[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]



                              MEMBERS' DAY

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

                                HEARING

                               before the

                        COMMITTEE ON THE BUDGET
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED EIGHTH CONGRESS

                             FIRST SESSION

                               __________

             HEARING HELD IN WASHINGTON, DC, MARCH 6, 2003

                               __________

                            Serial No. 108-7

                               __________

           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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                            WASHINGTON : 2003
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                        COMMITTEE ON THE BUDGET

                       JIM NUSSLE, Iowa, Chairman
CHRISTOPHER SHAYS, Connecticut,      JOHN M. SPRATT, Jr., South 
  Vice Chairman                          Carolina,
GIL GUTKNECHT, Minnesota               Ranking Minority Member
MAC THORNBERRY, Texas                JAMES P. MORAN, Virginia
JIM RYUN, Kansas                     DARLENE HOOLEY, Oregon
PAT TOOMEY, Pennsylvania             TAMMY BALDWIN, Wisconsin
DOC HASTINGS, Washington             DENNIS MOORE, Kansas
ROB PORTMAN, Ohio                    JOHN LEWIS, Georgia
EDWARD SCHROCK, Virginia             RICHARD E. NEAL, Massachusetts
HENRY E. BROWN, Jr., South Carolina  ROSA DeLAURO, Connecticut
ANDER CRENSHAW, Florida              CHET EDWARDS, Texas
ADAM PUTNAM, Florida                 ROBERT C. SCOTT, Virginia
ROGER WICKER, Mississippi            HAROLD FORD, Tennessee
KENNY HULSHOF, Missouri              LOIS CAPPS, California
THOMAS G. TANCREDO, Colorado         MIKE THOMPSON, California
DAVID VITTER, Louisiana              BRIAN BAIRD, Washington
JO BONNER, Alabama                   JIM COOPER, Tennessee
TRENT FRANKS, Arizona                RAHM EMMANUEL, Illinois
SCOTT GARRETT, New Jersey            ARTUR DAVIS, Alabama
GRESHAM BARRETT, South Carolina      DENISE MAJETTE, Georgia
THADDEUS McCOTTER, Michigan          RON KIND, Wisconsin
MARIO DIAZ-BALART, Florida
JEB HENSARLING, Texas
GINNY BROWN-WAITE, Florida

                           Professional Staff

                       Rich Meade, Chief of Staff
       Thomas S. Kahn, Minority Staff Director and Chief Counsel
                            C O N T E N T S

                                                                   Page
Hearing held in Washington, DC, March 6, 2003....................     1
Statement of:
    Hon. Don Young, a Representative in Congress from the State 
      of Alaska..................................................    28
    Hon. James L. Oberstar, a Representative in Congress from the 
      State of Minnesota.........................................    31
    Hon. Ike Skelton, a Representative in Congress from the State 
      of Missouri................................................    35
    Hon. Kevin Brady, a Representative in Congress from the State 
      of Texas...................................................    40
    Hon. John Tierney, a Representative in Congress from the 
      State of Massachusetts.....................................    42
    Hon. Tom Latham, a Representative in Congress from the State 
      of Iowa....................................................    48
    Hon. Heather Wilson, a Representative in Congress from the 
      State of New Mexico........................................    51
    Hon. Dennis J. Kucinich, a Representative in Congress from 
      the State of Ohio..........................................    54
    Hon. Lee Terry, a Representative in Congress from the State 
      of Nebraska................................................    59
    Hon. Bill Pascrell, Jr., a Representative in Congress from 
      the State of New Jersey....................................    61
    Hon. Brian Baird, a Representative in Congress from the State 
      of Washington..............................................    65
    Hon. Jim Cooper, a Representative in Congress from the State 
      of Tennessee...............................................    67
    Hon. Frank A. LoBiondo, a Representative in Congress from the 
      State of New Jersey........................................    69
    Hon. Vernon J. Ehlers, a Representative in Congress from the 
      State of Michigan..........................................    74
    Hon. Denny Rehberg, a Representative in Congress from the 
      State of Montana...........................................    82
    Hon. Rush D. Holt, a Representative in Congress from the 
      State of New Jersey........................................    84
    Hon. Tom Allen, a Representative in Congress from the State 
      of Maine...................................................    88
    Hon. Madeleine Bordallo, a Delegate in Congress from the 
      Territory of Guam..........................................    91
    Hon. Donna M. Christensen, a Delegate in Congress from the 
      Territory of the Virgin Islands............................    94
    Hon. Paul Kanjorski, a Representative in Congress from the 
      State of Pennsylvania......................................    97
    Hon. Susan A. Davis, a Representative in Congress from the 
      State of California........................................   103
    Hon. Rob Simmons, a Representative in Congress from the State 
      of Connecticut.............................................   104
    Hon. Robin Hayes, a Representative in Congress from the State 
      of North Carolina..........................................   109
    Hon. Tom Osborne, a Representative in Congress from the State 
      of Nebraska................................................   111
    Hon. Mark Steven Kirk, a Representative in Congress from the 
      State of Illinois..........................................   114
    Hon. Mike D. Rogers, a Representative in Congress from the 
      State of Alabama...........................................   116
Prepared statement of:
    Hon. Neil Abercrombie, a Representative in Congress from the 
      State of Hawaii............................................     1
    Hon. Michael Bilirakis, a Representative in Congress from the 
      State of Florida...........................................     2
    Hon. Earl Blumenauer, a Representative in Congress from the 
      State of Oregon............................................     3
    Hon. Michael C. Burgess, a Representative in Congress from 
      the State of Texas.........................................     4
    Hon. Jerry F. Costello, a Representative in Congress from the 
      State of Illinois..........................................     6
    Hon. Tom Davis, a Representative in Congress from the State 
      of Virginia................................................     7
    Hon. Lane Evans, a Representative in Congress from the State 
      of Illinois................................................     9
    Hon. Michael M. Honda, a Representative in Congress from the 
      State of California........................................    10
    Hon. Jay Inslee, a Representative in Congress from the State 
      of Washington..............................................    11
    Hon. Darrell E. Issa, a Representative in Congress from the 
      State of California........................................    12
    Hon. Sheila Jackson-Lee, a Representative in Congress from 
      the State of Texas.........................................    12
    Hon. Jack Kingston, a Representative in Congress from the 
      State of Georgia...........................................    15
    Hon. James R. Langevin, a Representative in Congress from the 
      State of Rhode Island......................................    17
    Hon. Rick Larsen, a Representative in Congress from the State 
      of Washington..............................................    18
    Hon. Denise L. Majette, a Representative in Congress from the 
      State of Georgia...........................................    18
    Hon. Jim McDermott, a Representative in Congress from the 
      State of Washington........................................    20
    Hon. Bob W. Ney, a Representative in Congress from the State 
      of Ohio....................................................    20
    Hon. Richard W. Pombo, a Representative in Congress from the 
      State of California........................................    22
    Hon. Ciro D. Rodriguez, a Representative in Congress from the 
      State of Texas.............................................    23
    Hon. Mike D. Rogers, a Representative in Congress from the 
      State of Alabama...........................................    26
    Hon. Ellen O. Tausher, a Representative in Congress from the 
      State of California........................................    27
    Mr. Young of Alaska..........................................    30
    Mr. Oberstar.................................................    33
    Mr. Skelton..................................................    36
    Mr. Brady of Texas...........................................    41
    Mr. Tierney..................................................    46
    Mr. Latham...................................................    50
    Mrs. Wilson of New Mexico....................................    53
    Mr. Kucinich.................................................    57
    Mr. Terry....................................................    60
    Mr. Pascrell, Jr.............................................    63
    Mr. Baird....................................................    66
    Mr. LoBiondo.................................................    72
    Mr. Ehlers...................................................    76
    Mr. Rehberg..................................................    83
    Mr. Holt.....................................................    85
    Mr. Allen....................................................    89
    Ms. Bordallo.................................................    93
    Mrs. Christensen.............................................    96
    Mr. Kanjorski................................................   100
    Mrs. Davis of California.....................................   103
    Mr. Simmons..................................................   106
    Mr. Hayes....................................................   110
    Mr. Osborne..................................................   112
    Mr. Kirk.....................................................   114
    Mr. Rogers...................................................   116

 
                              MEMBERS' DAY

                              ----------                              


                        THURSDAY, MARCH 6, 2003

                          House of Representatives,
                                   Committee on the Budget,
                                                    Washington, DC.
    The committee met, pursuant to call, at 2:06 p.m., in room 
210, Cannon House Office Building, Hon. Jim Nussle (chairman of 
the committee) presiding.
    Members present: Representatives Nussle, Gutknecht, 
Thornberry, Hastings, Brown, Bonner, Garrett, Barrett, 
McCotter, Diaz-Balart, Hensarling, Brown-Waite, Moore, Edwards, 
Baird, and Majette.
    Chairman Nussle. I would like to call the full Budget 
Committee to order.
    Today is an opportunity that we have under the Budget Act 
for Members to come before the committee and provide us with 
their wisdom and expertise with regard to a number of areas of 
concern in their individual district or State or committee, 
which is something that is required by law.
    We will have a number of Members--as a result of the 
``switcheroo''--that is probably not a technical term, but the 
``switcheroo'' that was done on the floor a little bit ago, we 
may be doing this a little bit out of the order that was 
announced. We will take Members in the first panel, but 
thereafter we will take Members on a first-come, first-served 
basis, so that Members will have an opportunity to catch planes 
as a result of the change.
    Mr. Baird, do you have any opening comments you would like 
to make before we begin?
    Mr. Baird. No, I just want to welcome my good friends from 
the Committee on Transportation, the chairman and our great 
ranking member, and also my good friend Ike Skelton. I am glad 
they are here and look forward to their comments.
    Thank you, Mr. Chairman.
    [Prepared statements of Representatives: Abercrombie, 
Bilirakis, Blumenauer, Burgess, Costello, Tom Davis of 
Virginia, Evans, Honda, Inslee, Jackson-Lee of Texas, Kingston, 
Langevin, Larsen, Majette, McDermott, Ney, Pombo, Rodriguez, 
Rogers of Alabama, and Tauscher.]

   Prepared Statement of Hon. Neil Abercrombie, a Representative in 
                   Congress From the State of Hawaii

                  fiscal year 2004 impact aid funding
    Mr. Chairman, as a member of the House Impact Aid Coalition, I am 
very concerned about the Bush administration's fiscal year 2004 budget 
proposal for the Impact Aid Program. I would like to urge the committee 
to at least restore Impact Aid funding to the fiscal year 2003 level. 
Under the administration's plan, the Impact Aid Program would receive 
$172.7 million less than fiscal year 2003 levels.
    This funding cut represents multimillion-dollar reductions to 
school districts across the country. The K-12 education budget in the 
State of Hawaii would suffer an $11-million decrease from the fiscal 
year 2003 levels under the administration's plan. It would be a 
tremendous blow to Hawaii's schools if this cut in Impact Aid was 
implemented.
    Regardless of the potential for U.S. involvement in military 
actions around the world, Impact Aid funds are in dire need. Impact Aid 
compensates public school districts near American military bases for 
lost tax revenues, but it affects every child in Hawaii's schools due 
to a centralized education system.
    In February, I joined 53 of my House colleagues in a letter to this 
committee to urge the restoration of Impact Aid funds to previous 
levels. We represent only a fraction of the 900,000 children whose 
education would be negatively affected by a cut in Impact Aid funding. 
Please keep these children in mind when you are crafting the fiscal 
year 2004 budget resolution. I am appreciative of the Budget 
Committee's consideration of the Impact Aid Program in the past.

   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 Budget Committee for giving me an opportunity to present my 
views on the fiscal year 2004 budget resolution.

                           CONCURRENT RECEIPT

    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. Mr. Chairman, I want to thank you and the other committee 
members for your support on this important issue.
    Last year, the committee took the extraordinary step to include a 
concurrent receipt provision in the fiscal year 2003 budget resolution. 
This provision provided sufficient funding to allow for a significant 
concurrent receipt benefit for severely disabled military retirees. I 
am disappointed that this provision was not fully implemented by the 
fiscal year 2003 National Defense Authorization Act.
    Last year's defense bill authorized a new ``special compensation'' 
program for certain severely disabled retirees. Specifically, the final 
defense bill authorizes new special compensation payments for all 
military retirees who were wounded in combat and received the Purple 
Heart.
    In addition, the conferees authorized military retirees whose 60 
percent or greater disability is attributable to combat situations, 
combat-oriented training, hazardous duty, or instrumentalities of war. 
The Secretary of Defense is charged with developing the criteria that 
will be used to determine qualifying combat-related activities.
    Nationwide, more than 550,000 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. 
The special compensation programs created by Congress only affects a 
small fraction of those impacted by the current offset.
    Consequently, I have reintroduced my legislation to eliminate the 
offset between military retired pay and VA disability compensation. 
More than 170 Members have already cosponsored H.R. 303, including 15 
members of the Budget Committee.
    While it may be difficult to completely eliminate the current 
offset at one time, I am hopeful that we will be able to continue the 
progress we made last year and expand the existing special compensation 
programs to cover more disabled retirees.
    I have been working with the various veterans organizations on a 
variety of options to keep the ball moving forward on concurrent 
receipt. One of these options would be to expand the combat related 
special compensation program to cover injuries that were incurred in 
the ``direct performance of military duties.'' This option would 
broaden the scope of last year's special compensation program beyond 
just combat or hazardous duty injuries but still limit coverage to 
individuals who were hurt while performing their military duties.
    While some of these proposals are still under development, the 
bottom line is that if we can include some funding for concurrent 
receipt in the fiscal year 2004 budget resolution, I will work with the 
veterans' organizations to craft a concurrent receipt proposal that can 
fit within that budget.

                             DIC REMARRIAGE

    Another veterans' initiative that I am hopeful that we can make 
progress on is a benefit for the widows of disabled veterans. The 
Dependency and Indemnity Compensation (DIC) Program is the only Federal 
program that does not allow a widow to remarry after age 55 and retain 
her annuity benefits. I have introduced legislation, H.R. 36, to allow 
DIC recipients to retain their DIC benefits if they remarry after age 
55.
    I have heard from military widows from across the country who have 
found someone they would like to spend the rest of their lives with but 
cannot afford to do so because of the current law. They have expressed 
deep frustrations about not being able to remarry. Many of these women 
lost their husbands at a very young age and have been alone for a long 
time. They have finally found someone to share their lives with but 
they are afraid to remarry because they will lose their DIC benefits.
    I think it is a wonderful thing if an older person finds 
companionship, falls in love and decides to marry. I don't think we 
should be discouraging such marriages by making them financially 
burdensome. For those remarrying after the age of 55, it is often the 
case that both partners are living on fixed incomes. The prospect of 
one partner losing financial benefits as a result of the marriage is a 
real disincentive. In fact, current law makes it virtually impossible 
for some couples to marry after age 55 because they simply cannot 
afford to do so and continue to support themselves.
    My bill makes a simple change that could mean a great deal to those 
who find themselves in this predicament, and I hope you will join me in 
supporting this change. As with concurrent receipt, I would certainly 
work with the committee on any changes that might be needed in order 
for Congress to address this issue.

                                MEDICAID

    As chairman of the Energy and Commerce Health Subcommittee, I also 
strongly encourage the Budget Committee to include money in the fiscal 
year 2004 budget resolution to address concerns with the Medicaid 
program. Specifically, I request that you include $3.8 billion in 
fiscal year 2004, and $12.2 billion over the next 5 years. As you know, 
the President in his budget requested a significant amount of money for 
the Medicaid program to facilitate Medicaid reforms. The Energy and 
Commerce Committee request is slightly higher than the President's 
because we subtracted the amount of money saved through the 
administration's drug rebate proposal.
    It is critically important that money for Medicaid reform be 
included in the budget. Mr. Chairman, our Nation's Governors are 
experiencing the worst fiscal crisis since World War II. Moreover, a 
growing percentage of the budget woes for States and the Federal 
Government are related to the Medicaid program. Absent reforms, CBO 
projects that Medicaid expenditures will more than double in the next 
decade.
    Medicaid reforms, with added State flexibility, are critical to 
ensure that States can operate their programs without burdensome 
Federal regulations that require unnecessary benefits to optional 
populations. However, to get from here to there we need to have some 
resources to ensure that States will seriously reform their Medicaid 
operation.
    Again, I would like to thank the committee for giving me an 
opportunity to present my views on the fiscal year 2004 budget 
resolution.

    Prepared Statement of Hon. Earl Blumenauer, a Representative in 
                   Congress From the State of Oregon

    Today our communities are meeting unprecedented challenges to 
ensure that families are safe, healthy and economically secure. The 
budget is the one unambiguous expression of what our Nation's leaders 
really believe in and what the real priorities are without any 
rhetoric.
    Despite efforts to obscure the budget discussion with ``dynamic 
scoring'' and disputes about how much each figure represents, Congress 
will make an irrefutable statement. Congress just concluded last year's 
budget discussion four and a half months late, disappointing everyone 
with the final product's inability to match political rhetoric with how 
tax dollars are invested. Education and seniors were shortchanged 
despite election year promises.
    The just concluded budget cycle and the one we are about to enter, 
deal with national security in a way that is much more fundamental that 
what we have done in decades. Congress is lavishing funds on unproven, 
untested and probably undeniably low-priority investments like $9 
billion for missile defense. At the same time Congress is shortchanging 
ongoing, urgent needs like homeland security assistance for hard-
pressed State and local governments. Congress is reneging on its 
previous commitments to provide funding for popular conservation 
programs to preserve precious farmland and open space, restore wetlands 
and create parks in our urban communities.
    These issues suddenly become even more ominous as we look at the 
budget proposal from the President and Republican leadership: massive 
additional tax cuts for those who need help the least; underinvesting 
in education, healthcare, and the environment; not owning up to massive 
international responsibilities for aid and reconstruction; and, 
ignoring the long-term likely costs of activities in the Middle East. 
This is a fiscal straitjacket which will cripple our ability to deal 
with homeland security today, undermine the livability of our 
communities, and weaken our economy for years to come, when we should 
be investing in our future at home and abroad.
    There are better ways to address our country's needs and remain on 
a responsible fiscal path. Congress should enact a budget that would:
Create a Clearer and Fairer Tax System.
    1. Congress should not enact new tax breaks for people that need 
help the least. This will save over a half trillion dollars.
    2. Congress should freeze all other tax cuts that are scheduled to 
take effect in the next year. We must first pay for our commitments at 
home and abroad and ensure that steps are being made to reduce the 
budget deficit.
    3. Congress should defer any inheritance tax on closely held 
enterprises and index the higher exemptions for inflation. 
Additionally, Congress should make the rate schedule less steeply 
progressive.
    4. Congress should fix the Alternative Minimum Tax. It will protect 
tens of millions of Americans from unintended consequences.
    5. Congress should eliminate abusive tax shelters which have no 
economic purpose and game the system to reduce taxes.
Provide Economic Stimulus
    1. Congress should provide a onetime tax holiday on the payroll 
tax. This is the quickest and most direct way to provide economic 
stimulus to all taxpayers.
    2. Congress should advance programs to create jobs, increase 
economic efficiency and improve our communities by investing and 
building. Investments in our Nation's surface transportation 
infrastructure create millions of family wage jobs and billions of 
dollars of economic activity. Each $1 billion of Federal funds creates 
47,500 jobs and $6.1 billion in economic activity. Increased 
productivity results in increased demand for labor, capital, and raw 
materials and generally leads to lower product prices and increased 
sales.
    3. One clear and specific example of a proposal that would 
accomplish these aims would be to invest in the many deteriorating 
bridges in our interstate highway system. Congress should pursue a $5-
billion down payment for fixing critical bridges that have become 
dangerous and restrict economic activity.
    These proposals will address the concerns I have heard from my 
constituents and small and large businesses. These solutions are more 
effective than the politics that are being played by the administration 
and the Republican leadership. Rather than targeting tax breaks that 
only benefit a few, who are least in need, as economic stimulus, 
Congress can provide real economic stimulus by investing in 
communities. By providing the funding and tools to meet multiple 
community challenges and put people back to work today, we can 
simultaneously improve community safety, enhance mobility and preserve 
those services that people value and depend upon--economic 
redevelopment, quality education, affordable housing, and a clean 
environment.
    Despite the current record deficit and the administration's own 
acknowledgement that we cannot accurately forecast long-term budget 
projections, Republicans are accelerating tax cuts that were initially 
to be phased in over 10 years. The result of these tax oscillations is 
that the public does not know the full costs and impacts of the budget 
and economic stimulus proposal being advanced by the administration and 
congressional Republicans. We must enter this new budget cycle with the 
aim of owning up to our responsibilities and truly serving the needs of 
our constituents.

  Prepared Statement of Hon. Michael C. Burgess, a Representative in 
                    Congress From the State of Texas

    Mr. Chairman, thank you for allowing me to speak today before you 
and the Budget Committee about my views on the fiscal year 2004 budget.
    I am a strong proponent of a balanced Federal budget. I know that 
budgeting for the Federal Government is an enormously complex process. 
In fiscal year 1998, Federal budget receipts exceeded outlays for the 
first time since 1969. Those surpluses continued through fiscal year 
2001, allowing for a balanced budget. The surpluses were also used to 
reduce the national debt. Due to an economic recession and the 
increases in spending after the events of September 11, the Federal 
Government is now operating in a deficit spending environment. I 
believe we need it work to achieve a balanced budget again as soon as 
possible.
    Last month, I became an original cosponsor to the Balanced Budget 
Amendment. Congressman Istook introduced a constitutional amendment 
requiring Congress to balance the budget. As you may know, the 
amendment will ensure that the Nation's deficit spending will end after 
the current national security crisis is resolved. In the event of 
imminent military threat to our national security, however, Congress 
could waive this requirement in order to defend our homeland. If 
passed, this amendment would take effect on December 31, 2003, or 2 
years after ratification by the States, whichever is later. The text is 
identical to the Balanced Budget Amendment approved by the U.S. House 
of Representatives in 1995. I believe we must plan ahead to guarantee 
that we return to a balanced budget once we overcome our current 
national security challenges. We must ensure that our kids and 
grandkids inherit freedom and security, but do not inherit a crushing 
national debt.
    I support a key component of the fiscal year 2004 President's 
budget--President Bush's jobs and growth package. I believe this 
proposal is necessary for the long-term economic health of our country. 
Although the package does project short-term deficits, economic growth 
resulting from the abolishment of double taxation on dividends, the 
acceleration of the 2001 marginal rate tax cuts, and decreasing 
unemployment will more than make up for these deficits. We need to 
implement the 2001 tax cuts now so that we can provide immediate tax 
relief to working families. Repeal of the dividend tax would pump an 
additional $1.16 billion into the Texas economy and $20.2 billion into 
the national economy this year alone. Furthermore, the President's plan 
will benefit the 84 million Americans, including working families and 
seniors, who have invested in the stock market. Critics of this 
stimulus proposal fail to take into account the increased revenue that 
will result from the real economic growth spurred by the president's 
plan.
    President Bush believes that the best way to hold down budget 
deficits is to promote growth policies and to control government 
spending. In the fiscal year 2004 budget, the President prioritizes 
economic growth, homeland security, providing a prescription drug 
benefit for Medicare and Medicaid patients, and education. In addition 
to these important domestic programs, I strongly believe the Congress 
needs to focus on investing in transportation infrastructure for the 
21st century.
    As a member of the Highways, Transit, and Pipelines Subcommittee of 
the Transportation and Infrastructure Committee, I want to work with 
you and my committee colleagues to effectively address our Nation's 
important transportation concerns. The U.S. Department of 
Transportation has determined that the Nation needs to invest $60 
billion on highways and $12 billion on transit annually by the year 
2009 to meet the demands of the growing economy. Unfortunately, the 
less than $40 billion we now spend is not close to the amount necessary 
just to maintain our current infrastructure, much less improve it.
    I believe the Congress needs to focus on increased funding for 
needed transportation infrastructure. The bipartisan leadership of the 
Transportation and Infrastructure Committee intends to explore all 
options to grow the program and produce a bill that adequately provides 
for our economic security, creates and sustains jobs, enhances safety, 
and continues to improve mobility for our Nation's citizens. You 
received a bipartisan letter today from many members of the 
Transportation and Infrastructure Committee requesting $50 billion in 
budget authority to be included in the Transportation and 
Infrastructure Committee's fiscal year 2004 allocation for the Federal 
aid highways, highway safety, and transit programs. As a signatory of 
this letter, I am anxious to work with you to achieve a funding level 
for our Nation's transportation infrastructure programs that is 
sufficient to not only maintain the system, but to improve it as well.
    In Texas, our identified transportation needs outstrip available 
funding three to one. Texas has several specific transportation needs, 
such as seeking opportunities for increased funding, supporting 
international trade transportation and more efficient environmental 
processes, and expanding innovative financing techniques. To address 
these important and growing transportation needs, I support increasing 
the Federal investment in the Nation's transportation programs and will 
work with my colleagues to explore all opportunities to provide 
increased funding for transportation. Furthermore, Texas only receives 
$.88 for every transportation dollar that it sends to Washington in 
gasoline taxes--ranking it 46 out of the 50 States. Working with donor 
States, I will seek to guarantee that all States at least a 95 percent 
rate of return on all funds distributed to the States.
    The reauthorization of Federal surface transportation programs is 
the top priority for my legislative agenda in the 108th Congress. As 
you may know, my district includes the growing northern suburbs of the 
Dallas-Ft. Worth Metroplex, which provides State and local officials 
with some of our greatest transportation mobility challenges. The 
increase in traffic over the past three decades is a result of 
unpredictable population and employment growth experienced in the north 
Texas region. I want to be an effective advocate for the district's 
citizens as well as the Nation in securing increased highway and 
transit funding for much needed, aging transportation infrastructure. 
Specifically, I will actively work with local, State, and Federal 
officials to improve international trade transportation via Interstate 
35 by widening current lanes and adding frontage roads without 
sacrificing Texas' ability to meet its regular mobility needs within 
the State. I also support the increased transit needs of the Metroplex, 
such as expanding the Dallas Area Rapid Transit (DART) to the Tarrant 
County line and extending transit opportunities to my constituency. I 
want to ensure that Texans get their money's worth out of every Federal 
fuels tax dollar sent to Washington.
    In closing, I believe the road to a balanced budget is through 
economic growth and spending discipline. This strategy will greatly 
assist my constituents of the 26th District of Texas in stimulating the 
economy, creating more jobs, and allowing Americans to keep more of 
their own money. I look forward to working with you and the Budget 
Committee in ensuring the Congress achieves a balanced budget while 
allocating sufficient funding levels to meet the needs of our country's 
again transportation infrastructure.

   Prepared Statement of Hon. Jerry F. Costello, a Representative in 
                  Congress From the State of Illinois

    Good afternoon. I want to thank Chairman Nussle and Ranking Member 
Spratt for providing me the opportunity to testify before the House 
Budget Committee on the President's proposed budget changes to the 
Impact Aid Program. As an active member of the Congressional Impact Aid 
Coalition, I am well aware of the importance of Impact Aid on local 
schools.
    I am disappointed by the President's proposed $172.7-million cut to 
the Impact Aid Program and for proposing to eliminate all categories of 
Federal children except for those residing on Indian land, military on-
base, and civilian children whose parent works and lives on Federal 
property. This new proposal does not cover military children whose 
parent lives off-base. This fine distinction does not take into account 
the overall deficit in tax revenue and the special needs of military 
children. The President's proposal eliminates over 900,000 federally 
connected children, reduces the number of eligible school districts to 
740, which is a loss of 525 school districts, and negatively impacts 88 
percent of all military children in the Impact Aid Program. As our 
Nation prepares itself for possible military conflict overseas, we 
should not cut funding for our military children.
    Impact Aid provides public school districts a Federal payment in 
lieu of the taxes lost due to the non-taxable status of Federal 
property. This essential funding helps local school districts pay for 
the cost of educating children enrolled in those school districts 
impacted by the Federal presence. For example, my congressional 
district is home to Scott Air Force Base. The surrounding school 
districts serve military children whose parents reside on and off base. 
As a result of the large number of military families, school districts 
depend on the additional funding from the Impact Aid Program as a 
crucial component of their annual budgets.
    In my congressional district, Impact Aid funding would be 
completely eliminated to the O'Fallon Township School District, the 
Belleville School District, and the Belle Valley School District, to 
name just a few, because they serve only children whose parent lives 
off-base. These townships would lose close to $700,000 in Federal 
funding from Impact Aid. This, coupled with the lack of funding for 
other government mandates established under the No Child Left Behind 
legislation, puts all school districts and students in my congressional 
district at risk of not achieving their educational goals.
    Impact Aid affects the quality of life for our military families, 
and thus impacts the readiness of our military. As we prepare our 
soldiers with every possible resource available, we should provide the 
same necessary resources for educating their families. At a time when 
the Nation prepares for war, when the Federal deficit is growing, when 
States are struggling with huge deficits of their own, and when school 
districts across the Nation are suffering from financial problems, I 
strongly urge the committee to reconsider the President's proposal. 
Restoring this crucial funding will ensure Impact Aid is adequately 
funded for our military children so they have the necessary resources 
for a safe and healthy learning environment.

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

    Chairman Nussle, Congressman Spratt, and members of the committee, 
thank you for inviting me to testify today about issues that the 
Committee on Government Reform would like included in the 2004 budget 
resolution. As you know, the Government Reform Committee has a very 
broad oversight and legislative jurisdiction that covers the programs 
and activities of the Federal Government. Our comprehensive views and 
estimates on the President's 2004 budget proposal, filed with your 
committee on February 24, 2003, contains substantial detail on a 
variety of budgetary issues that are important to our committee. Today 
I will highlight a few selected items from our submission that, if 
included in the budget resolution, would help improve the operations of 
the Federal Government and save taxpayer dollars. These items include 
correcting the formula used by the Postal Service to calculate payments 
for the Civil Service Retirement System, reforming the government's 
approach to real property management, ensuring ``pay parity'' for 
military and civilian Federal workers, implementing electronic 
government initiatives, improving the District of Columbia's court 
system and improving Federal service acquisition.

                         POSTAL SERVICE PENSION

    As you know, the Office of Personnel Management has determined that 
under existing law the Postal Service is set to over-fund its 
obligations to the Civil Service Retirement System (CSRS) by over $70 
billion. I along with Congressman Henry Waxman (CA), Congressman John 
McHugh (NY) and Congressman Danny Davis (IL), recently introduced 
legislation, H.R. 735, the ``Postal Civil Service Retirement System 
Funding Reform Act,'' that would correct this problem. This bill would 
authorize the Postal Service to lower its payments to the CSRS and use 
the surplus to pay down its debt to the Treasury and to hold postal 
rates steady until 2006. The Congressional Budget Office determined 
that a similar proposal included in the administration's 2004 budget 
would reduce revenues to the Federal Government by as much as $10 
[billion] to $15 billion over the 2003-07 period. We strongly recommend 
that funding to implement H.R. 735 be included in the budget resolution 
for fiscal year 2004. This legislation would help the Postal Service 
get back on solid financial footing and would prevent postal customers 
from unnecessary rate increases.

                            PROPERTY REFORM

    The committee is currently working on a bill that would reform the 
Federal Government's approach to real property management. As you know, 
property management has been a major challenge for the Federal 
Government. Over the years, agencies have been restricted from 
consolidating or releasing underperforming property, and in some 
instances, properties have fallen into disrepair or become obsolete. 
Additionally, more than half of the 8,000 buildings managed by the 
General Services Administration are over 50 years old and many cannot 
accommodate new technology or may pose health and safety risks to 
Federal employees. In fact, the situation has become so severe that 
last month the General Accounting Office added Federal real property 
management to its ``high-risk'' list.
    The bill that we will introduce is similar to one I introduced in 
the last Congress along with Congressman Dan Burton (IN) and 
Congressman Pete Sessions (TX). It would provide Federal departments 
and agencies with broader authorities and incentives to manage their 
real and personal property assets. If enacted, this bill will result in 
better management of facilities that are used to house Federal workers 
and are used by the public to obtain government services. This 
legislation is also a key component of the President's Freedom to 
Manage initiative and I request sufficient authority in the budget 
resolution to cover its costs. The Congressional Budget Office 
estimated that implementation of the legislation introduced in the last 
Congress would cost $1.5 billion over 10 years.

                             CIVIL SERVICE

    The committee strongly supports parity in pay adjustments for 
civilian Federal employees and members of the armed forces. As we fight 
the war on terrorism at home and abroad, respecting the tradition of 
``pay parity'' is more important than ever. Federal civilian employees 
at numerous Federal agencies including the Central Intelligence Agency, 
and the Departments of Justice, State and Homeland Security are working 
hard to protect and defend our freedom and values. ``Pay parity'' 
demonstrates that both military and civilian workers are essential to 
maintaining the success, strength and general welfare of our Nation. We 
commend you for your past commitment to this issue and the inclusion of 
``pay parity'' language in previous budget resolutions. We respectfully 
urge for your continued support and the inclusion of ``pay parity'' in 
this years budget resolution.
    The committee also supports an initiative included in the 
President's 2004 budget, which creates a $500-million fund that 
agencies could access to reward high performing employees. The 
committee supports performance-based initiatives to improve the civil 
service system. The current system is outdated and does not give 
managers enough flexibility to recruit and retain a workforce with the 
necessary skills to accomplish agency missions.

                              E-GOVERNMENT

    The committee supports inclusion in the budget resolution of the 
full $45 million requested by the President for electronic government 
initiatives. The Electronic Government Act, enacted into law last year, 
established an Office of Electronic Government within the Office of 
Management and Budget (OMB) to improve governmentwide coordination and 
deployment of information technology and to enhance citizen access to 
government information and services. It also included a variety of 
other provisions designed to improve electronic government, computer 
security, and acquisition of information technology. Electronic 
government projects, including Firstgov.gov, Free Tax Filing, and 
Govbenefits.gov, are transforming the culture of the Federal Government 
by making it more citizen focused. However, despite the importance of 
these and other similar projects, Congress has appropriated only $10 
million for electronic government initiatives over the last 2 years.

                          DISTRICT OF COLUMBIA

    The President's 2004 budget provides $196 million to the District 
of Columbia courts. The committee supports this amount in the budget 
resolution, which includes $32 million for the new Family Courts that 
were created by the passage of the DC Family Court Act. This law 
separated out the family division from the Superior Court to address 
the needs of families and children.
    The committee also supports funding in the budget resolution for a 
provision in the President's budget that would allocate $17 million for 
the District of Columbia Resident Tuition Assistance Program. This 
program allows District residents to attend public colleges and 
universities at in-State tuition rates. It also provides District 
residents attending private institutions with a stipend to apply toward 
tuition.

                              PROCUREMENT

    Congressional reforms of the government acquisition process in the 
1990s included various streamlining measures that resulted in cost 
savings, increased access to technology advancements and reduced 
procurement cycles. Consequently, there has been an improvement in the 
quality of products and services purchased by the Federal Government. 
However, these reforms did not address the growth in agency purchases 
of services necessary to meet their mission objectives, particularly in 
the IT field. That is why I intend to reintroduce the Services 
Acquisition Reform Act (SARA). This bill would provide the government 
with greater access to the commercial market, with particular emphasis 
on services and technology. SARA would (1) establish an acquisition 
workforce-training fund, (2) create a Chief Acquisition Officer within 
each agency, (3) facilitate commercial services contracting, (4) 
emphasize performance-based acquisition and (5) authorize greater use 
of share-in-savings contracting.
    Overall SARA should result in significant savings and efficiencies. 
However, there may be some costs associated with the expanded use of 
share-in-savings contracts. These performance-based contracts permit 
the acquisition of goods and services without an up-front cost to the 
government. Instead, agencies would pay contractors from the savings 
achieved. There is currently limited authority for agencies to use 
share-in-savings contracts. SARA would greatly expand this authority. 
While these contracts will lower costs and increase service delivery, 
some of them involve the possibility of the government assuming a 
limited contingent liability in the case of early termination. I am 
therefore requesting sufficient budgetary authority to cover this 
possibility.
    I appreciate the opportunity offer my comments on the budget 
resolution and look forward to working with you.

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

    Chairman Nussle and Ranking Member Spratt, thank you for hearing my 
views on the budget for fiscal year 2004. As you know, I am the ranking 
member of the Veterans' Affairs Committee. Our Chairman Chris Smith and 
I have already sent the committee's formal views and estimates on the 
budget proposed for the Department of Veterans' Affairs and I stand by 
them. Our committee approved these recommendations by a 20-1 margin. 
Every Democrat present voted in support of the recommendations. I am 
pleased that there was such strong consensus from both sides of the 
aisle on the budget increments we recommended.
    The committee's views and estimates are also in line with several 
of the major veterans service organizations. The independent budget 
developed by AMVETS, Disabled American Veterans, Paralyzed Veterans of 
America, and Veterans of Foreign Wars recommended an appropriation that 
falls very much in line with the recommendation of the committee.
    I have been concerned that the administration's budget submission 
falls far short of what is necessary to address serious problems within 
the system. I am also concerned about the practice the administration 
continues to employ of proposing unpalatable legislative initiatives in 
the budget as if Congress had already authorized them. This puts 
Congress at a distinct disadvantage from the start. Instead of leaving 
Congress with the ability to fund its own priorities we are forced to 
compensate the VA for legislation we have never authorized. Last year, 
for example, most of us agreed that the proposal to charge Priority 7 
veterans a $1,500 enrollment fee was outrageous. Before we were ever 
even asked to consider legislation, however, the administration 
``assumed'' that this legislation would be enacted and left us with a 
$1.1-billion hole to fill in VA's budget.
    It has employed the same tactics this year. We have proposals to 
charge a $250 annual enrollment fee to veterans in priority groups 7 
and 8. We have also been asked to increase their copayments for 
pharmacy notwithstanding the fact that just a year ago the copayments 
more than tripled for all veterans. Not acting on these legislative 
proposals would leave VA's health care system with an almost $800-
million deficit. There are also regulatory proposals at odds with 
current law. For example, Congress passed legislation in 1999 that 
required VA to maintain its nursing home beds at 1998 levels. The 
administration has not kept faith with this requirement and is now 
proposing a ``regulatory'' initiative that would eliminate 5,000 more 
VA nursing home beds. It claims it will save $221 million from this 
initiative. I am disturbed by the administration's ability to 
manipulate Congress's actions by embedding these types of proposals 
into their budget request. I respect the administration's prerogative 
to request legislation, but it should do so without assuming their 
passage in their budget requests.
    In addition, it is ridiculous to assume VA can find another $1.1 
billion in management efficiencies after it has already done so much to 
streamline its services. Just look at the numbers; in fiscal year 1996 
VA served 2,858,582 veterans with 196,154 employees (about 14 veterans 
to every employee). In fiscal year 2003, VA plans to serve 5,033,623 
veterans with 180,901 employees (about 28 veterans to every employee). 
It has consolidated about a dozen facilities while opening hundreds of 
new clinics. Health care is a labor intensive industry. Unlike some 
other industries, technology cannot replace ``human touch'' to create 
efficiencies. As a matter of fact, there is evidence that VA has 
already reached its limits. Waiting times for more than 200,000 
veterans now exceed 6 months. In moments of candor, VA will acknowledge 
that the projected savings from efficiencies are ``stretch goals.'' 
While I am certain VA could save money with leveraged purchasing--just 
one of the initiatives that make up the $784 million expected to be 
saved--VA has no plans in place to require its purchasing agents to 
make purchases off of the Federal supply schedule or through national 
contracts. Other initiatives similarly lack concrete plans to achieve 
this vast amount of savings.
    The committee has many other priorities it would like to fund. At a 
September 2002 VA Committee hearing on homeless veterans, Secretary 
Anthony J. Principi was asked if he intended ``to seek full funding for 
Public Law 107-95 in the fiscal year 2004 budget.'' The Secretary 
responded, ``I have requested a very, very significant increase in my 
budget for 2004. And that certainly incorporates resources to implement 
this legislation, this new law.'' Later, however, in response to one of 
my prehearing questions on the fiscal year 2004 budget asking the same 
question VA replied, ``The fiscal year 2004 budget submission of $174 
million for homeless programs does not include additional funding for 
the implementation of Public Law 107-95.'' Needless to say I am 
disappointed in this response.
    I am also increasingly concerned about mental health programs, 
including substance abuse. The attached VA charts below show the 
dramatic declines in these programs' funding and patients treated. 
http://www.herc.research.med.va.gov/VA--Substance--abuse--treatment--
spending--1995-20021.pdf There is ample evidence from the ``Capacity 
Report'' required under PL 107-135 that substance abuse programs 
continue to decrease both in terms of funding and patients treated. The 
Under Secretary for Health's Committee on Care for the Seriously 
Mentally Ill Veterans has identified significant funding shortfalls and 
recently Senator Rockefeller asked VA witnesses to specify the 
additional resources necessary to implement a full program for 
seriously mentally ill veterans. VA estimated that the additional costs 
for implementation of such a program in fiscal year 2004 could be as 
great as $1.8 billion. With respect to the magnitude of this need, the 
committee's recommendation for $100 million is extremely modest.
    VA's problems with claims adjudication for veterans' compensation 
and pension programs remain troubling. I fully commend the increases 
addressed in the committee's views and estimates.
    In addition, included within the House Veterans' Affairs 
Committee's budgetary views and estimate report submitted to the House 
Budget Committee is a recommendation to increase the education benefits 
under the active-duty Montgomery GI Bill Program (MGIB). In addition to 
this very important measure, I urge the Budget Committee to recognize 
the great sacrifice of our men and women who serve in the Guard and 
Reserves. Today there are approximately 180,000 Reserve component 
members who have been called-up to serve on active-duty. Clearly, our 
military could not effectively carry out its mission without our Guard 
and Reserve forces. Accordingly I recommend an increase in the 
Montgomery GI Bill for members of the Selected Reserve (MGIB-SR).
    Congress in recent years has provided incremental increases in 
education benefits available under the active-duty MGIB. However, 
Congress has not provided similar increases for Reserve component 
members under the MGIB-SR. Given the ``total force'' policy of today's 
Armed Forces, it would be equitable and appropriate to increase 
education benefits for members of the Selected Reserve. Additionally, 
extended call-ups and ever increasing activations have negatively 
affected Reserve component morale, and its recruitment and retention 
rates.
    Compared to the active-duty MGIB, the Selected Reserve education 
benefits remain low. Currently the monthly rates for the MGIB-SR are 
$276 for a full-time student; $207 for a three-quarter time student; 
$137 for half-time student; and $69 for less than half-time student. 
Increasing the MGIB-SR benefit levels to approximately 50 percent of 
active-duty MGIB levels would restore this program's purchasing power 
to its original levels. We should do this for equitable reasons, as 
well as providing the Reserve components with an effective recruiting 
and retention tool.
    Mr. Chairman and Ranking Member Spratt, we have troops in the 
field. I want them to return to a health care system that merits their 
service. VA is a good health care system, but too many veterans are 
experiencing delays that should shame this Congress. Other veterans 
have been locked out of the system all together. We need additional 
funding for cemeteries, homeless programs, additional personnel for 
claims processing, for the Board of Veterans Appeals, educational 
programs, like the G.I. Bill for our active duty and reservists. I 
believe we can do better, but we must make the proper investment in 
veterans' programs. Thank you.

   Prepared Statement of Hon. Michael M. Honda, a Representative in 
                 Congress From the State of California

    Chairman Nussle, Ranking Member Spratt, and members of the House 
Budget Committee, thank you for this opportunity to express the budget 
priorities for my district of San Jose, California. As a former member 
of this distinguished committee, it is a great pleasure to speak before 
you today.
    Mr. Chairman, as a former teacher and principal, promoting quality 
education continues to be one of my top priorities here in Congress. 
Two years ago, I voted in favor of the No Child Left Behind Act with 
great trepidation. While I support setting higher standards for our 
Nation's schools, I feared that without the necessary resources, the 
legislation would impose unfunded mandates on our schools, our 
teachers, and our students. Unfortunately, that fear has come true.
    Today, I hear from countless numbers of teachers, principals, and 
school board members who are struggling with the mandates set out by 
the No Child Left Behind Act while facing severe budgetary cuts. In 
Santa Clara County, there are teachers who have only been given one box 
of paper for their students for the entire year. There are teachers who 
do not have access to copy machines anymore because the schools have 
shut them down.
    That is why I am disappointed in the President's recently proposed 
budget for fiscal year 2004, and why I believe we must provide greater 
resources for education than the President has suggested. President 
Bush's budget provides $12.3 billion in funding for the Title I 
Program--one-third less than the amount agreed to in the No Child Left 
Behind Act. In addition, the President's budget once again fails to 
fully fund the Individuals with Disabilities Education Act, or IDEA.
    As the Budget Committee is aware, the Federal Government made a 
commitment to provide 40 percent of the cost of educating children with 
disabilities in 1975. Congress has failed to meet that commitment for 
over 28 years. This is simply unacceptable. That is why I am here today 
to urge the committee to make education a top priority by fully funding 
IDEA and increasing funding for the No Child Left Behind Act.
    Mr. Chairman, I am also here today to request $50 billion in budget 
authority be included in the Transportation and Infrastructure 
Committee's fiscal year 2004 allocation for the Federal-aid highways, 
highway safety, and transit programs. Increased transportation funding 
is critically important to addressing congestion in Silicon Valley and 
across our Nation.
    The fiscal year 2004 budget allocation for these programs is 
enormously important as the final allocation will serve as the baseline 
for the forthcoming reauthorization of the Transportation Equity Act 
for the 21st Century (TEA-21). By all accounts, TEA-21 has served our 
Nation well, providing unprecedented levels of funding for highways and 
transit. The challenge for Congress is to build on this extraordinary 
success when we reauthorize the Transportation Equity Act for the 21st 
Century (TEA-21) this year.
    Despite the successes of TEA-21, the current level of Federal 
investment has not kept up with the steadily growing demand for 
transportation and for improved maintenance of existing transportation 
infrastructure. Therefore, it is critical that the reauthorization of 
TEA-21 provides sustained investment in the Nation's transportation 
infrastructure adequate to meet the significant needs of both highways 
and transit.
    Accordingly, I joined with my Transportation Committee colleagues 
this week in sending a letter to the Budget Committee requesting an 
allocation of $50 billion in budget authority for the Federal-aid 
highways, highway safety, and transit programs in the fiscal year 2004 
budget. A $50 billion budget in fiscal year 2004 allocation would 
almost meet the $53 billion amount that the Department of 
Transportation recently concluded was necessary to hold congestion at 
current levels.
    I understand that the Budget Committee is being asked to make these 
funding decisions in the context of a deficit environment. However, the 
Federal Government has an obligation to invest in future growth. Our 
Nation's historical commitment to education and transportation has 
served us well, and we must reaffirm that commitment in the fiscal year 
2004 budget resolution. I respectfully ask the committee allocate $50 
billion for our highways and transit, fully fund IDEA and provide 
substantial increases for the No Child Left Behind Act.

  Prepared Statement of Hon. Jay Inslee, a Representative in Congress 
                      From the State of Washington

    I come before you today to urge the Budget Committee to affirm the 
importance of Impact Aid to our local school districts by rejecting the 
President's proposed cuts to the Impact Aid Program. Created in 1950, 
Impact Aid plays a critical funding role in school districts that lose 
tax revenues due to a Federal presence in their district. In his fiscal 
year 2004 budget proposal, President Bush proposes sharp cuts to the 
Impact Aid Program, which would prevent 63 percent of the students 
currently eligible from benefiting under the program. President Bush 
completely eliminates funding to school districts for children that are 
military ``B'' students, civilian ``B'' children, and funding for low-
rent housing. In total, the National Military Impacted Schools 
Association estimates children in the program will lose the benefit of 
$102,726,000 in Impact Aid funding.
    The loss of Impact Aid will be felt particularly strongly in the 
First District of Washington State, where the Central Kitsap and North 
Kitsap School Districts are heavily dependent on Impact Aid funds. The 
Central Kitsap School District has an overwhelmingly high percentage of 
military children. The Clear Creek Elementary located adjacent to the 
Bangor Sub Base, for example, draws 80 percent of their children, 484 
out of 601 students, from military families. If President Bush's 
proposal is enacted, the Central Kitsap School District will lose 80 
percent of its Impact Aid funding, or $10 million out of the $12.5 
million currently received by the school district. This will seriously 
detract from the school district's ability to provide adequate 
educational services to their children, not to mention meeting the 
standards set by the No Child Left Behind education reforms. As our 
Nation's troops are preparing to go off to war, it is unconscionable 
that they should have to worry about their children here at home. Their 
service deserves more respect than that. I urge the Budget Committee to 
remain mindful of the importance of Impact Aid and to reject funding 
cuts to this important program.

    Prepared Statement of Hon. Darrell E. Issa, a Representative in 
                 Congress From the State of California

    Mr. Chairman, thank you for allowing me to testify today. This 
committee has been working very hard to provide all members the 
opportunity to give their recommendations on the budget process. I will 
be brief.
    Mr. Chairman, I am deeply concerned about the President's budget 
request for Impact Aid funding for fiscal year 2004. Last year we 
funded Impact Aid at less than $1.2 billion. That funding was not 
enough for the schools that serve our military families and Indian 
reservations. But the schools thanked us for our efforts and scraped 
by. This year, the President has requested about $1 billion. That is a 
14 percent cut from last year.
    These schools simply cannot survive when faced with this kind of 
budget impact. I am told that this request will cut about $200 million 
from the budgets of school districts serving military children. These 
cuts will be particularly harmful to military children in California, 
where school districts are facing massive funding cuts as a result of 
the $30 billion State budget deficit. Over the next several years, 
Californian students will be denied the most basic educational 
resources by a State government that has failed them. These cuts to 
Impact Aid will only make life worse for our military children.
    My district includes Camp Pendleton and borders March Air Force 
Base. I have thousands of constituents who serve at other military 
installations in San Diego.
    A substantial portion of the men and women who have been deployed 
to the Persian Gulf serve on these bases and their children attend 
public schools that are funded by Impact Aid. These schools provide 
vital educational and counseling services for military children. These 
services are even more important when many of these children's parents 
are deployed overseas. We should be bolstering our military families 
and strengthening educational resources for our military children, not 
cutting their funding.
    Mr. Chairman, it is unwise to send our troops to war without first 
providing for the families who are supporting them back home. I urge 
you to return the Impact Aid numbers, at the very least, to last year's 
levels plus an inflation adjustment.

  Prepared Statement of Hon. Sheila Jackson-Lee, a Representative in 
                    Congress From the State of Texas

    Thank you chairman for giving me the opportunity to testify today 
on the fiscal year 2004 budget resolution. I want to outline my 
priorities for the coming fiscal year. My testimony focuses on both 
domestic and international policy.

                         CBO BUDGET PROJECTIONS

    First, let me say that I am concerned about the Congressional 
Budget Office's (CBO) projections that (1) the $5.6 trillion 10 year 
surplus projected 2 years ago has disappeared, and (2) public debt is 
now projected to be $1.336 trillion higher than projected at the 
beginning of 2001. CBO foresees growing public debt rising by half a 
trillion to $4.045 trillion in 2006. The CBO's projections did not 
account for a possible war with Iraq.
    Despite the failure of President Bush's budget and tax policies, he 
is calling for $1.5 trillion in new tax cuts that will bring the 
deficit up to $2.1 trillion. Operating under these fiscal constraints, 
I am concerned that key domestic and international priorities will not 
be fully funded. The President's budget spends the entire $2.2 trillion 
Social Security surplus, thus placing at jeapordy the future of our 
seniors.

                           HOMELAND SECURITY

    Fully funding the Department of Homeland Security must be one of 
our key priorities. The President's budget includes a total of $41.3 
billion for homeland security activities for 2004. Of this total, $6.4 
billion is for mandatory and fee-funded programs, and the remaining $35 
billion is for net appropriated programs. For net appropriations for 
domestic homeland security, the $24.8 billion provided is $0.6 billion 
more than the administration's estimate for 2003. This is a nominal 
increase of 2.5 percent, and does not provide a significant increase 
above the amount needed to maintain purchasing power at the 2003 level. 
The Federal Government's homeland security activities and budget span 
many departments and agencies--the most important of which is the new 
Department of Homeland Security (DHS). I have recently been appointed 
to the committee with oversight over DHS, and I am extremely concerned 
that the budgetary priorities of DHS are fully funded.
    The DHS establishes a single department whose primary mission is to 
protect the American people and their homeland; to unify principal 
border and transportation security agencies; to coordinate a cohesive 
network of disaster response capabilities; to create a central point 
for analysis and dissemination of intelligence and other information 
pertaining to terrorist threats to protect America's critical 
infrastructure; and to join research and development efforts to detect 
and counter potential terrorist attacks. The DHS has the challenge of 
merging 22 disparate agencies and programs into a cohesive department 
that has centralized leadership and decentralized operations.
    Our urban communities are most vulnerable. Densely populated 
cities, ports, and airports are the most likely targets of future 
attacks on America. Protection of our cities will require improved 
funding and training of police, first responders, and hospitals, in a 
``bottom-up'' fashion. We cannot risk waiting for security improvements 
to trickle down from the new Department of Homeland Security.
    Our rural communities cannot be forgotten. Increased focus on 
cities-or the desire of terrorists to make all Americans feel 
threatened-may leave small towns and rural areas vulnerable to attack.
    Every American deserves to feel safe and confident that they know 
how to protect themselves and their families. Emergency preparedness 
training must be culturally competent and cognizant of the diverse 
needs and backgrounds of all communities.
    The budget of the newly created Department of Homeland Security 
must contain funding that will protect our citizens, secure our 
borders, and combat terrorism.
    Funding for homeland security must be our Nation's top priority. We 
must provide for a new block grant to improve capabilities of first 
responders and funds to ensure inspection of all cargo containers 
entering the United States.
    We must also provide adequate funding to our Coast Guard and Border 
Patrol and strengthen visa and passport processes, as well as enhance 
information sharing among government agencies. Funds will be needed to 
improve security at nuclear plants, oil refineries and chemical plans 
and for transportation systems and food and water supplies. First 
responders-police, emergency personnel, paramedics, and firefighters-
need the resources and training to protect themselves and to serve the 
American people. The Department of Homeland Security combines 22 
Federal agencies with more than 170,000 employees and has the mission 
of protecting the Nation's ports, borders, airports and critical 
infrastructure from terrorism.
    The fiscal year 2003 omnibus appropriations bill includes $3.5 
billion in homeland security funds for police, fire and medical units. 
For 2003, homeland security funding is spread throughout the budgets of 
22 agencies that are being merged in the Department of Homeland 
Security. The Department of Homeland Security will have a unified 
budget in fiscal year 2004.The Department of Homeland Security will be 
charged with the mission of preventing terrorism, reducing the 
vulnerability of the Nation to terrorist acts, and ensuring that the 
country is prepared to respond to any disasters in the event of an 
attack. Americans should be well informed and educated about emergency 
preparedness and school systems need to have safety plans tailored to 
the needs of students, faculty, and parents. Communities must have 
direction from federal, State, and local levels in times of crises and 
a present system for a thorough educational plan before any emergency 
response system is utilized. Every urban and rural community and 
housing development must have an adequate safe haven to access in case 
of an attack.
    The alert system designed to warn of terrorist threats must be 
thoughtfully explained to the American people, and must be escalated 
only in response to credible corroborated evidence. The cost of false 
alarms and ``crying wolf'' is large. The Department of Homeland 
Security is critical to the safety of every American. Therefore, it is 
essential that it is staffed with a loyal and effective workforce, that 
it reflects the diversity of the United States as a whole, and that it 
addresses the needs of all of our communities.
minorities and women must be well-represented throughout the workforce, 

     ESPECIALLY IN LEADERSHIP AND UPPER-LEVEL MANAGEMENT POSITIONS

    Any university-based Homeland Security Institute should incorporate 
a wide range of schools, including historically black, Hispanic, and 
Native American universities. Federal contracts should seek out and 
utilize the excellent women-owned, minority-owned, and small 
businesses, and those in Historically Underutilized Business (HUB) 
zones.
    Workers' collective bargaining rights and whistleblower protections 
must be protected. The Department should have a strong inspector 
general to prevent waste, fraud, and abuse. Funding for infrastructure 
and preparedness improvements should target our most vulnerable 
communities. Also, the Department should incorporate a Civil Rights 
Division to keep the Department working for the American people.
    The President's budget includes no funding for a potential war 
against Iraq. Supplemental funding that would further increase the 
deficit would be required to pay for any military operations in Iraq. 
Such costs would be significant. The Congressional Budget Office 
estimates the cost of a war at $6 [billion] to $9 billion a month, in 
addition to the costs of deploying forces to the region and bringing 
them back.

                                  NASA

    The budget includes $15.5 billion for NASA, which is $54 million 
below the level needed to maintain purchasing power at the 2002 level.
    It provides $4 billion for the Space Shuttle, which is $548 million 
more than the amount needed to maintain purchasing power at the 2002 
level. For each year going back as far as 2000, Congress has 
appropriated more than the President requested for NASA and for the 
Space Shuttle. I hope this trend continues.
    Obviously, NASA is going through a challenging time in the wake of 
the Columbia tragedy. It is critical that we all work together to 
develop a bold vision for the future of NASA-one that builds on 
strengths and corrects weaknesses. We also must ensure that we provide 
adequate funding to realize that bold vision.
    I have been troubled by the consistent budget cuts and flat funding 
of NASA over the past decade. NASA and its noble mission mean a great 
deal to the city of Houston, to the Nation, and to all of mankind. It 
is unfortunate that the President's budget provides for less than a 1-
percent increase in funding over the fiscal year 2003 appropriations 
just passed. But the recent tragedy will force us to rethink 
priorities, and formulate creative means to continue our work in space. 
We have made great investments of time and resources into construction 
of the International Space Station [ISS]. The ISS is now poised to 
become an active hub of research and exploration, but it needs to be 
manned and fully equipped. Now, we need to develop a plan, and perhaps 
a backup plan, to enable us to capitalize on that investment. As 
findings come in from the Columbia investigations, decisions will need 
to be made about whether plans will include construction of another 
shuttle or perhaps an Orbital Space Plane, and how we can maximize crew 
safety in either of those spacecraft. The budget will have to provide 
for such planning and engineering.
    NASA contributes great knowledge of the origins of our universe and 
the workings of nature. But another important aspect of the NASA 
mission is its ability to stimulate the high tech industry that has 
helped to keep the United States as the dominant economic power in the 
world. NASA's Commercial Technology Program and Commercial Space 
Product Development Program are primary catalysts in that effort. In 
the fiscal year 2003 budget request, it was written that the Commercial 
Technology Program, ``enhances the NASA R&D mission through technology 
partnerships with industry, and facilitates the transfer of NASA 
inventions, innovations, discoveries or improvements developed by NASA 
personnel or in partnership with industry and universities to the 
private sector for commercial application leading to greater United 
States' economic growth and competitiveness.'' I would argue that is 
exactly the kind of economic stimulus we need right now, and it is a 
bargain.
    I have seen how these programs work at the University of Houston 
and Texas A&M, both centers for these important programs. At the 
University of Houston, NASA technology is on the verge of leading to 
perfection of a material that can be implanted into the eye of a 
patient with a damaged retina, in order to cure blindness. Furthermore, 
they have used their modest Federal funding to leverage investments 
from the private sector, seven-fold greater than the initial funding 
level. That is an excellent return on the American taxpayer's 
investment.
    But now I see that the Commercial Technology Program is being 
terminated and the Commercial Space Product Development Program funding 
is being reduced. Centers will be cut out of the budget. How does it 
make sense to cut such a program, that everyone seems to agree is 
productive and effective?
    Having Johnson Space Center in my neighborhood, I tend to gravitate 
toward NASA's manned space missions. However, a critical part of the 
National Aeronautics and Space Administration is aeronautics. Federal 
research and development is intended to make the American skies safer, 
to connect the American people and the world more efficiently through 
air travel, to keep our military aircraft on the cutting edge of 
technology, and help to re-establish the United States as the dominant 
force in commercial aviation.
    I and my colleagues from both sides of the aisle in the Science 
Committee have been disturbed by the fact that aeronautics R&D has been 
slashed by one-half since 1998. The fiscal year 2004 budget request 
flatfunds such research, and projects a further 4 percent decrease over 
the next 5 years.
    Our aviation industry is faced with unprecedented challenges. Our 
one domestic producer of large civil aircraft, Boeing, is facing fierce 
competition from Airbus, a European manufacturer that has strong 
support from European Union member states. For the first time ever, 
Airbus won 50 percent of new aircraft sales in 2002. Global climate 
change now seems to be a reality, and recent research confirms the 
negative impact of airplane emissions, in terms of greenhouse gasses 
and air pollution. Researchers and citizens are becoming more aware of 
the consequences of noise pollution on our communities and on the 
environment.
    The boom in air traffic in the 1990s, and the ensuing aviation 
gridlock, made it apparent that our air traffic control systems may be 
antiquated and unable to handle future demand. Although we are in a 
downturn, eventually we will need to design better systems. And of 
course, the attacks of 9/11 pointed out that we need to constantly 
reevaluate and improve our airline safety-in airports, in planes, and 
in the coordination between air traffic controllers and our military.
    All of these challenges can, and must, be addressed by good 
research and development. I believe that Federal investments should 
play a substantial role in driving that research. Therefore, I have 
been troubled by the 50 percent cut in aeronautics R&D at NASA between 
1998 and 2003. And now we see further reductions over the next 5 years, 
when inflation is taken into account. It seems that many of the 
specific big losers in this budget are the exact areas in need of help: 
such as propulsion and fuel systems. Furthermore, R&D is, by 
definition, about stimulating growth. In an economic environment when 
everyone seems to be talking about stimulating growth-it seems bizarre 
that this budget is cutting R&D funding in Aerospace, the largest 
source of exports for the United States.

                                HIV/AIDS

    HIV/AIDS is devastating the African American community. I support 
increased funding for the Office of Minority Health, which plays a key 
role in health policy decisions affecting minorities in this country.
    While I support the increase in the budget for the National 
Institutes of Health, I would hope that additional funds would be 
directed to the Office of Minority Health.

                               EDUCATION

    We must fully fund the No Child Left Behind Act, and in higher 
education I support increases in the Pell Grant Program and the TRIO 
Program. The budget provides only $22.6 billion for programs under the 
No Child Left Behind Act, which is $9 billion below the amount 
authorized for 2004 and $199 million below the amount needed to 
maintain programs and services at the 2002 level. The budget continues 
the theme of the previous budget by eliminating many education 
programs, freezing most others at the level in the 2003 continuing 
resolution and increasing funding for just a few programs such as 
special education and Title I. Education is critical to our country's 
growth. In my 18th Congressional District in Houston, some of the 
Nation's most underfunded schools rely on Title I funds to supplement 
State and local funding. I would hope that this budget adequately funds 
programs at the K-12 and higher education level.
    Thank you again for this opportunity to testify. I hope that our 
Nation's priorities: terrorism, health care, and education are fully 
funded. In addition, I hope that my colleagues will continue to support 
the Space Shuttle Program and adequately fund NASA.

Prepared Statement of Hon. Jack Kingston, a Representative in Congress 
                       From the State of Georgia

    Thank you Mr. Chairman for the opportunity to speak on behalf of 
fully funding the Impact Aid Program for fiscal year 2004.
    The Impact Aid Program was created by the Truman administration 
upon realization that some communities in our Nation bear the 
responsibility of educating the children of our service members and 
other federally connected children. The program rightfully realized 
that some municipalities do not have the tax base to handle the volume 
of federally connected children that reside in their communities. The 
funding formula was designed to address this imbalance. The imbalance 
of military children and a low tax base create the risk that 
communities will be unable to properly care for the children of men and 
women who risk their lives everyday for our country.
    To eliminate this imbalance, the Impact Aid Program created a 
special category of Impact Aid, referred to as B2, or ``heavily 
impacted schools.'' Of the 1,275 Local Education Agencies (LEAs), there 
are only 21 military and 5 Indian land districts that fit the B2 
category.
    Headline: Less than 1 percent of the IA districts bear 59 percent 
of cuts.
     Ironically, while these 26 districts are identified as the 
most in need of Federal aid, they will bear over 60 percent of the cuts 
in Impact Aid under the proposed 2004 budget.
     In fact, eight of these ``heavily impacted districts'' 
account for nearly $76 million of the overall $128 million total 
reduction of aid from fiscal year 2002 levels. So, 1 percent of Impact 
Aid districts will bear 59 percent of the cuts.

                                                     TABLE 1
----------------------------------------------------------------------------------------------------------------
                                                                                                          Kids
                                                                                      Funding Change    Effected
     Local Education Agency (LEA)      District            Representative             (in millions)       (in
                                                                                                       millions)
----------------------------------------------------------------------------------------------------------------
Copperas Cove, TX....................  ........                                  Chet Edw-$9.6 (100%)      2,687
Camden County, GA....................     GA-1                      Jack Kingston      -$5.56 (95.2%)      2,758
Liberty County, GA...................     GA-1                      Jack Kingston       -$7.1 (94.4%)      3,893
Central Kitsap Dist #401, WA.........       WA     Norm Dicks (D), Jay Inslee (D)        -$11.5 (86%)      3,302
Bellevue Public, NE..................       NE                      Lee Terry (R)       -$9.8 (68.6%)      2,806
Killeen, TX..........................       TX                                   Chet Edwar-$22 (55%)     13,752
Indian River, NY.....................       NY              Sherwood Boehlert (R)         -$5.2 (52%)      1,619
El Paso Co, CO.......................         CO                  Joel Hefley (R)           -$5 (46%)      2,300
                                      --------------------------------------------------------------------------
    Total losses of top eight B2       ........  .................................             -$75.8     33,117
     schools.........................
----------------------------------------------------------------------------------------------------------------

     I have visited hundreds of soldiers, sailors, airmen and 
their families from Liberty, Camden, Houston and Lowndes Counties as 
they deployed both for the global war on terrorism and for pending 
actions in Iraq.
     These communities have worked tirelessly to adopt these 
families, incur public debt to improve the educational opportunities, 
and invest in their communities to serve the military family and child.
     Ft. Stewart/Hunter, King's Bay Nuclear Submarine Center, 
and Warner-Robins and Moody Air Force Bases have developed into some of 
the finest places for military and Federal employees to raise families, 
educate their children and serve their country. This is evidenced by 
the large military retiree populations that have selected these 
communities to spend the rest of their lives.
     These four counties host over 17,800 federally connected 
children and rely on Impact Aid for a significant portion of their 
annual budget. Under the proposed formula, these four counties alone 
would lose $13.5 million. This will significantly impact their ability 
to provide a quality education to our children.
     Without continued Impact Aid funding these local 
communities can no longer fulfill their promise to these families and 
children.
     Two of the most heavily impacted school districts in the 
Nation reside in the First District of Georgia. Camden and Liberty 
county schools each have a disproportionate number of children that 
live off-post but have parents that work on base.
     These communities, in particular, do not have the tax base 
to recover from a cut of this magnitude. They will have no choice but 
to eliminate services, cease construction projects, and reduce staff. 
In the end we send a message to the military family that we are not 
committed to their well-being.
    Faulty rationale: ``Military families that live off base pay 
property taxes so they shouldn't be included in the formula for aid.''
     Non-federally impacted schools have a financial base made 
up of taxes from personal property, business and industry, sales, and 
income.
     Impacted schools lose some or all of these taxes with each 
federally connected student that they host.
     Federally connected families often do not pay State or 
local income tax.
     Most work on the base and not for businesses that 
contribute industry taxes.
     Many military families shop on post, thereby deprive the 
school districts of millions in sales tax revenues.
    Example: King's Bay Naval Base was designed as a state of the art 
innovative base whereby corporations were stationed on the base to 
train, refit and maintain the nuclear submarine fleet. Over the life 
cycle of the submarine this is the most cost effective in terms of 
money and readiness. As a result, over 22 large and small corporations 
reside on-base and do not pay taxes. From 1996 to the present the 
number of federally connected children has doubled as employees were 
moved to support these corporations. Forty-eight percent of all 
students in Camden County are federally connected. In response the 
local community incurred over $30 million in bond debt to build new 
facilities to educate these children. The loss of $5.2 million in 
Impact Aid each year will prevent them from providing for nearly 4,500 
federally connected children and will reverse a trend of quality 
improvements that sailors cite as a primary reason for re-enlistment 
and ultimately retirement in Camden County.

                               CONCLUSION

    The loss of Impact Aid is damaging for hundreds of school districts 
across the country. For some districts, like Liberty, Camden, Houston 
and Lowndes Counties, it is absolutely disabling in its scope. Failure 
to fund Impact Aid at fiscal year 2003 levels or higher will prevent 
these districts from providing the quality education that our service 
families deserve. Failure to fund Impact Aid for counties like Camden, 
Liberty, Houston and Lowndes County, GA will reverse education 
improvements that they have strived to build for so many years. It will 
also send a message to our military families that we do not recognize 
their sacrifices and are not committed to their well-being.
    I urge the distinguished members of this committee to fully fund 
Impact Aid and preserve a promise contract that we have with families 
that sacrifice every day for us.

   Prepared Statement of Hon. James R. Langevin, a Representative 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.
    Two years ago, the administration and Congress were looking 
covetously at a staggering $5.6 trillion cumulative surplus through 
2010. At the time, Congress was continually reassured by the 
administration that we could afford an enormous tax cut, ensure the 
solvency of Social Security and Medicare, pay down the national debt, 
fund our domestic priorities and still have a large reserve fund for 
unanticipated emergencies. Like many of my colleagues, I cautioned the 
administration at the time that its budget and enormous tax cut were 
based on unrealistic surplus projections that would never materialize.
    Earlier this year, the Congressional Budget Office (CBO) confirmed 
that in less than 2 years the 10-year projected surplus has been 
erased. While portions of this decline are a result of our efforts to 
defeat terrorism and preserve national security both at home and 
abroad, the depletion of the surplus to date was largely caused by the 
fiscally irresponsible policies of 2001. The additional $831 billion in 
tax cuts, about half of which are due to excluding dividends from 
taxation, that the President proposes 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, the President's budget would 
raid the entire $2.2 trillion Social Security trust fund to cover 
deficits in the rest of the Federal budget over the next 10 years. 
Moreover, the projections used to frame this budget are overly 
optimistic. They do not include the cost of the administration's plan 
to permanently extend several expiring tax cuts, which would add 
billions of dollars to the deficit between 2004-13. The projections 
also leave out an assessment of the cost of a potential war in Iraq, 
which has recently been estimated.
    The disappearance of the 10-year surplus compels us to consider not 
just a one-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 multiyear tax 
cuts, boosting spending for the military, and meeting commitments to a 
growing number of retirees. Furthermore, I find it incredibly 
irresponsible that the administration continues to pursue large tax 
cuts while shortchanging important priorities like homeland security, 
education, the environment and retirement security. The administration 
and Congress should devise budgetary rules that make tax cuts 
contingent on the realization of specified targets for the budget 
surplus and the Federal debt. Unfortunately, this budget fails on all 
those accounts.
    In closing, I would like to thank the chairman and ranking member 
for allowing me to take part in this important discussion. The need to 
respond to new short-term needs does not provide an excuse for ignoring 
the long-term problems we already have. Ultimately, deficits do matter. 
It is time that we all take the deteriorating budget outlook seriously. 
We need to ensure that the burden of today's fiscal policies is not 
placed on the shoulders of our children and grandchildren. This is a 
matter of fiscal stewardship and generational responsibility, and we 
must address it without delay.

 Prepared Statement of Hon. Rick Larsen, a Representative in Congress 
                      From the State of Washington

    Mr. Chairman, I'd like to address an issue of great importance to 
my district today--Impact Aid funding.
    I strongly oppose the president's proposed cut of $173 million to 
the Impact Aid Program, as well as his proposal to eliminate military 
``B'' students--off base military students--from the program. This is 
the worst time I can think of for the administration to rob military 
families of their children's education. Over 200,000 men and women in 
the military have been deployed to defend our country. At the very 
least, these brave men and women should expect that their children will 
be taken care of while they respond to the call of duty.
    In my home State of Washington, these proposals would be 
devastating to local school districts. Specifically, the Second 
Congressional District which I represent, is home to Naval Station 
Everett and Naval Air Station Whidbey. There are thousands of military 
families stationed at NAS Whidbey. These military families rely on the 
Oak Harbor School District to educate their children. Current 
enrollment there consists of about 60 percent children of active duty 
military, many of them living off base. Should the president's budget 
cuts become law, the Oak Harbor School District could lose an estimated 
$1.2 million. The president's cut would force the district to lay off 
approximately 20 teachers, the equivalent of an entire elementary 
school and dramatically increase class sizes. This is the wrong way to 
treat our military families.
    The Federal Government promised in 1950 that federally impacted 
school districts would receive adequate funding, and that they could 
use those Impact Aid funds where they would help children the most. 
These funds put schoolbooks on desks, chalkboards on the walls and 
teachers in the classrooms. To deny these school districts from serving 
military ``B'' students and from receiving their funding is to break 
the promise Congress made to military families and their children. Oak 
Harbor School District already manages its resources very well, 
spending approximately $500 per student less than State averages. 
Taking away such a significant financial resource to a responsible 
school district would dramatically reduce the quality of their 
education and penalize fiscal responsibility.
    With increased deployment levels, roughly 70 percent of the 
military families in the Oak Harbor School District now have only one 
parent at home. These families need the reassurance of continued 
Federal support for the education of their children at home. In this 
time of uncertainty and unpredictability, and as our Nation prepares 
for a possible war with Iraq, our brave women and men need to have 
confidence that their children will have access to quality public 
education.
    Mr. Chairman, the president's proposed cuts on the Impact Aid 
Program are flat-out wrong. I ask that the Budget Committee increase 
funding levels for the program over the president's proposal and to 
continue allowing the program to serve military ``B'' students. Thank 
you.

   Prepared Statement of Hon. Denise L. Majette, a Representative in 
                   Congress From the State of Georgia

    It is well known that how someone spends his or her money is a sure 
sign of his or her priorities. Beneath all of the number crunching and 
accounting tables, the national budget is an opportunity to redefine 
our Nation's priorities. In doing so, it is crucial that we do not 
shortchange our Nation's future with short-sighted decisions or short 
term plans.
    There are, of course, immediate needs. We must continue to fund the 
world in which we find ourselves. We must be vigilant in protecting our 
Nation from aggression and we must continue to meet the commitments we 
have made to those most in need of help.
    All too often, though, there are a number of long-term goals that 
we do not make our priorities. To realize our long term goals, we ought 
to first minimize our long-term debts, thereby allowing our children to 
pay for their dreams without being saddled with our realities. We must 
invest in the far-reaching, long-term process of research that is the 
hope of future generations, and, above all, we must give our children 
the tools to create their own future by investing in education.
    When our children inherit the world as we've left it, they will 
encounter both the accomplishments and the mistakes. However, we ought 
not unduly burden them with a large mistake in the form of public debt. 
Just a few short years ago, our Nation found that we had budget 
surpluses, and an opportunity to pay down the Federal debt after 
decades of deficits. Yet in the President's proposed budget I see a 
ballooning deficit, with continued debt into the foreseeable future. I 
am extremely concerned about the impact the proposed budget and future 
budgets will have on our children and grandchildren, who, after all, 
will be responsible for paying the bills we refuse to pay today.
    Before we force our children and grandchildren to pay as much as 
$6,000 per year in taxes, the amount necessary to cover the impending 
debt, we should take pause. Right now, under the current debt of $6.4 
trillion, each child under the age of 18 owes $80,000--enough to send 
each one to an Ivy League college. If the budget we adopt is anything 
like the one the President proposed, I don't see how we are ever going 
to retire the projected $8.5 trillion in debt.
    I would like to bequeath to our children a world where we have 
tackled the problems of our day and provided them unfettered access to 
the tools they'll need tomorrow. If we are determined to spend our 
precious resources now rather than saving them for our children's use, 
it is reasonable that we devote a large portion of these resources to 
the betterment of our children's future.
    Perhaps the most forward-looking use of a taxpayer's money is to 
invest in exploration of our world through research. Scientific 
inquiry, by its very nature, offers no guarantees; the paths of 
discovery are rife with pitfalls and stumbles. As the explosion of the 
Columbia tragically reminded us, exploring the unknown is never easy. 
It is often painful. In the end, however, scientific inquiry offers us 
our best hope that the world can be a better place than the one in 
which we now find ourselves.
    Through government assistance, some of the greatest minds of our 
time are working trying to find cures for the diseases that plague us--
young and old, rich and poor alike. Failing to fund these initiatives 
robs our children of their hopes for a better world. One day in the 
future these scientists will discover a cure for cancer, a vaccine for 
AIDS, and a better method for reaching further into the galaxy. We must 
continue to make their efforts a priority; they are exploring for all 
of us.
    As we consider our Nation's priorities, we must be absolutely 
certain that we fully fund education initiatives. Education is the 
ultimate mechanism for allowing social mobility by ``leveling the 
playing field'' of opportunity. Our Nation continues to be a beacon of 
hope for other nations as a place where anyone, regardless of 
socioeconomic background, race or parentage is limited only by their 
dreams; a place where everyone can achieve their goals. Our promise as 
a Nation rests on maintaining this ideal. As Thomas Jefferson once 
stated, ``If the condition of man is to be progressively ameliorated, 
as we fondly hope and believe, education is to be the chief instrument 
in effecting it.''
    Unfortunately, the President's budget proposal severely undercuts 
this essential charge. We are robbing our children when we fail to make 
the necessary investments in education. Though Congress has authorized 
over $32 billion to fund the ``No Child Left Behind'' initiatives, the 
President's budget only allocates $22.6 billion to these programs. 
Similarly, the President's budget provides only $9.1 billion for the 
Individuals with Disabilities Education Act (IDEA), this amounts to 
less than half of the 40-percent match that the Federal Government has 
committed to providing to the States. The President's proposed budget 
also includes only a 1.1-percent increase above the 2002 funding level 
for Head Start, the program most directly associated with a leveling of 
the playing field. This increase is simply not enough to fully fund 
this priority. In my home State of Georgia, alone, over 120,000 Head 
Start eligible children were not served, due to lack of funding.
    Perhaps the greatest gift we can leave to our children is the 
absolute assurance that they will be able to use their talents to 
achieve their dreams. In this Nation more than any other in history 
someone can, from the humblest of beginnings, rise to become a leader 
of their community in any field he or she chooses. Nowhere is this 
realization more apparent than in the opportunities afforded to 
entrepreneurs. The small business owner represents the best of America. 
These individuals initiate and mold their businesses to the needs of 
their communities and take pride in the ownership of their own 
destinies. Congress can and must ensure that everyone has this 
opportunity. We must ensure that the know-how and resources are 
universally available to make the American Dream a reality. This 
requires that we increase funding of adult education opportunities 
rather than cuts adult job training by $122 million, as the President 
proposes.
    We must not fail to look beyond the horizon. While continuing to 
fund our needs today, we must begin to see the future with the same 
urgency with which we view the present. We must begin to create the 
world we'd like our children and grandchildren to inherit by 
safeguarding its potential instead of squandering opportunity.
    As we establish our priorities in the weeks ahead, it is crucial 
that we remember where we are as well as where we are going. The future 
of our Nation depends directly on what we decide today. If we decide 
that we are truly committed to social equality and to leaving no child 
behind, we can provide our children with the tools necessary to create 
an even better world than the entirely too dangerous one in which we 
now find ourselves. If we endeavor to better understand our world 
through research, we give hope to our children that they will not be 
afflicted by the ailments that we suffer today and we give them the 
legacy of vision to look beyond that which is now imaginable. Finally, 
we must not bind our children with debt if we hope to allow them to 
rise above our own accomplishments.

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

    Members of the Budget Committee, thank you for inviting me to speak 
to you today. As a former member of the committee, I have a special 
interest in the crafting of a budget resolution. Today I would like to 
share with you some brief thoughts on the fiscal year 2004 budget.
    First of all, you as members of the Budget Committee are fortunate 
in a strange way this year. You are fortunate in that the President has 
set the bar so low with the budget he has presented to the Congress 
that it will be hard for you not to improve upon current expectations. 
The President's budget is the most fiscally irresponsible budget in 
American history.
    We are on the eve of a war in Iraq that the White House itself has 
estimated will cost at least $100 billion, and yet the President makes 
no mention of these costs in his budget proposal. We are in the process 
of rebuilding the nation of Afghanistan, and once again no funding is 
included. Yet somehow, the budget projects more than a $300 billion 
deficit for fiscal year 2004--a figure that will surely exceed $400 
billion when the costs of the war in Iraq and the continuing operations 
in Afghanistan are considered.
    How did we get to a $400 billion deficit? Because President Bush is 
the first American president to propose cutting taxes during wartime. 
The President has proposed $1.5 trillion in new tax cuts, which the OMB 
estimates will send the Federal Government into deficit for as far as 
the eye can see. The Bush budget projects triple digit deficits every 
year for the next decade. From the time President Bush assumed office 
until now, there has been a $7.7-trillion swing in revenue projections. 
Now the Federal Government has already reached the statutory debt limit 
for the second time in less than a year.
    We have quickly gone from an administration committed to fiscal 
discipline, balancing the budget, and paying down the Federal debt, to 
one that simultaneously cuts taxes and plans wars, raising the deficit 
to record highs. Under Bush's budget the Federal deficit would be more 
than $5 trillion by 2008. This would be a more than $68,000 debt burden 
per U.S. family. This administration likes to talk about the ``death 
tax'' and the ``marriage tax,'' but perhaps it is time to start talking 
about the interest payments American taxpayers make on the Federal 
deficit each year, the ``debt tax.''
    This year it is important that the Congress exercise fiscal 
discipline during the budget process. We need to reign in rising 
Federal deficit projections. Federal Reserve Chairman Alan Greenspan 
has repeatedly warned us the drastic consequences that long-term 
deficits have on interest rates and the economy. I urge this committee 
to take into account the state of impending war we are in, and to 
resist including the President's tax cut proposals in this year's 
budget resolution.

  Prepared Statement of Hon. Bob W. Ney, a Representative in Congress 
                         From the State of Ohio

    Thank you Mr. Chairman for allowing me to include my testimony in 
this hearing. I know that you are very busy and that many Members of 
Congress have had comments for the committee to consider. I want to 
highlight just a few of the areas that I believe are of vital 
importance to our Nation and its success in the future years.
    First, I want to state my support for the goals and intent of 
President Bush's budget. The president is proposing a fiscally sound 
budget that will limit unnecessary government spending while providing 
for the needs of our Nation. Our country is facing a difficult budget 
year, where we have many different needs to balance. The President has 
done an admirable job of trying to balance the many demands facing our 
Nation.
    However, I think that when looking at this budget we must make sure 
that we are funding the many important programs that are vital to the 
economic growth of rural areas, such as my district. We cannot overlook 
the impact of some of our Nation's most important economic development 
programs to these communities.
    I believe that there are many key programs and initiatives that 
must be included in the fiscal year 2004 budget as the Congress works 
through this process. Among the issues that must be addressed, at the 
top of the list, is a prescription drug benefit program for America's 
seniors, the availability of development money for Appalachia, 
assistance for the United States' steel industry, and funding for 
programs benefiting our Nation's veterans.
    Currently, the United States' steel industry is facing several 
challenges as it continues to recover from the damages caused by past 
illegal import surges. The Emergency Steel Loan Program was created to 
help steel companies, financially distressed following the import surge 
in the late 1990s, to restructure and modernize. It would be short-
sighted to significantly cut this program when there is such a strong, 
immediate need to ensure the steel industry has access to financial 
tools like this loan program. There is no disguising the economic 
hardships facing our steel companies and I urge you to include the 
funding necessary for this important program.
    Another important issue that I would like to bring to the 
committee's attention involves the health benefits of the Nation's 
retired coal miners. Under current law, interest which accrues to the 
unappropriated balance of the Abandoned Mine Reclamation Fund is 
authorized to be transferred to what is known as the Combined Benefit 
Fund to finance the cost of health care for a class of retired coal 
miners whose former employer cannot be identified. These retried coal 
miners and their widow are referred to as ``unassigned'' beneficiaries. 
None of the principal in the Abandoned Mine Reclamation Fund, which 
consists of fees paid by the coal industry, is used for this purpose. 
Support for this fund is needed so that our Nation's retried coal 
miners to not witness a cut in health benefits.
    The Appalachian Regional Commission (ARC) remains a critical 
contributor to the economic needs of many States, counties, and 
communities. The administration's proposal to reduce by half the 
funding for the ARC could not have come a worse time for many of the 
Nation's poorest regions. In many struggling counties across 
Appalachia, the cuts in Federal money could mean the difference between 
completion of economic-development projects and halting unfinished 
work. It is crucial that Congress provide the necessary funding to 
continue the success of ARC.
    Also, I am very concerned about the proposal to eliminate funding 
for brownfield redevelopment programs at the Department of Housing and 
Urban Development (HUD). Last year, Congress passed important 
brownfield reforms, clearing the way for these sites to be redeveloped. 
Now, we must provide the resources necessary to stimulate that 
development. This funding is crucial to turning brownfield sites from 
empty lots into productive businesses. I urge you to ensure that the 
budget includes the resources necessary for this important program.
    Prescription drugs are essential to 21st century medicine, 
especially when considering the health of our senior population. These 
medications help Senior Citizens improve their health, maintain 
independence, and extend their lives. We are living in a remarkable age 
of wonder-drugs and wonder-cures. Diseases and afflictions that once 
were life threatening are now easily cured thanks to countless 
developments in the field of medicine. Unfortunately, as these new 
procedures and drugs have been developed, costs associated with our 
Nation's healthcare system have risen.
    One aspect of this rise in costs has been in prescription 
medications. That is why in the 107th Congress, the House passed 
legislation that would have accomplished a comprehensive prescription 
drug program. We must do so again, and we must fund the program. It is 
simply unacceptable that 13 million seniors do not have prescription 
drug coverage and it is our duty, as Members of Congress, to remedy the 
situation. I urge you to include in the fiscal year 2004 budget the 
resources necessary to create a comprehensive prescription drug program 
for our Nation's seniors.
    We must also protect funding for programs that benefit our Nation's 
veterans. It is important that our country not forget to take care of 
the millions of men and women who have loyally served in our armed 
forces. They have fought to preserve our freedoms and the least we can 
do is to ensure they get the benefits that are expected. A fair and 
balanced budget must meet the needs of our military and defense 
personnel. Any newly structured aspects of veterans' programs must be 
backed up with funding, or they will be ineffective.
    Funding these programs is a challenge, but can--and must be--
accomplished through fiscal discipline. As the Congress considers the 
President's jobs and growth plan and the fiscal year 2004 budget, I 
urge the committee to keeps these programs in mind.

   Prepared Statement of Hon. Richard W. Pombo, a Representative in 
                 Congress From the State of California

    Chairman Nussle, Ranking Member Spratt, and members of the 
committee, I am pleased to provide you with the views and estimates of 
the Committee on Resources for fiscal year 2004, and appreciate this 
opportunity to provide additional comments regarding a few important 
funding and programmatic priorities.
    Overall, the committee is generally supportive of the 
administration's fiscal year 2004 budget for the departments and 
programs within its legislative and oversight jurisdiction. The 
committee recognizes that current world events, the war on terrorism, 
the potential conflict in Iraq, and the economic downturn, presents our 
Nation with some very difficult budgetary decisions and trade-offs. In 
the midst of these challenges, the administration's budget still 
provides for important funding increases for many vital environmental 
and resource programs.
    One of the most important areas reflected in the administration's 
resources budget is funding for the ``Healthy Forests Initiative,'' 
which provides $698.7 million for a combination of programs aimed at 
reducing the threats of catastrophic wildfires through fuels treatment, 
fire preparedness, fire suppression, rehabilitation, and rural fire 
assistance. This represents a 7-percent increase over fiscal year 2003 
funding, and will help facilitate important Federal-State partnerships 
in helping to restore important ecological balances in our Nation's 
public forests.
    Catastrophic wildfires have devastated millions of acres of vast 
regions of western public lands in recent years, destroying homes, 
property, infrastructure, wildlife, livelihoods, and have led to other 
harmful environmental consequences, such as erosion. As stewards of our 
public lands, the Federal Government must do all it can to restore 
proper ecological balance to our public forests through environmentally 
sound management, and therefore, the committee strongly supports the 
President's request which it believes, will be effective in helping to 
address these issues.
    On another front, energy problems threaten our Nation's its 
economic and national security interests. Shortages, power outages, and 
skyrocketing prices have threatened to disrupt and derail economic 
stability. These shortages did not occur overnight. It is clear that 
for nearly two decades, unduly restrictive environmental and liability 
concerns, combined with increasing energy demands, have placed us in a 
bind. It has been over 22 years since a large oil refinery was built in 
the United States, and more than 12 years since a power plant was built 
in California. As a Nation, we have neglected energy production and 
infrastructure and are producing approximately 39 percent less domestic 
oil than we were 30 years ago. As a result, we are having to import 
more and more energy from abroad, subjecting our energy supply to 
greater uncertainty and price fluctuations. Natural gas development on 
public lands is down by 14 percent, and nearly 40,000 miles of new 
pipeline, much of which must cross public lands, is needed to deliver 
the natural gas to meet demand.
    The committee is supportive of funding in the president's fiscal 
year 2004 budget which would provide resources and staffing within the 
Department of Interior to help address the problems of domestic energy 
production specifically as it pertains to public lands. For example, 
the fiscal year 2004 request would provide funding to improve access to 
the enormous coalbed natural gas reserves in Wyoming, Montana, New 
Mexico and Colorado, and to help reduce the backlog of rights-of-way 
applications and applications for permits to drill.
    The administration's energy plan, which calls for opening 1.5 
million acres of ANWR for oil exploration and development, was the 
subject of comprehensive hearings in the committee during the 107th 
Congress. Current estimates suggest that the oil we can gently extract 
from ANWR would replace Iraqi oil imports for the next 58 years. Oil 
development on the coastal plain of ANWR will only impact 2,000 acres 
of the 19.6 million acre refuge. We now have the technology to tap oil 
and gas in a way that protects the Arctic tundra and nearby wildlife. 
More than 20 years of developing oil in Prudhoe Bay has proven that. 
Today, the size of caribou herds near Prudhoe have increased five-fold 
since drilling and shipping began there. The committee remains 
supportive of efforts to allow for environmentally sound energy 
development of the Arctic National Wildlife Refuge (ANWR), and remains 
committed to moving legislation, as it did in the 107th Congress, that 
would allow it to occur. Not only would sound development of ANWR oil 
reserves reduce United States' dependence on foreign sources for 
decades to come, it would also generate billions in leasing revenue for 
the Federal Government.
    Another of the committee's highest priorities remains more 
effective implementation of the Endangered Species Act (ESA) by the 
Federal Government. The committee believes strongly that the ESA's 
worthy goals and objectives of preserving endangered species should be 
achieved through adherence to the best available science, and that 
Federal funding should be refocused on actual preservation efforts. 
Therefore, the committee is requesting an appropriation of $140 million 
for this account in fiscal year 2004, which is $11 million over the 
administration's request, which will help provide the Department of 
Interior with additional resources needed to administer ESA programs 
and to meet growing demands on departmental budgets necessitated by 
litigation of ESA disputes filed by non-governmental organizations.
    Our national parks are some of America's greatest natural assets, 
and the committee believes very strongly that they should be maintained 
and preserved for future generations, while also making them accessible 
and safe for the visiting public. The number of units of the National 
Park system has also increased greatly over the past three decades, 
making it a challenge to provide all of the needed resources necessary 
to keep them in good repair. The reality is that we have not been able 
to keep up. There are growing maintenance and infrastructure repair 
demands at existing parks, even as new park units are added, and it is 
estimated that the backlog remains in excess of a billion dollars. The 
committee recognizes that the President and the Congress made a 
substantial effort in the fiscal year 2003 budget to provide for a 
substantial increase, and notes that the fiscal year 2004 request of 
$705.8 million continues that strong commitment. While much remains to 
be done, this funding will go a long way toward helping the Park 
Service to get back onto solid footing in addressing the maintenance 
backlog.
    The committee is supportive of the fiscal year 2004 request for the 
National Marine Fisheries Service of $620.9 million for operations, 
research and facilities, which represents an increase of $33 million 
from fiscal year 2003. This will provide $17 million to fund additional 
stock assessments which will assist in the implementation of a west 
coast in-season harvest data collection system which is an important 
tool in the development and management of sustainable fisheries.
    Finally, the committee notes that the administration's fiscal year 
2004 request includes substantial reductions over fiscal year 2003 in 
land acquisition accounts for the various resource agencies. The BLM 
land acquisition account is reduced by $21 million, the Fish and 
Wildlife Service account by $30 million, the National Parks Service 
account by $7.4 million, and the Forest Service account by $45.4 
million. The committee is supportive of this funding reduction trend 
and believes that it is inappropriate for the Federal Government to 
continue to acquire private lands on a large scale, particularly in the 
western United States where a high percentage of the land mass is 
already owned by the Federal Government, and while there remains 
higher-priority funding needs elsewhere in the resource agencies.
    In conclusion, I appreciate this opportunity to testify on these 
important matters and look forward to assisting the Budget Committee 
and my other colleagues in the Congress in passing an fiscal year 2004 
budget that is fiscally responsible while providing for essential needs 
and programs.
    Thank you, Mr. Chairman.

   Prepared Statement of Hon. Ciro D. Rodriguez, a Representative in 
                    Congress From the State of Texas

    Chairman Jim Nussle and Ranking Member John Spratt, I would like to 
thank you for this opportunity to share with you some of my 
recommendations for the 2004 budgetary cycle. I represent the 28th 
Congressional District of Texas. My district encompasses all or part of 
11 south Texas Counties stretching from the San Antonio metropolitan 
area to the United States border with Mexico: Atascosa, Bexar, Duval, 
Frio, Hidalgo, Jim Hogg, Jim Wells, La Salle, McMullen, Starr and 
Zapata.
    I represent a portion of San Antonio, the largest city in my 
district and the eighth largest city in the United States with a 
population in excess of 1 million people. Two Air Force bases are 
located within the 28th District: Randolph AFB and Brooks City-Base. 
San Antonio is home to two other active duty bases and one closed 
facility: Lackland AFB, Ft. Sam Houston, and Kelly USA. My district is 
also home to over 60,000 veterans, and I work diligently to convey 
their needs and fight for the health care and benefits they have 
honorably earned.
    In Texas, the Federal Government contributes 22 percent of our 
State budget. This money pays for schools, public assistance, road, 
care for veterans, and other essential programs for Texas residents. 
While most States struggle through fiscal crises and budget cuts, the 
Federal Government's proposed spending cuts threaten to make it even 
more difficult for Texas to meet its people's needs.

                         DEPARTMENT OF DEFENSE
 
   I am concerned that the President's proposed defense budget of 
$399.2 billion will not be adequate. Although it represents an increase 
of 4.4 percent over last year, or an increase of $17 billion, it does 
not include the cost of war with Iraq or the war on terrorism.
    The President's budget counts on significant savings from 
outsourcing even more government jobs. The funding levels in the 
President's budget would require half of all government workers to 
compete with the private sector for their jobs. This policy of counting 
chickens before they are hatched can leave vital programs in peril, and 
I am particularly concerned that this proposal will have a significant 
negative impact on civilian employees at the San Antonio military 
facilities who have already taken more than their fair share of hits.
    The President's budget increases funding for programs which provide 
little military benefit while shortchanging programs vital to military 
readiness and quality of life for military members and their families. 
Specifically, I urge the committee to evaluate the President's budget 
proposal for missile defense programs which includes $9.1 billion--a 
20-percent increase over last year and nearly half of North Korea's 
gross domestic product--to continue development of a system which only 
addresses the threat of missile attack (North Korea). Military members 
would be better served by using some of these funds for long overdue 
military construction projects such as family housing and dormitories. 
I am disappointed that the President has proposed only $9 billion in 
funding for needed facilities--a $1.5-billion decrease from the amount 
appropriated in fiscal year 2003.
    Mr. Chairman, we are asking our Nation's military to take on more 
and more responsibilities. I know that the committee will be looking to 
take care of our soldiers, sailors, airmen, and Marines by providing 
them with the tools they need to defend our Nation and by providing 
benefits and services which are commensurate with the sacrifices we 
call upon them to make in defense of our country and our values.

                    DEPARTMENT OF VETERANS' AFFAIRS

    The Department of Veterans' Affairs operates the largest direct 
health care delivery system in the country. The Department of Veterans' 
Affairs ended the fiscal year 2002 facing a serious funding deficit. 
Veterans are currently facing inordinate and unacceptable waiting times 
for basic health care services. Over 286,000 are currently waiting 6 
months or longer for initial and follow-up medical appointments. In 
order to address this challenge the VA has implemented several policy 
tactics to limit and completely cut off care to entire classifications 
of veterans. This movement started with the suppression of all 
enrollment-generating activities undertaken by the various VA networks 
in order to alert veterans to the benefits they have earned.
    The president's 2004 budget continues the medical care policy 
changes implemented by Secretary Principi that have cut and limited 
enrollment to higher priority veterans. It would continue to stop 
enrollment of new Priority 8 veterans and assess an annual enrollment 
fee of $250 for non-service connected Priority 7 veterans and all 
Priority 8 veterans. It increases veteran's copay for outpatient 
primary care and pharmacy copayments for higher priority veterans.
    I would like to highlight that the administration's purported 
budget increase of $2.5 billion is built entirely upon savings from 
providing fewer services to veterans, shifting more costs to veterans 
or their health care insurers, and ``management efficiencies.''
    As the ranking member on the House Veterans' Affairs Subcommittee 
on Health I am proud of the budget recommendations the full House 
Veterans' Affairs Committee (HVAC) has submitted with bipartisan 
support for review to this committee. The Committee on Veterans' 
Affairs, after careful consideration of the budget for fiscal year 2004 
proposed by the administration for the Department of Veterans' Affairs, 
charged Congress to close the recurring gap between appropriated 
funding and the demand by eligible veterans for VA health care. 
Therefore, the HVAC recommended a substantial increase in veterans' 
health care funding for fiscal year 2004. In total they have requested 
just over $30 million of discretionary funds for the VA in fiscal year 
2004. Further, I and my colleagues on the HVAC strongly recommended 
that Congress adopt a new, fiscally sound finance system that would 
provide guaranteed funding for VA health care programs.

                               EDUCATION

    Texas ranks last among all 50 States in teacher salaries, has an 
unacceptable high school drop out rate, 30 percent overall--and 
significantly higher in underserved communities--and is facing growing 
student enrollments and demands on our public school system. With the 
State budgetary shortfall facing Texas it is imperative for us to 
receive sufficient Federal funds to support programs that provide 
quality education to students throughout our State.
    Tragically the President's 2004 budget recommendations fail to 
provide the promised resources to provide our children with a quality 
education. We will undermine our bipartisan efforts to enact the No 
Child Left Behind Act if we follow his lead and provide $9 billion less 
than the bill originally pledged for early and secondary education. We 
will leave millions of children behind and leave school districts to 
fend for themselves.
    I am also concerned that the President's 2004 budget supports 
private school vouchers. These efforts shortchange our public schools. 
Yet, the President has included two private school voucher 
initiatives--a $75 million voucher program and a voucher tax credit 
associated with the cost of transferring students from public to 
private school.
    I would request that the following aspects of the President's 2004 
budget request be rejected by this committee:
     Freeze teacher quality initiatives which helps States and 
school districts reduces class size and better recruit and train 
teachers.
     Cut Title I funding which serves our most disadvantaged 
children in math and reading. This funding level ($12.3 billion) will 
leave an additional 2.2 million disadvantaged children without critical 
education programs.
     Cut after-school funding by $400 million--approximately a 
40-percent cut compared to fiscal year 2002 appropriations and his own 
fiscal year 2003 budget. This cut would deny after school programs to 
over half a million disadvantaged children.
     Block grants and cuts vocational education funding. The 
President's budget would cut $300 million--approximately a 23-percent 
cut--from vocational education programs. The budget proposes to turn 
this program into a block grant to States, eliminating accountability 
and targeting of resources to disadvantaged students and programs.
    While the President's budget increases appropriations for the 
Department of Education by $1.7 billion (3.4 percent) above the amount 
needed to maintain programs and services at the 2002 level, it 
eliminates many education programs, and freezes most others 2003 
levels. Further this represents the smallest increase for Education in 
7 years--representing only a 5.6 percent total increase.

                           IMPACT AID FUNDING

    With soldiers being deployed overseas every day, it is important 
for them to know the needs of their families back home are being met. 
The Impact Aid Program, funded largely by the Department of Education, 
was designed to ensure that school districts serving military families 
and those living on Indian reservation lands have the funding necessary 
to provide a high quality education to all students. It should be noted 
that 15 million students in 1,331 school districts nationwide benefit 
from the Impact Aid Program. Many of these school districts rely on 
Impact Aid funding for a significant portion of their annual budget. 
Funding is used for a variety of expenses, including teacher salaries, 
textbooks, computers, after school programs, tutoring, advanced 
placement classes and special enrichment programs.
    As you begin the process of constructing the budget for 2004, I ask 
that you pay special attention to funding the Impact Aid Program. The 
President's 2004 budget includes a funding cut of $128.5 million, or 12 
percent, from 2002 levels for Impact Aid. This cut is not warranted; it 
hurts military readiness, undermines our goal to provide quality 
education to all students, and is simply inexcusable in a time of war.

        CHILDREN'S HOSPITALS GRADUATE MEDICAL EDUCATION FUNDING

    I am gravely concerned that the administration's budget contains a 
32-percent cut for the Graduate Medical Education (CHGME) Fund for 
children's teaching hospitals--from $292 million in fiscal year 2003 to 
$199 million for fiscal year 2004. Children's teaching hospitals play 
an important role in children's health care. Not only do they provide 
important health services, but they also serve as important training 
centers for pediatricians. I am sure that many of you house one in your 
own district and are acutely aware of how the local community values 
them.
    I am extremely proud of the work that Christus Santa Rosa 
Children's Hospital does for the greater San Antonio region. Each year, 
the Children's Hospital cares for more than 90,000 children through 
their inpatient, outpatient, and emergency services, and their 32 
specialty clinics help an additional 30,000 children annually. The 
Children's Hospital includes a pediatric rehabilitation unit, a 
children's cancer and blood disorders center, a pediatric hospice suite 
and an on-site classroom operated with the help of the San Antonio 
Independent School District.
    As a safety net care provider, the Christus Santa Rosa Children's 
Hospital is invaluable to San Antonio. As a training tool, their work 
is invaluable to the Nation's future pediatric workforce. In 2002, the 
Children's Hospital received $990,000 in CHGME funding.
    The children's hospital system cannot sustain continued cuts to 
Medicaid as well as cuts to alternative funding streams such CHGME. I 
ask that you take this into consideration and ensure that CHGME funding 
is adequately addressed in the 2004 budget.

                   FUNDING OUR HEALTH CARE SAFETY NET

    Recent reports show that the number of uninsured Americans is on 
the rise with 41.2 million people in this country lacking insurance in 
2001. I represent Starr County which is located on the Texas-Mexico 
border and ranks as the poorest county in the Nation. In Starr County, 
close to 40 percent of those between the ages of 19 and 64 are without 
health insurance. Lack of insurance means restricted access to 
preventive care which can lead to costly emergency room visits. While 
we have a patchwork of Federal-State safety programs--Medicare, 
Medicaid, SCHIP--in place to assist our most vulnerable in times of 
need, the economic downturn has placed enormous strain on States and 
counties.
    As you know, States are facing a huge budget crisis and State 
Governors are calling for Federal relief. I support a temporary 
increase of the Federal Medical Assistance Payment (FMAP) rate which 
will allow States to draw down more Medicaid dollars. This is a 
temporary solution to alleviate the financial burden of their growing 
Medicaid roles. An economic downturn is not a time to abandon the 
States. By doing so, States will be forced to cut health care services 
or beneficiaries from the rolls.
    The State of Texas is facing a $10 billion budget deficit. Each 
agency has been asked by Governor Perry to reduce their budget by 12.5 
percent for 2004-05. Last week, Texas Health and Human Services 
commissioner, Albert Hawkins, unveiled his plan to achieve $5 billion 
in savings. How did he do it? The plan eliminates $4 billion from 
medical care and it reduces reimbursement rates for health care 
providers by 33 percent. This will result in 250,000 children losing 
their CHIP insurance coverage, 69,000 adults losing Medicaid coverage, 
and 50,000 elderly and disabled adults losing their prescription drug 
coverage.
    I consider this a health care crisis and there is no easy answer. I 
do know that we can provide critical relief to our States by providing 
a temporary increase of the FMAP rate. We can work to ensure that 
States continue to receive appropriate levels of Disproportionate Share 
Hospital (DSH) funding. This is a critical funding stream intended to 
provide relief to hospitals that are disproportionately impacted by 
indigent care. Congress must do its part to assist States during this 
economic crisis. We cannot afford to let our health care system or 
safety net system deteriorate further. The consequences of inaction 
will be felt for years to come in greater health care needs, lower 
productivity, and higher rates of mortality and disability.
    I ask that you take this under serious consideration as you look at 
the budget for the Department of Health and Human Services.
    Mr. Chairman and members of the committee, thank you for taking 
these requests into consideration.

Prepared Statement of Hon. Mike D. Rogers, a Representative in Congress 
                       From the State of Alabama

    Mr. Chairman, and other distinguished members of the House Budget 
Committee, good afternoon, and thank you for the opportunity to testify 
before you today.
    Mr. Chairman, I come before the committee with a simple message, 
one that resonates loudly with the citizens of east Alabama: I urge you 
and your colleagues on the Budget Committee to continue your practice 
of fiscal restraint in the coming budget year.
    Mr. Chairman, as you may know, over 6,000 working citizens in my 
State have been called to active duty in the Army Reserves and National 
Guard--more than every other State besides North Dakota and Utah. But 
while Alabamians answer the call of duty proudly, and in greater 
numbers than other States, we also know that with duty, comes 
sacrifice. Many times, the fathers and mothers on active duty are the 
family's bread winner, and see their income cut dramatically while in 
service. This causes considerable pain for the spouses and children 
left behind, and forces difficult financial and emotional sacrifices to 
compensate for the loss of income. No less difficult are the sacrifices 
facing our State and local officials, as they address empty Treasuries 
and growing budget deficits. Just this week, my predecessor and now-
Governor Riley, said the State will sacrifice some of its most vital 
services--like Medicare coverage for the elderly, and hiring new 
teachers and police--to close a $500-million hole in the State budget.
    Mr. Chairman, the sacrifices should not stop in Washington. You and 
your colleagues on the Budget Committee face enormous pressures to 
drastically increase spending, but must stand firm in keeping our 
fiscal priorities in line.
    On behalf of the mothers and fathers called to service, and our 
State and local leaders, I commend you, Chairman Nussle--as well as 
members of the full Budget Committee, and the Republican leadership--
for your past efforts in remembering our fiscal responsibilities, and 
urge you continue the practice of fiscal restraint in the coming year.
    Thank you, Mr. Chairman.

   Prepared Statement of Hon. Ellen O. Tauscher, a Representative in 
                 Congress From the State of California

    Mr. Chairman, I would like to request that my statement be 
submitted to the record of this hearing. I am very concerned about the 
President's proposal to cut funding for the Federal Impact Aid Program.
    The purpose of the Impact Aid Program, which was established in 
1950, was to provide public school districts with a Federal payment in 
lieu of the taxes lost due to the non-taxable status of Federal 
property. In essence these funds help pay for the cost of educating 
Federal and non-federal children enrolled in those school districts 
impacted by the Federal presence. Most commonly school districts that 
receive funds from this program serve Indian land children, military 
children residing on-base, and military children whose parents reside 
off-base.
    Across America there are 1,275 school districts receiving Impact 
Aid funding. These schools enroll 15 million children. I represent one 
of those school districts, the Travis Unified School District, which 
serves many of the children whose parents serve or work at Travis Air 
Force Base.
    As the President prepares to send our men and women to war, I 
cannot sit idly by while their children's education is threatened. 
Cutting Impact Aid, as the President proposes, would mean a $200 
million loss to school districts serving military children. Should the 
President's budget become a reality, 88 percent of all military 
children in the Impact Aid Program would be negatively impacted. These 
cuts would result in a loss of 525 school districts from the program--
486 of which serve children of members of our armed forces.
    These cuts threaten many of the services that support the children 
in our military families. For example, representatives of Travis 
Unified have told me that school counselors could be eliminated if 
these cuts became a reality. At a time when levels of deployment and 
uncertainty are increasing, our children must have access to the 
services that they need in order to be able to cope with impact of the 
absence of one, and in some cases both, parents.
    We owe it to the men and women who have volunteered to serve in our 
armed forces to ensure that their children are supported while they are 
protecting our Nation. Cutting the Impact Aid Program sends the wrong 
message, and we must not allow it to happen.

    Chairman Nussle. Thank you. I know Mr. Spratt is on his way 
and will be here.
    Mr. Chairman of Transportation, ranking member, Ranking 
Member Skelton, we welcome you to the Budget Committee. You 
have been here and have testified before. You have a heavy load 
of area of interest in this budget and for our future, and we 
look forward to your testimony.
    We will start with Chairman Young, and then Ranking Member 
Oberstar, and then Ranking Member Skelton. Welcome, Chairman 
Young.
    You have to hold down the green button [referring to 
microphone]. It is a new infrastructure concern we have, Mr. 
Chairman.

STATEMENT OF HON. DON YOUNG, A REPRESENTATIVE IN CONGRESS FROM 
 THE STATE OF ALASKA AND CHAIRMAN, COMMITTEE ON TRANSPORTATION 
 AND INFRASTRUCTURE; ACCOMPANIED BY HON. JAMES L. OBERSTAR, A 
  REPRESENTATIVE IN CONGRESS FROM THE STATE OF MINNESOTA, AND 
 HON. IKE SKELTON, A REPRESENTATIVE IN CONGRESS FROM THE STATE 
                          OF MISSOURI

                  STATEMENT OF HON. DON YOUNG

    Mr. Young. I mean I don't have all this fancy equipment in 
my committee room, I can tell you that right now.
    Mr. Chairman, I do thank you for allowing us to be here to 
testify. I took to heart what you said about the Congress as a 
whole being a Congress of many different Members and not just 
one person's individual views.
    I am here today with Mr. Oberstar to testify on the coming 
needs of the programs in transportation. I appreciate your 
committee's willingness to work in a cooperative partnership 
with the Transportation and Infrastructure Committee. Mr. 
Chairman, without your help in last year's budget process, we 
would not have been able to avoid a significant cut in the 
Highway Trust Fund.
    By making room for additional highway funds in the House 
budget resolution last year, your committee played a key role 
in restoring highway funds. We thank you for your assistance 
and cooperation. It is my hope we can continue our partnership 
and our stewardship for transportation programs together.
    The economy cannot continue to grow without a 
transportation system that moves people and goods efficiently. 
People need improved transportation systems to get to work, 
shopping, and school. Businesses rely on the transportation 
systems to move freight and goods.
    I don't need to tell you that traffic congestion is getting 
much worse than everybody expected. I believe you experience it 
yourself every day, and I know your constituents do, too.
    Of the Nation's 75 largest urban areas, traffic delays 
increased by 288 percent from 1982-2000. Think about that 
increase: increased 288 percent from 1982 to the year 2000. In 
areas with fewer than 1 million people, delay more than 
quadrupled over these same years, indicating that even small 
areas are not able to keep pace with the rising demand.
    In 2000, traffic congestion cost the motorists a staggering 
$67.5 billion of lost revenue and wasted time, including the 
burning of many gallons of fuel. This $67.5 billion equates to 
an average annual cost for travel of $1,160 and a week and a 
half, or 62 hours, of work time lost sitting in traffic.
    Last week, the Transportation and Infrastructure Committee 
unanimously approved its views and estimates for the 2004 
budget, including a recommendation for a combined highway, 
highway safety and transit program level of $49.1 billion in 
the year 2004. By now, you should have received a letter signed 
by all 74 members of the Transportation Committee advocating 
$50 billion for these programs. A $50 billion budget authority 
level will provide the resources necessary to meet the $49.1 
billion program outlined in our views and estimates.
    This program level is based on data from the Department of 
Transportation. Let me repeat that. This is information from 
the Department of Transportation that indicates a combined 
Federal Highway and Transit Program of $52 billion is needed 
annually just to maintain our highways and transit systems in 
their current condition, including keeping congestion from 
getting worse.
    However, according to the same information, to improve the 
condition of this system, including improvements in safety and 
reduction in traffic congestion, a Federal program the size of 
$74.8 billion is needed annually. These are not my numbers. 
They are the administration's own numbers.
    My committee believes we cannot afford to merely maintain 
the status quo. The status quo is strangling our economy, 
limiting our mobility, and affecting our daily lives to an 
unacceptable degree.
    Therefore, we propose to gradually increase funding for 
highways, highway safety, and transit programs from the current 
combined level of $40 billion for 2003 to the total of $75 
billion by 2009, which would begin to the meet the cost to 
improve these systems. A total of $375 billion in budget 
authority for these programs will be required in the 6-year 
period from 2004-09.
    In order to increase investments in these programs, the 
revenue mechanisms that fund the Highway Trust Fund must be 
adjusted. We are not facing a choice between adjusting the 
revenue mechanism and not adjusting it. Rather, our choice is 
between different methods of adjusting of them. I will be happy 
to discuss these different methods with you, as I have with 
Chairman Thomas of the Ways and Means Committee, which has 
jurisdiction over these matters.
    Of course, increasing income to the trust fund is 
meaningless if we do not also have a mechanism in place to 
ensure that user revenues in the trust fund are actually spent 
for their intended purposes. One of the Transportation 
Committee's highest priorities is the continuation of the 
firewalls and guaranteed funding levels that we established in 
TEA-21, and we will soon be seeking your cooperation on this, 
too.
    In addition to the funding levels I have already discussed, 
I would like to highlight the committee's recommendation for 
the Airport Improvement Program. This program is also due for 
reauthorization this year.
    By the year 2005, air passenger traffic is expected to 
return to record-high levels that were experienced in 2000, 
when one in every four commercial flights was delayed, 
canceled, or diverted. Absent further improvements in aviation 
safety capacity, airline delays will quickly return to the 
levels experienced in 2000.
    The committee, therefore, recommends funding an increase of 
at least $100 million each year for the Airport Improvement 
Program, beginning at the funding level of $3.5 billion in 2004 
and totalling $18.5 billion in the 5-year period between 2004-
08.
    While the cost of meeting the investment needs of our 
surface transportation and aviation systems may seem high, the 
cost of not meeting them is far greater. The increased 
investment in transportation makes sense for our economy, our 
businesses, and our citizens.
    The one legacy that this committee and you can leave 
behind, and we recommending that you leave behind, is the 
future ability of our transportation needs to be met for the 
future citizens of this great Nation. Not to do so would be a 
disservice to them and a disservice to this Nation. I urge your 
support for my committee's proposal as you develop the 2004 
budget, and thank you, Mr. Chairman.
    [The prepared statement of Mr. Young follows:]

Prepared Statement of Hon. Don Young, a Representative in Congress From 
                          the State of Alaska

    Thank you Chairman Nussle and Ranking Member Spratt for allowing me 
and my committee's ranking member, Jim Oberstar, to testify before you 
on the funding needs of our programs.
    I appreciate your committee's willingness to work in a cooperative 
partnership with the Transportation and Infrastructure Committee. 
Without your help in last year's budget process, we would not have been 
able to avoid a significant cut in highway funding. By making room for 
additional highway funds in the House budget resolution last year, your 
committee played a key role in restoring highway funds, and we thank 
you for your assistance and cooperation.
    It is my hope that we can continue our partnership and our 
stewardship of transportation programs together. The economy cannot 
continue to grow without a transportation system that moves people and 
goods efficiently. People need improved transportation systems to get 
to work, shopping, and school. Businesses rely on transportation 
systems to move freight and goods.
    I don't need to tell you that traffic congestion is growing worse. 
You experience it for yourself every day. Your constituents do, too. In 
the Nation's 75 largest urban areas, traffic delays increased by 288 
percent from 1982-2000. In areas with fewer than one million people, 
delay more than quadrupled over these same years, indicating that even 
smaller areas are not able to keep pace with rising demand.
    In 2000, traffic congestion cost motorists a staggering $67.5 
billion in wasted time and fuel. This $67.5 billion equates to an 
average annual cost per traveler of $1,160, and a week and a half--or 
62 hours--of work time lost sitting in traffic.
    Last week, the Transportation and Infrastructure Committee 
unanimously approved its views and estimates for the 2004 budget, 
including a recommendation for a combined highway, highway safety and 
transit program level of $49.1 billion in 2004. By now, you should have 
received a letter from members of the Transportation Committee 
advocating $50 billion for these programs. A $50 billion budget 
authority level will provide the resources necessary to meet the $49.1 
billion program level outlined in our views and estimates.
    This program level is based on data from the Department of 
Transportation that indicate a combined Federal highway and transit 
program of $53 billion is needed annually just to maintain our highways 
and transit systems in the current condition--including keeping 
congestion from getting worse. However, to improve the condition of 
these systems, including improvements in safety and a reduction in 
traffic congestion, a Federal program size of $74.8 billion is needed 
annually.
    My committee believes that we cannot afford to merely maintain the 
status quo. The status quo is strangling our economy, limiting our 
mobility, and affecting our daily lives to an unacceptable degree. 
Therefore, we propose to gradually increase funding for highway, 
highway safety, and transit programs from the current combined level of 
$40 billion in 2003 to a total of $75 billion by 2009, which will begin 
to meet the cost to improve these systems. A total of $375 billion in 
budget authority for these programs will be required over the 6-year 
period from 2004-09.
    In order to increase investment in these programs, the revenue 
mechanisms that fund the Highway Trust Fund must be adjusted. We are 
not facing a choice between adjusting the revenue mechanisms and not 
adjusting them. Rather, our choice is between different methods of 
adjusting them. I will be happy to discuss these different methods with 
you, as I have with Chairman Thomas of the Ways and Means Committee, 
which has jurisdiction over these matters.
    Of course, increasing income to the trust fund is meaningless if we 
do not also have mechanisms in place to ensure that the user revenues 
in the trust fund are actually spent for their intended purposes. One 
of the Transportation Committee's highest priorities is the 
continuation of the firewalls and guaranteed funding levels that were 
established in TEA-21, and we will soon be seeking your cooperation on 
this, too.
    In addition to the funding needs I have already discussed, I would 
like to highlight the committee's recommendation for the Airport 
Improvement Program. This program is also due for reauthorization this 
year.
    By the year 2005, air passenger traffic is expected to return to 
the record-high levels that were experienced in 2000, when one in every 
four commercial flights was delayed, cancelled, or diverted. Absent 
further improvements in aviation system capacity, airline delays will 
quickly return to the levels experienced in 2000.
    The committee, therefore, recommends funding increases of at least 
$100 million each year for the Airport Improvement Program, beginning 
with a funding level of $3.5 billion in 2004, and totaling $18.5 
billion for the 5-year period from 2004-08.
    While the cost of meeting the investment needs of our surface 
transportation and aviation systems may seem high, the cost of not 
meeting them is far greater. Increased investment in transportation 
makes sense for our economy, our businesses, and our citizens. I urge 
your support for my committee's proposals as you develop the 2004 
budget resolution.

    Chairman Nussle. Thank you, Mr. Chairman. Mr. Oberstar, 
welcome.

              STATEMENT OF HON. JAMES L. OBERSTAR

    Mr. Oberstar. Thank you very much, Mr. Chairman. It is good 
to be back in the Budget Committee, where I spent six 
delightful years many years ago. It didn't look quite as 
handsome as it does today. It didn't have quite the technology 
that you have today with all these screens, but there was the 
same careful, thoughtful deliberation process. This is the 
nexus of where we join our values with our willingness to 
invest in them in this committee. I congratulate all of you who 
serve on this committee and thank you for your service.
    I join with Chairman Young in what he has said about the 
need for investment. We start with the Airport Improvement 
Program. We need an investment of $18.5 billion over the next 3 
years for AIP because airports have had to divert their 
taxiway, runway, and airside construction dollars to security 
improvements at airports, and have delayed, therefore, needed 
investment in airport capacity-enhancing initiatives.
    The aviation security legislation that we passed was 
supposed to be accompanied with funding to pay for explosive 
detection systems and the retrofit of airport terminals, but 
did not cover those costs. Hopefully, additional funding will 
come forth. The President has committed to do so.
    Meanwhile, airports have had to divert from their capacity 
programs to accommodate the security program. We need to 
increase the funding and prepare for what we hope is going to 
be a return to air travel in larger numbers after the 
hostilities in the gulf are ended.
    Prior to September 11, a billion people flew worldwide; 650 
million of all those travelers flew in U.S. airspace. Ours is 
the biggest, most intensive, the most lucrative, the most 
attractive airspace in the world, but it is rapidly becoming 
the most congested.
    Investments not only in airport improvement funding for 
taxiway and runway improvements and parking is necessary, but 
we also need to continue the investment in modernization of the 
air traffic control system. We have already completed about $12 
billion of enhancements in 47,000 pieces of equipment installed 
at the Nation's airports, in our control towers, terminal area 
control facilities and the en route centers. Those all now have 
to be upgraded.
    The continuing modernization of the terminal radar control 
facilities which control aircraft in the airspace surrounding 
the airport is entering a very important phase of installation 
of the equipment that has been now tested and proven, and is 
now being installed.
    Still remaining is redesign of the domestic airspace, 
straightening out the routes that now are ``dog legs'' in the 
air, that follow routes that were established with bonfires and 
beacons in the 1920s and 1930s and radio signals in the 1940s. 
We need to modernize that system and provide straighter routes 
to save fuel, save travel time, and improve the efficiency of 
our domestic airspace.
    We also have to invest in the control systems over the 
Atlantic and Pacific Oceans, which are $28 [billion] and $20 
billion markets for the United States, respectively. An 
investment that we make in air traffic control technology and 
improving our hard side of airports are critical to our future 
competitiveness.
    Similarly in the infrastructure on the ground. With TEA-21 
we achieved an extraordinary move forward advancement of 
highway, bridge improvement, safety programs, and transit 
systems all across America.
    In 43 years of the interstate system, we invested $114 
billion of Federal funds in building the interstate. But in 
only 5 years of TEA-21 we invested $120 billion of Federal 
funds, building 30,000 lane miles of highway, new or improved, 
more in 5 years than we accomplished in 42 years of the 
interstate system. We did it because we had a guaranteed 
account, because we had the firewall, because the States knew 
and the contractor community knew that at the start of the 
project they would be able to finish it as well.
    We need to continue that march toward productivity by 
increasing--we had a 40-percent increased investment in 
highways and transit from ISTEA 1991-97, a 40-percent over 
those funds in TEA-21. Now we need a 50-percent increase to 
keep ahead of congestion.
    The chairman cited figures on congestion. A newer, more 
recent report that the Texas Transportation Institute is 
preparing to publish this week will show that in those 75 major 
metropolitan areas in the United States the cost of congestion 
is over $70 billion, but nationwide it is over $100 billion, 
and our fellow citizens are spending a week longer in traffic 
than they would if they could drive at posted highways speeds. 
They are buying four tanks of gasoline more a year than they 
would if they could drive at posted highway speeds.
    The way to get around that is to improve the capacity of 
our highway system and our bridge system and our transit 
system. The way we do that is with increased investments.
    We also, during that period of TEA-21 created 1.5 million 
construction jobs that gave an enormous boost to the national 
economy.
    Furthermore, in 1987, logistics occupied 16 percent of our 
gross domestic product. Moving goods by rail, air, or 
principally on the ground, 90 percent of that is surface 
movement by truck, by vehicle. Today that is down to 10 
percent. That means in a $10 trillion economy our investments 
in ISTEA and TEA-21 have resulted in a $600-billion-a-year gain 
in productivity for the national economy. That is enormous when 
you consider that we haven't invested $600 billion, total, over 
that period of time. For a $30-billion-a-year investment in 
highway and transit, we are getting a tenfold return, a twenty-
fold return on investment. We need those investments to 
continue to grow the domestic economy and to advance our 
domestic productivity.
    In addition to productivity, safety: At the beginning of 
the interstate system, we were killing nearly 60,000 people a 
year on the Nation's highways. The interstate reduced that 
death toll to around 50,000. In the last 10 years we have 
reduced it to 41,000, about 3 million injuries a year.
    We have to do better. We invested $2.5 billion in highway 
safety in TEA-21. We need to continue that investment, to focus 
it better, and to reduce those highway fatalities and the $130 
billion in cost from highway accidents and injuries.
    We will do that if the program that the chairman has 
outlined, and which I support and all the Democrats on the 
committee, and all but one Republican on the committee, do as 
well. We want to significantly move this program ahead to a $50 
billion investment in fiscal year 2004 and rising to $75 
billion by the end of the 6-year period. If we do that, 
transportation in every one of our districts will be better, we 
will have a far more safe highway system, improved mobility, 
and we will continue to make productivity gains and reducing 
the cost of logistics in our national economy.
    Thank you very much, Mr. Chairman. I join with the chairman 
in thanking you for your support last fall during those 
difficult Continuing Resolutions, when investment in 
transportation for this current fiscal year was at stake. We 
appreciate your help.
    [The prepared statement of Mr. Oberstar follows:]

   Prepared Statement of Hon. James L. Oberstar, a Representative in 
                  Congress From the State of Minnesota

    Mr. Chairman, I rise in strong opposition to H. Con. Res. 95, the 
fiscal year 2004 budget resolution. Regrettably, this Republican budget 
is likely to force the Transportation Committee to slash the pensions 
of 34,000 Coast Guard retirees and 645,000 railroad retirees and their 
dependents, and the relief provided to families of the victims of 
September 11. Who in this House believes that we should cut the 
September 11th Victims' Compensation Fund to finance more tax cuts for 
the rich? With the Nation now at war, who in this House believes that 
the men and women of the Coast Guard, who are protecting our shores and 
ensuring the safe passage of U.S. Navy ships in the Persian Gulf, 
should be worrying that this Congress may cut their retirement? This 
budget displays a callous disregard for the families of the victims of 
September 11, the men and women of the Coast Guard, railroad retirees, 
as well as the infrastructure needs of this country.
    Section 201 of the Republican budget resolution forces the 
Committee on Transportation and Infrastructure to cut $3.7 billion from 
its mandatory programs over the next 10 years. We are told to find 
these savings from ``waste, fraud, and abuse'' and to produce greater 
efficiency in our programs. While these platitudes of ``waste, fraud, 
and abuse'' make for good rhetoric, these policies will have a 
devastating effect on these retirees and the families of the victims of 
the September 11 attack.
    The Congressional Budget Office says that 90 percent of the 
Transportation Committee's funding of mandatory programs includes these 
three:
     The September 11th Victims' Compensation Fund,
     Coast Guard retirement pay; and
     railroad retirement pensions and unemployment 
compensation.
    And this is where we're expected to find ``waste, fraud, and 
abuse?''
    The September 11th Victims' Compensation Fund provides compensation 
to the victims, or their families, who were injured or killed as a 
result of the September 11 terrorist attacks. Mr. Chairman, no one in 
this chamber will forget the tragedy of September 11. I can only hope 
that the families of the victims of September 11 have begun to put 
their lives back together. How can we, in good conscience, retreat from 
our solemn commitment to help them rebuild their lives? I commit to 
them now that I will oppose this Republican plan that could cut funding 
from the families of the victims of September 11.
    Similarly, I commit to the men and women of the Coast Guard, both 
the 36,000 Coast Guard officers and enlisted personnel and the 34,000 
Coast Guard retirees, that I will strongly oppose this Republican 
budget resolution and its likely cuts in Coast Guard retired pay.
    As we debate this budget resolution, Coast Guard cutters are on 
combat patrol with the U.S. Navy to help secure shipping lanes and the 
safe passage of Navy ships in the Persian Gulf and the Mediterranean. 
At home, the Coast Guard continues to protect our shores and ports. On 
Monday, March 17, the Secretary of Homeland Security initiated 
Operation Liberty Shield to increase security at our Nation's borders 
and protect our critical infrastructure and key assets. Under Operation 
Liberty Shield, the Coast Guard is increasing patrols of major U.S. 
ports and waterways, increasing its escorts of ferries and cruise 
ships, providing armed Sea Marshals onboard every high interest vessel 
arriving at or departing from U.S. ports, and enforcing security zones 
in and around critical infrastructure sites in key ports and petroleum 
facilities close to large coastal communities. In addition to its 
military and homeland security missions, the Coast Guard continues its 
search-and-rescue mission--responding to nearly 37,000 calls and saving 
3,654 lives in 2002--and many other missions. The Coast Guard has long 
been stretched thin, but has always been ready--``Semper Paratus''--to 
answer the call. I have always maintained that the public gets more out 
of its investment in the Coast Guard than virtually any other 
government service. The enlisted men and women of the Coast Guard 
should not have to worry about this Republican effort to cut their 
retirement pay.
    The Republican budget resolution also is likely to result in 
significant cuts to railroad workers' retirement and unemployment 
compensation programs. Railroad workers, unlike other workers, are not 
covered by the Social Security system. They have their own retirement 
program. Last Congress, the bipartisan leadership of the Transportation 
Committee, with the strong support of rail unions, railroads, and rail 
retirees and their dependents, introduced H.R. 1140, a bill to revise 
the railroad retirement program to restore rail worker benefits and 
decrease railroad payroll taxes. The House overwhelmingly passed this 
legislation, by a vote of 383-33, and it became law. Today, the 
Republican budget resolution forces the Transportation Committee to 
consider changing this act to cut railroad worker retirement benefits 
and unemployment compensation. I commit to the 248,000 rail workers and 
the 645,000 rail retirees and their dependents that I will fight any 
attempt to roll back the benefits so recently restored to you.
    Beyond these devastating cuts required by the reconciliation 
instructions, this budget resolution does little to meet our 
infrastructure investment needs. For the reauthorization of the 
Transportation Equity Act for the 21st Century (TEA-21), the 
Transportation and Infrastructure Committee urged the Budget Committee 
to provide $50 billion in budget authority for highway, highway safety, 
and transit programs. In its letter to the Budget Committee, 74 of the 
75 members of the Transportation Committee stated that we must provide 
this level of funding in fiscal year 2004 to maintain our surface 
transportation systems and have any hope of improving the overall 
condition of the Nation's highway and transit systems.
    Regrettably, this budget resolution provides $39 billion for these 
programs--little more than the status quo for TEA-21 reauthorization. 
Through the vigorous efforts of the bipartisan leadership of this 
committee, the Resolution also provides a reserve fund that would allow 
for additional allocations if this or other legislation includes 
increases in Highway Trust Fund receipts. Although this does provide 
the Transportation Committee with the opportunity to address this issue 
at a later date, this Resolution does nothing to address our enormous 
highway and transit infrastructure needs in the fiscal year ahead.
    Moreover, the Republican resolution cuts the amount of highway and 
transit funding that actually may be obligated in fiscal year 2004 
below the CBO baseline. Specifically, the Republican budget resolution 
assumes a cut in the transit program of $98 million in fiscal year 2004 
and $2.5 billion over the next 6 years. This cut is directly contrary 
to TEA-21's goal of modal balance. Under TEA-21 we significantly 
increased transit funding by guaranteeing $36 billion for transit. As a 
result of this increased investment, transit ridership has added 1.6 
billion riders--more than 900,000 new riders each day--over the last 5 
years. This transit renaissance could be threatened by these cuts in 
transit funding.
    At a time when our Nation's infrastructure faces huge unmet safety 
and security needs, congestion is crippling our cities, and our economy 
has lost 2.5 million jobs in the past 2 years, the Republican budget 
resolution cuts these vital programs that could address infrastructure 
security needs and congestion problems and create family wage jobs to 
grow our economy. Instead, it provides more than $1 trillion of new tax 
cuts.
    This budget resolution reflects more than misplaced priorities. It 
is an assault on working men and women from the Coast Guard to the 
Maintenance of Way railroad employees.
    Mr. Chairman, I strongly oppose the Republican budget resolution 
and urge my colleagues to vote ``no.''

    Chairman Nussle. I thank the gentleman. Mr. Skelton, we 
welcome you back to the committee.
    If I didn't say so to begin with, all of your testimony as 
prepared will be part of the record and you may summarize. So 
the testimony you have submitted will be made part of the 
record, and we do appreciate you submitting the written 
testimony as well.
    Welcome back, Mr. Skelton.

                 STATEMENT OF HON. IKE SKELTON

    Mr. Skelton. Mr. Chairman, thank you very much. Mr. Baird, 
thank you. I appreciate this opportunity.
    I know that your work and efforts on this committee are so 
difficult at times, and yet you are at the heart of what we do 
in Congress. Thank you for this opportunity to share some 
defense related thoughts with you.
    I only have three items I will touch on, if I may. I know 
it is difficult to foresee the exact costs, the exact nature of 
costs that will be incurred in the war on terrorism or the 
budget for it. Congress, in my opinion, must have a general 
notion of the impact of these contingency operations. From our 
perspective on our committee, I believe we must do all we can 
to make the costs on this war on terrorism a regular part of 
the authorization as well as the appropriations cycle.
    Last year in the request that the Pentagon sent over they 
asked for a $10 billion reserve fund for the global war on 
terrorism. It was authorized. However, it was not appropriated 
in the regular appropriations process because they didn't get 
the justifications over until July. However, it was 
appropriated in the omnibus appropriations bill. I think we can 
do better than that, and we may get part of the authorization 
in regular appropriations.
    Along that line, the same would be true for the potential 
conflict that we undoubtedly will have in Iraq. The war on 
terrorism should not, as well the conflict, the upcoming 
conflict in Iraq, should not be done merely by supplementals. 
We lose our constitutional oversight. Money is spent by 
authorization and appropriation, and if these contingencies 
come to pass, we can't exactly put a figure on them now; we can 
judge fairly well. However, it means that we do oversight in 
the Armed Services Committee and a great deal of oversight 
elsewhere, enough that the appropriators, which is usually done 
on a ``quick, let's do it right now'' basis--that is no way to 
run conflicts, wars, or the military.
    I know it is difficult to judge the figures, but I think it 
is incumbent upon this committee, and I would hope you would 
seriously take it into consideration in the budget resolution, 
allowing us to authorize and follow through with appropriations 
for those two contingencies.
    Let me also go into another subject. The subject is 
concurrent receipt. This is nothing new to you. Last year the 
Budget Committee provided the Armed Services Committee a 
mandatory spending allocation that allowed us to phase out over 
5 years the prohibition on concurrent receipts for those 
military retirees, not all veterans, military retirees with a 
VA disability rating of over 60 percent.
    The administration threatened to veto that, and we went to 
conference with the Senate, which actually had a larger figure 
than ours. But at the end of the day, we were able to convince 
the White House to take a lesser figure disability if it were 
directly related to the awarding of the Purple Heart and a 
combat related disability, such as stepping in a foxhole and 
breaking your leg, or whatever the case may be, but not 
actually by a wound, of 60 percent or better. I would recommend 
that you would allow us the allocation similar to what you did 
last year for those military retirees with VA disability 
ratings of 60 percent or higher.
    I would also like to mention briefly a matter that has come 
to our attention, that the recommendations coming from the 
administration cut this item called ``Impact Aid'' to children 
who are military dependents. As you know, in many counties and 
cities throughout the country where there are military 
installations, those military installations don't pay local 
taxes such as school taxes, and the money is made up by the 
Federal Government for those military children with what we 
call ``Impact Aid.''
    The Impact Aid figure has been cut by 14 percent below last 
year's level, and it is really difficult when I say to a 
sergeant who is getting ready to fly to Kuwait for the upcoming 
conflict, ``Good luck to you, and we have given you all the 
ammunition you need and defense training you need, and by the 
way, we're not going to fully educate your child who you are 
leaving back here at home.'' So I urge you to include that cut 
proposal of 14 percent back into the budget.
    I appreciate your consideration. These are very serious 
issues for people mainly in the military as well as all of our 
Nation. Thank you.
    [The prepared statement of Mr. Skelton follows:]

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

    Chairman Nussle, Mr. Spratt, and members of the Budget Committee: 
thank you for the opportunity to present my views about the national 
security function of the Federal budget.
    Mr. Chairman, I will limit my testimony to two defense related 
subjects. First, the question of how to better budget, authorize, and 
appropriate funds for contingency operations. Second, the need for 
Congress to address the issue of concurrent receipt.
    While it may be difficult to foresee the exact nature of what costs 
may be incurred in the war on terrorism, it is important to budget for 
them as best we can. Congress must have a general notion of the impact 
of these contingency operations on the government's bottom line. From 
my perspective on the Armed Services Committee, I believe we must do 
all we can to make these costs part of the regular authorization and 
appropriations cycle to best ensure proper congressional oversight.
    Last year, the House passed budget resolution included a provision 
that established a $10 billion reserve fund for the global war on 
terrorism, per the administration's request. Congress authorized the 
$10 billion, and $10 billion was appropriated in the omnibus 
appropriations bill.
    Last year's experience was not ideal. The administration sent its 
justification to Congress late in July, and the regular Defense 
Appropriations bill did not include any of the $10 billion. We should 
be able to do better this year, but the administration's budget request 
for fiscal year 2004 assumes no funding for contingency operations or 
specifically for the war against terrorism.
    One problem of not making any allowance for the war on terrorism in 
the budget request is that funding will then likely be provided through 
supplemental appropriations. As you know, supplementals are done 
primarily by the Appropriations Committee, and usually in expedited 
fashion. In my view, this leads to several undesirable outcomes:
     Since supplementals are crafted in a more ad hoc fashion 
than a regular Authorization and Appropriations defense bill, they are 
usually drafted without the benefit of hearings and input from a wide 
array of Members.
     Institutionally, Congress loses the process of checks and 
balances that the House and Senate Armed Services Committees provide in 
tandem with the Appropriations Committees.
     Most importantly, supplementals are often delayed, which 
means that the Pentagon must raid readiness accounts to pay for the 
contingency operations. This affects training and readiness levels, and 
is something we must strive to avoid.
    I believe we should include funding for the ongoing war on 
terrorism in the budget resolution. This means assuming a supplemental 
for 2003 and a reserve fund for 2004. Section 201 of last year's budget 
resolution would be a good model for the reserve fund for this year.
    The tougher question is Iraq. I believe the Budget Committees, the 
authorizing committees, the Appropriations Committees, and the 
administration need to establish rules and procedures on how to provide 
funding for any possible military action in Iraq. We in Congress must 
protect our constitutional obligation to ensure that authorized and 
appropriated funds are necessary and are being properly used.
    My second issue, concurrent receipt, is easier.
    Last year, the House Budget Committee provided the Armed Services 
Committee a mandatory spending allocation that allowed us to phase out 
over 5 years the prohibition on concurrent receipt for those military 
retirees with a VA disability rating of 60 percent or higher. 
Unfortunately, the administration threatened to veto our authorization 
bill if it included this provision, so it was dropped during conference 
with the Senate. We did adopt a provision that allows military retirees 
to collect both VA disability and their full military retirement 
payment if the disability resulted from a combat injury or a wound for 
which they were awarded a Purple Heart. This is a step in the right 
direction, but falls short of what fairness dictates we do for military 
retirees who have disabilities serious enough to warrant VA 
compensation.
    At a minimum, Mr. Chairman, I recommend that you again provide in 
this year's budget resolution an allocation to the Armed Services 
Committee that will allow us to adopt legislation to accomplish what 
you advocated last year--permitting concurrent receipt for those 
retirees with VA disability ratings of 60 percent or higher. This again 
could be a 5-year, gradual phase in, so the allocation would be similar 
to last year's allocation of $5.8 billion in direct spending over 5 
years.
    If a disability results from military service to our country, even 
if it was not sustained in battle, military retirees should be entitled 
to both retirement pay they earned and VA disability compensation. 
Going back to last year's initiative is a modest but critical step to 
fair treatment for our military retirees with disabilities, and I urge 
you to again include it.
    Before leaving, I want to mention an issue that is important to 
military members, their families, and to local school districts 
throughout the country--Impact Aid. As you know, Impact Aid provides 
public school districts with a Federal payment in lieu of taxes lost 
because of the non-taxable status of Federal property. In the 1275 
school districts that receive Impact Aid, this funding makes a real 
difference in the quality of the education that children, particularly 
the children of military members and Federal civilian workers, receive.
    About $1.2 billion was appropriated in the fiscal year 2003 omnibus 
appropriations act for Impact Aid. Unfortunately, the administration's 
request for fiscal year 2004 is only about $1 billion--14 percent below 
the 2003 level. I urge the committee to include in the budget 
resolution an allocation for this important program that, at a minimum, 
would permit funding at last year's level.
    Mr. Chairman, I again thank you, Mr. Spratt, and the rest of the 
Budget Committee for providing me with the opportunity to discuss these 
matters with you.

    Chairman Nussle. Thank you, Mr. Skelton.
    This is the end of the first panel. Let me just report to 
members that I know that there are a number of Members on the 
committee that want to testify that are hoping to move as 
expeditiously as possible. So why don't we move to questions 
for these three witnesses and see if there are any questions 
for this first panel. Do any members have any questions? Mr. 
Baird?
    Mr. Baird. Just very briefly, I wonder if I might ask Mr. 
Young or Mr. Oberstar if they could comment on the economic 
development implications of the budget proposal. Jobs and 
economic recovery are high on our priority list right now.
    Mr. Young. If you are referring to the effect of this type 
of investment, for every billion dollars, there are 44,000 
high-paying jobs created. But more than that--that is 
immediate. That is one of the best stimulus packages you can 
possibly have, but it is the long-term effect; if we don't do 
something, the effect upon the economy gets less and less, what 
I call, viable.
    This is a different role now. After we passed NAFTA, if you 
went up and down the highways, you would see the trucks, wall-
to-wall trucks coming north and south out of Canada and such. 
We have a problem because we are not able to deliver on time; 
things cannot leave these ports on time, and we are a trading 
nation. If we don't improve all the forms of transportation, we 
will not be competitive globally with the other countries.
    Mr. Baird. I appreciate that, and I also want to thank Mr. 
Skelton for his testimony and to share many of your comments. 
We appreciate your presence.
    Thank you, Mr. Chairman.
    Chairman Nussle. Mr. Brown?
    Mr. Brown. Good morning, Mr. Chairman.
    Gentlemen, I appreciate the input that you have given us on 
the roads and the needs we have. My question would be, with the 
increase in the additional funding, are you planning to adjust 
the State match? I mean most of the States are having budget 
problems of their own and they are having trouble finding 
enough revenue in order to meet the Federal plans. I am just 
wondering if you would address the State requirements.
    Mr. Young. We are going to try to address the formula 
question itself. With more money, we can do that. That is the 
debtor State and the receiver State. We also are aware of 
States that don't have the ability to make the match, but I 
also would suggest States that have, in fact, made an effort to 
raise the money to meet the national transportation needs, I 
would probably look more favorably on them than just doing the 
whole 100 percent Federal funding for a highway system within a 
State, because a lot of States are aggressively doing it. 
Florida is one of them. They have gone out and passed money to 
meet the match available to set the transportation system in 
place.
    What we have to do is start encouraging States and say, 
this is a national issue, but you have to participate in it. It 
isn't always just come from the Federal Government. But I am 
trying to raise the formula up to a level that is more 
equitable. I have said this all along, but I cannot do that 
unless the money is available to do so.
    Mr. Brown. But you are of the opinion now that you might 
need to raise everybody to at least some level?
    Mr. Young. We have thought of a number. Personally, I would 
like to get at 92 percent, and if that is possible, we will do 
it. It is going to be very difficult to do that without, I 
think, destroying the bill. Because if you think some of the 
States that are receiver States, that they lose the percentage 
they are getting now, they are not going to be very happy, and 
there are some very powerful Senators on the other side that 
have looked askance at whatever we are trying to do.
    Mr. Oberstar. If I may, Mr. Brown, in TEA-21 it was our 
very determined objective to improve the equity of the Highway 
Trust Fund. Then Chairman Shuster and I, and our staffs, spent 
a great deal of time with the Office of Management and Budget, 
the Federal Highway Administration, and the Department of 
Transportation, to work through numerous formulas that would 
achieve our goal of equity. We came up to 90.5 percent return 
for each State. That was the base. Every State would be assured 
they would get no less than 90.5 percent. Some would get more 
because of historically the way the formula has worked, the 
three-part formula for distribution of Federal Highway Trust 
Fund dollars.
    To close the gap, we had also a minimum guarantee amount 
for each of the States. That was a further adjustment based on 
the formula to assure that States got to 90.5 percent.
    We were able to achieve that objective because we had a 
growing national economy, rising revenues into the Highway 
Trust Fund, and ability to expand the total dollars by 40 
percent. Now, as Chairman Young said just a moment ago, if we 
get to the $50 billion program and $375 billion over 6 years, 
then there are more dollars available to increase the total 
funding and improve that equity position. We are going to have 
to do a lot of computer runs to get there, but, frankly, it all 
depends on how much money totally is going to be available in 
the program. That is going to mean an increase in revenues.
    Mr. Brown. Mr. Chairman, if might just add one--is my time 
up?
    Chairman Nussle. No. [Laughter.]
    Mr. Brown. Then may I ask one final question that really is 
pretty important to South Carolina? We have an unusual 
influence of tourism in our transportation system. I was just 
wondering if you would account for those States that are 
impacted by tourism. We are a State of 4 million people, and we 
have over 12 million tourists a year visiting via our roads. So 
if you would be so kind as to comment on that, Mr. Chairman?
    Mr. Oberstar. I think that fact does accrue for States all 
along the I-95 corridor, where there is a huge amount of 
tourism. You have 35 million people living in that corridor, 
and they are pass through States. The people are passing 
through, but they are buying fuel in that State. That 
additional gas purchase, plus revenue into the trust fund, 
accrues to the benefit of the State along that transportation 
corridor.
    We see that in other tourism corridors elsewhere around the 
country. That was one of the factors that we used in providing 
a minimum guarantee adjustment for South Carolina in TEA-21.
    Chairman Nussle. Are there other members who have quick 
questions for this panel? [No response.]
    We appreciate your testimony, and we certainly will take it 
under very strong consideration.
    Mr. Young. Thank you, Mr. Chairman.
    Chairman Nussle. Thank you.
    We will invite the other Members who are in the room to 
come up to the witness table. In the meantime, while they are 
coming forward, we will invite Mr. Brady, who is here, to begin 
his testimony, Welcome to the committee, and we are pleased to 
put all of the Members' testimony into the record as written, 
and you may summarize during the time. Mr. Brady?

  STATEMENT OF HON. KEVIN BRADY, A REPRESENTATIVE IN CONGRESS 
                    FROM THE STATE OF TEXAS

    Mr. Brady. Thank you, Mr. Chairman, Mr. Ranking Member. 
Thanks for being here today. I will summarize quickly.
    If there is one thing we all share in common, Republican or 
Democrat, it is that we want to cut wasteful spending out of 
our budget. We want to get a better bang for the dollars we 
spend up here. The past generations of Congress have not had 
much luck controlling the spending. We are becoming more 
efficient.
    What I am proposing today is a proven way to cut wasteful 
spending, shrink the size of government, and, more importantly, 
just to make sure that every dollar we spend up here really 
gets used for what it is intended to be used. This method is 
the creation of a Federal sunset commission.
    This is a bill proposed by Congressman Jim Turner and I, 
along with 50 other cosponsors from both sides of the aisle. It 
is a proven method that works, and more than half, almost half 
of our States today have a sunset mechanism. It really does, 
obviously, tackle the issues of duplication in all agencies.
    This Commission sets an expiration date, and every agency 
program will go out of existence unless they can prove their 
value to us, not their value 100 years ago or 40 years ago, or 
whatever. But do they deserve our precious tax dollars today?
    The Commission reviews the agency who looks at them for, 
are they doing what they originally were intended? Are they 
making efficient use of their tax dollars? Are they following 
the intent of Congress as they perform? What type of customer 
service do they provide? Do they duplicate other programs? Do 
they waste these dollars?
    Under the mechanisms, agencies will be put on about a 12-
year date timetable, which we have found in these 24 States is 
very key. Not only do States eliminate inefficient spending--in 
Texas, for example, we use sunset like other States. We have 
lost 43 State agencies, saved about $1 billion in tax savings 
each year. Other States achieve different degrees of success in 
it. It depends, in our study, on how dedicated you are to 
really sunset. There has to be a continual review. Agencies 
need to know that we are always looking at the spending 
mechanisms.
    What we have discovered also in studying States, that not 
only do you cut wasteful spending, but it is amazing and 
interesting how responsive agencies get to Members of Congress 
and taxpayers when their date for sunset comes up. Your phone 
calls get returned; letters are responsive. They learn who 
their customers are, but in truth the customers are the 
taxpayers. What we want to do is reinforce the fact that our 
agencies, our government is here to serve the taxpayers, not 
the other way around.
    The Commission is a bipartisan commission, half appointed 
by the House, half by the Senate, half by the majority, and 
half by the minority. We believe it can produce significant 
results.
    One of the key things, I guess the point of all this, to 
sum up, is that we ensure under sunset that there are no sacred 
cows. Every agency is reviewed. Every agency is set to high 
standards. What we basically say to our agencies is, ``Put up 
or shut up. Serve government, serve the people, or leave.''
    We want to invest in programs that work that are dying for 
those that don't. This is a proven way to control spending, and 
I would urge the Budget Committee, which is I think a champion 
in trying to make efficient use of our resources, to 
incorporate this whenever possible.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Brady follows:]

 Prepared Statement of Hon. Kevin Brady, a Representative in Congress 
                        From the State of Texas

    Purpose: To provide for the periodic review of the efficiency and 
public need for Federal agencies, to establish a commission for the 
purpose of reviewing the efficiency and need of such agency, and to 
provide for the abolishment of agencies for which a public need does 
not exist.
    Benefits:
     Requires each Federal agency to justify their existence--
or face elimination.
     Cuts wasteful spending and promotes efficiency.
     Abolishes obsolete agencies--streamlines others and 
identifies duplication.
     Promotes accountability and customer service.
     American taxpayers are given a voice in evaluating an 
agency's operations, responsiveness and need for existence.
     Discourages regulatory deviation from Congress' 
legislative intent.
     Builds on the foundation of the Results Act of 1993.
    Commission: A 12-member bipartisan commission is established 
composed of eight Members of Congress and four private individuals, 
appointed in equal numbers by the Speaker of the House and the majority 
leader of the Senate. Of the four Members of Congress appointed from 
each chamber, two will be of the majority party and two of the 
minority. The length of terms are 6 years for Members of Congress, 3 
years for private individuals. Members of Congress cannot serve beyond 
their term in elected office.
    Expiration Date: The commission will assign with the approval of 
Congress an expiration date to every agency of the Federal Government 
not specifically enumerated in the U.S. Constitution. The normal sunset 
length is expected to be 12 years for most agencies, a shorter length 
when deemed appropriate by Congress. If not re-established by 
legislative action of Congress, the agency will cease existence within 
one year of its sunset date.
    Review of Need: Prior to the sunset date the commission will 
consider: agency need and purpose, efficiency of operation, operations 
outside its scope of authority, cost-effectiveness in delivering 
essential services, duplication of programs, responsiveness of the 
agency to congressional recommendations, compliance with the Results 
Act, customer service and promptness in processing complaints, 
encouragement of public participation and the effects of abolishment on 
State and local governments.
    The commission will consult with the General Accounting Office, 
Comptroller General and the Office of Management and Budget, and 
solicit recommendations from the congressional committees of 
jurisdiction.
    Public Input: American taxpayers, agency customers and State and 
local governments will be encouraged to voice--through public hearings, 
Internet and other forms of communication--their opinions of agency 
need, quality of service and effectiveness.
    Recommendation: Following evaluation of each agency under sunset 
review, the commission will submit to Congress a recommendation as to 
whether the agency should be abolished, streamlined, reorganized or re-
established with recommendations for administrative and legislative 
action. If the agency is re-established, a future sunset date will be 
assigned by Congress to ensure continued accountability and periodic 
review.
    Cost: When the commission is established the appropriated 
expenditures will be offset by a reduction in current Federal spending 
to be identified.
    Sunset: To ensure continued accountability of the commission 
itself, the Abolishment of Obsolete Agencies and Federal Sunset Act 
contains a sunset date.

    Chairman Nussle. Thank you, Mr. Brady. Would you add me as 
a cosponsor?
    Mr. Brady. Yes, sir.
    Chairman Nussle. Thank you. And if there are any others, 
you can volunteer as well.
    The next Member by time who has arrived is Mr. Tierney. 
Welcome, and we are pleased to receive your testimony.

 STATEMENT OF HON. JOHN TIERNEY, A REPRESENTATIVE IN CONGRESS 
                FROM THE STATE OF MASSACHUSETTS

    Mr. Tierney. Thank you, Mr. Chairman. I thank you for the 
opportunity to speak today. I want to thank you, Mr. Baird and 
members of the minority and other members here also.
    You know the Budget Committee I guess is where the buck 
stops and where it also starts. As the process begins, I am 
here today, I think, just basically to try to urge the 
committee to adopt a budget resolution that will put Americans 
back to work, that will fund vital priorities such as homeland 
security, education, and health care, and include the cost of 
any impending war.
    We simply need a budget that will turn our economy around. 
I probably don't need to restate the fact that, if we add the 
President's budget up without the cost of Iraq, we are already 
looking at having seen the $5.6 trillion 10-year budget surplus 
we were looking at at the beginning of this term being replaced 
by a $2.1 trillion deficit. That is close to an $8-trillion 
turnaround in just 2 years. I think the public and I see the 
numbers as staggering.
    At the same time, we have record job losses and poor 
economic growth. Two million jobs have been lost since January 
of 2001. The stock market has gone down while unemployment 
rates have gone up, and consumer confidence is at its lowest 
level in 10 years.
    In response to all this, the administration puts in front 
of us, tries to promote now an economic plan of tax cuts for 
only a few, seemingly without regard for the plight of many. 
There are consequences to this type of a flawed policy, and our 
vital domestic programs on which many people depend are going 
to suffer.
    They were underfunded even before we started talking about 
what is happening in Iraq, and they are certainly going to be 
even more severely underfunded after that. We can simply do 
better.
    First, Congress has to adopt a budget that puts Americans 
back to work. Over the past 2 years, over 2.3 million private 
sector jobs have been lost; over 8 million Americans, white 
collar and blue collar, are out of work. In my district alone, 
the unemployment rate is an unacceptable 7.3 percent. Today we 
learned that 430,000 people filed claims for unemployment 
assistance just last week. That is 430,000 more American 
families struggling as our economy is sagging.
    Yet, the administration's response is an irresponsible 
economic policy that focuses on multiyear tax cuts for our 
wealthiest citizens. Despite the administration's claims that 
this latest tax cut would afford an average $1,000 tax cut for 
all Americans, the fact is that in my home State 25 percent of 
Massachusetts taxpayers will receive nothing at all. Forty-
three percent of Massachusetts taxpayers will receive less than 
$100. That is 1.3 million Massachusetts taxpayers who will get 
less than $2 a week.
    Now in my district there is a McDonald's on Main Street in 
Peabody that sells Big Mac for about $2.61. That means that, 
with the proposed so-called tax break, for most people in my 
district it won't even include enough money to buy the Mac even 
though it comes without the fries.
    This is unacceptable. We can do better. But those people do 
better than the 780,000 Massachusetts people who will get 
absolutely zero under the Bush administration's proposal. We 
can do better.
    This committee could adopt a bipartisan budget that 
incorporates the House Democrats' plan. We propose a fair, fast 
acting, fiscally responsible economic plan that will pump $136 
billion into the economy just this year. That plan offers a 
$300 tax rebate to every working American, putting money into 
the hands of consumers who need to spend it now--for rent, for 
food, for consumer goods, and school costs for their children.
    We provide immediate tax relief for small businesses to 
boost cashflow and generate investment in jobs by increasing 
from $25,000 to $50,000 the amount of the cost of new 
investments that a small business can expense in 2003 and 
allowing a 50-percent bonus depreciation for business 
investments.
    And we send $31 billion directly to the State and local 
governments for transportation, homeland security, Medicaid, 
and health care, giving hard-pressed States a burst of money 
for necessary projects that are ready to go except for the lack 
of funds. I, for one, think that we could do even more in that 
area.
    The American people expect us to fund vital priorities, 
which should mean this budget should be a statement of our 
national priorities, national values. It must fund the vital 
priorities of the American people.
    Although the President says he values homeland security, 
education, prescription drugs, and a myriad of other 
responsible needs, his budget reflects otherwise. There is a 
clear disconnect between what the President promises and what 
he produces in the budget. His rhetorical support for many 
critical domestic programs is simply not reiterated and 
reflected in his budget numbers and figures.
    The reality is that our first-responders and those who 
protect our borders and ports will not be adequately funded; 
our children will be left behind, and our senior citizens will 
be shortchanged. Our values have to be in consideration of our 
first-responders. Since September 11, local police and fire and 
emergency personnel have heroically answered the call to 
protect our country. Over 18 months later, we still haven't 
matched our rhetoric with our resources.
    We can do better for first-responders. We need to invest in 
the nuclear, port, industrial, and community protections that 
nonpartisan experts say our first-responders need to fight the 
clear and present danger of terrorism.
    Today I renew the call made last year with the bipartisan 
support from over 100 Members of Congress. Let's pass a budget 
resolution that helps local first-responders by counting the 
$2.6 billion they've already spent defending America after 
September 11 toward the 25 percent local match required for 
police, fire, and emergency personnel. Let's commit to a fast 
track disbursement of these funds directly to local 
communities, once the dollars have been appropriated. Before 
taking billions of dollars off the table with a tax cut to 
benefit the high end, let's fund homeland security first.
    Our budget must value education, starting with the No Child 
Left Behind Act. The Bush budget is billions beneath the amount 
that the President promised, millions short in fiscal year 2004 
alone, and will leave many children behind.
    The Bush budget cuts after school programs, including the 
21st Century Community Learning Center Initiative. In April of 
2002, the President went to New Mexico and told us about his 
support for Even Start. Such a program would offer tutoring to 
children and job training to adults, but the Bush budget cuts 
Even Start.
    It also cuts education in areas of vocational/technical 
programs for colleges, and my cities and towns are strained 
with Federal mandates imposed on them for testing and 
administrative requirements. They trusted that the President 
would at least keep his promise to pay for these. He didn't, 
and now in pressing times they must.
    Our students deserve more from the budget. This committee 
can start by keeping the promises the President made in signing 
his own bill and fully fund the No Child Left Behind Act.
    Hopefully, this budget must value health care. As Members 
of Congress, we value health care. We pay into a system that 
guarantees each of us access to quality care and prescription 
drugs. We must do the same for the American people.
    The Bush plan could force seniors to drop out of Medicare 
and give up the right to choose their own doctor in order to 
get a prescription drug benefit. Seniors who stay in 
traditional Medicare under that plan would only receive a drug 
discount card that offers minimal savings and would give 
catastrophic coverage, but it doesn't kick in until they have 
already spent thousands of dollars out of their own pockets. 
Rather than passing a budget that forces seniors and others to 
choose between their family doctors and needed prescription 
drugs, we should provide a guarantee.
    This committee could reach across the aisle and adopt the 
Democratic plan which offers seniors a prescription drug 
benefit that they deserve, one that is comprehensive, 
affordable, and available for all who receive Medicare, the 
same Medicare program they have trusted for over 40 years.
    We have to preserve the choices that matter most: what 
doctor to go to; what pharmacy to use. If the health care plan 
and meaningful prescription drug benefits that give more relief 
and more choices is good enough for Members of Congress, I 
suspect it is good enough for all Americans.
    This committee can act to hold the President to his 
homeland security, education, and health care promises, and I 
urge you to do that.
    Finally, we have to level with the American people and 
include the cost of war in the budget. While the White House 
speaks of little else today besides Iraq, the one place they 
are conspicuously silent is in the budget. The cost of 
disarmament or a potential war with Iraq are not even factored 
in the President's budget or in the Department of Defense 
estimates.
    We hear rumors that the President is going to request a 
supplemental spending bill of as much as $95 billion to pay for 
military action in Iraq. Why isn't that reflected in the 2004 
budget? Why isn't it being discussed with the American people 
today?
    There's already substantial sums, said to be as much as $26 
billion in grants and loans to Turkey for the use of our bases 
on their northern front against Iraq. If we have $26 billion 
for Turkey, we should have $26 billion to spend on education, 
homeland security, and health care in America. The $26 billion 
for Turkey comes on top of the $400 billion in fiscal year 
2004's budget already proposed for the Department of Defense 
for our military, and there is no end in sight.
    Estimates for the cost of war, Iraq's reconstruction, and 
the American occupation are rumored to be from $50 billion to 
$200 billion. For a year and a half now, we have spent millions 
of dollars each month in Afghanistan as part of a bipartisan 
commitment to rebuild that country. If our Afghanistan 
experience is any indication, the Iraqi war and aftermath will 
be a sustained commitment of blood and treasure.
    I think the President owes the American people an 
explanation of just what that commitment is, a concrete 
assessment in terms of American and Iraqi lives and in 
treasure, and what we are forfeiting domestically because of 
the war. That is what the American people have to know and have 
to debate.
    But we needn't wait for the White House to level with the 
American people, Mr. Chairman. Today this committee can tell 
the truth to the American people. The American taxpayers are 
the investors, so let's let them know how much of their hard 
earned tax dollars will be spent and for what. We have war 
plans. War plans have cost estimates. We have a number. Let's 
share it with the American people.
    Now the essential question is, how are we going to pay for 
this? How do we keep the promises made to the American people 
while protecting our country and preventing future generations 
from paying the bills? In this time of struggle against 
terrorism, contributions need not be limited to men and women 
in uniform. Every American can do his or her part.
    As a measure of shared sacrifice, we can temporarily 
suspend the phase-in of all future tax reductions under the 
2001 Tax Reduction Act until the President certifies that the 
situations in Iraq and North Korea have been resolved, and that 
there has been an adequate response to international terrorism, 
and the administration is no longer extending enlistments of 
members of the Armed Forces or activating Reserve units by 
reason of the situation in Iraq and North Korea. If Congress 
can't muster that resolve to do that, then we can suspend any 
future steps in lowering the top two income brackets.
    Mr. Chairman, I hope that in committee and on the House 
floor the majority will accord these options full 
consideration. I hope we have that debate before our country. 
Your committee has the opportunity today to bridge the 
credibility gap between the President's lofty political 
rhetoric and his harsh budgetary realities. I urge you to seize 
the opportunity to do that.
    Thank you for the opportunity to testify.
    [The prepared statement of Mr. Tierney follows:]

    Prepared Statement of Hon. John F. Tierney, a Representative in 
                Congress From the State of Massachusetts

 FISCAL YEAR 2004 BUDGET SHOULD PUT AMERICANS BACK TO WORK, FUND VITAL 
                    PRIORITIES, INCLUDE COSTS OF WAR

    Thank you, Mr. Chairman, for the opportunity to speak today. Thank 
you, Mr. Spratt, for your thoughtful leadership as the ranking member. 
The Budget Committee is where the buck stops--and starts. As this 
process begins, I am here today to urge the committee to adopt a budget 
resolution that will put Americans back to work, fund vital 
priorities--such as homeland security, education and health care--and 
include the costs of any impending war.
    We need a budget that will turn our economy around.
    When we add up the President's budget, without the cost of Iraq, 
the $5.6 trillion 10 year budget surplus we looked at the beginning of 
this Presidential term has already been replaced by a $2.1 trillion 
deficit. This is close to an $8-trillion turnaround in just 2 years. 
The numbers are staggering.
    At the same time, there are record job losses and poor economic 
growth. Two million jobs have been lost since January of 2001. The 
stock market has gone down while the unemployment rate has gone up. 
Consumer confidence is at its lowest level in nearly 10 years.
    Meanwhile, in response to all of this, all this administration can 
do is to continue to promote and advance the narrow economic plan of 
tax cuts for the few, without regard to the plight of the many.
    There are consequences for this flawed fiscal policy, and our vital 
domestic programs, on which many people depend, are going to suffer. 
They were under funded even before we started talking about what is 
going to happen in Iraq, and they are going to be even more severely 
under funded after that. We can do better.
    First, Congress must adopt a budget that puts Americans back to 
work: Over the past 2 years, over 2.3 million private sector jobs have 
been lost. Over 8 million Americans--white collar and blue collar--are 
out of work. In my district the unemployment rate is an unacceptable 
7.3 percent. Today we learned that 430,000 people filed claims for 
unemployment assistance last week. That's 430,000 more American 
families struggling as our economy is sagging.
    Yet the administration's response is an irresponsible economic 
policy that focuses on multiyear tax cuts for our wealthiest citizens. 
Despite the Bush administration's claims that its latest tax cuts would 
afford an average $1000 tax cut for all Americans, the fact is that in 
my home State, 25 percent of Massachusetts taxpayers would receive 
nothing at all and 43 percent of Massachusetts taxpayers would receive 
less than $100.
    That's 1.3 million Massachusetts taxpayers who will get less than 
$2 a week. Now in my district, the McDonald's on Main Street in Peabody 
sells a Big Mac for $2.61--and that does not include fries. With a so-
called tax cut of less than $2 a week, my constituents don't even get 
enough for one Big Mac. But these folks are better off than the 780,000 
Massachusetts taxpayers who will receive zero under the Bush plan. We 
can do better.
    This committee can adopt a bipartisan budget that incorporates the 
House Democrats' plan. We have proposed a fair, fast acting, fiscally 
responsible economic plan that will pump $136 billion into our economy 
this year. That plan offers a $300 tax rebate to every working 
American, putting money into the hands of consumers who need to spend 
it now for rent, food, consumer goods and school costs for their 
children.
    We provide immediate tax relief to small businesses to boost cash 
flow and generate investment and jobs by increasing from $25,000 to 
$50,000 the amount of the cost of new investments that a small business 
can expense in 2003 and allowing a 50 percent bonus depreciation for 
business investments. We send $31 billion directly to State and local 
governments for transportation, homeland security, Medicaid and health 
care, giving hard pressed States a burst of money for necessary 
projects that are ready to go but for lack of funds. I, for one, think 
we could do even more there.
    Second, the American people expect us to fund vital priorities: The 
budget is a statement of our national values. It must fund the vital 
priorities of the American people. Although the President says he 
values homeland security, education, prescription drugs, and a myriad 
of other responsible needs, his budget reflects otherwise. There is a 
clear disconnect between what the President promises and what he 
produces. His rhetorical support for many critical domestic programs is 
simply not reflected in his budget's numbers and figures. The reality 
is that our first responders, those that protect our borders and ports, 
will not be adequately funded; our children will be left behind; and 
our senior citizens will be short changed.
    Our budget must value our first responders: Since 9/11 local 
police, fire and emergency personnel have heroically answered the call 
to protect our country. Over 18 months later, we still have not matched 
rhetoric with resources.
    We can do better for first responders. We need to invest in the 
nuclear, port, industrial and community protections that non-partisan 
experts say our first responders need to fight the clear and present 
danger of terrorism.
    Today I renew the call made last year with bipartisan support from 
over 100 Members of Congress. Let's pass a budget resolution that helps 
local first responders by counting the $2.6 billion spent defending 
America after 9/11 in crisis response and consequence management as a 
``soft match'' toward the 25 percent local match required for police, 
fire and emergency personnel. Let's commit to a fast track disbursement 
of these funds directly to local communities once the dollars have been 
appropriated. Before taking billions of dollars off the table with a 
tax cut to benefit the high end, let's fund homeland security first.
    Our budget must value education, starting with the No Child Left 
Behind Act: The Bush budget is billions beneath the amount that the 
President promised--millions short in fiscal year 2004 alone--and will 
leave many children behind.
    The Bush budget cuts after school programs, including the 21st 
Century Community Learning Center Initiative. In April of 2002, the 
President went to New Mexico and told us all about his support for Even 
Start, a program that offers tutoring to children and job training to 
adults. But the Bush budget cuts Even Start. The Bush budget also cuts 
vocational and technical college programs that prepare students for the 
future.
    My cities and towns are strained by the Federal mandates imposed on 
them for testing and other administrative requirements. They trusted 
that the President would at least keep his promise to pay for these. He 
didn't, and now in hard times they have to pay.
    Our students deserve more from our budget. This committee can start 
by keeping the promises the President made in signing his own bill, and 
fully fund the No Child Left Behind Act.
    Our budget must value health care: As Members of Congress, we value 
health care, and pay into a system that guarantees each of us access to 
quality care and prescription drugs. We must do the same for the 
American people.
    The Bush plan could force seniors to drop out of Medicare and give 
up the right to choose their own doctor if they want a prescription 
drug benefit. Seniors who stay in traditional Medicare would only 
receive a drug discount card that offers minimal savings and 
catastrophic coverage that does not kick in until they have already 
spent thousands of dollars out of their own pockets. Rather than pass a 
budget that forces seniors and others to choose between their family 
doctors and needed prescription drugs, we should provide a guarantee.
    This committee should reach across the aisle and adopt the 
Democratic plan, which offers seniors a prescription drug benefit that 
they deserve--one that is comprehensive, affordable, and available for 
all who receive Medicare--the same Medicare program they have trusted 
for nearly 40 years. We must preserve the choices that matter most--
which doctor to go to and what pharmacy to use.
    If a health care plan with meaningful prescription drug benefits 
that gives real relief and real choices is good enough for Members of 
Congress, it's good enough for all Americans. This committee can act to 
hold the President to his homeland security, education, and health care 
promises--I urge you to do so.
    Third, we must level with the American people and include the costs 
of war in our budget: While the White House speaks of little else 
besides Iraq these days, the one place they are conspicuously silent is 
in the budget. The costs of disarmament or a potential war with Iraq 
are not even factored in the President's budget or those Department of 
Defense estimates.
    We hear rumors that the President is going to request a 
supplemental spending bill of as much as $95 billion to pay for any 
military action in Iraq. Why is that not in the 2004 budget? Why is it 
not being discussed with the American people today?
    They have already offered substantial sums, said to be as much as 
$26 billion in grants and loan guarantees to Turkey for the use of our 
bases on their northern front against Iraq. If we have $26 billion for 
Turkey, we should have $26 billion to spend on education, homeland 
security and health care in America. This $26 billion to Turkey comes 
on top of the $400 billion in the fiscal year 2004 budget already 
proposed for the Department of Defense for our military. And there is 
no end in sight.
    Estimates for the cost of war, Iraq's reconstruction, and an 
American occupation are rumored to range from $50 billion to $200 
billion. For a year and a half now, we have spent millions of dollars 
each month in Afghanistan as part of a bipartisan commitment to rebuild 
that country. If our Afghanistan experience is any indication, the 
Iraqi war and aftermath will be a sustained commitment of blood and 
treasure.
    I think the President owes the American people an explanation of 
just what that commitment is--a concrete assessment in terms of 
American and Iraqi lives, and in treasure--and what are we forfeiting 
domestically because of this war. That is what the American people have 
to know and debate.
    But Congress need not wait on the White House to level with the 
American people.
    Today, this committee can tell the truth to American people. The 
American taxpayers are the investors--let's tell them how much of their 
hard earned tax dollars will be spent. We have war plans; war plans 
have cost estimates; we have a number; let's share it.
    Now the essential question is, how do we pay for this? How do we 
keep the promises made to the American people while protecting our 
country and preventing future generations from paying the bills? In 
this time of struggle against terrorism, contributions need not be 
limited to men and women in uniform. Every American can do his or her 
part.
    As a measure of shared sacrifice, we can temporarily suspend the 
phase-in of all future tax reductions under the 2001 Tax Reduction Act 
until the President certifies that the situations in Iraq and North 
Korea have been resolved, there has been an adequate response to 
international terrorism, and the administration is no longer extending 
enlistments of members of the Armed Forces or activating Reserve units 
by reason of the situation in Iraq or North Korea.
    If Congress can't muster the resolve to do that, then we can 
suspend any future steps in the lowering of the top two income tax 
brackets. This affects taxpayers with incomes of $150,000 and above. 
Freezing the top two tax rates while allowing all other bracket 
reductions and phase-ins such as marriage tax relief and child credits 
provides middle class tax fairness and generates resources.
    I would hope that in committee and on the House floor, the majority 
will accord these and other options full consideration so that the 
American people can participate in an open, democratic--yes patriotic--
debate about the future of our country.
    You members of the Budget Committee have an opportunity today to 
bridge the credibility gap between the President's lofty political 
rhetoric and his harsh budgetary realities. I urge you to seize this 
opportunity; to restore sanity and candor to the budget process; and to 
pass a budget that promotes the physical, economic and health security 
of the American people without imposing increased social inequities and 
crushing debt to future generations.
    Thank you.

    Chairman Nussle. I thank the gentleman.
    Now for that good, old fashioned Iowa wisdom to the 
committee, we welcome Mr. Latham.

STATEMENT OF HON. TOM LATHAM, A REPRESENTATIVE IN CONGRESS FROM 
                       THE STATE OF IOWA

    Mr. Latham. Thank you, Mr. Chairman, and I am only 
following your lead here, but it is an honor to testify before 
you about an issue that I know you are very much aware of and 
have worked very hard on. I appreciate all the hard work that 
you have done during last year's debate on the Medicare 
Modernization and Prescription Drug Act, and I look forward to 
working with you in achieving an equitable Medicare solution 
for Iowa's health care providers.
    Iowa's health care infrastructure faces a critical 
shortfall due to the flawed fee-for-service reimbursement 
formula. Across my State and my district, hospitals are closing 
their doors and physicians are relocating to States with more 
equitable reimbursement, simply because Medicare does not cover 
the cost of providing health care in Iowa.
    Because of these cruel realities, many communities in Iowa 
are facing the future without access to health care; this is to 
say, a future with little hope of economic development and 
prosperity. Today Iowa has the lowest Medicare revenue for 
beneficiary reimbursement of any State and one of the highest 
elderly populations, proportionately.
    According to a May 2002 study conducted by the Medicare 
Payment Advisory Commission entitled, ``Current Observations on 
State Level Variation in Medicare Spending,'' Iowa receives 
only 56 percent--56 percent--of the national aggregated revenue 
per beneficiary under Medicare.
    To illustrate this disparity, Iowa's reimbursement rate of 
$3,053 is less than one-third of the rate provided for 
beneficiaries in Washington, D.C., the locality with the 
highest reimbursement rate at $10,373, and is well below the 
national average of $5,490. Iowa ranked second in the Nation 
for the percentage of persons 85 and older, third in the Nation 
in percentage of people 75 and older, fourth in the Nation for 
percentage of 65 and older, and fourth again of individuals 60 
years and older.
    Iowa's elderly rely on Medicare, a program to which they 
contributed the same rate as their peers in other States with 
the higher reimbursement. The inequity is a problem of dire 
consequence. So significant is the problem in Iowa, as I 
mentioned before, hospitals are closing and physicians are 
relocating to neighboring States.
    The current Medicare reimbursement regime has proven to be 
a failure in my State and is endangering the future of health 
care in Iowa. Over the next few months we will consider 
possible Medicare solutions. I would like to be perfectly clear 
that I will not support any proposal that does not adequately 
address the low reimbursement issue. I would also like to 
support your efforts, Mr. Chairman, to put additional dollars 
into Medicare for All States receiving low reimbursement.
    The root of Iowa's low reimbursement problem can be found 
in the prospective payment system used in calculating the 
reimbursement received by health care providers. The system the 
Congress established in the early 1980s sought to make payment 
for acute in-patient care uniform. The PPS calculates the 
payment for a given service through combining actual resources 
used with three variables: a relative value for service, the 
adjustment for geographical variations and costs, and the 
conversion factor.
    It is important to note that Iowa's problems are not the 
result of the adjustment for geographic variation alone. 
Rather, the adjustment has an effect on the relative value for 
service and is exacerbated by the conversion factor.
    The numerous fixes established by congressional repairs on 
the PPS offer reasonable reimbursement for a portion of Iowa's 
health care providers. About 42 of Iowa's 116 hospitals have 
become critical access hospitals and will remain afloat because 
of this cost-based reimbursement status. The larger hospitals 
and specialists who are accepting referrals are slowly nearing 
failure.
    The Iowa Hospital Association has suggested that $80 
million is lost every year in treating Medicare-dependent 
patients, and this number does not even account for physicians, 
home health care workers, physical therapists, and other 
Medicare-dependent providers.
    Highly skilled medical professionals must accept, as a 
condition of practicing medicine in Iowa, that the current base 
standardized payment rate and wage index yields a lower wage in 
Iowa than in neighboring States. The problem with Medicare's 
fee-for-service formula should be seen not as a problem of 
policy, although it certainly is, but a problem of political 
reality. The Medicare pot is too small to accommodate the 
concerns of all States, and the pot must be increased. We 
cannot solve this problem by taking away from some to fix our 
problem.
    In order to provide future certainty for Iowa's health care 
infrastructure, as well as the health care infrastructure in 
all States receiving less than the Medicare reimbursement 
average, I say again that I believe we must provide Medicare 
with new, additional dollars. Any proposal that does not 
include these new dollars does not fix the Iowa problem I have 
described and is a proposal that I cannot support.
    The future of Iowa's large hospitals and the patients and 
specialists who require referrals depend on action. We must 
take action immediately.
    Again, thank you, Mr. Chairman. This concludes my 
testimony. I will have a more complete statement for the 
record. Thank you.
    [The prepared statement of Mr. Latham follows:]

  Prepared Statement of Hon. Tom Latham, a Representative in Congress 
                         From the State of Iowa

    Thank you for allowing me to testify before your committee, Mr. 
Chairman. I appreciate all of your hard work during last year's debate 
on the Medicare Modernization and Prescription Drug Act and I look 
forward to working with you in achieving an equitable Medicare solution 
for Iowa's healthcare providers.
    Iowa's healthcare infrastructure faces a critical shortfall due to 
the flawed fee-for-service reimbursement formula. Across my State and 
my district, hospitals are closing their doors and physicians are 
relocating to States with more equitable reimbursement simply because 
Medicare does not cover the costs of providing care in Iowa. Because of 
these cruel realities, many communities in Iowa are facing a future 
without access to healthcare, which is to say, a future with little 
hope of economic development and prosperity.
    Today, Iowa has the lowest Medicare revenue per beneficiary 
reimbursement of any State and one of the highest elderly populations, 
proportionately. According to a May 2002 study conducted by the 
Medicare Payment Advisory Commission (MedPAC) entitled, ``Observations 
on State level variation in Medicare spending,'' Iowa receives only 56 
percent of the national aggregated revenue per beneficiary under 
Medicare. To illustrate the disparity, Iowa's reimbursement rate of 
$3,053 is less than one-third of the rate provided for beneficiaries in 
Washington, DC, the locality with the highest reimbursement rate at 
$10,373 and is well below the national average of $5,490.
    Iowa ranks second in the Nation for the percentage of persons aged 
85 and older; third in the Nation for percentage 75 and older; fourth 
in the Nation for the percentage of 65 and older; and fourth in the 
Nation for 60 years and older. Iowa's elderly rely on Medicare, a 
program into which they contributed at the same rate as their peers in 
the higher reimbursed States. The inequity is a problem of dire 
consequence. So significant is this problem in Iowa, as I mentioned 
before, hospitals are closing their doors and physicians are relocating 
to neighboring States. The current Medicare reimbursement regime has 
proven to be a failure in my State and is endangering the future of 
health care in Iowa.
    Over the next few months we will consider possible Medicare 
solutions. I would like to be perfectly clear that I will not support 
any proposal that does not adequately address the low reimbursement 
issue. I would also like to support your efforts, Mr. Chairman, to put 
additional dollars into Medicare for All States receiving low 
reimbursement.
    The root of Iowa's low reimbursement problem can be found in the 
prospective payment system (PPS) used in calculating the reimbursement 
received by health care providers. The system that Congress established 
in the early 1980s sought to make payment for acute, inpatient care 
uniform. The PPS calculates payment for a given service through a 
formula combining actual resources used through three variables:
     A relative value for service;
     The adjustment for geographical variations in cost, and;
     The conversion factor.
    It is important to note that Iowa's problems are not the result of 
the adjustment for geographic variation alone, rather, the adjustment 
has an effect on the relative value for service and is exacerbated by 
the conversion factor.
    The PPS assigns a relative value to services that compares the 
relative physician work involved in performing one service with the 
work involved in providing other physician services. This value is the 
sum of three factors:
     The physician work component;
     The practice expense component, and;
     The malpractice expense component.
    The physician work component is a measure of physician time, skill, 
and intensity in providing the care. The practice expense component is 
a measure of average practice expenses, including office rent, employee 
wages, etc. Malpractice expense is a measure of the average insurance 
cost.
    The second component of the PPS is the adjustment for geographical 
variations, which is an effort to account for the variations in the 
cost of practicing medicine in different areas. For each of the three 
variables in the relative value of service an adjustment is made.
    The three relative values are then added together to produce an 
indexed relative value unit for the service with that locality.
    The final factor that effects the calculation of the PPS is the 
conversion factor. This is a dollar figure that converts the 
geographically adjusted relative value for a service into a dollar 
payment amount.
    The numerous ``fixes'' established by congressional repairs on the 
PPS offer reasonable reimbursement to a portion of Iowa's healthcare 
providers. While 42 of Iowa's 116 hospitals have become Critical Access 
Hospitals (CAH) and will remain afloat because of this cost-based 
reimbursement status, the larger hospitals and specialists accepting 
referrals are slowly nearing failure. The Iowa Hospital Association has 
suggested that $80 million is lost every year in treating Medicare 
dependent patients and this number does not even account for 
physicians, home health care workers, physical therapists, and other 
Medicare dependant providers.
    Highly skilled medical professionals must accept, as a condition of 
practicing medicine in Iowa, that the current base standardized payment 
rate and wage index yields a lower wage in Iowa than in neighboring 
States.
    The problem with Medicare's fee for service formula should be seen, 
not as a problem of policy although it most clearly is but as a problem 
of political reality. The Medicare pot is too small to accommodate the 
concerns of all States and the pot must be increased. In order to 
provide future certainty for Iowa's healthcare infrastructure, as well 
the healthcare infrastructure in all States receiving less than the 
Medicare reimbursement average, I will say again that I believe we must 
provide Medicare with new, additional dollars. Any proposal that does 
not include these new dollars does not fix the Iowa problem I have 
described is a proposal that I will not support.
    The future of Iowa's large hospitals and the patients and 
specialists who require referrals depend on action. We must take action 
immediately. Thank you Mr. Chairman. This concludes my testimony.

    Mr. Mario Diaz-Balart of Florida [presiding]. Thank you 
very much, sir, for your testimony.
    Next the honorable gentlewoman Wilson. It is a pleasure to 
have you here.

STATEMENT OF HON. HEATHER WILSON, A REPRESENTATIVE IN CONGRESS 
                  FROM THE STATE OF NEW MEXICO

    Mrs. Wilson of New Mexico. Thank you, Mr. Chairman, and I 
appreciate the opportunity to testify today. I have a complete 
statement that I would like to ask unanimous consent that it be 
submitted for the record.
    Mr. Mario Diaz-Balart of Florida. Without objection.
    Mrs. Wilson of New Mexico. It seems to me that the 
challenges you have been presented with this year are very 
difficult ones. From my perspective, there are four priorities 
that this budget this year has to reflect. We have got to grow 
jobs. We have got to fund education, so that our next 
generation of Americans will be prepared for the challenges of 
the 21st century. We have to improve our health care system. We 
have to provide for the common defense.
    America is now engaged in war not of its choosing, but a 
war that we have to win. That is going to take place over a 
long period of time, and we must be prepared and committed to 
provide the resources to our military to prevail.
    In my State of New Mexico, while I think most economists 
agree that the recession is over, the recovery is not as strong 
as any of us would like. As long as there is one person without 
a job and without hope, we still have got work to do.
    I am pleased that we are considering the ways to continue 
to stimulate our economy. I am a strong believer that we have 
to make the tax cuts that we passed in 2001 permanent. I think 
that we need to accelerate the income tax reductions, so that 
people have more take-home pay in their pockets, but I think we 
need to do everything we can to make sure that small business 
has the incentives they need to create jobs, because that is 
where jobs come from. Government cannot create wealth, but it 
can create the conditions for businesses to create jobs.
    With respect to education, the previous Congress began 
implementation of the widespread reform in education, and we 
need to implement those reforms. So that will mean Federal 
funding and a real focus on teacher training and 
accountability.
    Finally, with respect to health care, we didn't plan this, 
but I am real glad I am sitting next to the guy from Iowa, 
because I want to echo what he just said with respect to 
Medicare and reimbursement rates. We have some of the best 
doctors and health care system in the world in America, and yet 
we have a system that discriminates against a handful of 
States. We don't pay into Medicare because of where we live, 
and we shouldn't be denied access to health care because of 
where we live.
    In New Mexico the average last year reimbursement rate for 
somebody on Medicare was $2,726. In Louisiana it was $7,336. We 
wonder why it is that every day of every week specialists in 
New Mexico get phone calls recruiting them to move somewhere 
else for a huge pay raise. It is even worse because Medicare is 
what every private insurance company ties its reimbursement 
rates to. It is not just Medicare that has been underpaying, 
but also every other insurance company that pays 95 or 100 or 
110 percent of the Medicare reimbursement rate for that county.
    We need to fix this system. It is a system that all of us 
know is set up to benefit large, urban areas and to 
disadvantage those of us who live in rural States. We must 
address it.
    Finally, the big challenge that you have, and that all of 
us have this year, is to create a blueprint to get back to a 
balanced budget. We all know that we are fighting a war and we 
are coming out of a recession, and our budget won't balance 
this year and probably not next year. But we have to get 
ourselves on a track to make sure it does balance within the 
foreseeable future.
    For we in Washington sometimes it is hard to think what a 
dollar means anymore. We talk in numbers that have so many 
zeros attached to them. But when I was in State government as a 
cabinet secretary for child welfare, we used to review our 
programs every year. If we justified our programs just on 
social need, we could justify huge increases in our budget 
every single year.
    But we asked ourselves, and our program managers have asked 
themselves, an additional question, and that question was: Can 
you use this dollar better than your neighbor who is taking 
home $475 a week to take care of a family of four? The real 
question is, what we do with this marginal dollar, the next 
dollar that comes in tax revenue?
    Because to a family of four making $475 a week, this is a 
visit from the tooth fairy. This is an ice cream cone after a 
soccer game. You know, it goes pretty far toward the next Junie 
B. Jones book from Scholastic this week. A day of allergy 
medicine for a kid who has allergies. This is a stop at the 
dollar store. This dollar matters to your neighbor and to our 
neighbors.
    When we look at this budget, we have to decide, does that 
dollar come to Washington or does it stay at home with your 
neighbor? I trust your neighbor.
    Thank you, Mr. Chairman.
    [The prepared statement of Mrs. Wilson follows:]

Prepared Statement of Hon. Heather Wilson, a Representative in Congress 
                      From the State of New Mexico

    Mr. Chairman and members of the committee, I want to thank you for 
the opportunity to testify and for having this hearing to discuss the 
fiscal year 2004 budget. I come to this hearing with four priorities; 
creating an environment for job creation, improving education, making 
quality health care more affordable, and providing for the common 
defense. All these things must be done in a way that gets us back to a 
balanced budget within a reasonable period of time.
    The challenges we face in this year's budget are unique. While most 
economists believe that the recession is over, the recovery is not as 
strong as any of us would like. That means tax revenues to fund 
government services have slowed. At the same time we are fighting a war 
on terrorism not of our choosing, but a war we must win. Destroying the 
terror networks that engineered unspeakable evil against Americans 
requires persistence over time and we must not shrink from funding the 
capabilities required to prevail.
    Our budget should reflect these realities while funding the 
priorities the American people most want and controlling the growth of 
government spending where it is not needed.
    New Mexico is one of the fastest growing States in the Nation, but 
we need more and better jobs. Government cannot create wealth, but we 
can create the conditions that allow businesses to create jobs. That 
means lower taxes, fair regulation and rules that bring integrity back 
to the boardroom and confidence to investors. We need a budget that 
provides a short-term stimulus to help get the economy moving. 
Specifically, the acceleration of income tax cuts, an increase in the 
child tax credit, and the small business expending provisions all have 
my whole hearted support. We need to abolish the death tax once and for 
all and make the 2001 tax cuts permanent.
    While I support these tax relief measures intended to boost 
confidence and job creation, it is long past time to simplify our tax 
code and make it fairer. Half of Americans can no longer do their own 
taxes because of the complexity of the system. That's ridiculous and we 
must make tax simplification a prominent part of our reform agenda.
    This budget needs to continue our work in improving education. We 
need a good public school in every neighborhood so that every child can 
get a great education. I will continue to support increased funds for 
education, better teacher training, high standards and accountability 
for results.
    Health care affects the quality of our lives from the cradle to the 
grave and it affects whether companies bring jobs to New Mexico. 
America has the best doctors and scientists in the world; there is no 
reason we should not have the best health care in the world. Americans 
want common sense, not Washington, to govern how they interact with 
doctors and hospitals. Reform should also include replacing the current 
payment system that penalizes many States like New Mexico. New Mexico 
seniors pay just as much in Medicare payroll taxes but doctors and 
hospitals get little more than V2the payments from Medicare as other 
States. Average Medicare per beneficiary spending in
    New Mexico is $3,726 compared to $7,336 in Louisiana. This unfair 
system drives doctors and other medical professionals out of our State 
and has led to a critical shortage of specialists. We don't pay into 
Medicare based on where we live and we should not be denied access to 
health care because of where we live. Seniors should not have to choose 
between buying food or buying medicine. I support adding coverage for 
prescription drugs as a benefit to Medicare so that we can reduce the 
cost of prescription drugs. A prescription drug benefit in Medicare 
must be voluntary, it must be available to every senior, it must offer 
choices, and must help the neediest seniors first.
    Finally, we need a blueprint that returns us to a balanced budget. 
We are in a war and recovering from a recession. The budget will not 
balance this year or next, but we need to find a way to live within our 
means when the economy recovers. That means making tough decisions, the 
type of decisions every American family has to make as they decide how 
to make their paychecks stretch to the end of the month.
    When I was in State government running a child welfare agency, we 
reviewed all of our programs every year as part of the preparation of 
our budget. To be sure, there were huge social needs that had to be 
addressed, but that wasn't the only question. The question we asked is 
one we should ask ourselves in Washington too: can we do more with this 
dollar than your neighbor who is raising two kids with a take home pay 
of $475 a week?
    Here in Washington, the numbers get so big we sometimes lose sight 
of how important this dollar is to the family that earned it. It's a 
visit from the tooth fairy. It's almost enough for another Junie B. 
Jones book from Scholastic this month. It's a day of allergy medicine, 
a special stop at the dollar store, an ice cream cone after a soccer
    game. Its four quarters saved in the bottom of a coffee can toward 
summer camp, or a call home from college.
    Our budget decisions are about this next dollar earned by your 
neighbor and who should spend it. Mr. Chairman, when in doubt, trust 
your neighbors. Thank you again for taking the time to have these 
hearings.

    Mr. Mario Diaz-Balart of Florida. I thank the honorable 
Congresswoman.
    The honorable Congressman from Ohio, the gentleman is 
recognized.

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

    Mr. Kucinich. Thank you very much, Mr. Chairman. Mr. 
Ranking Member, thank you, and members of the committee.
    I would like to address this present testimony in two 
different ways: first of all, to talk about spending priorities 
and then talk about revenue raises.
    I am here to agree with all of my colleagues who have 
spoken to the inequities which exist----
    Mr. Baird. Would the gentleman yield for one second?
    Mr. Kucinich. Yes.
    Mr. Baird. I see our two colleagues from New Mexico and 
Iowa are leaving. I just personally want to strongly associate 
myself with your remarks on the Medicare reimbursement rates. 
Washington State, my State, is very adversely affected, and I 
hope this committee can commit to fixing that. I apologize for 
the interruption, but it is a critical issue back home.
    Mr. Kucinich. It is alright; it is your committee.
    Mr. Mario Diaz-Balart of Florida. Thank you for that.
    The gentleman, please, if you would proceed with your 
statement, thank you very much.
    Mr. Kucinich. Well, we just heard from three Members, New 
Mexico, Iowa, and Washington State, all of whom have expressed 
concerns about the Medicare reimbursements. There is a 
solution, and that solution is Medicare for All: a single-
payer, universal health care plan that would guarantee access 
to health care, guarantee a universal high standard of care, 
and lower health care costs.
    Every person living in the United States and its 
territories would receive a health insurance card entitling 
them to universal best quality standard of medical care. The 
plan would expand the benefits under Medicare to cover all 
medically necessary health services. No private insurance would 
be permitted to exist that duplicates Medicare for All 
benefits. Other government health programs, such as Medicaid, 
would be subsumed under Medicare for All. The program would 
convert all privately owned health facilities, like hospitals 
and clinics, to nonprofit status. The spending priority I am 
recommending is a phase-in of Medicare for All, $5.9 trillion 
over 10 years, but $4.6 trillion is paid for over the 10 years.
    The New York Times yesterday reported that in a period of 2 
years over 75 million Americans at one time or another lacked 
adequate health coverage, and those are our constituents. 
Whether we are Democrat or Republican, our constituents do not 
have the kind of health care they need, and this Congress has 
the ability to do something about it, not to play around with 
it at the edges. If we do that, we are always going to run into 
difficulties in equities in reimbursement.
    The spending priorities that I recommend include funding 
the No Child Left Behind Act at $100 billion over 10 years. The 
administration's 2004 budget is funded at $22.6 billion, only 
two-thirds of the levels authorized in the Leave No Child 
Behind Act. Democrats, and I believe all of us, should advocate 
for the $9.7 billion not requested by the administration.
    With respect to an economic stimulus package, there is a 
bill by Mr. DeFazio which calls for $300 billion. I am here to 
support that bill and say that the extended unemployment 
assistance of $20 billion; the payroll tax relief of $180 
billion, which would work out to about $620 per worker; the 
Federal revenue sharing with States for $50 billion, and the 
infrastructure investment for $50 billion, all constitute 
measures which could greatly enhance our efforts to stimulate 
the economy.
    In connection with that, long-term infrastructure needs, 
$15 billion over 10 years could be affected by creating a 
reserve fund: the bill that I cosponsored with Congressman 
LaTourette of Ohio that would create a low-cost Federal 
financing mechanism to administer zero interest loans to 
localities. States under this would choose which projects to 
fund with the loans according to their specific needs.
    The spending priorities I am recommending would include $15 
billion over 10 years for the Afghanistan reconstruction 
obligation. We have a moral obligation to fully fund the 
reconstruction of Afghanistan. We need to do that to maintain 
our credibility internationally. We dropped thousands of bombs 
on a country, a third world country, and I think that we have 
to rebuild that country. Failure to fully fund this initiative 
would only create more animosity toward the United States.
    According to the preliminary needs assessment presented in 
January 2002 by the UNBP, the World Bank, and the Asian 
Development Bank, Afghanistan would need $15 billion over the 
next 10 years. Secretary of State, Colin Powell stated that 
Afghanistan would need $8 billion over the next 5 years.
    Mr. Chairman, the question comes, how do we raise revenue 
in order to meet these important needs? The one way that is a 
sure-fire way is to freeze the Bush tax cuts, $400 billion over 
10 years. In order to assure the Federal budget deficit does 
not grow out of control, Congress should repeal the top two tax 
brackets back to 39.6 percent and 36 percent and freeze the 
remaining rates at the 2000 and 2003 level.
    With respect to the Fed's reductions in spending, I am 
recommending reductions in spending of $489 billion over 10 
years. Specifically, the National Missile Defense System. 
Congress should eliminate all funding for the National Missile 
Defense System, as it is unnecessary and it doesn't work. 
According to the Central Intelligence Agency, intelligence 
estimates that have been published, the delivery of a nuclear 
weapon is more likely to come in a shipping container rather 
than a ballistic missile.
    We should be working on replacing the production of high-
cost weapon systems that offer little benefit to the war on 
terrorism and replace them with cheaper weapons. That would 
involve replacing the F-22 fighter, 276 units, with the F-16, 
500 units, at a savings of $25.3 billion over 10 years; 
replacing the V-22 Osprey with various helicopters, $9.7 
billion savings over 10 years; canceling the Virginia class 
submarine, saving $10 billion over 10 years, and replacing the 
Comanche helicopter with the Predator would be $14.1 billion 
over 10 years.
    Now, in the interest of this committee's time, I want to 
also submit for the record the background information from the 
Congressional Budget Office which provides an analysis for the 
canceling of the reproduction of the V-22, for the reduction in 
procurement of the Virginia-class submarine, for the canceling 
of the Comanche Helicopter Program, and for a reduction in 
purchases of the Air Force F/A-22 fighter.
    In addition, for the committee's edification, I also will 
present an outlining of how the Medicare for All Program would 
be financed, six different ways that it will happen, and if the 
committee desires, I can also give a recitation on the details 
of the Federal Bank of Infrastructure Modernization, which 
would be responsible for helping to rebuild our country's 
infrastructure.
    I want to thank the Chair for the time and for the 
opportunity to testify before this committee.
    [The prepared statement of Mr. Kucinich follows:]

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

     Phase in Medicare for All [$5.9 trillion over 10 years, 
but 4.6 trillion is paid for over the 10 years.]
    Create a Reserve Fund that phases into the budget H.R. 676, 
Medicare for All (Conyers/Kucinich/McDermott). Medicare for All is a 
single payer, universal health care plan that will guarantee access to 
health care, guarantee a universal high standard of care, and lower 
health care costs. Every person living in the United States and its 
territories would receive a health insurance card entitling them to a 
universal, best quality standard of medical care. The plan would expand 
the benefits under Medicare to cover all medically necessary health 
services. No private insurance would be permitted to exist that 
duplicates Medicare for All benefits. Other government health programs, 
such as Medicaid, would be subsumed under Medicare for All. The program 
would convert all privately owned health facilities, like hospitals and 
clinics, to non-profit status.
     No Child Left Behind Act [$100 billion over 10 years].
    The Bush 2004 budget for his signature Leave No Child Behind Act is 
funded at $22.6 billion, only two-thirds of the levels authorized in 
the Leave No Child Behind Act. Democrats should advocate for the $9.7 
billion not requested by the President and take back our advantage on 
education issue.
     Economic Stimulus Package [$300 Billion] (DeFazio bill).
     Extended Unemployment Assistance--$20 billion.
     Payroll Tax Relief ($620 per worker)--$180 billion.
     Federal Revenue Sharing with States--$50 billion.
     Infrastructure Investment--$50 billion.
     Long Term Infrastructure Needs [15 billion over 10 years].
    Create a reserve fund for a bill (Kucinich) that would create a 
low-cost Federal financing mechanism to administer zero-interest loans 
to localities. States choose which projects to fund with the loans 
according to their specific needs.
     Afghanistan Reconstruction Obligation [$15 billion over 10 
years].
    We must fully fund the reconstruction of Afghanistan to retain 
international credibility. We dropped thousands of bombs on a third 
world country and to ensure the people of Afghanistan do not suffer as 
a result of our actions we must help them rebuild. Failure to fully 
fund this initiative will only create more hatred toward the United 
States. According to the preliminary needs assessment presented in 
January 2002 by the UNDP, the World Bank, and the Asian Development 
Bank (ADB), Afghanistan would need $15 billion over the next 10 years. 
U.S. Secretary of State Colin Powell stated that Afghanistan would need 
$8 billion over the next 5 years.

                            REVENUE RAISERS

     Freeze Bush tax cuts [$400 billion over 10 years].
    In order to ensure the Federal budget deficit does not grow out of 
control, Congress should repeal the top two tax brackets (back to 39.6 
percent and 36 percent), and freeze the remaining rates at the 2002/
2003 levels.
    Defense Cuts [$489 billion over 10 years].
     National Missile Defense (NMD): Congress should eliminate 
all funding for the National Missile Defense System as it is 
unnecessary and does not work. According to CIA intelligence estimates, 
the delivery of a nuclear weapon is more likely to come in a shipping 
container, rather than a ballistic missile [$400 billion over 10 
years].
     Replace the production of high-cost weapons systems that 
offer little benefit to war on terrorism with cheaper weapons.
     Replace the F-22 fighter (276 units) with the F-16 (500 
units) [$25.3 billion over 10 years].
     Replace the V-22 Osprey with various helicopters [9.7 
billion over 10 years].
     Replace Comanche Helicopter with Predator B [14.1 billion 
over 10 years].

    Mr. Mario Diaz-Balart of Florida. I thank the gentleman 
from Ohio.
    Before we go on to the gentleman from New Jersey, I would 
like to see if anyone on the committee has any questions. Mr. 
Edwards?
    Mr. Edwards. Mr. Chairman, thank you. I don't have any 
questions other than perhaps, Mr. Kucinich, you know, I 
appreciate out-of-the-box thinking. Usually, we are finetuning 
the edges of the budget rather than thinking creatively.
    Do you have a sense--I am trying to look at all the numbers 
and get a sense of your pay-forwards: $400 billion freeze in 
the Bush tax cut and $489 billion in defense savings. If you 
add up your other programs and then count the pay-forwards, 
where do you come out over 10 years relative to the present 
budget? Any general sense?
    Mr. Kucinich. I would say that it would be up to Congress 
to appropriate funds, sufficient funds, to help make the 
Medicare for All work, and that is on top of--the Medicare 
financing would cost the same amount of money that is now being 
spent on health care costs. It is approximately $1.7 trillion 
per year, and these funds would be provided by existing 
government spending of $852 billion; the employers who would be 
implementing a payroll tax of 6.6 percent on all public and 
private employees. That would be funded at $40 billion.
    On deductions, because if you have universal health care, 
tax deductions are savings of $200 billion; significant cost 
savings from the reduction of administrative costs of $230 
billion; increased utilization of $180 billion, existing non-
patient revenues, rates from the Nation's foundations, et 
cetera, of $30 billion.
    So the Medicare ends up, inevitably, paying for itself with 
the possibility of some congressional participation in terms of 
extra appropriations, but in the end it ends up saving money.
    The elimination of the--or freezing the tax cuts would save 
about $400 billion over 10 years. The defense cuts that I 
talked about would save over $489 billion over 10 years. I 
think, when all is said and done, if you stopped or freeze the 
tax cuts, if you cut back on very controversial defense 
spending, and I will go to what Mr. Tierney had to say about a 
war which is essentially off-budget, you could still find a 
way--you know, if we are not at war all the time and you reduce 
military spending for unnecessary or unworkable programs, and 
you cut back the tax cuts, and you transfer it over to 
Medicaid, I think you work out where you end up saving the 
American people a substantial amount of money. You don't go 
into trending toward a deficit.
    We know that the deficit is looking toward $400 billion, 
and we also know that a significant part of that deficit is due 
to the tax cut. We know that other parts of the deficit are due 
to increase in military spending, and when you tack on the cost 
of the war, that is going to keep the deficit going.
    So if you start to freeze the tax cuts, reduce the military 
spending, and not prosecute wars, you get in a situation where 
your budget condition greatly appreciates. I hope that helps 
somehow.
    Mr. Edwards. You bet. Thank you, and thanks for the 
creative thinking in health care. I think there is a crisis out 
on the horizon. It is in our backyards and it is affecting a 
lot of families right now. We have got to do something about 
it.
    Mr. Kucinich. Every State, Mr. Chairman, every State has a 
crisis involving health care, every single State.
    Mr. Edwards. Thank you. Thank you, Mr. Chairman.
    Mr. Mario Diaz-Balart of Florida. OK. Any further 
questions? [No response.]
    And I said that we would now hear from the gentleman from 
New Jersey, but I understand that he has graciously allowed for 
the gentleman from Nebraska, who now has another plane, to go 
first. So, with that, we would recognize the honorable 
gentleman from Nebraska. You are recognized, sir.

STATEMENT OF HON. LEE TERRY, A REPRESENTATIVE IN CONGRESS FROM 
                     THE STATE OF NEBRASKA

    Mr. Terry. Thank you, Mr. Chairman, and thank you, my 
friend from New Jersey, for yielding this time. I appreciate 
it.
    I am here today to urge you, this committee, to restore 
funding to the Impact Aid Program. Military families across 
America are facing a drastic cut to this vital program that 
helps fund their children's education.
    It saddens me that it is even necessary to come here to 
defend Impact Aid. It saddens me that Congress has never fully 
funded this commitment to educate our military families. Now 
the President's budget pencils in $172.7 million funding cut. 
We are headed in the wrong direction. This places a great 
burden on this committee and Congress to restore that $172.7 
million cut.
    Impact Aid compensates the public schools near or on 
American military bases for lost tax revenues. Fifty million 
children look to this Federal program for aid. The Impact Aid 
funds are essential to providing a normal budget when there is 
a disproportionately high ratio of students to tax paying 
families, as is in the case near military bases in the United 
States.
    At the same time education costs are rising, revenue to 
schools is decreasing during these tough economic times. Yet, 
under this proposal, 243,000 military children whose parents 
live off-base would be stricken from the program.
    This cut further constrains school districts already 
strapped for cash. They still have the responsibility to 
provide a quality education for all children of military 
families. More than half of all affected school districts, 368 
to be exact, would face total elimination from the program. 
Funding would be cut for 88 percent of military children under 
Impact Aid. This is downright disrespectful to the parents we 
are at this very moment sending overseas to defend us.
    Bellevue Public Schools in my district is a perfect example 
of how devastating this cut could be. Almost half of Bellevue's 
students are military children, 3,600 of 8,500 students. Yet, 
under the administration's proposed budget language, only 1,600 
of these students would be considered under Impact Aid. 
Bellevue Schools stands to lose half of its Impact Aid budget, 
more than $7 million.
    We must correct this injustice. It is unacceptable to cut 
education for our children of military families. The formula 
change that eliminates the ``B'' students should be stricken 
from the budget language. In this budget language, not only 
does it reduce the dollars, but it takes out the ``B'' 
language.
    Mr. Edwards, we had a discussion of this already today in 
the elevator. We should find the resources to vigilantly fund 
Impact Aid. We owe it to our men and women in uniform fighting 
for us and for the values that we hold dear.
    That concludes my remarks, and I will answer any questions.
    [The prepared statement of Mr. Terry follows:]

Prepared Statement of Hon. Lee Terry, a Representative in Congress From 
                         the State of Nebraska

    Mr. Chairman, I am here today to urge you to restore funding to the 
Impact Aid Program. Military families across America are facing a 
drastic cut to this vital program that helps fund their children's 
educations.
    It saddens me that it is even necessary to come here to defend 
Impact Aid. It saddens me that Congress has never fully funded our 
commitment to educate the children of military families. Now the 
president's budget pencils in a $172.7 million funding cut. We are 
headed in the wrong direction. This places a great burden on this 
committee and Congress to replace that $172.7 million.
    Impact Aid compensates public school districts near American 
military bases for lost tax revenues. 15 million children look to this 
Federal program for aid. Impact Aid funds are essential to providing a 
normal budget when there is a disproportionately high ratio of students 
to taxpaying families, as is the case near military bases in the United 
States.
    At the same time education costs are rising, revenue to schools is 
decreasing during these tough economic times. Yet under this proposal, 
243,000 military children whose parents live off base would be stricken 
from the program. This cut further constrains school districts already 
strapped for cash--they still have the responsibility to provide a 
quality public education for all children of military families. More 
than half of all affected school districts, 368 to be exact, would face 
total elimination from the program. Funding would be cut for 88 percent 
of military children in Impact Aid. This is downright disrespectful to 
the parents we are at this very moment sending overseas to defend us at 
home.
    Bellevue Public Schools, in Nebraska, is a perfect example of how 
devastating this cut could be. Almost half of Bellevue's students are 
military children--3,600 of over 8,500 students. Yet under the 
administration's proposed budget language, only 1,600 of these students 
would be considered under Impact Aid. Bellevue Public Schools stands to 
lose half its Impact Aid budget--more than $7 million.
    We must correct this injustice. It is unacceptable to cut education 
for children of our military families. The formula change that 
eliminates ``B'' students should be stricken from the budget language. 
We should find the resources to vigilantly fund this Impact Aid. We owe 
it to the men and women in uniform fighting for us and for the values 
we hold dear.

    Mr. Mario Diaz-Balart of Florida. I thank the gentleman. If 
you have any questions, Mr. Edwards, you are recognized, sir.
    Mr. Edwards. Thank you, Mr. Chairman. I will be brief. I 
don't want Mr. Terry to be late to his next meeting, but I do 
want to thank you for being a champion for Impact Aid since 
your first day in Congress. This isn't a new issue to you. It 
is one you have always been out front on.
    I just talked to my staff since our conversation earlier 
today and urged her to set up a meeting of our bipartisan 
Impact Aid Coalition, of which you are the leader, to meet next 
week. I have found a lot of individual Members are raising 
great concerns about Impact Aid, but I haven't seen the 
threshold of people together taking action to change or to get 
either the OMB or the White House to come out and just say 
right now, ``We aren't cutting Impact Aid.''
    I agree with you. In my words, I think it is unconscionable 
to be sending 30,000 soldiers from my one district to the Iraqi 
theater in the weeks ahead, and as mom and dad are getting on 
the plane, we give them a note saying, ``By the way, we are 
going to be laying off teachers and cutting $31 million out of 
the two school districts where your children are being 
educated.''
    I assume that the President didn't have his fingerprint on 
this. Somebody in OMB did. But when I asked Mr. Daniels about 
it before this very committee 2 weeks ago, he said, ``Well, 
tell the military folks down there that we are giving them a 
pay raise and that we improved their quality of life, and that 
ought to more than make up for cutting their kids' education.'' 
I think that shows how out of touch he is with our military 
families and their sacrifices.
    So I hope we can find a way to get the message to the White 
House on a bipartisan basis. For the sake of the military 
morale, those folks who perhaps very soon will be fighting in 
Iraq, we need to kill this proposed cut now, not 6 months or 8 
months from now. I appreciate and salute your leadership on 
this important program.
    Mr. Terry. Well, I appreciate your partnership in those 
efforts as well. You have, too, been a leader on this issue. I 
would work with you to work with the White House. This 
committee, when it releases its budget, should just strike 
that, striking the ``B'' students.
    Obviously, the Office of Management and Budget, OMB, 
doesn't understand what these students are and made a comment 
that, ``Well, they're off-base, so they're paying taxes.'' 
Well, they aren't. They are renting. They are buying their 
products on base, so they are not paying sales tax that for 
many school districts is a source of funding. Registering their 
cars, they are not doing that because they are not residents of 
that State. So we are still losing out on a great deal of the 
debt.
    And the last part is, even if they were paying, they aren't 
paying as much as they would if everyone was on the tax rolls. 
It would be for Bellevue School much greater than the $7 
million that they get, or the $13 million they get from Impact 
Aid.
    Thank you.
    Mr. Mario Diaz-Balart of Florida. Any further questions? 
[No response.]
    Thank you, sir.
    Now we will get back to the honorable Member from New 
Jersey. Thank you for yielding your time, and we are pleased to 
have you here.

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

    Mr. Pascrell. Mr. Chairman, good afternoon, members of the 
committee.
    In the 106th Congress, Mr. Chairman, 285 of us came 
together, in fact, two-thirds of the members of the Budget 
Committee, to support and put together the Fire Act, the 
Assistance to Firefighters Grant Program. That has proven to be 
a tremendous success long before 9/11. Everyone is to be 
commended from the entire political spectrum.
    Today I am here to look at what is being proposed by the 
administration, and there's two issues at hand. The 
administration for the 2004 budget has specifically requested 
$500 million, and they have come to the realization that this 
is an appropriate use, to use the language back when we were 
debating this in the 106th Congress. This is an appropriate use 
for the 2,000 fire departments, career/volunteers, a million 
firefighters who need the day-to-day training apparatus, 
protection. We are not fighting fires like we did 25-30 years 
ago. So we now know it is appropriate.
    This would be a tremendous cut from what we had this year. 
This year we have already passed the budget for $750 million, 
so it turned around in the wrong direction. This is going in a 
circle. When you have the needs, thousands and thousands of 
departments have applied and others, the response can only be 
measured in the number of dollars that are there.
    I am asking, I am urging you today, Mr. Chairman and 
members of the committee, to provide the full funding of $900 
million for 2004 for the Fire Grant Program. The need is there. 
It is strong.
    Now the second issue I think I want to address with regard 
to the implementation of the Fire Grant, which has been 
tremendously successful under the auspices of FEMA. They have 
done a great job. There have been no complaints about any 
political interference. Throughout this country, fire 
departments are being judged on the depth of their requests and 
the need, obviously.
    I want to stress to the Budget Committee how important 
specific language is in the budget, and later in the 
appropriations bill, to protect the integrity of the Fire Act. 
Within the Department of Homeland Security, and I now serve on 
that committee which was just constituted, FEMA would be under 
the Office of Emergency Response and Preparedness. NFA and the 
United States Fire Administration, USFA, have done a 
spectacular job of administering the Fire Grant for 2 years. 
FEMA has done a great job by everyone's measures.
    So they have the infrastructure in place to run this 
program more efficiently and effectively. This money goes 
directly to the fire departments. It does not go through the 
State bureaucracy. Nobody can skim it. It goes right to that 
department. That is what I think is one of the major reasons 
for its success. Its staff is trained and very familiar with 
the process.
    Regardless, the new organization within DHS will have the 
Fire Grant Program administered under the Office for Domestic 
Preparedness. This will require reinvention of the wheel. It 
will be new staff. It will be a new program, new training, and 
more infrastructure.
    I don't want to be simple about this. We have seen programs 
historically in the past, long before any of us got here, 
melded to do away with them eventually.
    Part of protecting the economy of having the Fire Grant 
receive its mark within the budget, this demonstrates the 
congressional commitment to the program and, therefore, helps 
protect it from the unceremonious debt down the road. That is 
what I am urging you today, to protect the Fire Grant by 
earmarking it within the budget for its own funding, funding 
distinct from other first responder dollars.
    Finally, let me just say this, Mr. Chairman: A fire 
department in this country responds to a fire every 18 seconds, 
and they prevent a fire death every 2 hours. In my own district 
we have done some surveying about the fact that in the career 
department 75 percent of those departments are understaffed. We 
know how hard it is throughout this country to get volunteers 
to come into fire departments--many departments, whether we are 
talking about city, rural, or suburbs.
    I am so proud of the fact that in the first year of grants 
3 years ago we paid particular attention to the rural 
departments throughout America that had been depleted. I mean, 
there are just so many pancake breakfasts you can raise money 
for apparatus that now costs $400,000, $500,000, $700,000, 
$800.000.
    We should fully fund the Fire Act for fiscal year 2004 at 
$900 million and demonstrate that the Congress is fully 
committed to fire safety in America. Our firefighters in the 
communities we represent here deserve nothing less.
    And I thank you, Mr. Chairman. Any questions, I would be 
more than happy to respond.
    [The prepared statement of Mr. Pascrell follows:]

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

    Thank you Chairman Nussle and the entire Budget Committee for 
allowing me to speak with you today.
    I am so happy to be sitting here talking to you all about the 
fiscal year 2004 budget because this means we are finally done with the 
fiscal year 2003 appropriations process. May it never drag out like 
that again!
    Every year I sit here before you and urge you to include funding 
for the Assistance to Firefighters Grant Program, better known as the 
FIRE Grant, in the budget. At this point, the program doesn't need an 
introduction. It is hands-down one of the most popular grant programs 
we have ever funded nationwide.
    In fact, a quick perusal of congressional Websites reveals that 
almost every Member of Congress claimed credit in their hometown 
newspapers for the $750 million this program received in the fiscal 
year 2003 omnibus package we passed at the end of February.
    The President's budget specifically requested $500 million for this 
program. Let me just say that I am pleased to see that he has 
reconsidered his position from when he first took office 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.
    I am here today with two concerns. First, the FIRE Grant Program 
was funded at $750 million in fiscal year 2003, so $500 million is a 
one-third decrease from this year's funding level. Second, the program 
will be administered under the new ``Department of Homeland Security,'' 
or DHS, and we must earmark the funding for this program specifically 
so that it does not get lost in the administration's other first 
responder initiatives.
    First, with regard to funding levels, as we all know the fiscal 
year appropriations were not completed until after the President 
delivered his budget to us on Capitol Hill. It is entirely in the 
spirit of the President's request to--at the very least--maintain the 
program's funding level of $750 million. And perhaps even more within 
the spirit of his request to increase the funding to $900 million, 
which is full funding under the authorization. That is what I am urging 
you to do today, provide full funding of $900 million to the FIRE Grant 
Program.
    Second, with regard to the execution of the program within DHS, I 
want to stress to the Budget Committee how important specific language 
is in the budget and later in the appropriation's bill, to protect the 
integrity of the FIRE Grant.
    Within the new Department of Homeland Security, FEMA will be under 
the Office of Emergency Response and Preparedness. FEMA, and within it 
the U.S. Fire Administration (USFA), has done a spectacular job of 
administering the FIRE Grant for 2 years. They now have the 
infrastructure in place to run this program more efficiently and 
effectively. Its staff are trained and familiar with the process.
    Regardless, the new organization within DHS will have the FIRE 
Grant Program administered under the Office for Domestic Preparedness. 
This will require reinvention of the wheel: new staff, new training, 
and new infrastructure.
    If I were a more cynical man, I would suspect that moving the FIRE 
Grant from FEMA to the Office of Domestic Preparedness--a division 
formerly within the Department of Justice--is really a step toward 
merging the FIRE Grant with the President's first responder initiative. 
But because I choose instead to see the glass as ``half-full,'' I will 
focus instead on maintaining funding and protecting the autonomy of the 
program.
    Part of protecting that autonomy of having the FIRE Grant receive 
it's own earmark within the budget. This demonstrates the congressional 
commitment to the program and therefore helps protect it from an 
unceremonious death down the road. That is what I am urging you to do 
today, protect the FIRE Grant by earmarking it within the budget for 
its own funding distinct from other first responder dollars.
    I don't have to remind you that at the time of passage, the FIRE 
Act had the support of all the major fire service organizations as well 
as a bipartisan coalition of 285 Members of Congress. In fact, almost 
two-thirds of the members who were sitting on this committee in the 
106th Congress, including the chairman and ranking member, supported my 
bipartisan legislation. And this support has only grown since the 
program has been implemented.
    There are 32,000 fire departments in our Nation, many of which are 
understaffed, undertrained, and ill equipped. The FIRE Grant gives 
these departments the tools they need to successfully complete their 
vital mission. It provides for grants to be awarded directly to paid, 
partially-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 2 years of this program, a total of $460 million has 
been awarded to 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 2003--$750 million--
will include administrative costs for FEMA. In addition, for the second 
year in a row 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 has an infrastructure that 
allows it to run smoothly and to thrive.
    With the looming threat of war and with tension surrounding our 
daily lives because of fear of terrorism, it can be easy to forget that 
we needed this grant program to provide funding to firefighters before 
September 11.
    Yes, we need training to protect ourselves against chemical and 
biological attacks, and yes we need better communication systems 
between States and municipalities in the case of a wide scale 
debilitating disaster that crosses man-made boundaries. But we also 
need fire trucks, protective gear, self-contained breathing 
apparatuses, smoke filtering cameras, and all the other tools that fire 
fighters use every day to fight fires and save lives. If we merge our 
grant program with a broader scoped anti-terrorism program, then these 
bread and butter daily needs will be forgotten.
    These numbers don't lie. A needs assessment study that the FIRE Act 
mandated FEMA to do that was just released last month supported these 
startling facts:
    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 FIRE Grant Program for fiscal year 2004 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.

    Mr. Mario Diaz-Balart of Florida. Thank you. Does the 
gentleman have any questions for the gentleman?
    Mr. Edwards. Mr. Chairman, thank you.
    From someone who has eaten a lot of pancakes at volunteer 
fire department events, I would thank the gentleman for his 
leadership in the FIRE Act. It is a great program.
    Is it fair to say, Mr. Pascrell, that without full funding, 
and perhaps even with full funding, but certainly without full 
funding in the FIRE Act, we will have a massive amount of 
unfunded mandate placed on our first-responders?
    Mr. Pascrell. Yes, and many of these mandates, Congressman, 
existed long before 9-11, obviously, because we couldn't fund 
everything in the first 2 years. So we are talking about 17-
18,000 applications that are not being responded to because we 
don't have any money. So the need is there, and, obviously, 9-
11 has simply exacerbated that situation.
    Mr. Edwards. Thank you.
    Mr. Mario Diaz-Balart of Florida. Thank you very much.
    Mr. Pascrell. Thank you.
    Mr. Mario Diaz-Balart of Florida. The gentleman from the 
State of Washington, you are recognized, sir.

  STATEMENT OF HON. BRIAN BAIRD, A REPRESENTATIVE IN CONGRESS 
FROM THE STATE OF WASHINGTON; ACCOMPANIED BY HON. JIM COOPER, A 
     REPRESENTATIVE IN CONGRESS FROM THE STATE OF TENNESSEE

                 STATEMENT OF HON. BRIAN BAIRD

    Mr. Baird. I thank the Chair and the ranking member. 
Partway through my testimony, I will yield some time to my good 
friend from Tennessee because we are here sort of as a team act 
because we are both affected by the legislation that I would 
like to talk about--coincidentally, as the acting Chair and the 
acting ranking member.
    What I am referring to is the inequity in the Federal tax 
law which allows people who reside in States that have income 
tax, State income tax, to deduct that tax from their Federal 
return, but residents from seven States are not afforded the 
same opportunity because their States have chosen to raise 
revenues through a sales tax. Those States are rather 
interesting.
    It includes my home State of Washington; the State of 
Texas, which of course is the State of the President's origin 
as well as the majority leader and our acting ranking member 
today; the State of Wyoming, Vice President Cheney's State; the 
State of Tennessee, the majority leader from the other body; 
the State of South Dakota, the minority leader from the other 
body; the State of Nevada, the assistant minority leader from 
the other body, and the State of Florida, which of course is 
governed by the President's brother, Mr. Bush.
    But, frankly, even if none of those distinguished 
individuals were from any of these States, it would still be 
the right thing to do. It is not, in my judgment, the role of 
the Federal Government to dictate that one State's decision of 
how to raise revenue is superior to another's, and that is why 
my good friend and colleague, Kevin Brady, along with Jim 
Cooper from Tennessee, and Marsha Blackburn from Tennessee, 
Zach Wamp, Barbara Cubin, and I, and many others, including a 
number of members from this very committee, have joined 
together to propose a very simple but fair piece of 
legislation.
    Our legislation would say that taxpayers have the right to 
choose to deduct either their State income tax or their State 
sales tax from their Federal return. This does not complicate 
the Tax Code in any significant way. We figure that it would 
take about one minute for a person to look at their family 
income, their family size, look on a chart, and that would be 
the item they would insert on ``schedule A'' when they are 
itemizing their deductions.
    The cost to the Treasury is not small, but relative to the 
other tax cuts this body will be considering, it is relatively 
small. We estimate that over a 10-year period the total cost 
would be about $29 billion, or in other words, about $2.9 or $3 
billion a year, to establish a fundamental principle of 
fairness.
    I would assert that for the residents and the 
Representatives of the States I just mentioned there is no more 
important and more fair tax reform that we need to put in 
place, and I would also assert that it is consistent with the 
values of stimulus that we adhere. It affects predominantly 
middle class and working families. It is instantaneous in the 
sense that. If we implement, it would allow people to begin to 
receive the benefits quickly this year. It is simple, and the 
costs are modest at most.
    I would like to yield at this point to my good friend, Jim 
Cooper.
    [The prepared statement of Mr. Baird follows:]

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

    Thank you, Mr. Chairman.
    Mr. Chairman and members of the committee, I truly appreciate the 
opportunity to share some specific tax concerns that have put a strain 
on constituents in my home State of Washington.
    In principle, Mr. Chairman, I believe that the Federal Government 
must strive to avoid tax policies that favor residents of some States 
over others. Unfortunately, I believe that one egregious failure to 
adhere to this principle is found in the manner in which the Federal 
Government allows taxpayers to deduct State and local taxes.
    I'm sure, Mr. Chairman and members of the committee, that you are 
well aware of the problem. Simply put, residents of States without 
State income taxes now pay a greater percentage of taxes to the Federal 
Government than residents of States with State income taxes. Solely on 
account of the system of taxation their State uses to collect revenues, 
they pay more Federal tax. That differential treatment of taxpayers is 
a profound inequity that the 108th Congress should rectify.
    The repeal of the sales tax deduction in 1986, although well 
intended, resulted in a significant disparity between States. By 
disallowing State sales tax deductions, but retaining State income tax 
deductions in the Federal code, we now have a system in which one 
individual with an income and financial profile that is identical to 
another person may pay higher taxes to the same Federal Government 
simply because they live in different States. As a result, residents of 
States such as Texas, Florida, Washington, Tennessee, South Dakota, 
Nevada, Alaska, and Wyoming, pay more in Federal taxes than residents 
of equal income in other States. In effect, residents of States without 
income taxes are underwriting a disproportionate share of the Federal 
budget.
    It's not that Washingtonians pay less in taxes. To the contrary, 
we're in the top quarter of States in amount of our personal income 
that goes to State taxes. Which leads me to ask, should residents of my 
State pay hundreds more dollars per year to the Federal treasury for 
nothing more in return, than those individuals living across the river 
in another State. I believe that they should not.
    To remedy this situation, I along with Representative Brady, have 
proposed legislation, along with about 60 cosponsors, including several 
members of this committee, that will restore the sales tax deduction 
for taxpayers in States that do not have an income tax. My measure 
would allow taxpayers to deduct either their State income tax or State 
sales taxes paid in a given year. By giving a choice of deducting 
either sales or income tax, the budgetary scoring is kept to a minimum, 
but equity and fairness are restored across States.
    To keep the sales tax deduction simple for taxpayers, under this 
legislation the Internal Revenue Service would be directed to develop 
standard tables for taxpayers to use in determining their average sales 
tax deduction. Such tables, similar to those used by taxpayers prior to 
1986, would include average calculations, based upon income and 
household size, for a taxpayer in a given State. The bill does not 
restore the itemized deduction of individual purchases; it only allows 
taxpayers to deduct an averaged amount based on income level and family 
size.
    Mr. Chairman, I am committed to restoring the Federal budget to 
balance, but I am also committed to the principle of equal taxation as 
dictated by the Constitution. So, as you review the many tax relief 
proposals before you next week and if, in fact, the committee develops 
legislation to provide relief in this Congress, I strongly encourage 
you to consider this common sense proposal, for the simple reason that 
it is the right thing to do.
    Again, I want to thank you, and members of the committee for 
graciously granting me this opportunity, and I yield back the balance 
of my time.

    Mr. Mario Diaz-Balart of Florida. Mr. Cooper, you are 
recognized, sir.

                  STATEMENT OF HON. JIM COOPER

    Mr. Cooper. Thank you, Mr. Chairman, and I would like to 
thank, in particular, my good friend from Washington State 
because he has carried the battle to the point where it is 
right now.
    I think our seven States do have an excellent chance of 
finally achieving tax equity. We are not talking about special 
treatment here for these seven States. All we are talking about 
is ending the discrimination that has happened against Texas, 
Florida, Tennessee, and these other States for the last 16 
years.
    Because prior to 1986, sales tax at the State level was 
fully deductible on your Federal income tax return, but for the 
last 16 years these seven States have been discriminated 
against by the Federal Tax Code. These seven States and the 
tens of millions of residents of these States have effectively 
been subsidizing the other 42 States in this great country.
    There is one State, fortunately for it, I guess, that has 
no sales tax or income tax, New Hampshire. How they get by we 
don't know.
    But, still, these seven States have paid the bills for 
other States for 16 years. I know the chairman feels this 
acutely, being from Florida. I know the ranking member does as 
well, being from Texas.
    We are not asking for special treatment. If we just band 
together, we have the opportunity to do more to help the 
taxpayers of our States than any other measure this body could 
consider.
    Now it is always a challenge when you only have seven 
States affected by something to get a majority of votes, but 
there are 78 Members from those States. So if we band together, 
we will have enough strength.
    But it is important to note what my colleague from 
Washington said. If you are from the other 42 States, you would 
still get additional tax flexibility which would enable your 
taxpayers from those States to choose whether they are going to 
deduct the State income tax or the State sales tax. Because 
there are some States--like New York, for example--that has a 
very high local sales tax, many taxpayers there may choose to 
deduct the sales tax in New York State. So it is really tax 
flexibility for all States, tax fairness for all States, and 
relief from discrimination for the seven States most affected.
    So even though this is a little bit of an unconventional 
measure, it has a significant price tag. We estimate over the 
next 5 years between $10 [billion] and $15 billion. But in 
comparison to a $740 billion tax package from the President, 
this is almost a rounding error.
    So it is important that we stay united, that we work hard, 
that we inform the other Members who are not tuned into this 
important tax equity measure, and we get the job done both 
within this budget and on the floor of the House of 
Representatives in the coming weeks.
    So I thank the gentleman from Washington for yielding, and 
I thank the patience of this committee.
    Mr. Mario Diaz-Balart of Florida. Thank you. Thank you 
both, gentlemen.
    If there are any questions at this time for either one of 
them, we will take them. The gentleman from Texas.
    Mr. Edwards. Thank you, Mr. Chairman. I just want to 
compliment Mr. Baird and Mr. Cooper for this idea. I will say 
``amen'' to it. As a Texan, it doesn't seem fair.
    The Federal Government, at a time when our leadership here 
in Congress is saying, let's give authority to the States, the 
Federal Government is saying, ``No, we're going to approve one 
type of tax but not another type of tax.'' It should be left up 
to the States.
    Let me just ask one question, as a supporter of the bill. 
Technically, the way it would work is every time you make a 
purchase and have a receipt with sales tax on it, is it the 
receipt that you would then use for your IRS purposes?
    Mr. Baird. Actually, it is a great question. That is how it 
was prior to 1986. Prior to 1986, one could either save the 
receipts or just use a chart. We have opted to propose just 
simplifying it with a chart.
    Frankly, I remember when I first started filling out my 
taxes in Washington, I had a shoebox; I saved all my receipts, 
and at the end of the day I was within a tight margin.
    One of my fundamental values is simplifying the Tax Code. I 
think there are a host of other things we should do. So rather 
than forcing people to save their receipts--it complicates the 
prediction of costs and revenue implications; it makes people's 
lives more complicated.
    On average, we will estimate how much a family of a given 
size at a given income level makes per State, and if you are in 
that State and you are itemizing your deductions, it will just 
say, ``Refer to the table on page `X' and the family size/
income.'' Bingo, and it is literally about a minute of 
additional work, but that minute of additional works will save, 
we figure, an average family that itemizes some $300 to $500 
every single year, which is what they would get if they were in 
a State that had an income tax. There is no reason that two 
people who make the exact same amount of money, just because 
they live in different States, one should pay more to the 
Federal Government than the other. So it is very simple.
    Mr. Edwards. And I don't know the exact number on costs or 
lost revenues to the Federal Treasury of companies who decide 
to take advantage of all the resources, public resources, of 
the United States and then locate a sham corporate headquarters 
in the Caribbean somewhere, but it might come pretty close to 
paying for that.
    Mr. Baird. There are plenty of offsets we can have that 
will take care of this, but it would also actually be fair and 
would make this no net lost revenue.
    Mr. Mario Diaz-Balart of Florida. Thank you both.
    Any questions? [No response.]
    Thank you, gentlemen, for your testimony. Now we will hear 
from the honorable gentleman from New Jersey, who also is the 
chairman of the Coast Guard subcommittee that I sit on, so he 
is my favorite of all the people that have talked. I just want 
to make that clear for the record. [Laughter.]
    It's a pleasure to have you here, sir.

   STATEMENT OF HON. FRANK A. LOBIONDO, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF NEW JERSEY

    Mr. LoBiondo. Thank you very much, Mr. Chairman. I 
appreciate the opportunity to testify before this committee on 
my priorities for the 2004 budget resolution. I have a complete 
statement that is rather extensive that I would like to submit 
for the record, and just touch on two critical issues in the 
limited amount of time that I have today. The two issues are 
increased funding for the Coast Guard and continued funding for 
Round II Empowerment Zones.
    As the committee is well aware, the President has requested 
a 10-percent increase in the overall Coast Guard budget. While 
I am very pleased with the President's continued commitment to 
increase funding for the Coast Guard, I am concerned with the 
requested level of funding for the Integrated Deepwater 
Program. As you know, Mr. Chairman, the Deepwater Program is an 
ambitious procurement program to replace the Services' aging 
fleet of ships and aircraft with more flexible assets able to 
meet the multimission challenges of today. It is almost 
unbelievable to think that the Coast Guard is running with 
assets, some of which were commissioned during World War II, 
that are still expected to continue on in the same vein that 
they have been. It's a virtual impossibility.
    The successful and timely implementation of Deepwater is 
necessary to ensure that the Coast Guard is able to respond to 
terrorist threats and to maintain a high level of readiness to 
fulfill the other vital missions that they are expected to 
complete. A number of missions that have been traditional--
search and rescue, which any of the Great Lakes States are very 
interested in--traditional missions like illegal drug 
interdiction, traditional missions like making sure that they 
are enforcing fishery laws of this Nation--have really suffered 
because of the expectation if the Coast Guard's need to take 
care of homeland and port security.
    So Operation Deepwater is critical to homeland security and 
to traditional Coast Guard missions. Unfortunately, the $500 
million requested by the President for Deepwater 
recapitalization projects is well below what is needed to keep 
this critical procurement program on track.
    The administration's request reflects only the annual 
acquisition cost in 1998 dollars, and does not account for the 
annual inflation since that time. At the very least, an 
additional $78 million is required to counteract inflation and 
ensure the timely delivery of scheduled assets.
    Expanded responsibilities within the Department of Homeland 
Security and the need to sustain core mission effectiveness, as 
I've just described, has resulted in significantly higher 
operation tempos and a severe strain on aging assets. That 
means we are wearing out our aged assets at even a more rapid 
pace than we were before because of what we're expecting them 
to do. Therefore, the recapitalization of the Coast Guard's 
inventory with major cutters, aircraft, and their supporting 
systems is, in the very near term, a national priority and is 
now more critical than ever.
    I respectfully request that the committee strongly endorse 
a minimum level of $875 million in capital acquisition funding 
to accommodate the total of $578 million for the Integrated 
Deepwater System in order to sustain the on time delivery of 
these important assets.
    Mr. Chairman, I will add that the Coast Guard will be 
releasing a congressionally mandated report on the benefits of 
expanding the Deepwater procurements schedule in the very near 
future; and as we will soon find out, a modest increase in the 
annual level of funding for Deepwater will result in 
significant savings--in the billions, savings to the 
taxpayers--and deliver a full capability of these vital 
homeland security assets at least 5 years ahead of schedule. It 
is a win-win situation where homeland security and national 
defense both win; the taxpayers win as well, and I hope that 
the committee will embrace these findings of the report and 
support my future efforts to make them a reality.
    The second point, in addition to homeland security, is 
another national priority, which is improving our economic 
opportunities and economic stimulus package. A program now 
under way is helping to accomplish this in my district and 
across the country. As you may know, Empowerment Zone and 
Enterprise Community initiatives provide special Federal 
assistance to support comprehensive revitalization of 
designated urban and rural communities across the country. It 
is a 10-year program that targets Federal grants to distressed 
urban and rural communities for social services and community 
redevelopment, and provides tax and regulatory relief to 
attract and retain businesses and jobs.
    The original Empowerment Zone designations in 1994 received 
full funding as an entitlement, making all grant awards 
available for use within the first 2 years of designation. 
Unfortunately, this has not been the case with Round II 
designations. Benefits that have been promised with this 
designation include flexible funding grants of $100 million for 
each urban zone, $40 million for each rural zone, and about $3 
million for each Enterprise Community over a 10-year period, 
beginning in 1999. Again, this was a promise made by the 
Federal Government and the Congress to these communities that 
received designation. Round II zone designations were required 
to prepare strategic plans for comprehensive revitalization 
based on the availability of the promise--that is, $100 million 
in Federal grant funding over 10 years. Unlike the Round I 
designations, Round II designations have only received a very 
small fraction of the funding, a lot of which has been up 
front. As a result, our zone lacked the certain and predictable 
funding stream to implement their strategic plans, and must 
seek an annual appropriation to secure the promised Federal 
grant program.
    Cumberland County, which is my home county Empowerment 
Zone, is a collaborative revitalization strategy between the 
communities in my district of Bridgton, Millville, Vineland, 
and Port Norris. Cumberland is the second fastest spending zone 
in the Nation, having committed 100 percent of the nearly $22 
million that has been made available by HUD so far. Hundreds of 
jobs have been created to date, with additionally over 1,000 
jobs anticipated within the next 18 months--if the Federal 
funding source continues. Over 100 housing units have been 
renovated, rehabilitated, constructed, or purchased in EZ 
neighborhoods, and a $4 million loan pool is available to be 
reinvested back into the communities.
    So what they have done is, they have taken Federal dollars, 
they have loaned them out, but put them in a revolving loan 
fund so that those dollars come back and work over and over and 
over again to attract new jobs and retain existing jobs. 
Cumberland County has funded over 60 initiatives through 
Empowerment Zone programs, realizing over $11 million in 
funding. These projects are estimated to leverage a total of 
$123 million in private, public, and tax exempt bond financing.
    Put plainly, Mr. Chairman, the Cumberland County 
Empowerment Zone has leveraged nearly $10 in private investment 
for every single dollar of public investment. That's a 
tremendous return on the dollars that we are putting into a 
program that is an economic stimulus package. It's a great 
partnership that we have established, and it has proven 
results.
    So for further success and viability and the sustainability 
of the Empowerment Zone strategy--and more importantly, for our 
communities--it hinges on the ability to continue to attract 
and leverage private investment. It is imperative that the 
existing Round II Empowerment Zones receive multiyear funding 
to facilitate the implementation of a long-term strategy and 
continue to attract the private sector dollars that are so 
critical to the partnership. Unfortunately, the President did 
not request funding for Round II in his 2004 budget. Last year, 
when the President did not request funding for this initiative 
in the budget, the Budget Committee, in its infinite wisdom, 
included supportive language in the committee report, which I 
was very appreciative of, which accompanied H. Con. Res. 853, 
the fiscal year 2003 budget resolution. This language was 
extremely helpful. I believe, Mr. Chairman, that it was just 
totally critical to our efforts to successfully secure $30 
million, which was only a small fraction but a big help, in 
funding for the program in the 2003 omnibus.
    I respectfully request the committee again, as you did last 
year, include supportive language for the Round II Empowerment 
Zone funding. I have enclosed a copy of the language in the 
statement that I have submitted for the record and ask you to 
please look it over.
    While I recognize that we have significant budget 
restraints this year, I strongly believe that we must find the 
necessary resources to secure America's homeland and our 
economic future. Increasing Federal investment in the Deepwater 
Program and the Empowerment Zone initiative will help build a 
stronger and better America.
    I thank you, Mr. Chairman.
    [The prepared statement of Mr. LoBiondo follows:]

   Prepared Statement of Hon. Frank A. LoBiondo, a Representative in 
                 Congress From the State of New Jersey

    Mr. Chairman, thank you the opportunity to testify on my priorities 
for the fiscal year 2004 budget resolution. I have several critical 
issues I would like to bring before the committee for your 
consideration--increased funding for the Coast Guard, continued funding 
for Round II Empowerment Zones, a proposal in the President's budget to 
increase child support payment collections.
    As the committee is well aware, the President requested a 10-
percent increase in the overall Coast Guard budget. While I am very 
pleased with the President's continued commitment to increase funding 
for the Coast Guard, I am concerned with the requested level of funding 
for the Integrated Deepwater Program.
    As you know, Deepwater is an ambitious procurement program to 
replace the service's aging fleet of ships and aircraft with more 
flexible assets able to meet the multimission challenges of today. The 
successful and timely implementation of Deepwater is necessary to 
ensure the Coast Guard is able to respond to terrorist threats and 
maintain a high level of readiness to fulfill its other vital missions. 
Unfortunately, the $500 million requested by the President for the 
Deepwater recapitalization project is well below what is needed to keep 
this critical procurement on track. The administration's request 
reflects only the annual acquisition cost in 1998 dollars and does not 
account for the annual inflation since that time. At the very least, an 
additional $78 million is required to counteract inflation and ensure 
the timely delivery of scheduled assets.
    Expanded responsibilities within the Department of Homeland 
Security and the need to sustain core mission effectiveness, has 
resulted significantly higher operation tempos and a severe strain on 
the aging assets. Therefore, the recapitalization of the Coast Guard's 
inventory of major cutters, aircraft, and their supporting systems is a 
very near-term national priority, and is now more critical than ever. I 
respectfully request the committee strongly endorses a minimum level of 
$875 million in Capital Acquisitions funding to accommodate a total of 
$578 million for the Integrated Deepwater System in order to sustain 
on-time delivery of these important assets.
    Mr. Chairman, I will add that the Coast Guard will be releasing a 
congressionally mandated report on the benefits of expediting 
Deepwater's procurement schedule in the very near future. As we will 
soon find, a modest increase in the annual level of funding for 
Deepwater will result in significant (Billions) savings to the taxpayer 
and deliver the full capability of these vital homeland security assets 
at least 5 years ahead of schedule. I hope the committee will embrace 
the findings of this report and support my future efforts and make them 
a reality.
    In addition to homeland security, another national priority is 
improving economic opportunity. A program is currently helping to 
accomplish this goal in my district and across the country. As you 
know, the Empowerment Zone/Enterprise Community initiative provides 
special Federal assistance to support the comprehensive revitalization 
of designated urban and rural communities across the country. It is a 
10 year program that targets Federal grants to distressed urban and 
rural communities for social services and community redevelopment and 
provides tax and regulatory relief to attract or retain businesses.
    The original Empowerment Zone designations in 1994 received full 
funding as an entitlement, making all grant awards available for use 
within the first 2 years of designation. Unfortunately, this has not 
been the case with the Round II designations. Benefits promised with 
this designation included flexible funding grants of $100 million for 
each urban zone, $40 million for each rural zone and about $3 million 
for each Enterprise community over a 10 year period beginning in 1999. 
Round II zone designations were required to prepare strategic plans for 
comprehensive revitalization based on the availability of $100 million 
in Federal grant funding over 10 years (1999-2009). Unlike the Round I 
designations, Round II Zones have only received a small fraction of 
funding, none of which has been up front. As a result, our zones lack 
the certain and predictable funding stream to implement their strategic 
plans, and must seek an annual appropriation to secure the promised 
Federal grant award.
    Cumberland County Empowerment Zone is a collaborative 
revitalization strategy between the communities in my district of 
Bridgeton, Millville, Vineland, and Port Norris. Cumberland is the 
second fastest spending zone in the Nation, having committed 100 
percent of the nearly $22 million that has been made available by HUD 
so far. Over 300 jobs have been created to date with an additional 
1,100 anticipated over the next 18 months, if the Federal funding 
source continues. Over 100 housing units have been renovated, 
rehabilitated, constructed, or purchased in EZ neighborhoods and a $4 
million loan pool is available to be reinvested back into the targeted 
communities. Cumberland County has funded over 60 initiatives through 
the EZ program, utilizing $11,627,563 in funding. These projects are 
estimated to leverage a total of $123,948,631 in private, public, and 
tax exempt bond financing. Put plainly, the Cumberland County 
Empowerment Zone has leveraged nearly $10 in private investment for 
every one dollar of public funding, a remarkable achievement that shows 
the success and promise of the Zone. The future success, viability, and 
sustainability of the empowerment zone strategy and more importantly, 
our communities, hinge on the ability to continue to attract and 
leverage private investment. It is imperative the existing Round II 
empowerment zones receive multiyear funding to facilitate the 
implementation of the long term strategy plan as required by each Zone.
    Unfortunately, the President did not request funding for Round II 
EZs/ECs in his fiscal year 2004 budget. Last year, when the President 
did not include funding for this initiative in his fiscal year 2003 
budget, the Budget Committee included supportive language in the 
committee report accompanying H. Con. Res. 353, the fiscal year 2003 
budget resolution. This language was extremely helpful in our efforts 
to successfully secure $30 million in funding for the program in the 
fiscal year 2003 omnibus. I respectfully request the committee again 
include supportive language for Round II Empowerment Zone Funding. The 
language is as follows:
                empowerment zones/enterprise communities
    The committee strongly supports the continued funding of the Round 
II. Urban and Rural Empowerment Zone and Enterprise Community (EZ/EC) 
initiatives at least at the level pledged by the Round II designation 
of 1999.
    The committee recognizes that the current EZ/EC initiative is 
yielding measurable results; improving the economy and quality of life 
in distressed areas; enabling selfsufficiency of disadvantaged 
residents; and leveraging private and nonprofit resources. In competing 
for designation, these communities were selected for their thoughtful 
use of Federal funds over a full 10-year cycle, not on how quickly they 
could withdraw from funds from the Treasury. The Round II EZ/EC 
designees have received only a small portion of the Federal grant funds 
they were promised to implement their strategic plans for 
revitalization. This resolution assumes the program will receive 
sufficient resources to continue progress on this important work.

                  107TH CONGRESS, HOUSE REPORT 107-376

    Another important budget priority for my district is the defeat of 
a proposal in the President's fiscal year 2004 budget to establish a 
mechanism to collect winnings from casino patrons who have failed to 
pay child support. While I strongly support efforts to crack down on 
``dead beat'' parents, I remain concerned about any plan that would 
call on private industries to become arms of law enforcement.
    Let there be no mistake, I share the President's objective of 
making it more difficult for ``dead beat'' parents to elude their 
family responsibilities. In my home State, State and local law 
enforcement agencies work diligently to ensure that parents who abandon 
financial responsibilities to their children face the consequences. I 
support continued efforts to assist the law enforcement community by 
providing necessary tools and resources to fight this important battle.
    However, creating a new Federal bureaucracy to maintain a national 
database--especially one that is accessible by private sector employees 
not trained in law enforcement--does not seem to be the best approach. 
To fulfill the legal requirement to pay winnings when they are due, 
thousands of gaming industry employees would need accurate information 
from all 50 States accessible 24 hours a day, 7 days a week. Misuse by 
employees or mistakes in the database could create a litany of 
liability issues for both the gaming industry and the Federal 
Government.
    While we share the goal of implementing a more efficient method of 
collecting unpaid child support, a remedy that puts the burden on our 
private sector industries to become responsible for carrying out the 
duties of our trained and skilled law enforcement community is not the 
right approach. I therefore respectfully request that you not assume 
revenues from this proposal as you develop the fiscal year 2004 budget 
resolution.
    Finally, as you know, the coastal communities in my district have a 
strong history of working with the Army Corps of Engineers to protect 
local beaches, tourist economies, lives and property.
    Beach replenishment projects are not about suntans; they are about 
jobs and the economy. The tax revenue to the Federal Government is more 
than 180 times the Federal share of shore protection projects annually.
    The projects in my district are not only a vital component of our 
tourist based economy, but also provide key habitats for a variety of 
wildlife including rare and endangered species. While I appreciate the 
President's budget for my district projects for fiscal year 2004, I am 
very concerned with the continued prohibitions on ``new starts.'' I 
have several projects that have made it through the feasibility stage 
favorably, but are now delayed from moving to construction due to 
insufficient ``new start'' funding. These projects are critical to my 
district, I hope we can work together to find a solution to this 
problem.
    Thank you for your kind consideration of these requests. I look 
forward to working with you to develop comprehensive solutions to these 
and other budget issues facing our great Nation.

    Mr. Gutknecht [assuming Chair]. Thank you, Mr. LoBiondo.
    Questions or comments? The gentleman from Texas?
    Mr. Edwards. I just want to thank Mr. LoBiondo for pointing 
out and reemphasizing the important role the Coast Guard plays 
in our homeland defense efforts.
    Thank you for your leadership in pushing for additional 
funding there. I have a community in Texas that has been marked 
for Empowerment Zone designation; it is a great program, and I 
hope we can get bipartisan support in putting that money into 
the budget. Thank you.
    Mr. LoBiondo. Thank you.
    Mr. Gutknecht. Thank you, Mr. LoBiondo.
    The gentleman from Michigan, the honorable, the doctor, 
Vernon Ehlers. I understand you have a rather impressive slide 
show for us.

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

    Mr. Ehlers. Well, I am pleased that you think it is 
impressive before even seeing it, because you may never see it. 
They are having some technical problems here, and I am sure Mr. 
Nussle will not be pleased, because he was so proud of this 
system last year, when I was the first one to use it for a 
presentation.
    I do have a script and I will skip that, and I hope that I 
will have some charts to show you before I have finished.
    First of all, I thank you for the opportunity to testify 
today, and I appreciate that the Budget Committee always takes 
the time to listen to testimony and comments from all Members 
who wish to make those comments.
    You obviously have some very heavy priorities and difficult 
decisions to make. At the same time, I want to make sure we are 
able to put our funding where I think it is really important--
not only for military purposes, but for an area of research 
that backs up not only the military, but provides economic 
benefits as well as medical benefits and business benefits.
    Just to give an example, laser-guided bombs, which we think 
are wonderful just because they accomplish the task with far 
less collateral damage and far less use of resources, would be 
impossible without lasers; yet the first idea for lasers was 
developed in the 1930s by a theoretical physicist, sitting at 
his desk, inquiring as to what quantum mechanics had to say 
about the interaction of light and atoms. And from that, he 
discovered stimulated emission, which led to the development of 
lasers 20 years later. Even that was still only in the 1950s, 
and the applications of the laser have been tremendous. But all 
that early research was funded in the nature of basic research, 
with no idea whatsoever as to what the application would be, 
and yet we find it invaluable. Today we also have GPS weapons 
which are based on atomic clocks and something that I worked on 
when I was getting my Ph.D., and again, basic research--we had 
no concept that this would lead to a geosynchronous position 
system which allows us to guide airliners, as well as bombs and 
missiles.
    Science and technology are critical to our economic 
prosperity as well. It is very important to us to maintain the 
funding for that. Over the past 5 years, we have doubled NIH, 
and if I had my first slide I would show how that has had a 
very positive effect, but also has thrown our research effort 
out of balance. The director of the NIH is the first one to say 
that he could not continue the level of research they are doing 
without similar progress in the funding of physical sciences: 
physics, chemistry, engineering, computer science, and so 
forth, to the point where he said that if we do not increase 
the funding there--this was the previous director--he would 
have to start making certain that research gets done using his 
own funds, because he needs it.
    So we have doubled NIH. We should double NSF. In fact, the 
House and the Senate passed a bill last year and the President 
signed it into law, and this will be your first opportunity to 
provide that 15-percent increase for every year. Again, I have 
a chart which shows that this is a relatively small amount--not 
insignificant, but very small compared to what we deal with in 
NIH. If we had the money to do it for NIH, we certainly have 
the money to do it for the NSF.
    And so I am requesting that you allocate sufficient funds 
within the budget to honor the intent of that bill that we 
passed last year, so that the appropriations can match our 
authorizations.
    As you well know, I have been dedicated to science for a 
long time, but that's not the only--or even the main--reason 
that I appear before you to ask for this funding. I am 
convinced that we will do damage to our economic future, our 
children's future, our educational future, and for that matter 
our military future, if we do not continue our basic research 
in science. And above all, I ask that you go with the 15-
percent increase for the National Science Foundation this year.
    In addition to that, we must recognize that the Department 
of Energy's Office of Science has suffered over the past 
decade. It has actually gone down in appropriations in constant 
dollars; similarly, NASA has gone down in constant dollars, and 
so it is very important for us to make certain that those areas 
of research also receive increases.
    I am not prepared with recommendations for that, but I 
certainly hope you will keep that in mind as you consider the 
budget process.
    I would love to show you these charts on the screen. I can 
wave them in front of you, which is not very effective, but I 
will see that each of you are given copies and that copies are 
provided for the record, as well. But this particular chart, 
which you can probably just barely see, shows how NIH has gone 
up exponentially, as you expect when you give it a 15-percent 
increase a year, and it is now leveling off, whereas NSF is 
just barely increased. NASA has gone down. DOE has gone down 
during that 10-year period.
    If you compare the increase that we gave to NIH to what 
we're hoping for from NSF, you can see it is considerably 
smaller, only about a third of what we did for NIH. If we could 
fund NIH to that extent, we could certainly fund the increase 
in NSF. On an annual basis, this is what is represented there; 
again, even less than a third of it.
    Finally, just to show how important this is, the students 
follow the money. If you look at what has happened to student 
enrollments, you will find life sciences going up, following 
very nicely along the increased funding line that we provided 
for life science research. Down here we have the other 
disciplines, the physical disciplines, earth, oceans, 
atmospheric, physical science, math, computer science, and 
engineering. And I am particularly concerned about engineering, 
which is largely applied science--ah, we finally have the 
charts there. It shows here that engineering undergraduate 
enrollment in the United States is going down. Graduate 
enrollment is up, but not because of American students; because 
of foreign students.
    So we are dependent for our future on foreign students 
coming into this country, whereas our enrollments are going 
down. And this is all related to this budget request that I am 
submitting to you here.
    I know the slides flashed briefly on the screen, but at 
this point I suspect my time has expired. I will be happy to 
answer any questions.
    [The prepared statement of Mr. Ehlers follows:]

Prepared Statement of Hon. Vernon J. Ehlers, Representative in Congress 
                       From the State of Michigan

    Thank you, Mr. Chairman, for the opportunity to testify before you 
today as the committee deliberates a fiscal year 2004 budget 
resolution. I know that several priorities weigh heavily with the 
committee as you prepare the fiscal year 2004 budget, particularly 
funding the on-going war on terrorism, contemplating a potential war 
with Iraq, facilitating economic stimulus, and maintaining fiscal 
responsibility while preserving domestic spending responsibilities. I 
certainly do not envy the difficult choices you have to make, but let 
me assist you in your deliberations by pointing out the role that 
science research and development plays in all of these areas. Simply 
put, science research forms the foundation for each one of these 
priorities, and it must not be overlooked.
    For example, laser-guided bombs are incredibly useful and powerful 
weapons that have allowed our military to accomplish its missions in 
Afghanistan and elsewhere with a lower risk to our 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 examining the quantum mechanical interaction of atoms with 
light. In fact, the laser itself was developed when I was a graduate 
student in the 1950s. Furthermore, GPS-guided bombs and missiles are 
based on the use of atomic clocks in satellites. Atomic clocks were 
also developed in the 1950s and are intimately involved with research 
that I did during that time. It is clear that funding for basic science 
research leads to these kinds of developments, which are essential in 
medicine, education, and business, as well as for the military.





    Science and technology are critical to our economic prosperity as 
well. Economists have attributed much of our Nation's improvement in 
productivity in recent years to the results of research and 
development. Productivity improvement and technological breakthroughs 
spurred the longest period of economic expansion in our Nation's 
history, and they hold the key for stimulating our economy now. The 
Networking and Information Technology R&D Initiative (NITRD) has played 
a central role in this area, and this program and others must be funded 
adequately in order to support the research and development that spurs 
economic growth.



    Let me speak specifically about three science research and 
development programs that deserve your committee's utmost attention and 
priority: the National Science Foundation, the Department of Energy's 
Office of Science, and science funding for NASA.
    Last year, Congress passed the National Science Foundation 
Authorization Act of 2002, which set an fiscal year 2004 authorization 
level of $6.39 billion and authorized the eventual doubling of NSF 
funding in 5 years. I strongly advocate that the Budget Committee 
should follow that path. I am concerned with President Bush's budget 
proposal of $5.481 billion, an increase of $452.9 million, or 9 
percent, over his fiscal year 2003 request, but which was prepared 
prior to the finalization of fiscal year 2003 appropriations. When 
compared with actual fiscal year 2003 appropriated amounts, the 
purported high priority for NSF funding is reduced to a flat level when 
adjusted for inflation. I strongly urge the committee to set NSF 
funding at the full fiscal year 2004 authorization amount of $6.39 
billion. This would reflect the importance of NSF objectives, including 
support for core science research, the development of information 
technology, engineering research, and K-12 education programs, all of 
which will foster economic growth and provide vital contributions to 
our homeland and national security missions.



    With regard to the Office of Science at the Department of Energy, I 
want to echo the views and estimates on the budget provided by the 
Science Committee. The Office of Science, which funds 40 percent of our 
Nation's physical science research, is a well-run, valuable office that 
is in need of funding increases. The President's budget proposal 
essentially keeps funding at fiscal year 2003 appropriated levels, and 
this is inadequate. In fact, it is inconsistent with the President's 
Council of Advisers on Science and Technology (PCAST) recommendation 
that funding for physical sciences be brought into parity with that for 
life sciences. Again, I stress that the programs pursued by the Office 
of Science are critical to the advances in research and development 
that facilitate economic growth and contribute to homeland and national 
security.



    Finally, let me say a word about science funding at NASA. Of 
course, we are all still reeling from the tragedy involving the shuttle 
Columbia, and as the investigation into the accident continues, debate 
is taking place over the size and scope of our space science program. I 
certainly share the view of many that funding for safety programs is 
critical. But, I must stress that we must not let this disaster engulf 
other science resources at NASA. The practical technological advances 
that have come out of our space program are well known, and I am 
confident that additional funding will certainly continue to provide 
the foundation for economic development as well as military and 
security applications. As the Science Committee continues its 
investigation and evaluation of the NASA budget and priorities, I urge 
this committee to provide adequate funding for the science programs 
that underpin all of NASA's programs, including space science, earth 
science, and aeronautics.



    My lifelong dedication to science is well known, and I appreciate 
your attention to the priorities I have laid out today. I offer my 
opinions as a scientist, but the goals I have for increased science 
funding belong to me not only as a scientist but also as a public 
servant. Increased funding for science research and development 
initiatives at the Federal level serves the national good by supporting 
economic development and contributing to advances in medicine, 
education, and military and national security systems.


    Thank you very much, Mr. Chairman, and I would be happy to answer 
any questions that you have.

    Mr. Gutknecht. Well, now the charts are working; in fact, 
they will work perfectly, I am sure, as you leave the room.
    Dr. Ehlers, I just want to thank you for your testimony.
    Any questions?
    Mr. Ehlers. If I may just add one point before the 
questions, just on the broad general sense.
    I appreciate the very careful look this Budget Committee 
gives every dollar expended, and I urge you to exercise that 
same scrutiny with the military expenditures that are flowing 
out of our government. I know that at a time like this it is 
common that we just say, ``Well, we need it for the war 
effort,'' but I am old enough to remember the $500 toilets and 
the $200 hammers. Every department needs scrutiny, no matter 
how worthy their cause, and I encourage this committee to 
conduct that same sort of scrutiny in every area of the budget, 
and not just assume that some areas are sacrosanct.
    Mr. Gutknecht. Thank you, Mr. Ehlers. Having gone with you 
out to the labs in Boulder, CO, and on behalf if the 3M 
Company, I want to thank them because they are wise shepherds 
of the money that we give them. I believe they are the largest 
user of duct tape in the Federal Government. They don't waste 
the funds. The experiments we saw were impressive and beyond my 
ability to completely comprehend, but they really are the crown 
jewels of the Federal Government. Those kinds of labs need a 
little bit of seed corn money to do the job that we expect them 
to do. And ultimately, we get enormous returns on much of what 
they do in those labs. So I am solidly with you.
    Mr. Edwards?
    Mr. Edwards. Thank you, Mr. Chairman.
    Dr. Ehlers, I just want to thank you for speaking out for 
programs that often don't have many lobbyists on their behalf, 
because so often the payoff for research is long-term and we 
are reelected on a short-term basis.
    But hearing your testimony reminds me of 20 years ago when 
I was here as a young graduate of college, working for the 
Congressman who chaired the Science Committee. O.N.E. ``Tiger'' 
Teague was the head of the first Manned Spacecraft 
Subcommittee; he had an animal husbandry degree from Texas A&M. 
He was born in Arkansas, but he was a great champion of NASA 
and of research as an investment in our future. We need more 
``Tiger'' Teagues. We need more Vern Ehlers in Congress, and I 
hope you keep speaking out.
    Mr. Ehlers. I thank you, Mr. Chairman and Mr. Edwards, and 
I can assure you that most of the benefit from what I am 
advocating will happen after I die. Thank you.
    Mr. Gutknecht. Thank you.
    The gentleman from Montana, Mr. Rehberg.

 STATEMENT OF HON. DENNY REHBERG, A REPRESENTATIVE IN CONGRESS 
                   FROM THE STATE OF MONTANA

    Mr. Rehberg. Mr. Gutknecht, Mr. Edwards, thank you for 
giving me this opportunity. I am honored to be placed between 
two scientists, as a Montana ranch kid. I am going to give my 
testimony as impressively, the old fashioned way; I am going to 
read it.
    A quarter of a century ago the elected leaders of the U.S. 
Congress made a promise to the citizens of America, a promise 
that all children, regardless of physical or mental 
disabilities, would receive a quality public education.
    The landmark Individuals with Disabilities Education Act, 
IDEA, represents both the best and worst that Congress can do. 
While Congress solemnly guaranteed children with disabilities 
access to quality public education, Congress subsequently 
failed public school children in its refusal to cover the costs 
associated with its promise.
    IDEA directs the Federal Government to contribute 40 
percent of the costs associated with meeting the needs of 
disabled children directly to the States and local districts 
that provide the educational services. To date, local school 
districts across America are still waiting for the Federal 
Government to provide its promised share.
    Since IDEA was signed into law, we have witnessed the 
elections of six Presidents, spent trillions of taxpayer 
dollars on tens of thousands of government programs; and yet, 
for some reason, we have failed to meet this fundamental 
guarantee.
    Each time I visit a school in Montana, educators stress the 
desperate need to fully fund the Individuals with Disabilities 
Education Act. In fact, if I were to ask any K-12 teacher or 
principal what is the single greatest financial challenge their 
schools face, the answer would invariably be IDEA.
    The act's goal, to provide a quality education to all 
students, including the disabled, is an eminently worthy one. 
Under IDEA, students with disabilities should receive a wide 
range of services, including individualized instruction, access 
to assistive technology, and related services such as speech-
language therapy, occupational therapy, and physical therapy. 
But the Federal shortfall has forced schools to shift funding 
away from other areas in order to provide even a half-hearted 
attempt at meeting IDEA requirements. This is why IDEA is not 
just an issue for the disabled, but an issue for every parent 
and every child in our public school system.
    While schools struggle to meet the requirements of IDEA in 
the midst of a severe Federal shortfall, class sizes grow 
larger, school construction projects are put on hold, and fewer 
efforts are made at teacher training and retention.
    This underfunded government mandate has drained State and 
local district coffers of billions over the years. Since 1990, 
local school district expenditures for IDEA have increased by 
968 percent in my State. In just five school years, the 
estimated Federal shortfall in IDEA funding has cost Montana 
$92.7 million. This year alone Montana will be shortchanged at 
least $25.5 million in IDEA funding. That means $25.5 million 
less for new teachers, computers, books, Internet access, and 
infrastructure.
    It is unfortunate that while the requirements of IDEA have 
become a fact of life for every school district, the 40 percent 
Federal contribution has remained a fiction. I implore this 
committee to support full funding of IDEA and thus fulfill the 
promise Congress made to America's children over 25 years ago.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Rehberg follows:]

   Prepared Statement of Hon. Denny R. Rehberg, a Representative in 
                   Congress From the State of Montana

    Thank you, Mr. Chairman, for the opportunity to provide testimony 
before this committee.
    A quarter of a century ago the elected leaders of the U.S. Congress 
made a promise to the citizens of America, a promise that all children, 
regardless of physical or mental disabilities, would receive a quality 
public education.
    The landmark Individuals with Disabilities Education Act (IDEA) 
represents both the best and worst that Congress can do. While Congress 
solemnly guaranteed children with disabilities access to quality public 
education, Congress subsequently failed public school children in its 
refusal to cover the costs associated with its promise.
    IDEA directs the Federal Government to contribute 40 percent of the 
costs associated with meeting the needs of disabled children directly 
to the States and local districts that provide the educational 
services. To date, local school districts across America are still 
waiting for the Federal Government to provide its promised share.
    Since IDEA was signed into law, we have witnessed the elections of 
six presidents, spent trillions of tax payer dollars on tens of 
thousands of government programs and yet for some reason we have failed 
to meet this fundamental guarantee.
    Each time I visit a school in Montana, educators stress the 
desperate need to fully fund the Individuals with Disabilities 
Education Act. In fact, if I were to ask any K-12 teacher or principal, 
what is the single greatest financial challenge their schools face, the 
answer would invariably be IDEA.
    The act's goal, to provide a quality education to all students, 
including the disabled, is an eminently worthy one. Under IDEA, 
students with disabilities should receive a wide range of services, 
including individualized instruction, access to assistive technology, 
and related services such as speech-language therapy, occupational 
therapy, and physical therapy. But, the Federal shortfall has forced 
schools to shift funding away from other areas in order to provide even 
a half-hearted attempt at meeting IDEA requirements. This is why IDEA 
is not just an issue for the disabled, but an issue for every parent 
and every child in our public school system.
    While schools struggle to meet the requirements of IDEA in the 
midst of a severe Federal shortfall, class sizes grow larger, school 
construction projects are put on hold, and fewer efforts are made at 
teacher training and retention.
    This under funded government mandate has drained State and local 
district coffers of billions over the years. Since 1990, local school 
district expenditures for IDEA have increased by 986 percent in my 
State. In just 5-school years, the estimated Federal shortfall in IDEA 
funding has cost Montana $92.7 million. This year alone Montana will be 
shortchanged at least $25.5 million in IDEA funding. That means $25.5 
million less for new teachers, computers, books, and Internet access.
    It's unfortunate that while the requirements of IDEA have become a 
fact of life for every school district, the 40 percent Federal 
contribution has remained a fiction. I implore this committee to 
support full-funding of IDEA and thus fulfill the promise Congress made 
to America's children over 25 years ago.
    Thank you, Mr. Chairman.

    Mr. Gutknecht. Thank you, Mr. Rehberg.
    Mr. Edwards?
    Mr. Edwards. Thank you for your testimony. I think that I 
speak for the entire committee when I say that we are well 
aware, and we appreciate the reminder about the importance of 
IDEA and our commitment to those kids who have special needs. 
Thank you very much.
    Mr. Gutknecht. Next we have the gentleman from New Jersey, 
Mr. Holt. Welcome to the committee.

 STATEMENT OF HON. RUSH D. HOLT, A REPRESENTATIVE IN CONGRESS 
                  FROM THE STATE OF NEW JERSEY

    Mr. Holt. Thank you, Mr. Gutknecht. I am here to follow on 
with the remarks that you heard from our colleague, Vern 
Ehlers. I am the other half of the bipartisan Physics Caucus. I 
am here to make an appeal that we not eat our seed corn. 
Whether we are to use a 5-year time base or a 10-year period as 
we prepare our budget, we have to look at where our future 
economic growth will come from, where will the productivity 
come from, and it comes from research and development. We are 
underfunding in the United States research and development both 
in the private sector and in the public sector. Our investment 
in science R&D is essential for the economy, for our national 
security, and to build the skilled next generation workforce. 
Now NSF is the backbone of basic research. And let me talk 
about a couple of examples in Function 250.
    NSF supports over 20,000 research and education programs in 
science and engineering every year. And the passage of the NSF 
reauthorization bill in the 107th Congress was clear evidence 
of the bipartisan support for this agency. And when I served on 
this committee I was pleased to be able to get increases in 
Function 250 built into the budget that resulted in increases 
in appropriations. The fiscal year 2003 appropriation of $5.3 
billion represents a 10-percent increase over the previous 
year. But now we find that the Bush proposed budget for fiscal 
year 2004 does not continue to build on this support; barely a 
2-percent increase, almost $1 billion below the authorized 
level. This will hamstring a number of programs, but, most 
important, it really does not provide the seed corn we need.
    We have all talked about the great advances in the National 
Institutes of Health. Most of us have supported this doubling 
of the funding of the National Institutes of Health. But if you 
talk with any director of any of the Institutes or with the 
overall directors of the NIH, they all will tell you that in 
order to have the instrumentation, the techniques, and, most 
important, the scientists that they need to use that funding 
that we have given them at NIH, they need the NSF. They need 
the NSF to keep pace with what they are doing at NIH. And to 
put the NSF on the appropriate doubling path, the increase for 
the coming year should not be, say, 2 percent but it should be 
more like 17 percent. We can afford it. It will fit. And we 
absolutely need it.
    Another example in Function 250 is the Office of Science in 
the Department of Energy. Many of us talk about the looming war 
in Iraq, the connection to energy in the Middle East, the 
global climate change, carbon-emitting fuels. In introducing 
the DOE budget request, Energy Secretary Abraham focused on the 
Energy Department's long term vision of transforming the United 
States into a zero emissions energy economy.
    So whether we are talking about reducing our reliance on 
foreign oil, reducing the impact of our energy use on the 
change in our climate, we should recognize that we are 
drastically underfunding research in energy. Funding at the 
Office of Science has remained flat since fiscal year 2001 at 
$3.1 billion. It remains so in the fiscal year 2004 budget 
request. It should have an increase on the order of $400 
million by my calculations. Investment in hydrogen fuel cell 
technology is not nearly enough to make the President's State 
of the Union remarks anything more than ludicrous. And fusion 
energy, an area that I know a great deal about, the request of 
$257 million is identical to the 2003 request, not nearly 
enough to provide for the participation on the international 
research reactor either. And more important, it is not nearly 
enough to make it an energy program where we will actually get 
something useful that will contribute to useable energy on the 
grid here in the United States.
    So, science will help us meet our future energy needs. 
Science will help us meet our future health needs. And most 
important and most basic for our budget considerations here, it 
is this research and development that will make it possible for 
us to have the growth that you have postulated to cover the 
health, transportation, defense, and other needs of America 5 
and 10 years out. So I thank you.
    [The prepared statement of Mr. Holt follows:]

Prepared Statement of Hon. Rush Holt, a Representative in Congress From 
                        the State of New Jersey

    Thank you, Chairman Nussle, Ranking Member Spratt, and 
distinguished members of the House Budget Committee. I appreciate the 
opportunity to testify regarding appropriate funding levels for 
Function 250 programs in the fiscal year 2004 budget.
    The struggling economy and the irresponsible tax cuts of the Bush 
administration have left us in dire budgetary straits. The projected 
$350 billion fiscal year 2003 budget deficit represents a serious 
threat to the long-term fiscal health of our country. This year we will 
be forced to make difficult budgetary choices and may have to cut vital 
government services and programs.
    I come here today to argue that Function 250 programs are not the 
proper place to make dire cuts and to urge you to continue to support 
funding of the general science portfolio. Our investment in science R&D 
and in STEM education represents one of the best investments our 
country can make to help re-invigorate our faltering economy, protect 
our national security, and build a skilled next-generation workforce.
    Federal investment in Research and Development has one of the best 
returns on investment of any investment we can make. Its reach extends 
far beyond the specific field of investment and it provides the ideas 
and technologies that will drive our future economic prosperity.
    In summarizing his committee's report for the President's Council 
of Advisers on Science and Technology (PCAST) regarding United States' 
R&D investment, Chairman G. Wayne Clough recommended ``that beginning 
with the fiscal year 2004 budget and carrying through the next four 
fiscal years, funding for physical sciences and engineering across the 
relevant agencies should be adjusted upward to bring them collectively 
to parity with the life sciences.''
    Funding of Function 250 programs is a primary way to achieve these 
policy objectives. Collectively, the NSF and the DOE Office of Science 
provide a lion's share of physical science funding and non-defense R&D. 
While President Bush and Congress have begun to make a significant 
commitment to NSF, the Office of Science continues to suffer from 
inconsistent and flat funding levels. The fiscal year 2004 budget 
provides an opportunity to reverse this historic under funding of the 
Office of Science and to continue to support the recent increases in 
the NSF budget.
    The NSF is the backbone of basic research in our academic 
institutions supporting over 20,000 research and education programs in 
science and engineering every year.
    The passage of the NSF reauthorization bill in the 107th Congress 
was clear evidence of the bipartisan support for this agency; an agency 
credited by Mitch Daniels as being one of the ``true centers of 
excellence in this government.''
    The passage of the reauthorization bill reflects the growing 
recognition on Capitol Hill and in the scientific community that we 
must strive for parity in our support for health and physical sciences. 
Although NSF has a very balanced research portfolio, with equal funds 
dedicated to life sciences, physical sciences, environmental sciences, 
math/computer sciences and engineering, it provides one of the largest 
sources of Federal funding for the physical sciences, which have 
endured over two decades of flat funding.
    Despite these difficult economic times, Congress made adequate 
funding of the NSF a priority in the recently passed fiscal year 2003 
omnibus appropriations act. The NSF's $5.3 billion fiscal year 2003 
appropriation represents a 10-percent increase from fiscal year 2002, 
with NSF research and development enjoying even a larger increase of 
11.4 percent. The fiscal year 2003 omnibus appropriation act continues 
to build on recent support for the NSF, reversing a paucity of funding 
for this agency throughout the 1990s.
    In relation to the fiscal year 2003 funding levels, the Bush 
administration's proposed fiscal year 2004 budget does not continue to 
build on this support, and if passed would lead to significant cuts in 
established programs.
    The Bush administration's request of $5.48 billion for NSF in 
fiscal year 2004, represents just a 3.2-percent increase over fiscal 
year 2003 levels and is $909 million below the authorized level.
    This short fall would seriously hamstring some programs, such as 
those supported by the research and related account that would receive 
no increase from fiscal year 2003 appropriated levels.
    In addition, the significant increase in funding for the Math and 
Physical Science Directorate in the fiscal year 2003 budget leaves the 
Bush administration's fiscal year 2004 budget with only a 1.9-percent 
increase in these programs.
    In addition to its R&D activities, NSF is playing a vital role in 
enhancing the quality of K-12 math and science education, and in 
attracting top students to pursue graduate degrees in science and 
engineering.
    I had the honor to serve on National Commission on Mathematics and 
Science Teaching, known as the Glenn Commission. Our final report, 
entitled ``Before it's Too Late,'' identifies teaching as the most 
powerful instrument for reform and calls for major changes in the 
quality, quantity, and professional work environment of our math and 
science teachers.
    For example, the NSF Math and Science Partnership Program is 
designed to develop model partnership initiatives to improve teacher 
professional development and increase student achievement in these 
areas through merit-based grants.
    I appreciate the Bush administration's support for the Math and 
Science Partnership Program, providing $200 million in its fiscal year 
2004 budget request. This represents an increase from the $128 million 
fiscal year 2003 appropriated levels and will enable a significant 
expansion in the partnerships that the NSF is able to support.
    In addition, the proposal to increase NSF graduate fellowship 
stipends to $30,000 per year, and to increase the total number of the 
fellowships to 5,000 represents a vital commitment to attracting more 
U.S. students to pursue advanced scientific degrees.
    In addition to the NSF, general science programs in the Department 
of Energy comprise a major component of Function 250's investments. The 
looming war with Iraq, the continued instability in the Middle East, 
and the threat of global climate change highlight more than ever our 
need to reduce our dependence on foreign oil and carbon-emitting fossil 
fuels.
    In introducing the DOE budget request, Energy Secretary Abraham 
focused on the Energy department's long-term vision of transforming the 
United States into a zero emissions energy economy. This is a noble and 
formidable goal. However, like many Bush administration proposals, the 
rhetoric is not backed by the funds needed to complete the task.
    We all are in agreement that achieving energy independence and a 
significant reduction in greenhouse gas emissions from the energy 
sector will take a sustained investment in basic sciences that could 
lead to clean alternative energy sources.
    Nevertheless, funding for the Office of Science within the U.S. 
Department of Energy has remained flat since fiscal year 2001 at $3.1 
billion and remains so in the fiscal year 2004 budget request. The Bush 
administration's request of $3.2 billion for the Office of Science 
shortchanges the required commitment to the potential of physical 
science research to help meet our Nation's energy needs.
    While I applaud the administration's commitment to research and 
development of hydrogen fuel cell technology, their budget is not 
sufficient to accomplish their stated goals. The creation of hydrogen 
takes energy, and a zero emission economy requires that this energy 
come from a renewable or nuclear power source.
    Many of the Federal Government's renewable energy and energy-
efficiency research programs, however, would see little new money or 
would be cut under President Bush's proposed budget for fiscal year 
2004. Total research funding for the Energy Department's energy 
efficiency and renewable energy programs would increase just $1.3 
million, or 0.1 percent, to $1.32 billion. Research money for wind 
energy would fall 5.5 percent, while solar energy funding would 
increase 0.1 percent, and hydropower research dollars would remain the 
same.
    The Bush administration has hailed their decision to participate in 
ITER--the international fusion energy project--as a sign of their 
commitment to finding a clean energy alternative. But talk is cheap. 
The fusion energy science's budget request of $257.3 million is 
identical to the fiscal year 2003 request. Where is the additional 
money to support our commitment to ITER?
    This money for ITER, a mere $12 million, comes at the expense of 
domestic fusion energy programs. This is not acceptable. We must 
support this international collaboration with additional and sufficient 
money and we must continue to increase our support of domestic fusion 
energy research, so we can take advantage of the technology developed 
through ITER.
    Fusion energy is just one example of how research supported through 
the Office of Science will help our Nation meet our future energy 
needs. Let's not shortchange this effort.
    Dynamic funding for the Office of Science and NSF must be a top 
priority for this committee as you look for ways to stimulate our 
Nation's economy, to improve our national security, to move us toward 
energy independence, and to maintain American leadership on the 
frontiers of science and technology.

    Mr. Gutknecht. Thank you, Mr. Holt. Questions? Comments?
    Mr. Edwards.
    Mr. Edwards. Thank you, Mr. Chairman. I want to thank the 
second half of the physics caucus. Mr. Holt, thank you for your 
leadership in pushing research. Again, I am a strong believer 
in research, both basic research that may not have an immediate 
dollar payoff but is important for the development of our 
knowledge of ourselves and the world in which we live, and also 
applied research.
    Mr. Chairman, I will apologize to you for having to leave 
to go meet with a group of school students from my district. 
But as I am leaving, I would like to make one observation if I 
could, since this is my first time as a new member of the 
Budget Committee to listen to Members testify. During the time 
I was here we had ten Members testify, basically five 
Republicans, five Democrats. The first witness I heard, in 
fairness to that Member, I did not get in on the beginning of 
that testimony but toward the end, but the comment was made 
that what we need to do is let people keep their own money 
rather than Washington. But I would observe that out of the 
five Democrats and four other Republicans who testified, every 
one of them supported programs that would either decrease 
revenues to the treasury or increase spending. Frankly, out of 
all of them, I did not hear a single frivolous request, 
everything from education for disabled children, to dollars for 
first responders, fire departments and police officers, funding 
for the Coast Guard Empowerment Zones. And these requests are 
in addition to what is already the largest deficit proposed in 
the history of the United States.
    I guess it underscores the challenge we have ahead of us, 
Mr. Chairman, in this committee. And I thank you for chairing 
this part of the testimony.
    Mr. Holt. If I could comment on that, Mr. Chairman.
    Mr. Gutknecht. Mr. Holt.
    Mr. Holt. The point that I was making is that we will not 
have economic growth in the United States without an investment 
in research and development. We will not have the money to due 
all those other good things that you and my colleagues have 
been talking about today unless we invest in Function 250, 
research and development.
    Mr. Edwards. Sure. And I agree with you. That is why, my 
personal editorial, I do not think we can make budget decisions 
based on sound bites. We have got to look at these programs, 
weigh the cost to taxpayers, and the benefit to the country as 
well. Thank you, Mr. Chairman. Thank you, Mr. Holt.
    Mr. Gutknecht. Thank you, Mr. Holt. I would say that the 
number that I have is that over 50 percent of our economic 
growth of the last 10 years has directly resulted from research 
done in and by the Federal Government. So what we spend those 
dollars on ultimately does pay real dividends. Thank you again.
    Next we have Mr. Allen from Maine.

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

    Mr. Allen. Thank you, Mr. Chairman, Mr. Moore, members of 
the committee. I very much appreciate the chance to be here and 
talk with you today. The proposal I am going to make to you is 
budget neutral. Let me say that right up front. I am urging the 
committee to fully fund all of the 55 programs authorized in 
the No Child Left Behind Act enacted last January. This act 
implements sweeping changes and sets impressive goals for 
schools across the country. But it is not being funding at the 
appropriate level.
    We are asking our schools to comply with demanding goals 
but we are not providing the promised funding. Back in Maine, 
educators are really very unnerved, concerned about their 
ability to meet the standards of the No Child Left Behind Act 
precisely because of the inadequate funding.
    Just for an example, professional development is a major 
concern in Maine. No Child Left Behind requires each State to 
have a well-prepared teacher in every classroom by the end of 
the 2005-06 school year. But the proposed fiscal year 2004 
budget has eliminated four teacher quality programs and cut 
funding for the remaining programs $173 million below a 2002 
purchasing power level. Nationally, 92,000 teachers will not 
receive mentoring in high quality professional development 
without full funding of the programs at the level authorized in 
the act.
    If you talk to people in Maine, particular ed techs, 
recently we have been talking to them, and they just do not 
know how they are going to do it. On the one hand, they are 
being told they can only keep their jobs if they fulfill 
certain requirements. But there is little time and insufficient 
money to meet those requirements before the deadline. It would 
be a tragedy for us to lose talented staff at a time when we 
are having difficulty attracting and keeping new teachers.
    Educators in Maine also worry about the annual yearly 
progress assessment system. The last 15 years, the State of 
Maine has developed an extraordinary system. In a public-
private partnership over a long period of time, we have 
developed a statewide curriculum which we call Learning 
Results. It is publicly supported. It was passed by the State 
legislature. And we also developed something called the Maine 
Educational Assessment, an assessment, not just a multiple 
choice test, given periodically to determine if students are 
meeting State goals.
    So, on the one hand, we have already spent an enormous 
amount of money and time, over a decade and a half, to develop 
a State assessment system that applies to students in the 
fourth grade, the eighth grade, and the eleventh grade. And now 
we are being told you have to do testing of a different kind 
every single year. And our schools are really in dire fiscal 
straits. Most States are struggling to meet the requirements of 
the No Child Left Behind Act. Basically, what we are doing is 
we are setting up schools to fail. That is what this act does 
when you do not have adequate funding.
    If we fully fund the No Child Left Behind Act, it would 
take an additional $9 billion. Now even in Washington, $9 
billion is real money. That is for fiscal year 2004. But the 
fiscal year 2004 cost of the President's tax proposal is about 
$100 billion. And so all I am suggesting to you, reduce the tax 
cut by $9 billion and fully fund No Child Left Behind. This is 
really a question of priorities. And it seems to me clear that 
education, our children, our schools should be our top 
priority.
    So I ask the committee to budget an additional $9 billion 
in fiscal year 2004, and appropriate amounts thereafter, to 
fully fund the No Child Left Behind Act. As I said, it is a 9-
percent reduction in the $674 billion proposal that the 
President made for tax relief, about half of the tax relief 
that is actually in the President's budget. So, you know, it is 
9 percent of that amount, it would be a smaller amount of the 
entire package. I would urge the committee to take that into 
consideration. I thank you for your time.
    [The prepared statement of Mr. Allen follows:]

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

    Mr. Chairman, Mr. Spratt, and other committee members, thank you 
for allowing me this opportunity to testify before the committee about 
the budget resolution for fiscal year 2004.
    Today, I urge the committee to fully fund all 55 programs 
authorized in the No Child Left Behind Act enacted on January 3, 2002. 
The No Child Left Behind Act implements sweeping changes and sets 
impressive goals for schools across the country. Yet the inadequate 
funding levels proposed for these programs in fiscal year 2004 make it 
difficult for schools across the country to reach these goals.
    President Bush has stated that the No Child Left Behind Act is 
``the cornerstone'' of his administration. Indeed, the bill passed the 
House and Senate by substantial majorities because this law touched a 
sensitive nerve for people around the country. Our education system was 
in need of reform, direction and structure. The President and Congress 
agreed that our schools needed Federal attention. The law encourages 
greater investment in Title I programs, which helps disadvantaged 
students; ensures schools that need improvement will receive special 
assistance; and advances the ideal of having qualified teachers in 
every classroom.
    Unfortunately, we've asked our schools to comply with these lofty, 
demanding goals, and we aren't providing the promised funding. 
Educators in Maine are anxious about their ability to meet the 
standards of the No Child Left Behind Act. Their consensus is that the 
major obstacle to making these ideals a reality is lack of funding.
    For example, professional development is a major concern in Maine. 
No Child Left Behind requires each State to have a well-prepared 
teacher in every classroom by the end of the 2005-06 school year. 
However, the proposed fiscal year 2004 budget has eliminated four 
teacher quality programs; and cut funding for the remaining programs 
$173 million below the 2002 purchasing power level. Nationally, 92,000 
teachers will not receive mentoring and high quality professional 
development without full funding of the programs at the level 
authorized in the act.
    Maine teachers are beginning to fear for their jobs as the deadline 
for compliance draws near and there is not enough funding to make 
compliance possible. I have received numerous letters from ed techs, as 
they are called in Maine, who are completely devoted to their job and 
the children they teach, and they are simply confused. They have been 
told they can only keep their jobs if they fulfill certain 
requirements, but there is little time and insufficient money to do it 
before the deadline. It would be a tragedy for schools to lose 
dedicated and enthusiastic staff at a time when we are having 
difficulty attracting and keeping new teachers.
    Educators in Maine also worry about the annual yearly progress 
assessment system. Over the past 15 years Maine has developed an 
extraordinary Statewide set of curriculum standards called Learning 
Results. We have developed the Maine Educational Assessment, an 
assessment--not just a multiple choice test, given periodically to 
determine if students are meeting State goals.
    As Maine has already spent a great amount of resources creating its 
own assessment program, the development and administration of a yearly 
assessment that meets both Federal and State standards will be an 
additional costly venture. Creating and implementing an adequate yearly 
assessment involves additional professional and curriculum development. 
Struggling school districts in Maine do not have the resources to 
develop an annual assessment.
    Due to Maine's own budget crisis, there is little funding 
assistance the State can provide to schools as they begin to apply 
these new standards. Maine is not the only State in dire fiscal 
straights. Most States are struggling to implement the requirements of 
the No Child Left Behind Act. The National Governors Association has 
reported that the combined current budget shortfall for all States in 
2003 is about $30 billion and is projected to be about $82 billion in 
2004. We are setting up the States to fail by forcing them to make up 
for inadequate Federal education aid while they attempt to implement 
budget cuts and tax increases.
    There is one way we can help: fully fund the No Child Left Behind 
Act at the levels authorized when we passed the law. This would cost an 
additional $9 billion in fiscal year 2004. Some may say we don't have 
that money, given the growing deficit. I remind the committee that the 
fiscal year 2004 cost of the President's tax proposal is approximately 
$100 billion. If there is money for that, we can certainly carve out 9 
percent of that amount to make good on the promise of the No Child Left 
Behind Act. We must prioritize and I firmly believe that our top 
priority should be our schools.
    To summarize my request, I ask the committee to budget an 
additional $9 billion in fiscal year 2004, and appropriate amounts 
thereafter, to fully fund the No Child Left Behind Act. This can be 
easily accomplished by reducing the tax cut by a small percentage.
    Again, thank you, Mr. Chairman, Mr. Spratt and other members of 
this committee for allowing me to testify. I urge the committee to fund 
No Child Left Behind at the authorized levels. This will guarantee the 
best for our schools, our teachers and our children, provide relief to 
States facing budget crises and nurture investments in education that 
are essential to our Nation's future economic health.

    Mr. Gutknecht. Thank you, Mr. Allen. Questions? Mr. Moore.
    Mr. Moore. Thank you, Mr. Chairman. Mr. Allen, have you 
heard from other Members in other States that they are having 
similar problems and similar concerns with lack of full 
funding?
    Mr. Allen. What I hear from other Members is there is a 
revolt going on among educators in a lot of different States, 
because they have so many different examples to draw from. 
IDEA, which is a Federal mandate where we are not even close to 
coming to full funding; Homeland Security, where we are not 
funding all the mandates that we are imposing on our first 
responders. Now it has happened again with No Child Left 
Behind. At some point, people get upset.
    What we hear now in Maine is enormous frustration and a 
rebellion against the act itself and a real concern that it is 
going to dumb-down our education system, partly because of a 
lack of funding, but also because we are in a place in Maine 
where we have two choices, we can maintain our high standards, 
and they are higher than the Federal law, and have more failing 
schools and lose Federal funding, or we can dumb down our 
assessment. And if we dumb down our assessment, we will not 
have as many failing schools, we will keep our Federal money, 
but it is the wrong thing for the kids in Maine.
    Mr. Moore. I just want to say I have been contacted by the 
superintendents in my district who have expressed the same kind 
of concerns about the lack of resources to do what the law 
requires them to do, No. 1. And No. 2, also concerns, and not 
in my district, from other parts of Kansas, about rural schools 
not being able to comply with this and making it much more 
difficult for rural schools.
    I hope we can do something to try to meet the concerns that 
you have. Thank you.
    Mr. Allen. I thank you. Thank you very much, Mr. Chairman.
    Mr. Gutknecht. Thank you, Mr. Allen.
    Next we have the Delegate from Guam. I especially want to 
welcome her because, on a per capita basis, the people of Guam 
are the highest consumers of the world's finest lunch meat that 
comes in blue cans, and I just happen to be wearing the spam 
tie. So, welcome. [Laughter.]

 STATEMENT OF HON. MADELEINE BORDALLO, A DELEGATE IN CONGRESS 
                   FROM THE TERRITORY OF GUAM

    Ms. Bordallo. Thank you very much, Mr. Chairman. You took 
the words right out of my mouth. I have it right here saying 
that Guam consumes more Spam per capita than any other State or 
Territory in the Union. And we are very proud of that.
    Mr. Gutknecht. And we are very thankful. Thank you, and 
welcome to the committee.
    Ms. Bordallo. You are welcome. I want to thank you for 
letting me come before the committee to share my views 
regarding the administration's fiscal year 2004 budget.
    The budget request stops short of providing the funding 
necessary to protect United States' interests in Guam and to 
meet Federal obligations to the island. I wish to draw the 
committee's attention to two key areas; the first, Compact-
Impact Aid, the second, military construction.
    Compact-Impact Aid: The agreement that the United States 
has with the Federated States of Micronesia and the Republic of 
the Marshall Islands allows their citizens to freely enter the 
United States without a visa to work and make use of State and 
local services. To help defray the cost of this agreement, 
funds have been allocated to those areas most impacted; namely, 
Guam, Hawaii, and the Commonwealth of the Northern Marianas 
Islands. The proposed budget shortchanges Compact-Impact 
reimbursement funding.
    The fiscal year 2004 proposal engages in budgetary musical 
chairs by first zeroing out the $4.58 million that Guam has 
received in the past, and then allocating a total of $15 
million for Compact-Impact Aid for all three affected 
jurisdictions, in a yet to be determined formula that will 
accompany the proposed modified compact legislation. I 
understand that this proposal, Mr. Chairman, will be formally 
submitted by the administration this spring.
    Health care, education, and law enforcement costs 
associated with this obligation continue to grow rapidly beyond 
the limited Federal assistance. The amount of funds proposed, 
$15 million, is grossly inadequate for the reimbursement needs 
that have consistently been reported to the Secretary of the 
Interior and the Congress.
    By not defining how Compact-Impact Aid will be distributed, 
the administration creates a situation whereby Guam, Hawaii, 
and the Commonwealth of the Northern Marianas Islands are vying 
for shares of a $15 million allocation that is more appropriate 
to the amount necessary for just Guam or just Hawaii alone. The 
administration must be reminded that Compact-Impact is a 
Federal responsibility that flows from a Federal immigration 
policy that neither Guam, Hawaii, nor the Commonwealth of the 
Northern Marianas Islands had a role in negotiating in the 
first place. Zeroing out Compact-Impact Aid in the fiscal year 
2004 budget has further added to the financial difficulties in 
Guam due to recent natural disasters and other adverse economic 
factors. So I am hoping that the Budget Committee will take a 
look at this. We need additional funding.
    Under military construction, the second point. As the 
committee is aware, the budget increases every Department of 
Defense account except military construction. The 2004 funding 
level of $5 billion is 20 percent below the 2003 enacted level. 
Furthermore, I am concerned that savings from base closures on 
which this budget relies will not be realized and that 
maintenance of military installations will suffer.
    I believe it is wrong to increase the operational tempo at 
bases and at the same time cut their funding to meet this 
challenge. For example, the Air Force and the Navy bases on 
Guam submitted requests recently to the Office of Management 
and Budget for a total of $337 million to help cover the cost 
of supertyphoon Pongsona. Both requests were rejected by OMB 
despite having the support of the Secretary of Defense.
    Supertyphoon Pongsona struck Guam on December 8, with 180 
miles per hour winds for over 8 hours. Power lines were struck 
down, military housing was damaged, and the heavy rains and 
flooding degraded the water supply system operated by the 
Department of Defense. The typhoon seriously damaged bases on 
Guam that are vital to homeland security and projecting U.S. 
strategic power in the Asia-Pacific region. At the same time, 
military operations on Guam have increased as war on terrorism 
and tension on the Korean peninsula continue to worsen. The 
arrival of long-range bombers to Andersen Air Force Base just 
yesterday highlights the crucial need for repairs to the 
military infrastructure that was damaged due to this storm. 
That must be rebuilt so they can increase in operations.
    As a member of the House Armed Services Committee, I 
understand the competing priorities our Nation is faced with in 
regards to national defense. In packaging these priorities into 
the President's budget request to Congress, military 
construction needs should have been given their due 
consideration. So I am asking, Mr. Chairman, that this be taken 
into account as well.
    I thank you very much for allowing me to give my views this 
afternoon.
    [The prepared statement of Ms. Bordallo follows:]

    Prepared Statement of Hon. Madeleine Z. Bordallo, a Delegate in 
                  Congress From the Territory of Guam

    Chairman Nussle, Ranking Member Spratt and members of the Budget 
Committee, thank you for letting me come before you to share my views 
regarding the administration's fiscal year 2004 budget. The budget 
request stops short of providing the funding necessary to protect the 
United States' interests in Guam and to meet Federal obligations to the 
island. I wish to draw the committee's attention to two key areas: 
Compact-Impact Aid and military construction.

                           COMPACT-IMPACT AID

    The agreement that the United States has with the Federated States 
of Micronesia and the Republic of the Marshall Islands allows their 
citizens to freely enter the United States without a visa to work and 
make use of State and local services. To help defray the cost of this 
agreement, funds have been allocated to those areas most impacted, 
namely Guam, Hawaii and the Commonwealth of the Northern Mariana 
Islands. The proposed budget shortchanges Compact-Impact reimbursement 
funding.
    The fiscal year 2004 proposal engages in budgetary musical chairs 
by first zeroing out the $4.58 million that Guam has received in the 
past, and then allocating a total of $15 million for Compact-Impact Aid 
for all three affected jurisdictions, in a yet to be determined formula 
that will accompany the proposed modified Compact legislation. I 
understand it will be formally submitted by the administration this 
spring.
    Healthcare, education, and law enforcement costs associated with 
this obligation continue to grow rapidly beyond the limited Federal 
assistance. The amount of funds proposed, $15 million, is grossly 
inadequate for the reimbursement needs that have consistently been 
reported to the Secretary of the Interior and the Congress.
    By not defining how Compact-Impact Aid will be distributed, the 
administration creates a situation whereby Guam, Hawaii, and the 
Commonwealth of the Northern Mariana Islands are vying for shares of a 
$15 million allocation that is more appropriate to the amount necessary 
for just Guam or Hawaii alone. The administration must be reminded that 
Compact-Impact is a Federal responsibility that flows from a Federal 
immigration policy that neither Guam, Hawaii, nor the Commonwealth of 
the Northern Mariana Islands had a role in negotiating. Zeroing out 
Compact-Impact Aid in the fiscal year 2004 budget, has exacerbated the 
financial difficulties in Guam that already exist due to recent natural 
disasters and other adverse economic factors.

                         MILITARY CONSTRUCTION

    As the committee is aware, the budget increases every Department of 
Defense account except military construction. The 2004 funding level of 
$5 billion is 20 percent below the 2003 enacted level. Furthermore, I 
am concerned that savings from base closures on which this budget 
relies will not be realized and that maintenance of military 
installations will suffer. I believe it is wrong to increase the 
operational tempo at bases and at the same time cut their funding to 
meet this challenge.
    For example, the Air Force and the Navy bases on Guam submitted 
requests to the Office on Management and Budget for a total of $337 
million to help cover the costs of supertyphoon Pongsona. Both requests 
were rejected despite having the support of the Secretary of Defense.
    Supertyphoon Pongsona struck Guam on December 7th and 8th, with 180 
miles per hour winds for over 8 hours. Power lines were struck down, 
military housing was damaged and the heavy rains and flooding degraded 
the water supply system operated by the Department of Defense. The 
typhoon seriously damaged bases on Guam that are vital to homeland 
security and projecting U.S. strategic power in the Asia-Pacific 
region.
    At the same time, military operations on Guam have increased as 
part of the war on terrorism and ominously, tension on the Korean 
peninsula continue to worsen. The arrival of long range bombers to 
Andersen Air Force Base yesterday highlights the crucial need for 
repairs to the military infrastructure that must support this increase 
in operations.
    As a member of the House Armed Services Committee, I understand the 
competing priorities our Nation is faced with in regards to national 
defense. In packaging these priorities into the President's budget 
request to Congress, military construction needs should have been given 
their due consideration.
    Thank you for considering my views with regards to the President's 
2004 budget.

    Mr. Gutknecht. Thank you very much. Mr. Moore.
    Mr. Moore. I do not have any questions, thank you. But I 
thank the gentlelady for her testimony today.
    Mr. Gutknecht. Thank you very much.
    The Delegate from the Virgin Islands, Mrs. Christensen.

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

    Mrs. Christensen. Thank you, Mr. Chairman, Congressman 
Moore, for the opportunity to once again present my views, and 
the views of my constituents, and the Congressional Black 
Caucus' Health Brain Trust on the fiscal year 2004 budget. Last 
year, I had the privilege of addressing this important 
committee for the very first time, and I am equally pleased to 
be here again this year.
    As I did last year, my remarks will focus on the cap on 
Medicaid, which continues to be of critical importance to my 
community and, indeed, all of the United States' off-shore 
areas. But before I go into the specifics of the Medicaid cap 
issue, permit me to make a few observations on the fiscal year 
2004 budget, specifically in the area of health care in 
general, as I did last year.
    As the Chair of the Congressional Black Caucus' Health 
Brain Trust, I am particularly concerned about the treatment of 
minority health in the President's fiscal year 2004 budget, 
which is also relevant to my district. The President's budget 
for next year for the Department of Health and Human Services, 
in my view, represents a wholesale change for the worse in the 
treatment of minority health issues. Specifically, the 2004 
budget calls for reductions to a $300-million per year program 
that provides funds to train potential doctors for needy 
communities and to a program that assists some hospitals in 
purchasing important equipment. Further, the President's 
proposal would reduce funding for a program initiated by the 
Clinton administration that provides more than $100 million 
annually to facilitate cooperation between community health 
centers, hospitals, and drug treatment centers.
    It makes severe cuts in programs on public health and 
quality care. Specifically, it cuts the Center for Disease 
Control's budget by $33 million which will slash vital minority 
health screening public health programs at the very worst time. 
It cuts birth defects research and prevention money by nearly 
$11 million, more than 10 percent, even though the cause of 60 
to 70 percent of birth defects is still unknown. CHIP is cut by 
$2 billion during a time when minorities and others are 
constantly underenrolled in the program. It cuts funding for 
environmental health programs that help track asthma and other 
chronic diseases and prevent lead poisoning in children. 
Minorities continue to have the highest incidence of childhood 
asthma in American cities, and the Centers for Disease Control 
multiple grants help us to track the incidence of asthma an 
other environmentally caused illnesses and work with those 
communities to develop prevention and treatment programs.
    We would propose the restoration of these and other similar 
minority health related cuts in the HHS budget, even without 
the identification of corresponding offsets. While it is true 
that we should not put a cap on the costs we will incur in 
prosecuting the war against terrorism, similarly we should not 
place budgetary roadblocks in the way of improving the health 
care for those for which health care has long been 
systematically denied. To do otherwise jeopardizes the future 
of every American.
    We fully support a budget which adequately funds our 
defense and Homeland security needs. But I cannot in good 
conscience support the additional tax cuts on top of the $5.6 
trillion tax cut of last year.
    Back to the issue of health care access in my district and 
the other territories. Mr. Chairman, the time has come that 
this body passes a budget which once and for all would remove 
the cap on Medicaid payments to the territories. Because of the 
Medicaid cap and a match that is not indexed for average income 
level, both of 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, one-fifth of 
the national average.
    Our hospitals in all of the territories are struggling 
because the cap prevents them from collecting payments for many 
of the services they provide. And they are also unable to 
collect disproportionate share payments despite the fact that 
about 60 percent of our 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 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.
    Along with my fellow representatives from Guam, American 
Samoa, and Puerto Rico, I have introduced bills to remove the 
Medicaid cap as well as for the first time to provide for the 
creation of a disproportionate share payment to our hospitals. 
Mr. Chairman, we are the only country in the world which does 
not provide universal health care for all of its residents. 
This is a deficit which a number of my colleagues and I are 
working to address. However, with regard to better health care 
for the Americans living in the off-shore areas, this committee 
can begin to correct this inequity by passing a budget which 
removes the cap on Medicaid payments. I ask that this committee 
finally take this bold and first step toward fairness and 
equality for all Americans. I thank you again for this 
opportunity to testify. I would have claimed that we eat the 
most Spam per capita in the Virgin Islands, but I will take 
second place to my colleague from Guam.
    [The prepared statement of Mrs. Christensen follows:]

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

    Thank you, Chairman Nussle and Ranking Member Spratt for the 
opportunity to present my views, and the views of my constituents on 
the fiscal year 2004 budget. Last year I had the privileged of 
addressing this important committee for the first time and I am equally 
pleased to be able to be here with you once again.
    As I did last year, my remarks will again focus on an issue, which 
continues of be of critical importance to my community and indeed all 
of the United States' off-shore areas--I am of course speaking of the 
cap on Medicaid payments to the Territories and Commonwealths.
    Before I go into the specifics of the Medicaid cap issue, permit me 
to make a few observations on the fiscal year 2004 budget, specifically 
in the area of health care in general.
    As the Chair of the Congressional Black Caucus' Health Braintrust, 
I am particularly concerned about the treatment of minority health in 
the President's fiscal year 2004 budget. The President's fiscal year 
2004 Department of Health and Human Services (HHS) budget in my view, 
represents a wholesale change in the treatment of minority health 
issues. When you look at the cuts in the HHS budget for minority 
health, it can be viewed as an attack on minority health and a 
downgrade on women's health.
    Specifically, the 2004 budget calls for reductions to a $300 
million-per-year program that provides funds to train potential doctors 
for ``needy communities'' and to a program that assists some hospitals 
in purchasing equipment such as X-ray machines. Further, Bush's 
proposal would reduce funding for a program initiated by the Clinton 
administration that provides more than $100 million annually to 
facilitate cooperation between community health centers, hospitals, and 
drug treatment centers.
    It makes severe cuts in programs on Public Health and Quality Care. 
Specifically it cuts the Centers for Disease Control's budget by $33 
million, which will slash vital and minority health screening public 
health programs at a time when those funds are already being siphoned 
off to conduct smallpox preparedness activities that the administration 
has not appropriately funded.
    It cuts birth defects research and prevention money by nearly $11 
million, more than 10 percent, even though the cause of 60-70 percent 
of birth defects is still unknown. This would mean the loss of 
research, jobs and birth defect prevention studies.
    It cuts the HUD Lead Hazard Control Grant Program (which are 
concentrated in minority districts) from the Senate fiscal year 2003 
$201 million to $136 million, which funds State efforts to remove lead 
hazards from private housing.
    It cuts SCHIP by $2 billion during a time when minorities are 
constantly underenrolled in the program.
    It cuts funding for environmental health programs that help track 
asthma and other chronic diseases and prevent lead poisoning in 
children. The tracking of chronic diseases and potential environmental 
causes is critical to the elimination of health disparities. Minorities 
continue to have the highest incidence of childhood asthma in American 
cities, and the CDC multiple grants help us to track the incidence of 
asthma and work with communities to develop prevention and treatment 
programs.
    We would propose the restoration of these and other similar 
minority health related cuts in the HHS budget even without the 
identification of corresponding offsets. While it is true that we 
should not put a cap on the costs we will incur in prosecuting the war 
against terrorism, similarly we should not place budgetary roadblocks 
in way of improving the health care of the neediest among us. To do 
otherwise jeopardizes our future.
    As it was last year, the linchpin of President Bush's 2004 budget 
is a new $1.5 trillion tax cut. Those of us in the minority believe 
that the President's budget is fiscally irresponsible because it 
needlessly returns us to record deficits for the foreseeable future.
    We fully support a budget, which adequately funds our defense, and 
homeland security needs, but I don't believe that we need an additional 
$1.5 trillion tax cut on top of the $5.6 trillion tax cut last year.
    Mr. Chairman, the time has come that this body passes a budget, 
which once and for all removes the cap on Medicaid payments to the 
territories as we incorporate the changes in Medicaid that the 
President has proposed.
    Because of the Medicaid 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 one-fifth 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 in-patients are below the poverty 
level. About one third 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.
    Along with my fellow representatives from Guam, American Samoa, and 
Puerto Rico, I have introduced bills to both remove the Medicaid Cap as 
well as, for the first time, provide for the creation of a 
disproportionate share payment to our hospitals.
    Mr. Chairman, ours is the only country in the world, which does not 
provide universal health care for all of its resident. This is a shame, 
which a number of my colleagues and I are working to address. However, 
with regard to better healthcare for the Americans living in the 
offshore areas, this committee can begin to correct this inequity by 
passing a budget, which removes the cap on Medicaid payments.
    History will judge you well if you take this bold step forward for 
fairness and equality for all Americans.
    Thank you again for the opportunity to testify.

    Mr. Gutknecht. Let the record note that you are a very 
close second, and we appreciate that. Mr. Moore.
    Mr. Moore. Thank the gentlelady very much for her 
testimony.
    Mr. Gutknecht. Thank you very much, Doctor.
    Ms. Christensen. Thank you.
    Mr. Gutknecht. Next we have Mr. Kanjorski from 
Pennsylvania. Welcome to the committee.

STATEMENT OF HON. PAUL KANJORSKI, A REPRESENTATIVE IN CONGRESS 
                 FROM THE STATE OF PENNSYLVANIA

    Mr. Kanjorski. Thank you very much, Mr. Chairman. Mr. 
Chairman, I would ask that my full statement be submitted for 
consideration.
    Mr. Gutknecht. Without objection.
    Mr. Kanjorski. I will try and make three points in my 
testimony. There are acute problems and, obviously, we have 
budgetary constraints in the country. Of course, I find it very 
difficult to understand, with all the requests and all the 
needs in the country, how we can further reduce the revenues to 
the Federal coffers.
    With that being said, there are certain areas of importance 
that concern life and death. The first one I would like to 
address is the total need for reform regarding reimbursements 
to hospitals based on the wage indexes in certain MSA areas. 
Particularly, my district represents one of about 26 in the 
country where the reimbursement rate for Medicare and Medicaid 
is below the actual cost of providing the service. It causes 
and exacerbates a problem in which the 13 hospitals contained 
in my congressional district lose $39 million a year because of 
the under-reimbursements. Every senior citizen that the 
hospitals take in as a patient is a loss factor to them. One 
administrator recently said to me it would pay them to hand a 
senior citizen a $2,000 check every time they walk into the 
hospital.
    This situation is sad for several reasons. Out of the 
medical providers and the hospitals in my district, a number of 
them are on the brink of bankruptcy. These are billion dollar 
institutions. Quite frankly, I am not aware of what you reuse a 
hospital for once it closes down. And several of them over the 
next several years, without a reform to the reimbursement 
formula, will in fact be closing down.
    It is such a grave problem in my area because 65 percent of 
the patient loads in the hospitals are Medicare patients. So 65 
percent of the revenues of these hospitals come directly from 
Medicare. And the underpayment received has taxed all the 
endowments that the hospitals once had. They are now operating 
in a negative position and will continue to operate that way 
for the foreseeable future.
    In 1997 we made an adjustment to the Budget Act and we cut 
about $82 billion out of Medicare. Finally, the chickens are 
coming home to roost, I suspect we would have to say. But it is 
absolutely unacceptable for this government to ignore areas of 
this country, particularly those with high senior citizen 
density, and undercompensate hospitals that provide all of the 
services when the largest portion of their patients are senior 
citizens. The only way this can be corrected is for more funds 
to be budgeted for a true formula reform.
    Let me give you an example of what happens in my district. 
Because my district is in the northeastern part of 
Pennsylvania, my region borders the metropolitan cities of 
Philadelphia and Allentown. The hospitals in the Allentown 
area, some of which are less than 16 miles away from some of my 
hospitals, are compensated at a rate that is 13 percent higher 
than the hospitals in my district. Not suprisingly, we have had 
a tremendous outflow of professionals, doctors, and nurses, as 
all they have to do is drive 16 miles more a day to increase 
their income by 30 or 40 percent because of the formula 
inequity that exists.
    So I urge the committee to put sufficient funds in the 
budget to allow for true reform of the reimbursement formula 
because, quite frankly, although we cannot count how many 
people are dying, people are indeed dying as a result of this 
inadequacy.
    Secondly, I am very much disturbed with the President's 
proposal on prescription drugs. Obviously, it is being written 
by someone who lives inside the beltway, because they argue 
that they want to give the same benefits to senior citizens 
around the country as Federal employees get. Well, you know the 
Federal employee program in which we participate. Quite 
frankly, I never had a week to read all the programs so I just 
selected a fee-for-service program. But if you had a week to 
read all the possible programs that are available, you would 
find that approximately 90 are available. That is not the norm 
for the rest of this country. In my congressional district 
there are only two Federal HMOs and one of them is thinking 
about giving up the program. There are only two HMOs that 
provide any services for senior citizens and they are at a much 
higher rate than the senior citizens can afford.
    Now if we administer prescription drug payments through 
HMOs in this country, what we are basically going to be saying 
is only senior citizens who live in unusually dense 
metropolitan areas will have the opportunity of having a choice 
of plans and the availability of prescription drugs. Most of 
the senior citizens of this country will not have that ability, 
other than a discount card which, on its face, is a joke.
    So when we go into prescription drugs, it seems to me we 
have to have a universal, and simple program under Medicare 
that all senior citizens can rely upon the fact that they will 
be entitled to some subsidy on prescription drugs. Although I 
am in the minority and understand we are probably going to lose 
this fight, may I make a suggestion to my friends in the 
majority? If you are going to go to an HMO system, be fair. I 
think these systems will pull out of unpredictable areas, as 
they did in my district 2 years ago. Under Medicare+Choice, all 
the HMOs in northest Pennsylvania pulled out of the system, 
leaving 45,000 or 50,000 senior citizens that had left the 
Medicare system and had gone to an HMO without coverage. Within 
a month they were notified that the systems were closing down. 
This naturally occurs because of supply and demand. Companies 
that are for-profit under HMOs do not go to areas with a high 
density of senior citizens if they want to make money. Only a 
fool or someone who works in the government would think that 
that is a possibility.
    Now having hit those two issues on prescription drugs and 
Medicare, I also would like to call the committee's attention 
to the underfunding of the Abandoned Mine Land Program. I 
happen to also represent a district that has about 110,000 
acres of devastated, degraded land as a result of prior mining 
practices. And when we build new industrial parks or new 
locations for factories, we do not locate them on degradable 
land. We have to put them on pristine land. And we are fast 
losing our inventory of pristine land.
    It seems to me the Abandoned Mine Land Program is minuscule 
in its nature, but again the administration has succeeded in 
reducing it by 14 percent funding from last year. Even if that 
program were fully funded to the amount of the trust fund and 
the funds that flow into the program, correcting the abandoned 
mine land problem in this country would take more than 250 
years. Now I understand that is only a little time more than 
between now and when the Constitution was adopted. I am certain 
that sometime in my later years in life we will have completed 
the abandoned mine problem, because I hope to live to that 
extraordinary age. Quite frankly, the current program is a 
joke. And to cut these funds even more is an outrage both 
environmentally and economically, because these areas are 
economically distressed by their very nature.
    I would suggest, and I do have a pending bill, that we 
really look at establishing as a comprehensive program. This 
issue affects 128 congressional districts in this country. And 
if you conduct a study of those districts, by and large, most 
are classified as economically distressed. It seems to me that 
we can come up with a forthright program and make a commitment 
over the next 30 years of $20 billion in tax credit bonds. By 
doing so, we can reclaim all the abandoned mine lands of the 
United States. This would give these areas an opportunity to be 
economically competitive with other parts of the country that 
did not sacrifice their environment to pay for the industrial 
revolution of America.
    I think we have to stretch our imagination and find new 
ways to address this problem. And incidentally, Mr. Chairman, 
the cost of those bonds, $20 billion, would be a loss of 
revenue to the Government of the United States of less than $1 
billion a year. And at the end of 30 years, you would not know 
that mining practices of the past ever existed in this country. 
You would have clean, recyclable land, and you would have clean 
water. Without comprehensively attacking these problems, 
whether they occur in Medicare, in prescription drugs, or 
environmentally unsound land because of prior mining practices, 
what we reflect to the American people is really what 
represents the opinion of most of the American people of the 
Congress--that we really do not care, and that we play magic 
tricks or shell games with the American people. I think they 
are getting fed up with and tired of it. I suggest that the 
Medicare disaster, the potential prescription disaster, and the 
lack of attending to sound environmental and economic 
development policy will eventually haunt this institution to 
the point that Congress will change its approach. I hope that 
is so, so that in the future we can handle these problems.
    I thank the committee for allowing me to testify. I urge 
the committee to stand tall and make sure the existing problems 
are addressed before we have a massive tax cut for the 
wealthiest Americans. Thank you.
    [The prepared statement of Mr. Kanjorski follows:]

   Prepared Statement of Hon. Paul E. Kanjorski, a Representative in 
                Congress 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 fiscal 2004 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 Pennsylvania.
    This budget shortchanges the Federal Government's responsibility to 
current and future Medicare and Social Security beneficiaries and 
provides inadequate funding for important environmental restoration 
programs. The health of Medicare is also crucial for our region's 
overall health care system because such a high proportion of 
northeastern Pennsylvanians are elderly. 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 much of the Commonwealth of Pennsylvania. 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.
    First and foremost, Mr. Chairman, I have genuine concerns about 
where our Nation's elderly retirement programs rank in terms of this 
administration's priorities. Unfortunately, this budget proposal 
further increases the size and scope of the Federal deficit, thereby 
forcing the Bush administration to continue spending surplus Social 
Security funds to pay for other Federal programs. I have sincere 
concerns about the effects that budgetary deficits will have on the 
Federal Government's ability to meet its other responsibilities to 
future retirees across the country.
    One of the clearest problems with the Bush budget request is its 
failure to provide sufficient funding for the types of Medicare reforms 
that we can all agree are desirable. We also need to increase 
reimbursements for the health care providers in the Scranton/Wilkes-
Barre/Hazleton Metropolitan Statistical Area and other similar markets 
nationwide. Because of an unfair Medicare reimbursement formula, 
professionals in this statistical area receive significantly less than 
medical providers in other regions of the Commonwealth of Pennsylvania. 
Mr. Chairman, we need to fix this problem.
    While almost no hospital in the Nation has been left unaffected by 
the cost pressures brought about by the passage of the Balanced Budget 
Act of 1997, hospitals in my district face a unique set of problems 
because of the demographic composition of the area and its geographic 
location. The population of my district is older than average, 
relatively low-income, and located close enough to areas in which 
Medicare reimbursement rates are much higher so that skilled personnel 
are recruited away for higher salaries. Because we have such a high 
concentration of senior citizens, our hospitals are therefore much more 
dependent on Medicare reimbursements than most hospitals in other parts 
of the country. The Medicare patient utilization rate is well over 50 
percent for most hospitals and as high as 76 percent in one hospital. 
Hospital officials have told me that the current reimbursement rate 
falls far short of covering the cost of treating senior citizens, so 
that hospitals in our region lose money caring for seniors. Inadequate 
Medicare reimbursements are threatening to collapse the entire health 
care delivery system in northeastern Pennsylvania.
    As you know, Mr. Chairman, Medicare reimbursements to hospitals are 
based largely on the wage index for each MSA. Although situated in a 
small urban area, the Scranton/Wilkes-Barre/Hazleton MSA has a wage 
index so low that hospitals are reimbursed at the rural wage index. 
This classification sets in motion a vicious cycle: Medicare 
reimbursements are lower for rural areas than for urban areas, meaning 
that hospitals in my district get less money back from Medicare and 
must consequently pay their employees less than those in urban areas. 
Because employee wages are lower, these hospitals continue to be 
classified under a lower paying rural wage index. Even as hospitals are 
forced to raise wages to keep qualified nurses and other personnel, the 
3-year lag in adjusting the reimbursement rate costs them hundreds of 
thousands of dollars. The hospitals are caught in this cycle and cannot 
catch up. Meanwhile, hospitals in parts of the State that are just 
adjacent to my district continue to be classified under a higher paying 
wage index, and are consequently able to offer higher wages to their 
employees. A nurse working at a hospital in Hazleton, for example, has 
to drive just 16 miles to work instead at a hospital in the Allentown 
MSA, which has a reimbursement rate 13 percent higher than that in my 
district.
    As a result, the continued underpayment by Medicare makes it even 
harder for northeastern Pennsylvania hospitals to recruit and retain 
skilled health care professionals as the United States continues to 
experience a nationwide nursing shortage. In fact, a recent nurses' 
strike in my district was partially blamed on the low pay that 
hospitals are forced to offer to the nurses they employ. Meanwhile, 
many costs for hospitals in my region remain the same as hospitals 
receiving higher Medicare payments under the urban wage index. 
Therefore, these hospitals in my district experience an even greater 
financial burden than hospitals in general are experiencing. Areas such 
as northeastern Pennsylvania can expect to see more of these problems 
if this situation is not rectified.
    Frankly, shoring up Medicare and raising rural and small urban 
reimbursement rates to a fair level must be a higher priority than a 
second trillion-dollar tax cut. We should put the health of millions of 
senior citizens ahead of added wealth for a fortunate few. While I 
supported the provisions altering the level of Medicare reimbursements 
to hospitals and physicians included in the recently enacted fiscal 
2003 omnibus appropriations bill, these temporary alterations are 
merely the first steps in the process. There is still a marked 
disparity between reimbursement payment rates received by healthcare 
providers in large urban areas and the reimbursement payments made both 
to small urban areas, such as those in my congressional district. This 
disparity leads to non-urban seniors having far less access to the 
quality healthcare that they deserve.
    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 for all seniors within Medicare, the President seems to be 
recommending full prescription drug coverage only for those seniors who 
enroll in private, managed care, HMO-type plans. In contrast, under the 
President's plan those seniors that choose to stay in the traditional 
fee-for-service plan would only receive a prescription discount card 
and coverage for extremely high ``catastrophic'' drug costs. 
Overwhelming reliance on private providers to deliver a prescription 
drug benefit will likely lead to coverage imbalances across the country 
because these organizations are able to choose where they will provide 
coverage.
    Because private plans can choose where they will provide coverage, 
this has meant that rural areas, and areas like northeastern 
Pennsylvania where there are a disproportionate number of senior 
citizens, are either left without HMO coverage, or are left with 
unaffordably high premiums and copayments under the few HMOs that have 
remained. For example, in my district, the few Medicare HMOs that 
remain charge premiums as high as $133 per month, and none of them even 
offer prescription drug coverage in four of the five counties I 
represent. In the fifth county, the only Medicare HMO that does offer 
drug coverage charges a premium of $105 per month, plus a copayment of 
$15 per 30-day supply of each prescription. Seniors on fixed incomes 
need a prescription drug benefit that is affordable and available 
everywhere in the Nation: according to the Medicare Payment Advisory 
Commission, in 2003 only 61 percent of Medicare beneficiaries will have 
access to HMO enrollment.
    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, in one day, 
abandon the program and leave participating seniors without 
prescription drug benefits, as was the case with the HMOs that left the 
Medicare program in northeastern Pennsylvania in recent years.
    Furthermore, Mr. Chairman, the President's budget drastically 
shortchanges Federal abandoned mine land cleanup programs. This budget 
proposal represents a 14 percent cut--or $29 million--in cleanup 
projects funded by the Abandoned Mine Reclamation Fund. 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 Pennsylvania and, on their behalf, I urge you to fully 
fund these vital programs as you work on the 2004 budget.
    Making matters worse is the fact that 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 Reclamation 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 attempt by the President to balance the budget using the 
Abandoned Mine Reclamation Fund is just the latest evidence of the need 
to pass H.R. 419, my bipartisan legislation to establish a nationwide, 
comprehensive cleanup and economic development initiative for all of 
the coal regions. We must change from the year-by-year, underfunded 
system for abandoned mine cleanup that we have now, or the remaining 
projects in this country will take about 200 years. America's coal 
regions deserve the same consideration given to other areas of the 
country, like the Everglades, that have experienced environmental 
degradation.
    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.

    Mr. Gutknecht. Thank you, Representative Kanjorski, for 
your excellent testimony. I would only say for your benefit and 
the benefit of all of our colleagues who have been here today 
and are preparing to testify, we are attempting to squeeze 
about $3 trillion worth of requests into about a $2.4 trillion 
package. But we appreciate your testimony.
    Mr. Moore.
    Mr. Moore. I just want to thank Mr. Kanjorski also for his 
testimony. Thank you very much, sir.
    Mr. Gutknecht. Representative Davis, welcome to the 
committee.

  STATEMENT OF HON. SUSAN DAVIS, A REPRESENTATIVE IN CONGRESS 
                  FROM THE STATE OF CALIFORNIA

    Ms. Susan Davis. Thank you, Mr. Chairman. I have come today 
to strongly oppose the administration's budget proposal to 
drastically cut over 14 percent of Impact Aid funding to 
schools by eliminating compensation for large categories of 
children.
    The need for Impact Aid has been clear for over half a 
century. Begun in 1950, Impact Aid compensates districts for 
the loss of a variety of taxes which form the basis of school 
support. Military bases and the military homes located on those 
lands do not pay property taxes, as most of us know. It is 
clear to all that the Federal Government must help to make up 
for the loss of these taxes, which traditionally have provided 
school support.
    However, the administration would now cut the much lower 
rate of funding that has been allotted for children living off 
base on the misapprehension that they do not negatively affect 
the school tax base because property taxes may, in fact, be 
paid on their apartments or homes that they rent or possibly 
own. Yet, taxes are also lost from these families. Over three-
quarters of the military members living in my district claim 
residency in other States and do not pay State income or car 
registration taxes. Moreover, all sales on military bases at 
commissaries or exchanges are exempt from State and local sale 
taxes. Property, income, and sales taxes are all needed, all of 
that is needed to provide the State and local funds to pay for 
education.
    One out of every three children in a school district that I 
represent is militarily connected, and nearly half of these 
children are unable to be housed on the base. For a small 
school district to lose funding even at the low rate for this 
category of children can be catastrophic to the district 
services.
    I bring this to you not just because a dollar amount or the 
percentage of a district budget is lost, or a fairly decent 
percentage is lost, it is the message that I am concerned 
about. It is the message that we are giving to our military 
families. Last week I met with a group of people from some of 
the Navy and Marine bases in my district, and these 
representatives, often wives of servicemen, strongly expressed 
their concern about the loss of this funding.
    Today, Mr. Chairman, as members of our Armed Services are 
deploying in large numbers to prepare for a possible war, it is 
critical for them to know that their children's schools are 
being supported by the country for which they are prepared to 
give their lives. Thank you, Mr. Chairman.
    [The prepared statement of Mrs. Davis follows:]

Prepared Statement of Hon. Susan A. Davis, a Representative in Congress 
                      From the State of California

    Mr. Chairman, members, I have come today to strongly oppose the 
President's budget proposal to drastically cut over 14 percent of 
Impact Aid funding to schools by eliminating compensation for large 
categories of children.
    The need for Impact Aid has been clear for over half a century. 
Begun in 1950, Impact Aid compensates districts for the loss of a 
variety of taxes which form the basis of school support. Military bases 
and the military homes located on that land do not pay property taxes.
    It is clear to all that the Federal Government must help to make up 
the loss of these taxes, which traditionally have provided school 
support.
    However, the administration would now cut the much lower rate of 
funding that has been allotted for children living off base on the 
misapprehension that they do not negatively affect the school tax base 
because property taxes may be paid on their apartments or homes that 
they rent or possibly own.
    Yet, taxes are also lost from these families. Over three-quarters 
of the military members living in my district claim residency in other 
States and do not pay State income or car registration taxes. Moreover, 
all sales on military bases at commissaries or exchanges are exempt 
from State and local sales taxes. Property, income, and sales taxes are 
all needed to provide the State and local funds to pay for education.
    One out of every three children in a school district that I 
represent is military connected. Nearly half of these children are 
unable to be housed on base. For a small school district, to lose 
funding, even at the low rate for this category of children, can be 
catastrophic to the district's services.
    It is not just the dollar amount or the percentage of a district's 
budget that is lost. It is the message we are giving to our military 
families. Last week I met with on-base people from some of the Navy and 
Marine bases in my district. These representatives, often wives of 
servicemen, strongly expressed their concern about the loss of this 
funding.
    Today, as members of our armed services are deploying in large 
numbers to prepare for a possible war, it is critical for them to know 
that their children's schools are being supported by the country for 
which they are prepared to give their lives.

    Mr. Gutknecht. Thank you, Mrs. Davis. Mr. Moore.
    Ms. Susan Davis. I wanted to focus on that issue 
particularly because I think it is something that we really 
cannot ignore.
    Mr. Gutknecht. You missed the earlier testimony. We have 
had several people talk about that and the impact that it has 
not only on the local school districts, but ultimately on the 
children.
    Mr. Moore. I was not here for the earlier testimony. But I 
do appreciate the testimony you have given today because it 
really is a problem. Thank you very much.
    Ms. Susan Davis. Thank you.
    Mr. Gutknecht. Thank you, Representative Davis.
    Next we have Representative Simmons from Connecticut. 
Welcome to the committee.

  STATEMENT OF HON. ROB SIMMONS, A REPRESENTATIVE IN CONGRESS 
                 FROM THE STATE OF CONNECTICUT

    Mr. Rob Simmons. Thank you, Mr. Chairman. In the interest 
of efficiency, I would like to ask unanimous consent that my 
whole testimony be introduced into the record and then I would 
like to summarize a couple of points that I think are 
important.
    Mr. Gutknecht. Without objection.
    Mr. Rob Simmons. Thank you. First of all, thank you and Mr. 
Moore for sitting through these interesting and elucidating 
hearings. I commend you for that and I appreciate that.
    I was recently elected chairman of the Subcommittee on 
Health of the Veterans' Affairs Committee. And as a veteran who 
served on active duty and reserve since 1965, retiring just a 
week ago, it is my honor to try to represent the interests of 
our veterans before this committee when it comes to the budget.
    Recently, the Veterans' Affairs Committee as a whole 
committee voted its recommendations to the Budget Committee. We 
were gratified that the President had requested an 11-percent 
increase in health care funding for the VA. The problem is that 
in testimony received before the committee by Dr. Roswell, who 
heads up the Veterans Health Administration in the Veterans 
Administration, with current enrollment increases, and with the 
escalating cost of health care, a 13-to 14-percent increase was 
necessary between fiscal year 2003-04 if we are to keep pace 
with those costs. That is the problem. And it is on the basis 
of that problem, and it is on the basis of the hearings held by 
our committee that we have recommended to the Budget Committee 
a 15-percent increase in VA health care for fiscal year 2004. 
And we feel that this is responsible.
    There is an important reason that you consider this 
increase, and I would like to share with you two pieces of 
information relative to it. First of all, we have received 
testimony from the Paralyzed Veterans Association, and using an 
example of a paralyzed veteran who is a Category 8, under 
current policy this veteran has total yearly liabilities of 
$1,455 a year. Under the proposed new regulations which 
increase copayments for medicine and which increase the 
enrollment fee to $250 a year and make certain other 
adjustments to the program, this same Category 8 veteran will 
be paying $3,210 a year for his care and for his service. That 
is a 221-percent increase--a 221-percent increase. That 
increase is contained within the policy recommendations that we 
have received from the administration for fiscal year 2004. 
That is a serious problem.
    There is a second aspect to this problem that you also have 
to know and understand. The impact of suspending enrollment of 
Priority 8 veterans and adding the $250 annual enrollment fee 
for Priority 7 and for Priority 8 enrollees for fiscal year 
2004 is as follows. One and a half million veterans will cease 
to be eligible under the old rules. Now just looking at the 
impact of that on some States chosen at random, Minnesota, for 
example, just a random choice, would have to exclude 31,580 
veterans; Kansas, 20,398; my own State of Connecticut, 23,115. 
And the question that I pose to the committee is what do you 
say to these veterans. What do you say to these veterans? You 
have served our country in uniform, you are eligible for 
certain benefits, but the proposal that is coming forward for 
fiscal year 2004 is not only underfunded, but it eliminates 
certain categories of veterans from being eligible for these 
benefits. It is a serious problem for us on the committee. I 
will argue it is a serious problem for the Congress.
    Let me share with you my view that we could solve a lot of 
these problems if funding for veterans health care was not 
carried in a discretionary account, that at least some funding 
of health care for some categories of veterans be mandatory. 
And in an effort to study that issue, the President formed a 
task force titled Presidential Task Force to Improve Health 
Care Delivery for Our Nation's veterans. Today that task force 
released its findings on this issue and supported what they 
call assured funding for Priority 1 through 7 veterans, assured 
funding for Priority 1 through 7 veterans, and they also 
concluded that excluding Priority 8 veterans from eligibility 
was unacceptable. So what we have here is an independent 
presidential task force that is making a recommendation for 
assured funding and that is recommending against excluding 
veterans from the system. And what you have here is the full 
Veterans' Affairs Committee voting virtually unanimous for the 
same cause and for the same purpose.
    I would encourage the members of the committee to give 
serious consideration to this issue. I would be happy to work 
with the committee in any way possible on these subjects. And I 
thank the Chair.
    [The prepared statement of Mr. Simmons follows:]

 Prepared Statement of Hon. Rob Simmons, a Representative in Congress 
                     From the State of Connecticut

    Mr. Chairman and colleagues, I would like to thank the chairman and 
members of the Committee on the Budget for receiving my testimony on 
behalf of veterans who need and deserve a good health care system 
provided by a grateful Nation.
    It is my honor to have been chosen as chairman of the Subcommittee 
on Health of the Veterans' Affairs Committee for the 108th Congress. 
This is a humbling honor, and I am determined to try to make a 
difference in the lives of those who have served our country in 
uniform.
    The Veterans' Affairs Committee carefully reviewed the 
administration's budget proposal for the Department of Veterans' 
Affairs (VA). The committee held a hearing on February 11, 2003, to 
receive VA's testimony, as well as recommendations from national 
veterans' organizations.
    While true that the administration has again proposed an apparent 
large increase in the budget for veterans' affairs, there remains a 
real gap in the level of resources that are needed. There is also a 
serious backlog of maintenance and repair projects necessary to 
maintain a decent system of care for our veterans.
    On February 27, our committee voted to endorse a large increase in 
the budget, nearly $3 billion, over the amount the President requested. 
We did this because we are concerned about some of the policy pretzels 
twisted by VA to get to OMB's bottom line for VA spending. Most of the 
pressure would have fallen on veterans, not the VA. The committee 
concluded this was not fair, nor was it equitable, to agree to allow VA 
to proceed in such a fashion. That decision we made as a committee 
costs money, Mr. Chairman, so we are voting with our pocketbooks on 
veterans' health care this year.
    VA's ability to provide long-term care would be severely impaired 
by the administration's proposal to close almost half of VA's 12,000 
nursing home beds--a total non-starter. Raising copayments for needed 
drugs won't fly--VA just raised drug copayments a year ago. This 
Congress is on the verge of spending $400 billion for Medicare drugs, 
and frankly, probably even more. With half of VA's patients fully 
Medicare eligible, how can we approve policies to take VA drug benefits 
away from veterans? Given the expected number of elderly veterans from 
World War II and the Korean War who are expected to seek all forms of 
VA health care over the next 10 years, the committee is strongly 
opposed to any proposal that would result in the closure of even a 
single VA nursing home bed, and we do not support a number of other 
related policy proposals with similar effects--to drive veterans out of 
VA care.
    The administration's health care budget is predicated on achieving 
``management efficiencies'' totaling $950 million. Mr. Chairman, with 
all due respect to the Secretary's seriousness of purpose here, this 
level of predicted ``savings'' simply does not add up. Certainly we 
don't want to discourage efforts at efficiency, but there is little 
evidence that such savings have been or will be achieved. It's just a 
``plug number,'' to get to VA's bottom line. Thus, we could not in good 
conscience rely on projections of this magnitude as a substitute for 
funding needed health care.
    It has not been very hard to observe that discretionary 
appropriations for veterans' health care have become one of the most 
contentious topics on the Hill year-after-year. It has become nearly 
impossible to manage veterans' health care on a rational, business-like 
basis with the current unreliable unstable funding situation.
    Many of us believe that veterans' health care funding must be put 
on a more firm foundation that matches funding with the actual number 
of veterans who seek care from VA. Consequently, the committee believes 
that Congress should make a commitment to funding VA health care for 
enrolled veterans on a fiscally responsible and guaranteed basis--to 
use a standard formula, not political debate--and the committee 
recommends that the Budget Committee provide for this change in the 
budget resolution this year.
    Beginning in the mid-1990s, VA accelerated internal reforms, 
greatly emphasizing primary and managed care, while expanding sites of 
clinical service. Today, VA health care is widely available to millions 
of veterans in 1,300 locations, ranging from major urban academic 
medical centers to rural storefront clinics. VA health care is 
recognized for its world-class patient safety program and provides 
veterans a measurable advantage in quality of care. As provided by law, 
VA manages veterans' access to care through a formal enrollment system. 
Through outreach VA has enrolled nearly 7 million veterans, about 5 
million of whom are regular patients.
    While the number of veterans enrolled in VA medical care has 
increased dramatically, appropriated funding is not keeping pace with 
the growth in enrollment or the increased needs of elderly veterans. In 
July 2002, VA reported to Congress that it estimated that 310,000 
veterans were waiting more than 6 months for initial appointments. By 
December 2002, that number had been reduced to 236,000, but two-thirds 
of these were new enrollees, not respondents to the initial data review 
from July.
    On January 29, 2003, the Under Secretary for Health, the Honorable 
Robert H. Roswell, testified that to adequately meet the needs of VA's 
core constituency of service-disabled and poor veterans, the Veterans 
Health Administration would require annual budgetary increases of 13-14 
percent. The Department received a record health care funding increase 
of 11 percent from the omnibus appropriations bill signed by the 
President on February 20, 2003, Public Law 108-7. This increase, 
however, did not address a reported $1.9 billion shortfall in current 
time!
    Using BLS reported rates of health inflation shows the overall U.S. 
health care inflation rate was 5 percent for calendar year 2002. Within 
that level, hospital care inflation was the highest single component at 
10.2 percent, followed by prescription drugs and medical supplies at 6 
percent. On inflation, during the committee hearing on January 29, 
2003, I personally asked Dr. Roswell about inflation. He testified 
that:
    ``* * *a 7-percent increase associated with enrollment in our 
highest priority groups, coupled with another 2 to 3 percent of 
increased utilization costs, coupled with a conservatively estimated 
health care inflation rate of 4.5 or 5 percent, yields a 13 or 14 
percent per year increase in the money available to take care of just 
our core population of veterans.''
    Given all the considerations in our views and estimates report to 
the Committee on the Budget, our committee chose to recommend a 15-
percent increase in VA health care for fiscal year 2004. I think this 
is a responsible, and even prudent, request, Mr. Chairman, given the 
well documented needs and the growth in that need that Dr. Roswell 
testified to. They were once young and healthy, but now they are not. 
We needed them back then, and they need us now. President Lincoln said 
it best, ``To care for him who shall have borne the battle, and his 
widow and his orphan.'' My job--our job--Mr. Chairman, is to see to it 
that Mr. Lincoln's admonition is not forgotten.
    Medical Care Collections Fund--VA is authorized to bill health care 
insurers for covered non-service-connected care provided to veterans. 
The Department projects medical care collections for 2004 to be $2.1 
billion.
    The committee unanimously supports VA's efforts to improve 
performance in first- and third-party collections, since it is only 
collecting about 40 cents on the dollar bill. But the committee remains 
skeptical that VA can achieve all it promises in fiscal year 2004. If 
VA fails to achieve its goal of such a significant 1-year increase, 
veterans will be denied care to the extent of that failure. My 
committee is unwilling to assume VA will be successful in increasing 
collections as promised. We assumed in our views and estimates that VA 
should accomplish a 10-percent increase in collections in fiscal year 
2004 over the current estimate for this year.
    VA research Programs--I could itemize many other aspects of the VA 
budget, Mr. Chairman, but you have our views and estimates on all of 
these. I want to speak about VA's research programs, and make a special 
request for attention there. VA research is a tremendous national 
resource that operates quietly in conjunction with some great academic 
teaching programs like those at the University of Iowa, Yale, Stanford, 
NYU, UAB, Texas, Minnesota, PITT, Miami, Missouri, Colorado U, LSU, 
UMDNJ, Oregon, U of Wisconsin, Vandy, U of California, U Washington. I 
am sure a number of distinguished members of this committee are well 
aware of the excellence of these programs.
    The Department carries out an extensive array of research and 
development as a complement to its affiliations with medical and allied 
health professional schools. While these programs are specifically 
targeted to the needs of veterans, VA research has defined new 
standards of care that benefit all of us. Among the major emphases of 
the program are aging, chronic diseases, mental illnesses, substance-
use disorders, sensory losses, and trauma-related illnesses. VA's 
research programs are internationally recognized and have made 
important contributions in virtually every arena of medicine, health, 
and health systems.
    The Secretary requested a 2004 budget for VA research of $408 
million, an increase of $8 million or 2 percent over the fiscal year 
2003 level. The committee strongly supported an increase in the 
research account to $460 million (15 percent) in 2004, as recommended 
by both the independent budget as well as the Friends of VA research 
coalitions. The committee believes, and I am absolutely convinced, that 
this additional funding is needed in VA's research programs to keep 
pace with funding developments in the Federal biomedical research 
community. A 16 percent funding increase was provided for the National 
Institutes of Health in the 2003 omnibus appropriations bill. 
Additional funding of $52 million in VA biomedical research in fiscal 
year 2004 would provide coverage for inflation and permit a small 
program expansion. These are investments in the future, to cure 
disease, reduce human suffering and produce a healthier America. They 
are well worth the tiny cost increment we are recommending.
    Major Construction Projects--In the 107th Congress, the committee 
authorized nearly $800 million in major medical facility construction 
needs, but little of this funding was appropriated. Last year, the 
Department advised Congress of its 20 major construction priorities. 
One of these is in my district, at the West Haven Medical Center. It's 
an important and overdue matter that would improve patient privacy, 
renovate three inpatient wards, and consolidate support services. There 
are dozens of projects like this that need funding. While the House 
passed an authorization measure supporting the completion of many of 
high-priority projects, only 1 of the 20 was funded [the Hines, IL 
blind rehabilitation project] received appropriations in fiscal year 
2002. No funds for any of the other projects were appropriated in 
fiscal year 2003.
    Even beyond Connecticut, Mr. Chairman, there are many other worthy 
projects high on VA's established priority list that lack funds. These 
are medical centers that will not be affected significantly by the so-
called CARES process, and that are needed to continue providing good 
health care to veterans. The committee will further explore these needs 
and will recommend specific projects to meet them. Consequently, the 
committee recommends an additional amount of $500 million for the major 
medical facilities construction account in fiscal year 2004.
    Guaranteed Health Care Financing: The most important reason I am 
here today, Mr. Chairman, is to seek your understanding, if not your 
outright support, which I would welcome, for Guaranteed Health Funding. 
Because VA health care discretionary appropriations have not kept pace 
with the needs of veterans enrolled in the VA health care system, H.R. 
5250 was introduced in the 107th Congress to establish a funding 
formula to guarantee sufficient annual funding to meet the medical care 
needs of these veterans. The bill was intended to stabilize VA's health 
care financing and promote more efficient use of funds. Stabilized, 
dependable, sufficient funding for health care delivery is what we 
seek.
    The committee has recommended to the Committee on the Budget that 
it convert the Veterans' Health Care Account from discretionary to 
mandatory funding, to pave the way for guaranteed funding. The 
committee believes the conversion would be essentially budget-neutral 
because the increase in mandatory funding would be offset by a decrease 
in current discretionary appropriations for veterans' health care. The 
continuing health care of veterans would be funded through a new 
financing system similar to the financing systems used for the military 
TRICARE for Life Program, the Medicare program, and the Federal 
Employees Health Benefits Program. In none of these programs has the 
funding formula itself been the source of increased costs. Veterans 
deserve a health care program with an equally reliable funding 
mechanism.
    Mr. Chairman, this concludes my testimony, and I do appreciate the 
opportunity to represent the needs of America's veterans before the 
Committee on the Budget. I would be pleased to respond to any 
questions.

    Mr. Gutknecht. Thank you, Representative Simmons. 
Representative Moore.
    Mr. Moore. I very much appreciate Mr. Simmons' testimony 
today. I tell people I really believe there are four groups in 
our society who need and deserve special attention. Children, 
people with disabilities, senior citizens, and veterans are the 
four groups that I think really need and deserve special 
attention from Congress. I appreciate very much what you had to 
say today, and I think we do need to do a better job when we 
make promises to certain groups, and especially to veterans, 
that we keep those promises. Thank you, Mr. Simmons.
    Mr. Rob Simmons. I thank you, Mr. Moore, for your comments 
and I agree with you completely. And one of the interesting 
things that I have discovered in dealing with the veterans 
population, and I happen to be a veteran, is that of the four 
categories you mentioned, the veterans also in many cases are 
disabled and in many cases are senior citizens. So I thank you 
for your comments.
    Mr. Moore. I am a veteran too, and I appreciate your 
comments. Thank you.
    Mr. Gutknecht. Thank you, Representative Simmons.
    The gentleman from North Carolina, Mr. Hayes, welcome to 
the committee.

  STATEMENT OF HON. ROBIN HAYES, A REPRESENTATIVE IN CONGRESS 
                FROM THE STATE OF NORTH CAROLINA

    Mr. Hayes. Thank you, Mr. Chairman, Mr. Moore. This is a 
little bit of a reemphasis on an issue you have discussed 
before, Impact Aid. I am here today to express my deep concern 
about the level of funding that has been requested for Impact 
Aid in the President's budget. Simply put, it is not enough and 
must be increased substantially.
    Impact Aid began in 1950 as the Federal Government accepted 
that it has the responsibility to reimburse local public school 
districts for revenues lost due to a Federal presence such as 
military base. The students of Cumberland County in North 
Carolina and 1,275 other federally impacted school districts 
across our country depend on Uncle Sam to honor this 
commitment.
    Impact Aid funds are sent directly to the local school 
districts, making Impact Aid one of the most efficient programs 
the Department of Education administers. The streamline program 
has almost no bureaucracy, but can and does meet the same State 
regulations as any other school funding.
    In an area where there is not a large Federal presence, the 
local business community tax payments usually generate 
approximately 25 percent of a school district's funding. 
Obviously, in a public school district where the Federal 
Government is a primary employer or landowner, this vital base 
is lost. Impact Aid funds then fill the financial gap that the 
Federal Government has created.
    Unfortunately, under the President's budget there is a 
proposal to eliminate critical sections of this vital program. 
The proposal removes off base military, low rent housing, and 
civilian ``B'' children, or children whose parents are employed 
by the Federal Government. These local school districts would 
no longer receive Impact Aid payments for these 900,000 
children. According to the administration, only 750 local 
educational agencies would remain eligible for a basic support 
payment, down from approximately 1,300 that presently receive 
this important funding.
    We must consider that civilian children and military 
families living off base are still employed by an employer that 
does not pay taxes. Furthermore, these folks also can often 
shop tax free at the PX on post. They might not be paying local 
income tax because they have an alternate official State of 
residence. We must recognize that this results in the loss of 
vital tax revenues. We should not further penalize localities, 
especially school systems, by eliminating the funding for 
education.
    The eighth district of North Carolina provides an excellent 
example of what I am talking about. Cumberland County, NC, is 
the proud home of Ft. Bragg and Pope Air Force Base, two of the 
largest military installations in the world. Last year the 
Cumberland County system received almost $4.2 million in 
payments from the Federal Government to make up for the lost 
taxes caused by the presence of the posts. Under the current 
proposal, this same county would receive only approximately 
$550,000 for the next fiscal year despite not gaining any 
additional revenue.
    Given the large number of troops being sent out from Ft. 
Bragg, there is a pretty good chance that local revenues will 
actually be diminished. Needless to say this loss of Impact Aid 
funding represents a potentially devastating blow to the 
Cumberland County school system.
    Instead of decreasing funding, we should be working to 
fully fund this vital program. The Federal Government has an 
obligation to school districts across the country. I urge the 
committee to reject the proposed reduction and restore funding 
for Impact Aid. I thank you for your attention.
    [The prepared statement of Mr. Hayes follows:]

 Prepared Statement of Hon. Robin Hayes, a Representative in Congress 
                    From the State of North Carolina

    Mr. Chairman, I am here today to express my deep concern about the 
level of funding that has been requested for Impact Aid in the 
President's budget. Simply put, the request is not enough and must be 
increased substantially.
    Impact Aid began in 1950 with the Federal Government accepting that 
it has a responsibility and an obligation to reimburse local public 
school districts for revenue that is lost due to a large Federal 
presence, such as a military base, in their district. The students of 
Cumberland County, NC, and the students of the 1,275 other federally 
impacted school districts across our country depend on Uncle Sam to 
honor this commitment.
    Impact Aid funds are sent directly to the local school districts 
making Impact Aid one of the most efficient programs that the 
Department of Education administers. This streamlined program has 
almost no bureaucracy but can and does meet the same State regulations 
as any other school funding.
    In an area where there is not a large Federal presence, the local 
business community's tax payments usually generate approximately 25 
percent of a school district's funding. Obviously, in a public school 
district where the Federal Government is a primary employer or 
landowner, this vital tax base is lost. Impact Aid funds then fill the 
financial gap that the Federal Government has created.
    Unfortunately, under the President's budget, there is a proposal to 
eliminate critical sections of this vital program. The proposal removes 
off-base military, low-rent housing, and civilian ``B'' children, or 
children whose parent is employed by the Federal Government. These 
local school districts would no longer receive Impact Aid payments for 
these 900,000 children. According to the administration, only 750 local 
educational agencies would remain eligible for a basic support payment; 
down from approximately 1,300 that presently receive this important 
funding.
    We must consider that civilian children and military families 
living off base are still employed by an employer who does not pay 
taxes. Furthermore, these folks can also often shop tax free at the PX 
on post or they might not be paying local income tax because they have 
an alternate official State of residence. We must recognize that this 
results in the loss of vital tax revenues. We should not further 
penalize localities and school systems by eliminating this funding for 
education.
    The Eighth District of North Carolina provides an excellent example 
of what I am talking about. Cumberland County, NC is the proud home Ft. 
Bragg, one of the largest military installations in the world. Last 
year the Cumberland County school system received approximately $4.2 
million in payments from the Federal Government to make up for the lost 
taxes caused by the presence of the Post. Under the current proposal, 
this same county would receive only $550,000 approximately for the next 
fiscal year despite not gaining any additional revenue. Given the large 
number of troops being sent out from Ft. Bragg, there is a pretty good 
chance that local revenues will actually be diminished. Needless to 
say, this loss of Impact Aid funding represents a potentially 
devastating blow to the Cumberland County school system.
    Instead of decreasing funding, we should be working to fully fund 
this vital program. The Federal Government has an obligation to school 
districts across the country. I urge the committee to reject the 
proposed reductions and restore funding for Impact Aid.

    Mr. Gutknecht. We thank you, Mr. Hayes, for educating us 
even more about Impact Aid. Mr. Moore.
    Mr. Moore. I join the Chairman in thanking you for your 
testimony. We have heard in the time I have been here one or 
two other people talk about Impact Aid. So we are very well 
aware of that. Thank you, Mr. Hayes.
    Mr. Hayes. Thank you, gentlemen, for your time and effort 
and energy.
    Mr. Gutknecht. Thank you.
    Representative Osborne from the great State of Nebraska. 
Welcome to the committee and you have 10 minutes.

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

    Mr. Osborne. I bet you are hoping I will take all ten, too. 
I am reading your body language.
    Mr. Gutknecht. We actually were hoping that you would get a 
chalkboard and give us a little chalk talk.
    Mr. Osborne. I am going to be very brief. I wanted to talk 
really just about three items and I will submit the rest of my 
statement for the record.
    The first concern that I have is mentoring programs. The 
standard procedure here has been everybody comes in and says, 
well, the President is not going to fund my program. We have 
the reverse problem here. Last year we had $17.5 million for 
mentoring programs, and that was part of H.R. 1. This year, the 
President is proposing $100 million for mentoring and then an 
additional $50 million for mentoring children of prisoners. So 
we hope very much that that is authorized as budgeted because 
we feel that this is very cost effective. Right now we do not 
have enough prisons to lock people up. It costs about $25,000 a 
year to incarcerate someone. It costs about $300 to $500 to 
mentor someone. So we feel that this money is very well spent 
and we would encourage full funding of that request by the 
President.
    The second issue is the Rural Education Achievement 
Program. I think both of you gentlemen understand the situation 
in rural education. One of the problems that small rural 
schools have is that they do not have grant writers. Sometimes 
their numbers of students are so small that the Federal 
formulas do not really allow for much. So this rural education 
initiative allows them to pool the funds and get up to $20,000 
to maybe as much as $60,000 for small rural schools. This has 
not been included in the President's budget. We hope very much 
that this will be funded for this year. We had to fight for the 
funds last year. We got them, and it has been much appreciated.
    The last I will mention is rural health care. Again, I 
think from your experience and your areas, you realize that 
Medicare payment formulas to rural physicians and other health 
care providers continue to be less than what their equivalent 
counterparts are paid in more densely populated areas. We 
really feel that we need to address these discrepancies in the 
Medicare payment and reimbursement.
    So those are my three major concerns. There are others 
certainly that affect my district. But I appreciate your being 
here today. I appreciate the opportunity to testify before you. 
And I will submit the remainder of my comments for the record. 
Thank you.
    [The prepared statement of Mr. Osborne follows:]

 Prepared Statement of Hon. Tom Osborne, a Representative 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 2004 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 2004 budget:
     Mentoring programs
     Rural Education Achievement Program
     Rural health programming
     Transportation funding
     Rural development programs

                               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 15 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.
    Two years ago, I worked to include the Mentoring for Success 
Program in H.R. 1. Mentoring for Success is a competitive grant program 
that received $17.5 million in the fiscal year 2002 and fiscal year 
2003 appropriations process. This important funding allows 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 2004 budget includes funding for a 
significant new investment in mentoring programs. Specifically, he has 
requested $100 million for Mentoring for Success and $50 million for a 
program called Mentoring Children of Prisoners to be administered out 
of the Department of Health and Human Services. I strongly support the 
President's efforts on behalf of mentoring and urge the Budget 
Committee to include this request in their bill.

                  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. We have worked for the past 2 years to get funding for this 
program through the appropriations process. We have been successful 
both years in significant funding to help struggling rural schools. 
However, for the past 2 years, the administration has not included 
funding for Rural Education in the budget proposal. However, 
significant new funding was included for programs for which many rural 
residents will not be able to qualify, in particular, programs to 
offset the cost for parents who choose to send their children to 
private schools. I am especially concerned as a Member who represents a 
rural area where lack of population does not allow for the creation of 
schools at which vouchers or choice tax credits could be used. Simply, 
our public schools struggle for students as it is. I am concerned that 
funding vouchers and school choice tax credits at the expense of the 
pre-existing rural education program that was authorized, as part of 
the No Child Left Behind Act will create a very difficult situation for 
my rural schools and my rural constituents.

                           RURAL HEALTH CARE

    In addition to education programs, I am deeply concerned about the 
budget provisions that will be available for rural health care 
providers. The geographic disparities that exist between Medicare 
payments to rural and urban providers adversely affect seniors' access 
to quality health care in these communities. Medicare payment formulas 
to rural physicians and other health care providers continue to be less 
than what their equivalent counterparts are paid in more densely 
populated areas, even though it costs as much and even more to provide 
medical services in rural areas. I feel strongly that Medicare payment 
formulas should accurately compensate physicians and providers who 
deliver high-quality, cost-effective services to Medicare beneficiaries 
in rural areas. I urge you to address these geographic disparities in 
Medicare reimbursement in this year's budget.
    I also encourage your support for important rural health programs, 
including the Telehealth Grant Program, the State Offices of Rural 
Health, the Medicare Rural Hospital Flexibility Grant Program, and 
other programs designed to strengthen rural health care delivery 
systems.

                             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 20 years. Without 
Federal funding, these projects cannot move forward.

                           RURAL DEVELOPMENT

    The rural development programs administered by the U.S. Department 
of Agriculture could make the difference between maintaining viable 
communities in rural Nebraska and watching those towns slowly fade 
away. One important program is the Value-Added Agricultural Product 
Market Development Grant Program, which helps independent producers and 
cooperatives enter into value-added activities. In the 2002 farm bill, 
Congress approved the use of mandatory funds for the Value-Added 
Agricultural Product Market Development Grant Program. The provision 
for the use of mandatory funds indicated that Members placed a priority 
on this program. I support the use of mandatory funds for the Value-
Added Agricultural Product Market Development Grant Program and 
encourage the retention of mandatory funds in the budget.
    Another program that will have a significant impact on rural 
America is the Rural Strategic Investment Program. This program will 
provide planning and innovation grants on a competitive basis to 
Regional Investment Boards (RIBs) that have been certified by the 
National Board on Rural America. Each RIB must submit a regional plan 
that covers the region's basic infrastructure needs, services, 
opportunities for economic diversification and innovation, human 
resource capacity, access to market based financing and venture and 
equity capital, and the development of public/private collaborations. I 
support the inclusion in the House budget of the mandatory funding that 
Congress authorized for this program in the 2002 farm bill.

                               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 programming
     Transportation funding
     Rural development programs
    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.

    Mr. Gutknecht. Thank you, Representative Osborne. 
Representative Moore.
    Mr. Moore. Mr. Osborne, I very much appreciate your 
comments, all of them, but especially regarding the mentoring 
program. I was a district attorney for 12 years and worked a 
lot with juvenile offenders as well as adult offenders. And, 
boy, if we can head young people off from a life of crime or 
getting involved with the criminal justice system in the first 
instance, and mentoring may well accomplish that, then we have 
done a great service not only for the young person but for our 
country as well. So I very much appreciate your comments.
    Mr. Osborne. Thank you.
    Mr. Gutknecht. Mr. Baird.
    Mr. Baird. No.
    Mr. Gutknecht. Thank you very much, Mr. Osborne.
    Mr. Kirk, welcome to the committee.

STATEMENT OF HON. MARK KIRK, A REPRESENTATIVE IN CONGRESS FROM 
                     THE STATE OF ILLINOIS

    Mr. Kirk. Thank you. I think I am the last one so I am 
going to be really quick and go easy on you. I am here, now off 
the committee, just to urge you to look at the oldest education 
in the Federal budget, which is the Impact Aid Program. And as 
we go to war, this is probably the wrong time to cut education 
Impact Aid.
    Unfortunately, I saw a 14.5-percent reduction in the Impact 
Aid Program. And while the reductions will not affect kids in 
my district, they will affect some of the 1,275 school 
districts in the country where kids of military families are 
educated. And here's the big thing about Impact Aid, and I know 
this from military recruiting now, the children of military 
families are overwhelmingly the most likely to sign up. We now 
see that in the recruiting statistics for the last 20 years in 
the all volunteer military. So when we talk about these 
military kids, we are actually talking about the future U.S. 
Army, Navy, and Air Force. And to underfund the school 
districts where these kids go is to underfund national defense 
in a long-term sense because this is the man and womanpower 
that the future national security cadre comes from.
    I wish it were different. I wish that the data did not show 
that kids of military families were over represented. I wish 
the volunteer military was still coming from the entire 
population, but it is not. The military family is 
overwhelmingly the one that will re-up from generation to 
generation. Therefore, funding the Impact Aid Program is rather 
essential for what the national security of the United States 
looks like not in 2004 but in 2024.
    So I am just hoping that you can take that on and explain 
to the rest of the committee just how important this is. And 
otherwise, I will let you go.
    [The prepared statement of Mr. Kirk follows:]

   Prepared Statement of Hon. Mark Steven Kirk, a Representative in 
                  Congress From the State of Illinois

    Mr. Chairman, thank you for allowing Members the opportunity to 
speak about the importance of the Impact Aid Program. The oldest 
Federal education program currently in law, Impact Aid is the life 
blood for 15 million children across our country who live on or near 
Federal lands.
    The administration's fiscal year 2004 budget calls for a 14.5 
percent cut to Impact Aid. I am here to ask that we maintain at least 
the fiscal year 2003 appropriation of $1.18 million. There are 1,275 
school districts that depend on Impact Aid to educate 15 million 
students. This is a compelling detail, because without Impact Aid, the 
education of these children is compromised.
    In my district, the 10th District of Illinois, I have three school 
districts that receive funds from the Impact Aid Program. One in 
particular, North Chicago School District No. 187 is one of only 30 
``heavily impacted'' schools districts in the Nation. This means that 
at least 40 percent of their enrollment is comprised of military 
children. Due to the presence of Great Lakes Naval Training Center, tax 
dollars do not follow these kids into the classroom, but the district 
is required to educate them. Children should not be looked upon as a 
drain to a school budget. North Chicago educates all the children that 
enter their classrooms, because they believe each one deserves a 
quality education, however, we need to go the extra mile to ensure they 
are able to follow through on their promise made to parents that they 
will help their child learn.
    This is also a school district where one hundred kids require 
special education services and 61 percent qualify for free and reduced 
meals. The motto of District No. 187 is ``Character, Education, and 
Achievement.'' North Chicago is an example of the 1,200 districts 
across the country who are incredibly and selflessly dedicated to 
providing their students with a quality education with little help from 
the government.
    North Shore School District No. 112, also in my district, receives 
only $185,727 or 6.3 percent from the Federal Government in Impact Aid 
funds to contribute to the $2,949,738 they spend each year to educate 
their 261 military children. There are also many undocumented costs 
such as the stress that absent parents creates in a family, as well as 
the needs created by children who are frequently moved due to 
reassignment of a parent from one military post to another. Helping 
these children cope with the deployment of a parents requires special 
attention such as counseling from social workers this kind of attention 
is necessary, but it comes at a cost. Federally impacted districts have 
no choice but to educate all their students. Lets provide them with the 
services and funds they need and deserve.
    As we continue to deploy military personnel overseas, I can think 
of no better time to support our military families. We are asking our 
young men and women to protect our hopes, our dreams, our very way of 
life. In return, we must protect and provide for their children. We 
have an obligation to not only live up to our original promise made in 
1950, but we also have a moral obligation to our military. We are 
sending them into harm's way to protect our freedoms, but we are 
neglecting their needs. We have a unique opportunity here to make good 
on a promise we made to our Military and Native American families. The 
time to support our military families is now and its time for the 
Federal Government to make good on our end of the bargain.

    Mr. Gutknecht. Thank you very much, Mr. Kirk. We have heard 
several people this afternoon talk about Impact Aid but no one 
had offered that observation, and I think it is very accurate. 
I can say from my own experience, probably at least 40 percent 
of the kids that we recommend to the military academies come 
from families where one or more of the members of the family 
were military personnel themselves. That is an interesting 
observation. I have never thought of it.
    Mr. Baird.
    Mr. Baird. I just want to say you are in great company 
today. Mr. Edwards spoke about this as did Lee Terry from 
Nebraska. And it is something that really all Americans should 
care about. If we are going to send people into harm's way, we 
need to make sure that we support the schools that support 
their families. So thanks for your leadership on this.
    Mr. Kirk. Right. And for those of us who support a Federal 
role for education, this is the first Federal education 
program. So thank you very much.
    Mr. Gutknecht. Thank you, Mr. Kirk.
    I believe we have one last panelist. Is Mr. Rogers in the 
room? Now that is real service. You may be the last to testify 
here today, so you are batting cleanup. Welcome to the 
committee. Thank you so much for joining us. You have 10 
minutes.

  STATEMENT OF HON. MIKE ROGERS, A REPRESENTATIVE IN CONGRESS 
                   FROM THE STATE OF ALABAMA

    Mr. Rogers of Alabama. Mr. Chairman, other distinguished 
members of the House Budget Committee, good afternoon and thank 
you for the opportunity to testify before your body.
    Mr. Chairman, I come before the committee with a simple 
message, one that resonates loudly with the citizens of east 
Alabama. I urge you and your colleagues on the Budget Committee 
to continue your practice of fiscal restraint in the coming 
budget year.
    Mr. Chairman, as you know, over 6,000 working citizens in 
my State have been called to active duty in the Army Reserves 
and National Guard, more than any other State besides North 
Dakota and Utah. But while Alabamians answer the call of duty 
proudly and in greater numbers than any other State, we also 
know that with duty comes sacrifice. Many times the fathers and 
mothers on active duty are the family's bread winner and they 
see their income cut dramatically while in service. This causes 
considerable pain for the spouses and children left behind and 
forces difficult financial and emotional sacrifices to 
compensate for the loss of income.
    No less difficult are the sacrifices facing our State and 
local officials as they address empty treasuries and growing 
budget deficits. Just this week my predecessor and now Governor 
Bob Riley said the State will sacrifice some of its most vital 
services--like Medicare coverage for the elderly, and hiring 
new teachers and police--to close a $500 million hole in the 
State budget.
    Mr. Chairman, the sacrifices should not stop in Washington. 
You and your colleagues on the Budget Committee face enormous 
pressures to drastically increase spending but must stand firm 
in keeping our fiscal priorities in line. On behalf of the 
mothers, fathers called to service and our State and local 
leaders, I commend you, Mr. Chairman, as well as the members of 
the full Budget Committee and Republican leadership for your 
past efforts in remembering our fiscal responsibilities and 
urge you to continue the practice of fiscal restraint in the 
coming year. Thank you, Mr. Chairman.
    [The prepared statement of Mr. Rogers follows:]

Prepared Statement of Hon. Mike D. Rogers, a Representative in Congress 
                       From the State of Alabama

    Mr. Chairman, and other distinguished members of the House Budget 
Committee, good afternoon, and thank you for the opportunity to testify 
before you today.
    Mr. Chairman, I come before the committee with a simple message, 
one that resonates loudly with the citizens of east Alabama: I urge you 
and your colleagues on the Budget Committee to continue your practice 
of fiscal restraint in the coming budget year.
    Mr. Chairman, as you may know, over 6,000 working citizens in my 
State have been called to active duty in the Army Reserves and National 
Guard--more than every other State besides North Dakota and Utah.
    But while Alabamians answer the call of duty proudly, and in 
greater numbers than other State, we also know that with duty, comes 
sacrifice.
    Many times, the fathers and mothers on active duty are the family's 
bread winner, and see their income cut dramatically while in service. 
This causes considerable pain for the spouses and children left behind, 
and forces difficult financial and emotional sacrifices to compensate 
for the loss of income.
    No less difficult are the sacrifices facing our State and local 
officials, as they address empty Treasuries and growing budget 
deficits. Just this week, my predecessor and now Governor Riley, said 
the State will sacrifice some of its most vital services--like Medicare 
coverage for the elderly, and hiring new teachers and police--to close 
a $500 million hole in the State budget.
    Mr. Chairman, the sacrifices should not stop in Washington. You and 
your colleagues on the Budget Committee face enormous pressures to 
drastically increase spending, but must stand firm in keeping our 
fiscal priorities in line.
    On behalf of the mothers and fathers called to service, and our 
State and local leaders, I commend you, Chairman Nussle--as well as 
members of the full Budget Committee, and the Republican leadership--
for your past efforts in remembering our fiscal responsibilities, and 
urge you continue the practice of fiscal restraint in the coming year.
    Thank you, Mr. Chairman.

    Mr. Gutknecht. Thank you, Mr. Rogers. Mr. Baird.
    Mr. Baird. Nothing, Mr. Chairman.
    Mr. Gutknecht. Mr. Rogers, we are particularly delighted to 
conclude with you because we have heard from I think, it may 
not be an official count, roughly 30 of our colleagues today 
and probably 28 or 29 of them were here specifically for one 
program or another which is important to them and their 
testimony was excellent. But it seems appropriate now that we 
are trying to squeeze about $3 trillion worth of requests into 
about a $2.4 trillion package that you would be the cleanup 
hitter for the Budget Committee. We appreciate your testimony 
and your membership in the Congress.
    Mr. Rogers of Alabama. Thank you very much, sir.
    Mr. Gutknecht. There being no further witnesses, we would 
adjourn the meeting.
    [Whereupon, at 5:10 p.m., the committee was adjourned, to 
reconvene at the call of the Chair.]

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