because the rooms are not there, but 
because we do not have enough MEDICAID dollars to pay for them, even 
though the Federal funds are matched 2-to-1 by local dollars--far above 
our requirement. While many states are covering women and their minor 
children well above 100 percent of poverty, we cannot even come close.
    This country is the only one in the world, which does not provide 
universal health care, and that is a shame. However, it has made a 
commitment to provide coverage for the poor and disabled, but it is not 
meeting that commitment in the offshore areas. This committee can begin 
to correct that with this budget.
    Thank you again for the opportunity to testify.

    Chairman Nussle. It is hard not to miss your stationary. I 
have two beautiful district offices where I get to go and spend 
some time. But, boy, when you see St. Croix and St. Thomas as 
your district offices, that is a nice place to have to go and 
work.
    Ms. Christensen. Yes. Yes, it is.
    Chairman Nussle. We appreciate your testimony. We 
understand it is your first time but we appreciate the advice 
and the recommendations that you gave us.
    Ms. Christensen. Thank you.
    Chairman Nussle. Next is a distinguished friend and 
colleague, Mr. Bilirakis from Florida. Welcome, again. We are 
pleased to receive your testimony.

   STATEMENT OF HON. MICHAEL BILIRAKIS, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF FLORIDA

    Mr. Bilirakis. Thank you very much, Mr. Chairman. I very 
much appreciate the invitation to testify before you today. I 
also want to thank the members of your committee and their 
staffs. I am going to talk, as you might expect, on the 
veterans concurrent receipt legislation.
    As many of you know, it has been something like 17 years 
that I have been working on this particular issue of interest 
to our Nation's military retirees, which is the concurrent 
receipt of military retired pay and VA disability compensation. 
Some military retirees, individuals who are eligible for 
military retirement benefits as a result of a full service 
career, they have served 20-plus years, are also eligible for 
disability compensation from the VA based on a medical problem 
they incurred while in the service. Under present law, 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. This law goes back to 1891, the 
year that it was enacted.
    I ask my colleagues to think of two soldiers who joined the 
Army roughly together and were in a foxhole and were wounded, 
similar wounds, if you will, in the same battle. Joe left the 
Army after his 4 year stint and he joined the Department of 
Defense as a civilian employee. Jim stayed on and made a career 
in the military.
    Joe, who had left the Army, is working for the government 
and also receives his service-connected disability pay. For 20 
years, for 30 years, whatever the period of time it might be 
when he might reach retirement age from the Federal Government, 
he has been receiving service-connected disability pay.
    Jim, who has the same disability, continues to stay on 
active duty, continues to serve America with all the sacrifices 
and family separations, but he cannot receive his service-
connected disability pay until after he retires from the 
service.
    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, the man 
who stayed in the service for 20-plus years with all the 
sacrifices and everything else that goes along with it, he must 
forfeit an equal amount of his retired pay in order to receive 
any of the disability compensation, while Joe has been 
collecting it for 30 years. He collects the full amount of both 
benefits without a deduction in either. Moreover, to add insult 
to injury--and I am not against this sort of thing--but he can 
receive civil service retirement credit for his 4 years in the 
military.
    So I guess we finally have to ask ourselves, why should the 
individual who chose a military career be penalized? Military 
retired pay is earned compensation for the extraordinary 
demands and sacrifices inherent in a military career. It is the 
promised reward--if we can call it that--for serving two 
decades or more under conditions most Americans would find 
intolerable. On the other hand, veterans' disability 
compensation is recompense for pain, suffering, and lost future 
earnings, something that we kind of overlook, lost future 
earning power caused by a service-connected injury or illness.
    Military retirement pay and disability compensation were 
earned and awarded for entirely different purposes. Over the 
years, Mr. Chairman, it is amazing the number of people I have 
heard who talk about this as double-dipping. They are earned 
for entirely different purposes. Current law ignores the 
distinction between these two entitlements. Military retirees 
with service-connected disabilities should be able to receive 
compensation for their injuries above their military retired 
pay.
    Nationwide, more than 500,000 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 really 
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.
    We can put ourselves in the shoes of a person who is in the 
military with full intent of making the military their career, 
has the skill, if you will, to be so very helpful in our 
defense structure, he suffers a service-connected disability, 
and then he finds out about this 1891 law. He knows that if he 
spends the remaining 15 years or whatever it would be in order 
to make a career of the military and retire he is not going to 
receive that service-connected disability that he has earned as 
a result of the service-connected injury and also his 
retirement. He knows he is going to have to reduce drastically 
that retirement pay in order to help pay for that disability. 
So why stay in the service to complete that period of time that 
is required? It does not make sense that they would.
    Those of us who are very defense conscious, and really the 
entire Congress is, we should really look at this also as a 
defense thing. So I introduced again in this Congress H.R. 303, 
which has become a famous number around here, to eliminate that 
current off-set. My bill has strong bipartisan support with 379 
cosponsors in the House--379 cosponsors. I have not considered 
a discharge petition, nor would I. But the point of the matter 
is 379 cosponsors, 37 members of this Budget Committee, have 
cosponsored the legislation. A Senate companion bill, S.170 has 
also received strong support with 77 cosponsors.
    As you may know, the last Congress took the first steps 
toward addressing this inequity somewhat by authorizing the 
military to pay a monthly allowance, special pay we call it, to 
military retirees with severe service-connected disabilities 
rated at 70 percent or greater. It is some payment of $300 a 
month, $200 a month, $100 a month, depending.
    The fiscal year 2002 Authorization Act of last year took us 
another step closer by authorizing the legislation, which is 
something we have been wanting to do, to fully eliminate the 
current off-set. But that provision is contingent upon funding 
being provided. So it is authorized but funding has to be 
provided.
    Recently, more than 190 Members of our body signed a letter 
to you, Jim, and to Ranking Member Spratt urging the committee 
to include the appropriate language in the fiscal year 2003 
Budget Resolution. I urge the committee to address this issue 
in your deliberations.
    I do not have to tell you, we see what is happening. People 
ask me what has September 11 done insofar as the veterans are 
concerned. Obviously, it is more of a realization I think by 
the American people of our dependence on our American military 
people and on our veterans. So we want them to go into the 
service, we want them to feel like they can serve and that they 
will be compensated, not because they reach an entitlement as a 
result of a certain age, or as a result of being poor, as a 
result of being sick, but an entitlement as a result of 
something. They are really entitled by virtue of their conduct 
and their sacrifices for their time in the service. It is 
unfair. Boy, it would be a real feather in the cap of this 
Congress if we can change it at some point.
    If you have any questions, by all means I'll be glad to 
respond. Thank you very much.
    [The prepared statement of Michael Bilirakis follows:]

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

    Mr. Chairman, I would like to thank you and the other members of 
the House Committee on the Budget for giving me an opportunity to 
present my views on the fiscal year 2003 budget resolution.
    As many of you know, for more than 17 years I have been working on 
an issue of particular interest to our Nation's military retirees the 
concurrent receipt of military retired pay and VA disability 
compensation. 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, 
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. Congress enacted this unjust law in 1891.
    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. Moreover, he can receive civil service 
retirement credit for his 4 years in the military.
    Why should the individual who chose a military career be penalized? 
Military retired pay is earned compensation for the extraordinary 
demands and sacrifices inherent in a military career. It's the promised 
reward for serving two decades or more under conditions most Americans 
would find intolerable. On the other hand, veterans' disability 
compensation is recompense for pain, suffering, and lost future earning 
power caused by a service-connected injury or illness.
    Military retirement pay and disability compensation were earned and 
awarded for entirely different purposes. Current law ignores the 
distinction between these two entitlements. Military retirees with 
service-connected disabilities should be able to receive compensation 
for their injuries above their military retired pay.
    Nationwide, more than 500,000 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?
    At the start of the 107th Congress, I once again introduced H.R. 
303, the Retired Pay Restoration Act, to eliminate the current offset 
between military retired pay and VA disability compensation. My bill 
has received strong bipartisan support with 379 cosponsors in the 
House. I am pleased that 37 members of the Budget Committee have 
cosponsored my legislation. A Senate companion bill, S. 170, has also 
received strong support with 77 cosponsors.
    As you may know, 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. The fiscal year 2002 National Defense Authorization Act (S. 
1438) took us another step closer by authorizing my legislation to 
fully eliminate the current offset. However, this provision is 
contingent upon funding being provided.
    Recently, more than 190 Members of Congress signed a letter to 
Budget Committee Chairman Nussle and Ranking Member Spratt urging your 
committee to include the appropriate language in the fiscal year 2003 
budget resolution so that the brave men and women who served our Nation 
can finally receive the retired pay they earned. I urge the entire 
committee to address this issue in your deliberations over the fiscal 
year 2003 budget resolution.
    Once again, our Nation is calling upon the members of the U.S. 
Armed Forces to defend democracy and freedom. We have no doubt that 
these brave men and women will rise to the challenge. However, for 
those of them who have selected to make their career in the U.S. 
military, they face an unknown risk. If they are injured, they will be 
forced to forego their earned retired pay in order to receive their VA 
disability compensation. Indeed, a number of our brave servicemen and 
women have already sustained serious injuries while fighting our war 
against terrorism.
    We have a unique opportunity this year to redress the unfair 
practice of requiring disabled military retirees to fund their own 
disability compensation. It is time for us to show our appreciation to 
the men and women who have sacrificed so much for our great Nation.
    I and the supporters of H.R. 303 stand ready to work with you on 
this important matter.

    Chairman Nussle. I thank the gentleman. There is no more 
consistent champion for veterans' issues than the gentleman 
from Florida.
    Mr. Bilirakis. Thank you.
    Chairman Nussle. We appreciate your advocacy. We have 
talked personally and we have talked publicly about this issue 
many times. And message received. We will go to work on that. I 
am not sure what we will accomplish, that is something we are 
going to have to continue to work on, but----
    Mr. Bilirakis. If I may, I know the time has expired, with 
your indulgence, eliminating the complete off-set, which is so 
darn unfair, is something that I know we all want to do. I know 
that you, Mr. Chairman, want to do it. But money is a problem. 
Can we think about alternatives? Sure. We could phase this 
thing in. Let's make it law and phase it in so that the dollars 
would be spread out over a period of time. And in the out 
years, God willing, the economy is going to pick up again and 
we are going to have surpluses and that sort of thing. So there 
are ways to approach this without necessarily saying all or 
nothing. Thank you so very much.
    Chairman Nussle. And your willingness to work with us on 
that is greatly appreciated. So, thanks so much.
    Mr. Bilirakis. Thank you, sir.
    Chairman Nussle. Next, the very distinguished gentleman 
from California. Talking about tireless champions for 
particular issues, there is probably no one in the Congress who 
has taken on the issue of strengthening our national defense 
more than the gentleman from California. We welcome you to the 
Budget Committee and we look forward to your testimony. Your 
written testimony will be made part of the record. You may 
proceed.

 STATEMENT OF HON. DUNCAN HUNTER, A REPRESENTATIVE IN CONGRESS 
                  FROM THE STATE OF CALIFORNIA

    Mr. Hunter. Well, thank you, Mr. Chairman. It is a pleasure 
to come in and listen to Mike Bilirakis make his very effective 
presentation and have a chance to listen to him. Thanks for the 
opportunity. What I wanted to do is get right to the heart of 
what I think you want to know about, and that is what does this 
defense budget do with respect to our requirements for national 
security and what is left undone, if anything. Let me just go 
straight to that.
    First, you need to know the context in which we are 
operating, and that is that we have cut the military since the 
early 1990's, the Desert Storm era, almost in half in terms of 
force structure. In the early 1990's, when we went into Desert 
Storm we had 18 Army divisions. Today, we are down to 10. So we 
have cut the Army almost in half. We had 24 active fighter air 
wings in the Air Force. Today, we are down to 13. So we have 
cut that portion of our air power almost in half. We had about 
546 ships. Today, we are down to 314. So we have cut the Navy 
dramatically, by about 40 percent with respect to ship numbers.
    The tragedy of that cutback was not just that we cut the 
force almost in half, but that the half that we had left and 
that we have left today is not as ready per unit, per plane, 
per truck as the big force that we had in the early 1990's. So 
when you cut down a political operation, a business operation, 
or a sports operation, the presumption is that when you are 
left with this core after you have cut it down the core is 
going to be highly efficient, well-equipped, well-trained, and 
ready to go. Tragically, because we have not been modernizing 
over the last 10 years, the smaller force that we have today is 
not as ready as the big force that we had 10 years ago. If I 
could stand up, I will illustrate that with a couple of my 
diagrams.
    I have explained that the force has been cut back 
dramatically, yet the efficiency of the remaining force is less 
than it was in the early 1990's. The best way to illustrate 
that is with our front line fighter aircraft, the ones that are 
being used in operations right now, F-15, F-16, F-15E. These 
are mission capable rates. In the early 1990's, we had 
approximately 85 percent mission capable rates on our front 
line aircraft. That meant that if you had 100 aircraft on a 
given morning, 85 of them, on average, were mission capable. 
They could take off; they could go do the mission; they could 
return. Today that has been knocked down to about 75 percent. 
So the 13 air wings that we have today, instead of being 85 
percent ready with 24 air wings, today you have got 13 air 
wings and those 13 air wings are about 75 percent. So the real 
import of this is that you have got less than 10 air wing 
equivalents.
    We asked CBO to do a little exercise for us about a year 
ago. The request was go through all of our tanks, trucks, 
ships, planes, the equipment of our present force structure, 
figure out how old they are, figure out what their life 
expectancy is, and figure out how many we have to replace on a 
steady basis to keep a force that is halfway modern. They did 
that and they reported back to us last year. Here is what they 
said:
    I might just use this as an illustration. This is an 
illustration of the aging equipment that we have. But they 
looked at everything, from helicopters, to tanks, to trucks, to 
ships. They said--and we were spending $60 billion at that time 
for modernization, for equipment replacement--we have analyzed 
this thing out and if you take an optimistic view of the life 
expectancy of all these platforms, we analyze that you are $30 
billion short per year; that is, you need to spend at least $90 
billion a year on replacement of equipment to keep the forces 
in a halfway modern condition, and that is under the optimistic 
view of life estimate. They said if you take a more pessimistic 
view of how long these systems can last, the ones we have got 
in place right now, you are going to have to have a lot more. 
And let me illustrate that.
    They went through all the classes of aircraft, everything 
from small recon helicopters up to the big stuff, the air-to-
air refuelers, the bombers, the attack aircraft, the fighters. 
They analyze that you have to replace across-the-board in DOD 
roughly 450 aircraft a year. In fact, it was not rough. They 
put in, and I have got a copy of CBO's testimony here. They 
analyzed it out right through class of aircraft, whether it was 
a small rotary aircraft or one of the big movers, and they said 
you have got to replace about 450 aircraft a year.
    For the last six, seven, eight years--and I can testify as 
the former chairman of the Procurement Subcommittee in Armed 
Services--we have been replacing less than 100, in some cases 
far less than 100. One year we bought fewer aircraft than 
Switzerland.
    During the 1990's, we took the so-called procurement 
holiday. The result of that is we have this $30 billion 
shortage. Now we asked Mr. Perry, who was President Clinton's 
own Secretary of Defense who put this blueprint in place, to 
testify after CBO, and he came in and said I disagree with CBO. 
There is a shortfall, he said, I think it is between $10 and 
$20 billion short per year that we are spending. The Chairman 
of the Joint Chiefs had an estimate that said that we were 
spending $40 to $50 billion too little, that is General Myers. 
So you had a range there. But let's take CBO's estimate as a 
fairly dispassionate, objective analysis. So we are $30 billion 
short on modernization.
    I went through the ammunition accounts, and I have got in 
this presentation that I made for the President and I want to 
give it to you. I got a chance to go in and brief him for about 
30 minutes on this. I got the records from our military 
services, the most predominant of which was the Army. The Army 
is $3 billion short on basic ammo. This is aside from the 
equipment problem. They are $3 billion short on ammo even if 
they use old ammunition.
    Then I went down through precision munitions. That is a 
very critical type of munitions. That is the transformational 
new high-tech stuff where you use a precision munition. You go 
in and you knock out one strut in a bridge instead of having to 
carpet bomb it, you save enormous amounts of air power and 
logistics, et cetera, and you are very effective. The numbers 
are classified, but I went through all the classified numbers 
and I can tell you--with precision munitions and conventional 
munitions added together against our own requirements, where 
our war planners have said what do we think we need to have in 
the ammo belt to be safe enough to know we can fight a war even 
if it is a war of some duration and have some ammo left before 
our industrial base catches up and is able to produce some more 
for us--we are a little shy of $15-billion short. Thirteen and 
a half to $15 billion short of our own requirements across the 
board. That includes precision munitions and the big shortage 
that the U.S. Army has of $3 billion.
    Now if you look at people, when Ronald Reagan became 
President he closed the so-called pay gap. That was the gap 
between the civilian sector and the military sector. It was 
12.6-percent under Jimmy Carter's last days. He closed that in 
two big pay raises in 1980. Since then, it has widened back out 
to about 11.1 percent now. We have got a 4.2 percent pay raise 
going in in this budget. Nonetheless, our staff on Armed 
Services analyzed out that if you close the pay gap totally, it 
is going to cost a little over $5 billion this year and an 
average of a little over $10 billion for the next five or six 
years. A big ticket item.
    CBO similarly went through our operations and analyzed 
them, operations and training, and they came to the conclusion 
we were $5 billion short a year on operations and training. 
That is everything from giving a guy enough of a tank course to 
make him competent, to having the fuel and the equipment, to 
having enough flying hours for a Navy or Marine Corps pilot to 
remain proficient. Operations and training, they analyzed, were 
$5 billion short a year.
    This is what we briefed the President on before the budget 
came out. You take the $30 billion shortfall in modernization, 
that is an annual shortfall that CBO analyzed--incidentally, 
our signals from them are they are going to come out 
momentarily with the modernization shortfall this year, update 
it in a week or two. Our indication is it is going to be about 
$34 billion. Because if you have got a fleet of old units, 
whether they are taxi cabs or aircraft, and you do not replace 
them this year, then they are 1 year older the next year and 
you have got a bigger problem.
    So this bow wave of modernization requirements gets bigger. 
They think it is going to be about $34 billion. But let's take 
$30 billion. Ammo and precision munitions, we figure we have a 
shortfall of $15 billion. We would like to be ready, you do not 
want to run out of ammo. You need to increase that by about $5 
billion a year. Readiness accounts, $5 billion, according to 
CBO. Personnel, the first year it is about $5.4 billion, but it 
goes up to over $10; we put down an average of $10 billion. 
Those requirements--modernization, ammo, readiness, and 
personnel, no new weapons systems, no increases in this very 
small force structure that we have right now, just equipping 
the military we have now--is about a $50-billion increase.
    Now here is what we have got. The President's budget came 
in with some things that we had not counted on. It looks like a 
big budget. But it has got almost $20 billion in up front war-
fighting cost, which I think is admirable from an accounting 
standpoint. They are coming up front with what they think it is 
costing to fight this war. So there are good points on that. On 
the other hand, that is something we had not taken into 
consideration as being in the budget.
    We had not counted the $3.7 billion that they put in for 
realistic budgeting. They looked at the history of budgeting 
for our big systems, we have been way underestimating costs. 
They used a Cost Accounting Improvement Group (CAIG) system 
which they have seen historically as much more accurate. So 
Rumsfeld said let's have truth in accounting. So we are going 
to have to pay this additional $3.7 billion for what they call 
realistic costing, that is the systems in the pipeline.
    Then there is $7.3 billion that we had not counted on which 
includes $4 billion--our analyses were that the TriCare for the 
Uniformed Services was $4 billion a year for retirees. That has 
now gone to $8 billion. So if you take $4 billion of that that 
we did not count on plus the civilian sector TriCare of $3.3 
billion which has been shifted by DOD to the defense budget, 
that is $7.3 billion in health care that is in this budget and 
manifested in this chart.
    Without trying to glaze your eyes over with these numbers, 
I thought what I would do is simply show you what the 
President's budget does against what we need. And so here is 
what we have got. In modernization, we needed $30 billion a 
year. We got $11.9 in this budget. That leaves a shortfall of 
$18.1 if you use CBO's estimate. Precision munitions, we had a 
$5 billion analysis. $2.7 billion against precision munitions 
and ammo, which is pretty good but it still leaves a $2.3 
billion delta. Readiness, CBO's estimate is we are $5 billion 
short; $3.7 billion additional monies going. Pretty good slug 
of money. We are still $1.3 billion short. Personnel 
requirements, if you use $10 billion as your base, they have 
got a $2.7 billion for pay this year. That leaves us $7.3 
billion. But this year there is approximately a $5 billion 
requirement. So if you want to go with the first year, you 
could pull $5 billion off of that.
    My point is, if you overlay what we have got in these four 
vital areas--equipment, ammo, readiness, and people--if you 
overlay what we got from the President against what we needed, 
we still have major shortfalls. So one reason I wanted to come 
down and talk to you was to let you know that, newspaper 
headlines notwithstanding, we are not all protected, we are not 
all well, and everybody is not made whole.
    So, thanks a lot for letting me make a little pitch to you 
here.
    Chairman Nussle. I guess the biggest question I have, 
Duncan--this is not news. Your presentation in its specific 
form is not news to anybody at the other end of Pennsylvania 
Avenue in the decision-making hierarchy. And you finally had 
the opportunity to talk to the President about this as well. My 
experience in working with you is you have touched every base 
is my guess.
    Mr. Hunter. Yes. I showed him that same chart.
    Chairman Nussle. That is what I figured and this was before 
he presented his budget. Now given all of that, I guess the 
question I am dying to ask is, OK, given all of the information 
that you provided, given all of the information he is provided 
by the Pentagon, the Defense Department, the Chiefs, and 
everybody else, why did he not put that $29 billion into his 
budget?
    Mr. Hunter. First, I think we got in late. I think that 
although the budget had not formally come out, I think that 
things had pretty well gelled. Secondly, I think on the face of 
it, that when the President is sitting around looking at 
priorities, just like you listening to priorities here with my 
colleagues, that $48-billion increase looks on the face like a 
very large piece of change. I think it takes getting down into 
the details to understand what you are getting and what you are 
not getting.
    So, first, in terms of the context of having a deficit and 
having lots of priorities out there and putting big dollars 
against defense, which $48 billion is, I think that there was a 
certain comfort level achieved by the White House and by the 
President with the numbers that they were given. That is my 
feeling, but also the feeling that down the line we could do 
more. When I talked to him subsequently, I said we have got to 
replace the old equipment, he said I know.
    The President understands we are building, for example, to 
a 200 ship Navy. We are only building five ships a year, 
although we are converting two ballistic missile submarines, 
which are big, big submarines, into cruise missile submarines 
which will have enormous capability and are very effective war-
fighters. So we are really building seven ships a year. I think 
the administration has got to be credited. But I think he has a 
feeling that defense is a big ship and he is starting to turn 
it around. You cannot do it quickly. So I want to give him all 
the benefit of the doubt. But I think he simply needs to have 
enough time to get into the details of some of this.
    Chairman Nussle. And you are going to keep pushing.
    Mr. Hunter. We are going to let him know and continue to 
work this problem.
    Chairman Nussle. Would you provide--you have obviously done 
some redo of the chart as you have gone through this process. 
Is it possible for you to provide that for the committee in 
some final form?
    Mr. Hunter. Oh, absolutely.
    Chairman Nussle. That would be helpful.
    Mr. Hunter. And one thing that is very helpful I think for 
you folks, too, this is the administration's DOD presentation 
of the budget. From this you can extract the numbers against 
modernization, ammo, readiness, and people that we matched 
against our analyses. I have got this book, the same book that 
we gave the President, that has the documentation and the CBO 
analyses and the response from the Services with respect to 
their ammo levels, their readiness levels, et cetera, that were 
the basis for our numbers. So we will give that to you also. It 
has got a lot of good information from the Services.
    Chairman Nussle. One final question before I turn to Mr. 
Holt. The President has proposed a $10 billion war reserve 
within this budget. Mr. Skelton from Missouri, who I know is a 
partner and someone you greatly respect, suggested to the 
committee today that was not something that we should consider 
as far as--I do not want to put words in his mouth, so if I 
misstate this, I will stand corrected--but I think what he was 
suggesting is that historically Congress does not provide funds 
in that kind of manner to the President to use as a 
contingency, that typically the President comes back to 
Congress for those funds as the needs arise. Do you share that 
opinion? What is your advice as we consider the contingent 
reserve fund that is found as part of the budget request?
    Mr. Hunter. No. I do not agree totally with Ike, and for 
this reason. First, the monies that you use in the war are 
never the monies that the Congress comes up with in a 
supplemental. When the President goes to war, and it is usually 
on pretty short notice, goes into an operation, makes a 
contingency operation, he simply reaches into the cash 
register, like I used to do when I had a service station in 
Idaho when I came back from Vietnam. If I wanted to go to the 
dance on Saturday nights, I would reach into my cash register 
and I would take out the cash, and when I got back next week I 
would worry about getting some money together so I could buy 
some more fuel so I could keep my gas station going. By the 
same token, the President reaches into an operating fund, which 
is a big operating fund, into the cash that is available for 
training, flight hours for your pilots, fuel, ammo, all the 
things that you are buying in the readiness area. He reaches in 
and takes that money out for the operation--in Kosovo, in 
Bosnia, wherever he is going.
    After the President has done that, the Joint Chiefs say, 
you know, if we do not get the money back, we are going to have 
to cancel these training operations, our flight hours are going 
to drop to 50 percent of what they should be, et cetera, we are 
not going to be able to fix our planes and ships, we 
desperately need that money back, Mr. President, that you took 
for this contingency. At that point, we come in and do a 
supplemental.
    So what has happened--and it is somewhat analogous to me 
coming back from Boise after I had left my gas station to go up 
and have a good time on the weekend, I never put back as much 
money for replacement in the cash register as I took. And so 
what has happened over these 10 years of the 1990's is that the 
previous administration has slowly starved these accounts. The 
hard evidence of that is not anecdotal; it is very strong, very 
clear, and very well documented. All those planes falling in 
mission capability, that is their ability to take off and go do 
their job and return, is a function of not enough spare parts, 
perhaps not enough trained mechanics, not enough flight hours, 
the pilots, the guys who are operating them, did not have as 
much savvy as they needed to have. And if you look across the 
board, you see in all of our systems over the last 10 years 
this degradation in readiness.
    So, to go back to your question, the administration said, 
OK, instead of reaching into the cash register and taking this 
money and then trying to get it back in a supplemental for the 
Services and for the things they have to do, let's get it up 
front. Then you have what some Members would say is a specter 
of pre-financing of operations, which means that Congress is 
going to be consulted last, because once the President has the 
money, he does not need us. That is the theme. But I would say 
weighed against that is an honest attempt to make sure that our 
service personnel have all the training that they need, have 
all the ammo they need, and that we do not just reach in the 
cash register and take this money for contingencies.
    One thing you have got to do now, Mr. Chairman, is you have 
to move quickly I think in contingencies. And I think the 
present situation in the Middle East is a good example, in 
Afghanistan. We have learned one thing over the last few 
months, and that is to expect the unexpected. This President 
might have to move fast, he might have to move with great 
flexibility. So there are lots of good arguments. Even though I 
would like to have some of that $10 million for new equipment 
right now, there are lots of reasons for them to be able to 
have a reserve that they could go to immediately and utilize, 
because we have got troops in the field right now.
    Chairman Nussle. Without disrespecting your analogy, on the 
weekends you did not have to deal with Article I of the 
Constitution.
    Mr. Hunter. That is true. That is true, thankfully.
    Chairman Nussle. Part of the reason I ask is that I think 
Congress has shown, and this is not to be argumentative, it is 
just an issue we are going to have to deal with in the budget 
or soon, that is that Congress has I do not think ever failed 
to fund a war. If the President came to us and said 
Afghanistan, Iraq, you pick the target, we are at war, whether 
it is $10 billion or $20 billion, or, as we proved last fall, 
$40 billion would be made available very quickly.
    So part of the reason I ask is certainly in an effort to 
ensure that we do the right thing by the defense budget, the 
Defense Department and our defense needs, but also to do the 
right thing constitutionally. Because while we happen to agree 
that maybe it is in a bipartisan way that this President is 
prosecuting the war and future possible conflicts in a very 
appropriate way, that may not be our opinion in the future. And 
abdicating that responsibility may not be----
    Mr. Hunter. Sure.
    Chairman Nussle. So I would just ask the gentleman to think 
about that. I think that is what Ike Skelton was getting at.
    Mr. Hunter. Mr. Chairman, I think you make a good case 
here. But I think if you look back at the history of the 1990's 
when we did basically reach into the cash register and go off 
and do some foreign missions, if you talk to the people that 
had the accounts that got the money taken away, the repair of 
ships, airplanes, et cetera, most of them would probably argue 
with the notion that at the end of the supplemental they were 
fully restored. Most of them will tell you they got half a loaf 
back or maybe something less. And that ultimately was 
manifested in these degrading readiness rates.
    Chairman Nussle. Mr. Holt, did you have questions?
    Mr. Holt. Just a quick question for Mr. Hunter. Duncan, you 
refer to the unexpected content of the President's defense 
budget this year. You are talking about TriCare, talking about 
the realistic budgeting, and, of course, the war-fighting. Of 
those, how much do you think will be ongoing expenses and how 
much is that one time, just so we can look ahead to future 
years?
    Mr. Hunter. Probably your staff and probably the Chairman 
and Mr. Spratt, being a member of the committee, have a better 
handle on this. I said we did not count this $7.3 billion in 
TriCare, and this is the President's presentation that Mr. 
Rumsfeld made to us, that was the military over 65 health care 
accrual. My understanding again was that we analyzed this thing 
early on to be $4 billion, it ended up being $8 billion, and 
that the $3.3 billion for civil retirement health care accrual 
was something that was anticipated not to be paid by the 
defense budget but that the administration moved it to the 
defense budget. So, that $4 billion in underestimation plus the 
$3.3 billion made the $7.3 billion.
    Mr. Holt. Do you mean that is a transition cost, or is that 
likely to be an ongoing cost?
    Mr. Hunter. I am going to have to get some help on this. 
But I think the $3.3 billion is a transition, that is the 
civilian aspect. Maybe John Spratt knows about that?
    Mr. Spratt. I think, Duncan, there is a plus and a minus 
here. The plus is that TriCare is paid out of function 550, it 
is out of the defense budget. So we are adding that to quality 
of life for retirees without really charging the defense budget 
the full cost of it. We have got an analysis by Hugh Brady that 
shows the net cost of all those changes is $5.4 billion in 
accrual.
    Mr. Hunter. OK. Yes. I have got the delta at $7.3 billion. 
But that is why, Mr. Chairman, what I laid out--and you guys 
are a lot better on this, obviously, the dynamics of the 
calculations, than I am--but that is why I laid out for you my 
view of the defense system, which I think most of us have, 
which is, what do we need in terms of equipment, training, 
ammo, and people to protect the country against what do we have 
and what are we getting. So, John, before you came in I 
mentioned that this looks like a fairly large increase. But, in 
fact, if you stack it up against the requirements that CBO has 
analyzed out--the $30 billion a year for modernization, $11.9 
of that $30 billion is taken care of, leaving a pretty big 
delta. Similarly, if you wanted to totally close the pay gap, 
you are going to have to come up with a much bigger piece of 
change. And we have smaller deltas in readiness and ammunition, 
but nonetheless shortages.
    Mr. Holt. That is all I have at the moment, Mr. Chairman. 
Thank you.
    Mr. Hunter. Thank you for the question. I appreciate it.
    Chairman Nussle. OK.
    Mr. Spratt. I put these questions to Wolfowitz the other 
day really as the Devil's advocate, because I think any agency 
coming up here and asking for $40 to $50 billion more than 
nearly $5 trillion already has a burden of persuasion and 
production and ought to be questioned hard by us.
    Mr. Hunter. You go right ahead, John. [Laughter.]
    Mr. Spratt. One of the questions we should ask is, have you 
scrubbed your budget. This is a big budget. It is approaching 
$400 billion. Surely there is somewhere in a budget of that 
magnitude that we can realize some savings. One area I would 
expect to find it, we just came from the committee meeting this 
morning, is strategic nuclear accounts. You would expect to see 
those diminishing as conventional forces, particularly the 
modern version of it with stealth and stand-off and precision-
guided munitions came on and became a regular feature in all 
four services. But you do not see it.
    Secondly, I understand how transformation will cost more at 
the front end. But I would expect to see, and we have been 
implicitly told, that there will be savings at the far end. We 
will get more tooth and less tail and it will save money. We 
will move troops out of bureaucracy and onto the battlefield. 
But I do not see the savings taking effect in the 10 year 
timeframe of the budget they have laid before us. And that is a 
little dismaying.
    Mr. Hunter. OK. Let me lay an answer to both of those good 
points, John. First, transformation. When I laid out these 
shortages when Mr. Rumsfeld appeared before us, his answer was 
we are going to do transformation and he used an example of 
that. He said, for example, if you use a precision targeted 
munition instead of having to carpet bomb with a lot of dumb 
bombs, you save a lot of money, a lot of logistics, et cetera. 
The point is the shortages that I have pointed out here do not 
include a single dumb bomb. They are all transitional systems, 
that is precision munitions, and we are more than $10 billion 
short on the transformational systems. So, in fact, there is 
not a single dumb bomb that is in this analysis.
    This is, for me, this is kind of bare bones. New systems do 
cost you more money up front. But I do not see how you are 
going to avoid at some point that $30 billion modernization 
requirement. You have got to replace the old platforms. And if 
you replace them with new ones, typically they do cost more.
    Now let's go to cost-savings. You and I have worked on this 
stuff. I have had the initiative in each year to cut the 
shoppers out of the acquisition system. That started out at 
about 300,000 people around 1994, people that strictly did the 
shopping for DOD. They were not engineers, they were not 
bending metal, they were not making things, they were buying 
stuff that industry makes. We really worked on that. The Senate 
never came in with a number, I always had a reduction of 25,000 
in, sometimes we would compromise. We knocked that down from 
300,000, with the administration saying that they were working 
it, too, that was something that the administration was working 
on in the 1990's, but that came down to under 200,000. But we 
then saw lots of Members get involved. When that happens, you 
have lots of people that have facilities in their areas.
    So here is what you are met with. You are met with a 
requirement to give our people in uniform the best we have got. 
You are also met with a requirement to keep mowing the grass on 
cost-savings. The problem is you have got to keep mowing the 
grass, and you and I have been trying to do it and let's try to 
shake some money out of this agency that we are talking about 
this morning. You cannot hold hostage a guy that is flying a 
25-year old helicopter to the notion that we in Congress are 
going to become less interested in our districts, that we are 
going to let more of our Federal workers go, and we are going 
to do things that free up a lot of money. Because, as you know, 
the cost of DOD, just like the cost of any other big agency in 
this country, is to some degree a creature of ours. So I have 
learned in this struggle of trying to reduce the shopping 
corps, which to my knowledge does not provide any bang for the 
buck, that it is a tough struggle.
    I think the genius of Ronald Reagan when he came in in 1980 
was he did what he had to do and when he was addressed with the 
question of it is going to cost a lot of money, Mr. President, 
can't we go down the road, the legend goes, his answer was, if 
not us, who? And if not now, when? Now the average Army 
helicopter today is 17.6 years old. Two-thirds of our Navy 
aircraft are over 15 years old. You have got to replace them.
    Mr. Spratt. Let me make a point here, because this goes to 
transformation. The Army is going for a new technology 
helicopter, the Comanche. The Marine Corps has already gone for 
a vastly new technology, tilt rotor airplane, the V-22. If we 
have a transformation investment program like that leapfrogging 
existing technology, not incrementally changing things but 
leaping forward, you run the risk that the systems you are 
going for will fall short of what is promised. They will take 
longer to bring on line, and in the meantime you have got to 
maintain these old systems with high maintenance costs, high 
risk of operation, and you are faced with systems that are not 
yet up to spec, or on schedule, or on time, or on cost. The 
Defense Department announced a week ago that of the 22 major 
weapons systems now in advanced R&D or procurement, the cost 
escalation since 2001 is $105 billion.
    So that is one of the risks that really concerns me about 
transformation. It is a great word, it is a way to challenge 
the military to change the way we do things, it is asking the 
hard questions about the tooth-to-tail ratio, but it has a lot 
of risk associated with it. It could cost us a lot of money and 
we could come up short.
    Mr. Hunter. Sure. And I think your statement has led to 
what I think is the most reasonable conclusion, and that is 
that we have to have a broad capability that includes a large 
subset of basic capabilities that we can handle even if the so-
called transformation, and I am not a big user of this 
transformation thing. I think the best way to describe it is 
getting good technology as quickly as you can and fielding it, 
but you have got to have reliable standby technology in case 
the new system does not pan out. With the Army, for example, 
they have got a good utility helicopter in the Black Hawk 
helicopter. That is a proven workhorse. Nonetheless, their 
helicopters average 17.5 years of age because we have not been 
paying that ticket for replacement.
    I am sure glad you came over to talk about this because I 
have wanted to be questioned by you for a long time, John.
    Chairman Nussle. I hesitate to even get in the middle of 
the two of you because you have so much expertise on it. I 
guess just in listening to both of you talk about this, and 
maybe this is another way to say it, Duncan, there is nobody 
who can go through this information and these charts and the 
graphics and what is happening and what is not happening better 
than you. There is nobody in the Congress that can do that. 
Maybe others can do it equally, but nobody----
    Mr. Hunter. Do not go too far now.
    Chairman Nussle. No. I am serious. No one can do it better, 
let's put it that way. There are I am sure others who are 
equal, but no one can do it better. I think what I am hoping 
for now that you have been able to put this together, and maybe 
what I am hearing John and others say too at the same time, is 
there has got to be some things we do not need.
    Mr. Hunter. I agree.
    Chairman Nussle. There has got to be some things. And 
getting an equal amount of charts and graphics and presentation 
on what we do not need, what bases we can close, and what 
things we can transform, if that is possible, is another part 
of this that I think we need to work on.
    Mr. Hunter. Yes, Mr. Chairman, that is one thing, the huge 
acquisition force has been a thing I have worked on for the 
last 10 years, bringing it down. It is tough to do. But we have 
to keep mowing the grass.
    One thing I would point out for the administration, and I 
have not looked into the depths of this, but they do include, 
and, John, you may have looked at it, the $9.3 billion in cuts. 
They have made a number of cuts. I have not had a chance to 
look at them.
    Mr. Spratt. Well look. They do not bear scrutiny. Look 
hard.
    Mr. Hunter. OK.
    Mr. Spratt. For example, they have got listed restructuring 
several programs. That does defer costs from the near-term, but 
in the long-term, once they are restructured, they come back. 
They include the cancellation of the area-wide missile defense 
system. You know the mission is still there. It was the first 
mission the Navy had for missile defense.
    Mr. Hunter. Yes. And they have got to carry the standard 
missile upgrade with something.
    Mr. Spratt. Right. So that program will come back. They are 
taking credit for cancelling the program as if the cost will go 
away. It is not going away. It will come back in another form. 
And that is true of half that list. And the other half is 
unspecified. They have got $4.8 billion and loose change of 
cuts that I do not know how you identify. But all the other 
cuts are restructuring, deferring, and stuff like that. There 
are very few true vertical permanent eliminations in that $9.8 
billion figure.
    Mr. Hunter. Well let's work together. You know, I hate the 
idea, and there have been a lot of editorials to the effect, 
that if you give money to the security apparatus, you are not 
going to have efficiencies. Then you have in your mind's eye, 
because we know how old this stuff is and we are worried about 
the guys flying the 20 year old helicopters and the 15 year old 
fighter aircraft, do we have to hold that guy hostage to us 
becoming better business people and having a better efficiency 
in spending money?
    I would just hope, Mr. Chairman, we could aggressively 
pursue both tracks. Do what we have got to do for the good 
equipment, for the efficiencies, and nobody is faster to want 
to spend dollars when it is important and it helps than John 
Spratt--and incidentally, on the missile defense, I think 
General Kadish has been given some discretion to throw out the 
losers and reward the winners with these new technologies. We 
are going to have a tough time as Congressmen keeping our hands 
off of that because we are going to have contractors coming in 
saying I have just been canceled. This is a representative form 
of government and we are going to have some difficult times. 
But let's try to follow both tracks. Let's try to do what we 
have got to do for defense and yet make it efficient. John, do 
you think we can do that if we work at it?
    Mr. Spratt. I hope so, and that is what I am looking for. I 
think you struck the right note. You cannot give them so much 
that they will not be forced to be efficient, make trade-offs. 
On the other hand, we are not going to be stinting about the 
cost of war. We have got troops in the field; we have got a war 
we have to win; we mean to win it. So there is a balance to be 
struck there. But you can go too far and give them so much that 
they do not really affect the efficiencies that we have a right 
to expect from them.
    Mr. Hunter. Thank you very much. It has been a pleasure. 
Thanks so much for the time.
    Chairman Nussle. That is a fair wrap-up. We do appreciate 
your time and your efforts in putting this all together.
    Mr. Hunter. I will leave any materials your folks need. I 
have got them here, Mr. Chairman.
    Chairman Nussle. Thank you very much.
    If there is no further business to come before the 
committee, then we will stand adjourned.
    [Whereupon, at 2:40 p.m., the committee was adjourned, to 
reconvene at the call of the Chair.]

                                
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