[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

                             SECOND SESSION

                               __________

             HEARING HELD IN WASHINGTON, DC, MARCH 3, 2004

                               __________

                           Serial No. 108-22

                               __________

           Printed for the use of the Committee on the Budget


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


                                 ______

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                        COMMITTEE ON THE BUDGET

                       JIM NUSSLE, Iowa, Chairman
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 EMANUEL, Illinois
SCOTT GARRETT, New Jersey            ARTUR DAVIS, Alabama
J. 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 3, 2004....................     1
Statement of:
    Hon. Don Young, a Representative in Congress from the State 
      of Alaska..................................................    16
    Hon. Duncan Hunter, a Representative in Congress from the 
      State of California........................................    21
    Hon. Ike Skelton, a Representative in Congress from the State 
      of Montana.................................................    25
    Hon. Lane Evans, a Representative in Congress from the State 
      of Illinois................................................    33
    Hon. Frank A. LoBiondo, a Representative in Congress from the 
      State of New Jersey........................................    35
    Hon. Robin Hayes, a Representative in Congress from the State 
      of North Carolina..........................................    40
    Hon. Mark Steven Kirk, a Representative in Congress from the 
      State of Illinois..........................................    43
    Hon. Todd Tiahrt, a Representative in Congress from the State 
      of Kansas..................................................    47
    Hon. Vernon J. Ehlers, a Reprentative in Congress from the 
      State of Michigan..........................................    51
    Hon. Paul Ryan, a Representative in Congress from the State 
      of Wisconsin...............................................    55
    Hon. Wally Herger, a Representative in Congress from the 
      State of California........................................    58
    Hon. George Radanovich, a Representative in Congress from the 
      State of California........................................    62
    Hon. Marsha Blackburn, a Representative in Congress from the 
      State of Tennessee.........................................    63
    Hon. E. Clay Shaw, Jr., a Representative in Congress from the 
      State of Florida...........................................    65
    Hon. Mike Rogers, a Representative in Congress from the State 
      of Alabama.................................................    68
    Hon. Ed Case, a Representative in Congress from the State of 
      Hawaii.....................................................    70
    Hon. Darrell E. Issa, a Representative in Congress from the 
      State of California........................................    77
    Hon. Jeff Miller, a Representative in Congress from the State 
      of Florida.................................................    80
    Hon. Madeleine Z. Bordallo, a Delegate in Congress from the 
      Territory of Guam..........................................    86
    Hon. Mike Ross, a Representative in Congress from the State 
      of Arkansas................................................    90
    Hon. Rodney Alexander, a Representative in Congress from the 
      State of Louisiana.........................................    93
    Hon. Rush D. Holt, a Representative in Congress from the 
      State of New Jersey........................................    95
    Hon. John Abney Culberson, a Representative in Congress from 
      the State of Texas.........................................    99
    Hon. Rob Simmons, a Representative in Congress from the State 
      of Connecticutt............................................   102
    Hon. Jeff Flake, a Representative in Congress from the State 
      of Arizona.................................................   105
    Hon. Jeb Bradley, a Representative in Congress from the State 
      of New Hamshire............................................   108
Prepared statement and addition submission of:
    Hon. Joe Barton, a Representative in Congress from the State 
      of Texas...................................................     1
    Hon. Shelley Berkley, a Representative in Congress from the 
      State of Nevada............................................     3
    Hon. Judy Biggert, a Representative in Congress from the 
      State of Illinois..........................................     3
    Hon. Michael C. Burgess, a Representative in Congress from 
      the State of Maryland......................................     4
    Hon. Barbara Cubin, a Representative in Congress from the 
      State of Wyoming...........................................     6
    Hon. Tom Feeney, a Representative in Congress from the State 
      of Florida.................................................     7
    Hon. Jim Gibbons, a Representative in Congress from the State 
      of Nevada..................................................     8
    Hon. David L. Hobson, a Representative in Congress from the 
      State of Ohio..............................................     9
    Hon. Walter B. Jones, a Representative in Congress from the 
      State of North Carolina....................................    10
    Hon. James R. Langevin, a Representative in Congress from the 
      State of Rhode Island......................................    11
    Hon. Tom Latham, a Representative in Congress from the State 
      of Iowa....................................................    12
    Hon. Jon C. Porter, a Representative in Congress from the 
      State of Nevada............................................    13
    Hon. Jim Saxton, a Representative in Congress from the State 
      of New Jersey..............................................    14
    Hon. Greg Walden, a Representative in Congress from the State 
      of Oregon..................................................    15
    Mr. Young....................................................    18
    Mr. Hunter...................................................    23
    Mr. Skelton..................................................    26
    Mr. Evans....................................................    34
    Mr. LoBiondo.................................................    37
    Mr. Hayes....................................................    42
    Mr. Kirk.....................................................    45
    Mr. Tiahrt...................................................    48
    Mr. Ehlers...................................................    53
    Mr. Ryan.....................................................    56
    Mr. Herger...................................................    60
    Mrs. Blackburn...............................................    64
    Mr. Shaw.....................................................    65
    Mr. Rogers...................................................    69
    Mr. Case.....................................................    73
    Mr. Issa.....................................................    79
    Mr. Miller...................................................    82
    Ms. Bordallo.................................................    88
    Mr. Ross.....................................................    92
    Mr. Holt.....................................................    96
    Mr. Simmons..................................................   103
    Mr. Flake....................................................   106
    Mr. Bradley..................................................   108

 
                              MEMBERS' DAY

                              ----------                              


                        WEDNESDAY, MARCH 3, 2004

                          House of Representatives,
                                   Committee on the Budget,
                                                    Washington, DC.
    The committee met, pursuant to call, at 2:38 p.m. in room 
210, Cannon House Office Building, Hon. Christopher Shays 
[acting chairman of the committee] presiding.
    Members present: Representatives Shays, Garrett, Brown, 
Hensarling, Baird, Bonner, Scott, and Brown-Waite.
    Mr. Shays. The Budget Committee hearing to hear and to 
learn from our fellow Members is now in order. I will suspend 
with any statement I have and go right to it.
    [Statements for the record:]

  Prepared Statement of Hon. Joe Barton, a Representative in Congress 
                        From the State of Texas

    Mr. Chairman, I appreciate the opportunity to submit my remarks for 
the record. I appreciate you and the other members of the Committee 
allowing me to explain why I believe we must pass fundamental budget 
process reform legislation this year.
    Since the Republicans have taken the majority, I have been a strong 
supporter of budget process reform, which I believe is an essential key 
to reaching and maintaining a balanced budget. Passage of meaningful 
process reform would leave its mark on this Nation for generations to 
come. The American people are sick and tired, like I am, of the same 
old budget story coming out of Washington at the end of every year. The 
process in which we fund our government has become one big staring 
contest. Each year, hot political issues and scare tactics are used to 
hold up and stall the Federal budget process so that at the end of the 
year some can attempt to cater the final budget numbers to be most 
appealing to their constituencies, regardless of whether or not the 
spending direction and levels are good for the country as a whole. This 
political game must be ended and sanity must be brought back to the 
Federal budgeting process.
    The current budget process is a long, grueling and bureaucratic way 
for Congress to allocate the taxpayer's money and run the Federal 
Government. I believe that Congress can make some important steps 
forward that will change the way that Washington works by enacting real 
budget process reform, and eliminating our current bias toward 
increased spending and runaway entitlement spending. Even better, we 
would empower the Congress and the American people to participate in a 
process that is understandable and fully transparent as to its purpose. 
I come to the Budget Committee today to urge you to work with 
interested Members to put forth a comprehensive budget process reform 
proposal.
    I would like to see improvements to the process that include: a 
budget with the force of law, a supermajority vote to break the budget 
agreement, an automatic continuing resolution, ending baseline 
budgeting, creating a ``rainy day'' fund, protecting Social Security, 
and ending unlimited entitlement spending. In addition, I believe 
replacing the current annual budget with a 2-year budget will allow 
more time for oversight rather than partisan politics.
    My colleagues probably recall that Congress passed balanced budget 
agreements in 1982, 1985, 1987, and 1990. Needless to say, none 
balanced the budget. We have tried many times to find procedures to 
force a balanced budget and reduced spending, like Gramm-Rudman, but 
only the 1990 nominal dollar caps for discretionary spending have ever 
really held down Federal spending. Clearly, discipline must be 
restored--Congress must be required to balance its budgets. Therefore, 
I believe that it is crucial that Congress pass budget process reform 
to protect future balanced budget and reduce the size of the Federal 
Government. We must implement caps on discretionary and entitlement 
spending. I would propose global entitlement caps, and separate caps 
within the global caps for big entitlement programs. If actual or 
projected spending exceeds the caps, sequestration would affect only 
the programs or categories that caused the overage.
    Everyone should have a stake in enforcing any budget agreement. 
Therefore, I propose that the budget resolution be a simple, one page 
joint resolution establishing spending levels for only four broad 
spending categories: mandatory spending, nondefense and defense 
discretionary spending, and a new ``rainy day'' fund for emergencies. 
This resolution would have the force of law as signed by the President. 
In this way, the White House and Congress will be involved with the 
budget process from the very beginning--making the major policy 
decisions prior to determining individual funding levels. In addition, 
nominal dollar limits, backed up by sequestration, will keep spending 
within the agreed to amounts. A two-thirds vote of Congress would be 
required to exceed those limits.
    More importantly, I want to specifically and officially eliminate 
baseline budget projections. If we write into law caps for both 
discretionary and entitlement spending, the caps will become the base 
unless spending is lower than the caps. I would adjust the spending 
caps, revenue, and spending targets for actual changes in economic 
conditions and numbers of eligible beneficiaries, to avoid forcing 
policy change due directly and exclusively to the assumptions 
underlying the budget resolution.
    In the 106th Congress, I included biennial budgeting for the 
Federal Government as one of the main points in my reform bill. There 
are many sound arguments as to why and how biennial budgeting would 
help make the Federal budgeting process more reliable and sensible. 
First of all, budgeting for a 2-year cycle would force Congress to be 
more careful in their spending habits and encourage Members to be more 
responsible in the amounts and directions in which they allocate 
taxpayer dollars. Far too often, pet projects for a certain party are 
added onto annual appropriation bills at the last minute, usually 
without the proper scrutiny of Congress. With one budget process every 
2 years, the opportunities for that kind of spending would be cut 
nearly in half.
    Federal agencies would also be more efficient and cautious in how 
they use their funds because of the length and stability of their 
funding over a 2-year cycle. In addition, Congress would be able to 
exercise better oversight over these government agencies and programs 
to ensure that the financial commitment involved is sound fiscal policy 
for the country to undertake.
    However, the most important aspect of biennial budgeting in my 
opinion is not what enacting it would do for Congress, but rather what 
it would allow Congress to accomplish. Each year, both parties state 
the many goals and accomplishments they hope to pass in order to 
improve the life of the American people. And each year, achieving these 
goals are becoming more and more difficult because of the time that is 
required to be spent on the annual appropriations process. Imagine how 
productive Congress could be if instead of having to deliberate over 
every dollar the government will see that given year, we could commit 
more time to the different issues that most of us came here to work 
toward. I want to spend more time helping small business and small 
communities by cutting taxes and wasteful spending in our government 
and pushing for legislative proposals that give more freedom for the 
American people to work toward a better tomorrow. I think every Member 
would tell you that he or she would like to have more time and 
resources to pursue the types of issues that they were all sent to 
Congress for in the first place. Biennial budgeting can help to make 
that happen.
    Biennial budgeting is simply one of the reforms I would like to see 
happen to the Federal budget process. However, I think it is one of the 
most vital. It is time for Congress to free up this process and allow 
this body to stand for more than annual appropriations battles. It is 
time for us to start spending our time and the American taxpayers' dime 
more wisely.
    There are additional reforms needed to bring us the type of 
efficient and honest budgetary process, and I am a cosponsor of ``The 
Family Budget Protection Act,'' introduced by Representatives 
Hensarling, Chocola, and Ryan. This legislation includes many of the 
reforms mentioned above and I believe it includes common sense 
provisions that should be adopted.
    Again, I thank you for the opportunity to testify here today and 
stand ready to help in any way in future budget process reform 
considerations.

    Prepared Statement of Hon. Shelley Berkley, a Representative in 
                   Congress From the State of Nevada

    Thank you, Mr. Chairman.
    I would like to outline some of my concerns regarding the budget 
presented to Congress by the administration.
    There is a provision in the budget that would require gaming 
establishments to intercept customer winnings because of the remote 
chance that the customer owes child support.
    In effect, the gaming establishment would be unreasonably burdened 
with the duties of a law enforcement agency, and all winning customers 
would be presumed to be persons not in compliance with a child support 
order.
    Under the proposal, each time an individual would win enough to 
require filling out an Internal Revenue Service W2-G form, the gaming 
establishment would be required to check Federal records in the Child 
Support Federal Parent Locator Service to ascertain whether the winner 
is delinquent in child support payments. There would be stringent 
penalties assigned to gaming establishments who fail to execute this 
function as mandated by the Federal Government.
    This administration budget proposal is ill-conceived, creates 
unreasonable demands on gaming businesses and their employees, and sets 
alarming precedents.
    It forces gaming establishments to pry into the court records of 
their customers, creating serious concerns regarding invasion of 
privacy. Bear in mind, this proposal would force gaming establishments 
to assume the investigatory and enforcement duties heretofore entrusted 
to law enforcement and government agencies. It inevitably creates 
liability for gaming businesses, who will be required to investigate 
and enforce a court order against a customer.
    It creates a new bureaucracy to process information and leaves the 
gaming business and the customer at the mercy of any mistakes or 
misinformation generated by that new bureaucracy. It establishes the 
precedent of requiring a private business to directly apply the law to 
an individual; i.e., it makes a casino clerk equivalent to a law 
enforcement agent. Certainly it is no great leap to imagine that this 
opens the door to requiring many businesses doing cash transactions to 
similarly assume the burden of law enforcement duties. Should banks 
check the court records of all customers making deposits or 
withdrawals? Must car dealers invoke the same requirements against 
their customers? The answer is no, but approval of the administration's 
proposal will open the door to further costly and unreasonable mandates 
on our business communities.
    On another subject, I am deeply concerned that this administration 
is asking for a more than 50 percent increase in the Yucca Mountain 
Project budget, some $880 million. In view of our staggering deficit, 
and considering the rapidly mounting proof that the Yucca Mountain 
Project is dangerous policy for our environment and for all the cities 
and towns which will be exposed to nuclear waste during 38 years of 
shipping and inevitable calamities, I urge in the strongest terms, that 
this budget request be whittled down sharply, to historic levels or 
lower. There is absolutely no need to provide this administration with 
the funding to accelerate a project that has not even met the 
qualifications for licensing.
    Further, I strongly urge restoration of funding for drop out 
prevention programs in our public schools. Critical Federal dollars 
have been helping schools in my district to improve a troubling dropout 
rate in an area with many disadvantaged students. I know funding is 
needed in a great many other communities in order to give our most at-
risk youth a better chance of academic success. The cancellation of 
drop out prevention funding is a disaster for young people in need. It 
must be restored, if there is to be any credibility whatsoever in the 
slogan Leave No Child Behind.
    Thank you, Mr. Chairman.

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

    As you prepare to mark up the fiscal year 2005 budget resolution, I 
strongly urge you to provide the necessary resources in Function 250 
for the Department of Energy's Office of Science.
    The DOE Office of Science is the nation's primary supporter of 
research in the physical sciences, providing an important partner and 
key user facilities in the areas of biological sciences, physics, 
chemistry, environmental sciences, mathematics and computing, and 
engineering. Furthermore, the DOE Office of Science supports a unique 
system of programs based on large-scale, specialized user facilities 
and large teams of scientists focused on national priorities in 
scientific research. This makes the Office of Science unique among, and 
complementary to, the scientific programs of many other Federal science 
agencies, including the National Institutes of Health (NIH) and the 
National Science Foundation (NSF).
    I applaud the strong support shown for research conducted within 
the NIH and NSF, and ask that this level of support be extended to the 
DOE Office of Science. Future medical breakthroughs depend on 
fundamental advances in the physical sciences and other research 
conducted by the DOE Office of Science. One recent example is the Human 
Genome Project, which progressed so rapidly because of advanced 
computing and biological technologies pioneered by the DOE Office of 
Science. Harold Varmus, former director of the NIH, said, ``Medical 
advances may seem like wizardry. But pull back the curtain, and sitting 
at the lever is a high-energy physicist, a combinational chemist, or an 
engineer.''
    While Federal funding for medical research like that conducted by 
NIH has doubled in the last decade, funding for research in the 
physical sciences has remained stagnant. In constant dollars, the 
budget for the DOE Office of Science remains at its 1990 level.
    To ensure America's future economic, energy, and national security, 
we must provide strong support today for basic research across the 
physical sciences. Economic experts maintain that during the last half-
century, science-driven technology has accounted for more than 50 
percent of the growth of the U.S. economy. As for energy security, 
basic energy research funded by the DOE Office of Science will help 
address current and future energy challenges with technologies that 
improve the efficiency, economy, environmental acceptability, and 
safety of energy generation, conversion, transmission, and use. 
Finally, according to the 2000 Hart-Rudman Report on National Security, 
``* * * the U.S. Government has seriously underfunded basic scientific 
research in recent years. The quality of the U.S. education system, 
too, has fallen well behind those of scores of other nations. The 
inadequacies of our systems of research and education pose a greater 
threat to U.S. national security over the next quarter century than any 
potential conventional war that we might imagine.''
    The Hart-Rudman report went on to recommend doubling the Federal 
Government's investment in science and technology research and 
development by 2010. More recently, the President's Council of Advisors 
on Science and Technology recommended that research and development for 
the physical sciences and engineering should be brought to parity with 
the life sciences over the next five budget cycles.
    Many members of the House and Senate agree that funding for the 
physical sciences in general, and for the DOE Office of Science in 
particular, should be increased. Last year, 91 of our colleagues joined 
me in sending a letter to appropriators supporting increased funding 
for the DOE Office of Science in fiscal year 2004. A similar letter was 
signed by 39 members of the Senate. The House and Senate also 
authorized in separate comprehensive energy bills over $4 billion in 
fiscal year 2005 for the DOE Office of Science, and the conference 
report to accompany H.R. 6, as passed by the House, included a 20 
percent increase for the DOE Office of Science over current funding 
levels.
    While I understand it may not be practical to provide such an 
increase as we confront a sizeable deficit in this tight budget year, I 
urge you to provide the necessary resources in Function 250 to enable 
Congress to increase appropriated funding for the DOE Office of Science 
and the physical sciences research it supports. Please help ensure that 
the DOE Office of Science can attract the best minds, educate the next 
generation of scientists and engineers, support the construction and 
operation of modern facilities, and continue to provide the quality of 
scientific research that has been its trademark for so many years.
    Thank you for this opportunity to testify.

  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 2005 budget 
resolution.
    I am a strong proponent of a balanced Federal budget and am 
concerned about projected future budget deficits. In fiscal year 1998, 
the Federal Government began operating in a surplus environment for the 
first time since 1969. Those surpluses continued through fiscal year 
2001, which allowed for a balanced budget and a reduction of the 
national debt. As you know, due to an economic recession and spending 
increases after the September 11, 2001 terrorist attacks, the Federal 
Government is now operating in a deficit spending environment. I 
believe we need to work to achieve a balanced budget again as soon as 
possible. That is why, in February 2003, I became an original cosponsor 
to the Balanced Budget Amendment.
    To facilitate the return to balanced budgets, Congress has a number 
of tools at its disposal, including reducing spending, improving 
government efficiency, and promoting economic growth through tax 
relief.
    I believe that spending is one of the biggest problems plaguing our 
Federal Government and has contributed to the burgeoning budget 
deficit. In an effort to curb excess government spending, I would like 
to work with the Budget and Appropriations Committees to redirect 
mishandled government funds. For example, in some states, funds from 
the State Child Health Insurance Program have been used to provide 
health insurance for childless adults despite the statutory objective 
of SCHIP to improve health assistance to low-income children. Thus far, 
millions of SCHIP dollars have been spent in violation of statutory 
authority. Mr. Chairman, addressing this misallocation of funding is 
but one small example of how we can reduce government spending by 
improving government efficiency.
    In his fiscal year 2005 budget, the President prioritizes economic 
growth, homeland security, and making healthcare costs more affordable 
and predictable.
    I strongly believe that future economic growth depends, in large 
part, on the level of investment in transportation infrastructure that 
we make today. As a member of the Highways, Transit, and Pipelines 
Subcommittee of the Transportation and Infrastructure Committee, I look 
forward to working 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.
    The reauthorization of Federal surface transportation programs is 
the top priority for my legislative agenda in the 108th Congress. 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. As you may know, my 
district includes the growing northern suburbs of the Dallas-Fort 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.
    In Texas, our identified transportation needs outstrip available 
funding three to one. Texas has several specific transportation needs, 
such as supporting international trade transportation, more efficient 
environmental processes, and expanding innovative financing techniques. 
To address these needs, 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 via the 
Denton County Transportation Authority to my constituency.
    Furthermore, Texas only receives 88 cents for every transportation 
dollar that it sends to Washington in gasoline taxes--ranking it 46th 
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. I want to ensure that Texans get their 
money's worth out of every Federal fuels tax dollar sent to Washington.
    The bipartisan leadership of the Transportation and Infrastructure 
Committee intends to explore all options to grow the program and 
produce a final version of H.R. 3550, The Transportation Equity Act: A 
Legacy for Users that adequately promotes economic prosperity, creates 
and sustains jobs, enhances safety, and continues to improve mobility 
for our nation's citizens.
    As a fiscal conservative, I will continue to hold the line on the 
Federal deficit by constraining unnecessary spending. Now, more than 
ever, as our nation fights the war on terrorism, we must act wisely, 
and spend prudently. Fiscal discipline is the hallmark of a free 
society because it enables individuals to pursue their dreams without 
the burdensome intrusion of the Federal Government.
    We must also continue pressing for more tax relief for American 
families and businesses. Relieving this tax burden ensures a healthy 
national economy, which, combined with fiscal restraint, will help 
alleviate our national deficit. We must not place the burden of our 
current national spending spree on our children and grandchildren.
    Currently, Congress and President Bush are working to address 
deficit concerns. President Bush's fiscal year 2005 budget contains his 
proposals for reducing the deficit--the administration budget would cut 
the budget deficit in half over the next 5 years. While I applaud the 
President's efforts to reduce the budget deficit, I believe that it may 
not go far enough.
    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 our domestic and 
international needs.

Prepared Statement of Hon. Barbara Cubin, a Representative in Congress 
                       From the State of Wyoming

    As the House Committee on the Budget moves forward with its 
important charge of creating the budget resolution for fiscal year 
2005, I fully recognize the difficult challenges we all face in 
spending decisions over the coming months.
    As Chairman of the Energy and Minerals Resources Subcommittee, 
within the Resources Committee, I would like to bring attention to the 
following item of particular importance to our nation's economic and 
environmental health.
    I strongly support the $53 million increase listed in the 
President's Budget to re-authorize Section 402(a) of the Surface Mining 
Control and Reclamation Act (SMCRA) set to expire on September 30, 
2004. This section, enacted in 1977, establishes a per tonnage fee for 
mined coal. These fees are placed in the Abandoned Mine Reclamation 
Fund (AML Fund), and are used to finance reclamation for dangerous 
abandoned mine lands in the United States. Interest accrues on the 
unused potion of the collected fees and becomes part of the AML Fund to 
be used for reclamation. A portion of the interest has recently been 
transferred to the United Mine Workers of America Combined Benefit Fund 
(CBF) in order to help finance health benefits.
    In collecting the per tonnage fee, a compromise was reached by 
which 50 percent of the share would be returned to the state of origin, 
and the other 50 percent would be disbursed by the Federal Government 
based on historic coal production and other Federal priorities. This 
promise has been broken year after year since the inception of the AML 
Program.
    Almost $6 billion has been collected for the AML Program since 
1977, all intended for reclamation projects. The AML Program was 
initially meant to take only about 12 years to complete. But, despite 
the enormous amount of money already collected, it is estimated that it 
will take at least an additional $6 billion and anywhere from 12 to 100 
years to complete work on priority one and two sites under current law.
    As my Subcommittee works to re-authorize the AML program, we must 
ensure that our clean up efforts are reasonable and efficient so that 
we don't just keep throwing good money after bad.
    The largest problem we face is that the money being collected is 
not being appropriated back to the states and to the AML program as was 
originally promised. The original 1977 statute made a commitment that 
half of the money would be returned to the states from whence the fee 
was collected. However, the House and Senate Appropriators have not 
been applying the funds to these states, nor to the high priority 
reclamation projects that need to be funded.
    In fact, little over half of the funds are being appropriated. Year 
after year, Congress has failed to live up to its promises, and states 
like Wyoming are suffering the consequences.
    The amount owed to Wyoming as of December 31, 2003 was $408 million 
dollars and the total unappropriated state balance nationwide is as 
high as one billion dollars. This is a huge sum of money that could be 
put to legitimate reclamation needs, and pay down the debt owed to the 
states where the fee was collected.
    Too much spending of these funds on other programs, as has occurred 
in the past, is bad practice and bad policy. The AML program should be 
about cleaning up our environment and therefore we must protect our 
environment and honor the Federal Government's responsibility to the 
states.
    As we work to re-authorize this program, we need to find a solution 
to the appropriations problem and compel the Congress and 
Administration live up to their commitment to return the 50-percent 
state share balances to the states where they were collected. This must 
begin in the budget process, and the $53 million dollar increase 
proposed by the President to this program to address the needs of those 
states owed by Federal Government is a much needed shift in this area.
    Chairman Nussle and Ranking Member Spratt, I look forward to 
working with the Budget Committee to develop a smart and sensible 
budget that addresses our Federal deficit while funding high priority 
items such as the AML Fund Re-authorization.

  Prepared Statement of Hon. Tom Feeney, a Representative in Congress 
                       From the State of Florida

    Mr. Chairman, thank you for granting me the opportunity to provide 
you and the members of this Committee with my thoughts on this year's 
budget resolution. As we begin the budget cycle faced with large 
deficits caused by recent record spending increases. With the current 
trend of increased discretionary spending coupled with the ever 
expanding burden of entitlement spending, the need for responsible 
budgeting is greater than ever. I commend this Committee and the House 
leadership for the seriousness they are approaching this matter and for 
their desire to control future spending.
    Long term spending projections paint a bleak picture of the 
future--especially in regards to Federal entitlements. In 2003, 
entitlements reached a record level of nearly 12 percent of GDP. By 
comparison, total Federal spending in 1940 after the creation of the 
New Deal was only 9.8 percent of GDP.\1\ Future projections suggest 
that entitlements will monopolize a growing portion of GDP. In the 
Social Security program alone, total spending is 4.4 percent of GDP. 
This level will rise to 6.6 percent by 2073, with more than half of the 
increase coming before 2033.\2\ Federal Reserve Chairman Alan Greenspan 
diagnosed this problem and highlighted the need for action in his 
recent testimony before this Committee: ``Today, Federal outlays under 
Social Security and Medicare amount to less than 7 percent of GDP. In 
December, the CBO projected that these outlays would increase to 12 
percent of GDP by 2030 under current law * * * we will eventually have 
no choice but to make significant structural adjustments in the major 
retirement programs.''\3\ Although I do not presently share his opinion 
that it is necessary to reduce the benefits calculation structure or 
raise the age recipients begin to receive benefits, this is a clear 
indicator that the time to begin examining significant reforms to 
Social Security has come. As Members of Congress, we must accept that 
the need for reform is a reality and must closely examine legitimate 
options including the creation of personal savings accounts.
    The dangers of long term spending growth are not limited to the 
ever expanding entitlement programs; recent growth in all areas of 
discretionary spending has been a major contributing factor in the 
growth of government. Any long term fiscal discipline begins with short 
term fiscal responsibility. No longer can government afford to squander 
taxpayer funds on programs that exceed the jurisdiction of responsible 
government. We can no longer afford to create new programs without 
first evaluating existing ones to determine if they continue to serve a 
legitimate purpose or are being managed responsibly, and now more than 
ever it has become necessary to watch every dollar that government 
spends, and combat the waste, fraud, and abuse in government.
    Over the last 5 years government has not only begun to expand the 
amount of money it spends, but it has expanded into new territories of 
expenditures. A 2003 Heritage Foundation study by Brian Riedl shows 
that: ``Since 1998, real discretionary spending has jumped 36 percent 
from $603 billion to $820 billion.'' The same study clearly points out 
that discretionary spending in programs unrelated to defense and 9/11 
have increased by 27 percent over the same period. Much of this is 
fueled by double digit percentage increases since 1998 in education (78 
percent), health programs (81 percent), agriculture (76 percent), and 
international affairs (87 percent).\4\
    These increases once again force our body to ask the question 
whether these are legitimate Federal expenditures. In education, K-12 
spending is $13 billion a year higher than 5 years ago, and this 
increase comes in an area where decisions may better be left to the 
states. The unprecedented increases to foreign aid point out another 
example of how expansions of the role of government are increasing the 
burden on taxpayers.
    One solution is to require the creation of new Federal programs be 
offset by corresponding eliminations or reductions to outdated or less 
important programs. The current fiscal situation provides less room 
than ever to increase deficits simply to create more government. If as 
a legislative body we determine changes in national priorities or 
emerging issues require the creation of new Federal programs, we must 
find another government program of lesser importance and eliminate it. 
Just as individuals and families make tough decisions everyday on what 
is important and what they can afford, we must make the same tough 
decisions with American tax dollars.
    Another way to put government on a diet is to watch its waste. 
Government waste, fraud, and abuse exists in nearly every agency and 
department. Reigning in this waste would produce a significant savings 
for the taxpayer. The endemic nature of this problem has so concerned 
me that I joined with two of my colleagues, Representatives Jeb 
Hensarling and Mario Diaz Balart, in creating Washington Waste 
Watchers. Our mission is straightforward--identify government waste and 
eliminate it. We have been inspired by this Committee's efforts to 
identify waste, fraud, and abuse in the Federal Government. I urged you 
to act on the $85 [billion] to $100 billion\5\ in waste reduction 
recommendations gathered last year by this Committee. This study along 
with others--including the identification of ineffective and poorly 
managed Federal programs through the President's Management Agenda--
provide excellent directions for serious spending reductions. 
Furthermore, savings achieved through eliminating waste, fraud, and 
abuse should be directed to deficit reduction and not to funding new 
Federal programs.
    Any commentary on this year's budget would not be complete without 
acknowledging the profound need for budget process reform. The current 
process almost encourages annual spending increases and expansions in 
government. I applaud the efforts of Representatives Hensarling, Ryan, 
Chocola, and Cox, the sponsors of the Family Budget Protection Act. 
This groundbreaking legislation will provide a thorough review of the 
entire budget process. The most essential reforms include the creation 
of a one page budget, biennial budgeting, procedural changes to limit 
Congress' ability to increase spending, controls on entitlement growth, 
provisions to combat waste fraud and abuse, and, most importantly, the 
end of baseline budgeting--a tool used by spenders to label reduction 
in the rate of growth as a spending cut. Additionally I support the 12 
Consensus Principles to Reform the Budget Process reached by the 
conservative Republican Study Committee and the moderate Republican 
Tuesday Group. This dialogue represents real progress in bringing 
genuine budget reform.
    In summary, I hope the committee would consider the following 
recommendations for this year's budget resolution: a minimum 1-percent 
reduction to the total level of nondefense, nonhomeland security 
discretionary spending, make additional reductions throughout all 
Federal spending from the elimination of waste, fraud, and abuse, and 
finally the budget process reforms previously mentioned. Thank you, for 
providing me with this opportunity to share my thoughts with this 
committee.

                                ENDNOTES

    \1\ (a) calculation of 11.8 percent based on actual mandatory 
spending of $1,279 million in mandatory spending and a GDP of $10,829 
million GDP for 2003. Information listed in CBO Current Economic 
Projections, January 26, 2004. (b) 9.8 percent Federal spending as a 
percentage of GDP, as listed in office of management and budget 
historical budget tables.
    \2\ CBO Long-range Fiscal Policy Brief, Measuring Challenges to 
Social Security Benefits; December 1, 2003; Congressional Budget 
Office.
    \3\ Testimony of Chairman Alan Greenspan; Before the Committee on 
the Budget, U.S. House of Representatives; February 25, 2004.
    \4\ Brian Riedl, $20,000 per Household: The Highest Level of 
Federal Spending Since World War II, December 3, 2003, The Heritage 
Foundation.
    \5\ Addressing Government Waste, Fraud, and Abuse; Committee on the 
Budget, U.S. House of Representatives. September 2003.

 Prepared Statement of Hon. Jim Gibbons, a Representative in Congress 
                        From the State of Nevada

    As your Committee begins the challenging task of drafting the 
fiscal year 2005 budget resolution, I would like to call your attention 
to a funding concern that is of the utmost importance to my 
constituents in the State of Nevada and to me. As the Representative 
from Nevada's Second Congressional District, a vast district that 
encompasses the proposed Yucca Mountain nuclear waste repository site, 
I must express my strong opposition to the funding level for the Yucca 
Mountain project included in President Bush's budget request for fiscal 
year 2005. Additionally, I also strongly oppose any language that would 
eliminate Congressional oversight of the annual Yucca Mountain funding 
process.
    While the overall funding level of $880 million in fiscal year 2005 
is a tremendous concern, I would first like to address the proposal to 
take the Yucca Mountain project off-budget. The Administration budget 
proposes legislation that would allow utility company contributions to 
be paid directly to the Department of Energy, thus severely limiting 
Congress' ability to oversee and manage how DOE spends these funds. As 
fellow fiscal conservatives, you and I both understand that annual 
Congressional oversight of every funding measure that is signed into 
law is key in executing our duty of ensuring that every cent of 
American taxpayers' dollars is spent responsibly and efficiently. I 
strongly encourage you not to include this legislative proposal in the 
final budget resolution and to strongly oppose such a proposal should 
it come before your committee in the future.
    As you know, the Administration's budget request for the Yucca 
Mountain project in fiscal year 2005 is $880 million--a 50 percent, or 
$303 million, increase from the last fiscal year. Certainly, the 
unanswered scientific questions, public safety and health concerns, and 
unresolved issue of how the nuclear waste will be shipped across 
country to Yucca Mountain warrant further examination before Congress 
allows the budget for this proposed repository balloon to this 
unprecedented level. At a time when Congress should be tightening its 
spending belt whenever possible, it would be ill-considered for us to 
allow funding to increase at an astronomical rate for a project that 
may very well be proven unfeasible before it is even licensed.
    With this letter, I respectfully request that as you continue your 
deliberations over the budget resolution for fiscal year 2005 that you 
do not include $880 million for the ill-advised Yucca Mountain project 
and that you express your strongest opposition to taking the Yucca 
Mountain budget off-budget, thus removing all Congressional oversight 
from the process. As we work to exert fiscal responsibility to reduce 
our deficit while still ensuring that our highest priorities of 
national defense and homeland security are met, such irresponsible 
expenditures and authority requests at this critical time should not be 
supported. Thank you for your consideration of this request and for 
your continued leadership.

    Prepared Statement of Hon. David L. Hobson, a Representative in 
                    Congress From the State of Ohio

    On behalf of the Subcommittee on Energy and Water Development, 
Committee on Appropriations, I want to express serious reservations 
about the inadequate budget request submitted by the Administration for 
the Army Corps of Engineers and about the proposed reclassification of 
fees for the nuclear waste repository at Yucca Mountain, Nevada.
    The fiscal year 2005 budget request for the Corps of Engineers is, 
when the proposed rescission of $1 million is included, only $4.115 
billion. This is a historically low request, and is particularly 
damaging to the Corps Civil Works program because it follows several 
years of meager budget requests for which the Congress has been unable 
to compensate adequately with additional funds. In constant dollar 
terms, the Corps budget was $6.6 billion in 1986, and that budget has 
declined by over one-third in subsequent years. In the same timeframe, 
the demands on the Corps have risen steadily as new environmental 
missions have been added and the physical infrastructure for which the 
Corps is responsible grows ever older, demanding more attention and 
funding.
    The budget request, if enacted, would stop hundreds of authorized 
Corps of Engineers projects and studies already underway around the 
Nation, wasting the funds already invested by Congress and the local 
sponsors as well as requiring additional funds to terminate these 
ongoing projects, and to pay claims to contractors when contracts are 
breached. In many other cases, the proposed funding level is so 
constrained that little meaningful progress can be made on ongoing 
projects and studies.
    The proposed budget would stop or slow progress on a long list of 
construction projects ranging from Alaska to Puerto Rico and covering 
all Corps project types, from flood control and navigation to shore 
protection and environmental restoration. There are major commercial 
harbors that will be unable to accommodate fully-loaded vessels, lock 
and dam projects on which major rehabilitation will be stopped, and 
flood protection work that will be terminated without providing the 
protection promised to the communities at risk. The Administration 
proposes a new policy on beach renourishment, in which renourishment 
would no longer be considered a Federal responsibility after initial 
construction. Through its authorizations of these renourishment 
projects, which are generally for 50 years, Congress clearly considers 
periodic renourishment to be part of the construction cost. This policy 
change alone would cost States and localities almost $2 billion in the 
loss of Congressionally authorized funds.
    In its areas of emphasis, the budget request does a few things 
well: it provides adequate funding for the New York/New Jersey Harbors 
and Olmsted Lock and Dam on the Ohio River, for flood and storm damage 
reduction in Houston and New Orleans, and for a number of environmental 
mitigation or restoration projects, including the Florida Everglades, 
all of which have been embraced and supported in previous years by the 
House. In the main, however, this budget request repudiates the role of 
the Congress in the determining of priorities for the Corps of 
Engineers.
    For example, Congress has passed a number of regional and statewide 
authorizations in the last several years authorizing the Corps of 
Engineers to assist communities with environmental infrastructure 
needs, and many communities have benefited from funds appropriated for 
this purpose. Despite the popularity of these programs, the 
Administration requests no funds for this type of work. The 
Administration also refuses to request funding for the maintenance of 
most small ports and shallow-draft waterways, despite the economic 
dependence of many communities on these waterways. I believe this 
budget request ignores the needs and concerns of the Members of 
Congress and their constituents, and ignores the priorities and policy 
directions that have been provided by Congress in recent years.
    I ask you to work with the Subcommittee on Energy and Water 
Development to secure a fiscal year 2005 appropriation for the Corps of 
Engineers of $4.85 billion. This amount represents the minimum 
necessary to do no harm to current projects and to fulfill prior 
commitments to Congress. This amount will allow the Corps to continue 
ongoing work on a scale which will make reasonable progress toward 
meeting the priorities of both the President and the Congress, to save 
money by executing major projects at a pace which maximizes 
efficiencies and delivers benefits on schedule, and which enriches the 
lives of millions of American by contributing to increased prosperity 
and good health.
    Additionally, the Administration submitted with its budget request 
for Yucca Mountain a proposal to reclassify the mandatory fees paid 
into the Nuclear Waste Fund as an offsetting collection to offset 
discretionary spending on this program. I do not disagree with the 
merits of reclassifying the fees as proposed by the Administration. 
Such reclassification should help to ensure that these funds are spent 
for the purpose intended by Congress when it established the Nuclear 
Waste Fund. However, the Administration has made a high-stakes gamble 
with this proposal on a program of vital importance to the country.
    As you know, the consumers of electricity generated by nuclear 
power pay into the Nuclear Waste Fund to finance the construction and 
operation of a permanent repository for the Nation's spent nuclear 
fuel. Under the terms of the Nuclear Waste Policy Act of 1982, as 
amended, the Department of Energy (DOE) entered into contracts with the 
generators and holders of spent nuclear fuel to take such fuel for 
disposal beginning not later than January 31, 1998. DOE failed to meet 
this statutory and contractual obligation, and damage awards for this 
failure are now pending against the Federal Government. Under DOE's 
current schedule, the earliest the repository can begin accepting spent 
nuclear fuel for disposal is 2010. Any further delay in this schedule 
will add to the mounting liability that already faces the Federal 
Government.
    The Administration's budget request seeks a total of $880 million 
in fiscal year 2005 for the repository program. This is an adequate 
request that will keep the program on track to open the repository and 
begin accepting spent fuel in 2010. However, the budget request also 
assumes that the proposal to reclassify $749 million of receipts into 
the Nuclear Waste Funds as an offsetting collection will be adopted, 
yielding a net budget request of $131 million. I am very concerned that 
this legislative proposal may not be enacted into law this year and 
this offset of $749 million that may not materialize. Therefore, I 
request the Budget Committee to adopt a budget resolution that makes 
the full amount of $880 million available as discretionary budget 
authority for the nuclear waste disposal program. In the event that the 
reclassification proposal is enacted into law, the Budget Committee can 
adjust the total discretionary allocation to reflect that change at a 
later date. The repository program is too important to risk having a 
shortfall of three-quarters of a billion dollars over a 
reclassification proposal that may not be enacted.
    Thank you for considering my views on these two issues.

    Prepared Statement of Hon. Walter B. Jones, a Representative in 
               Congress From the State of North Carolina

    Mr. Chairman and Members of the Committee: Thank you for setting 
aside time today for this candid discussion about our nation's budget.
    As the Committee knows, America's fiscal house is anything but 
stable. In fact, I believe any reasonable observer would recognize that 
the U.S. Government is quickly spending this country into bankruptcy.
    As of today, the national debt--which our children and 
grandchildren must repay--is $7.1 trillion.
    The sad fact is that this number grows dramatically every day as 
Federal spending spirals further out of control. For example, over the 
past 3 years, discretionary spending grew at an average annual rate of 
10.3 percent--nearly six times faster than inflation. As a result, over 
this time the U.S. Government racked up over $405 billion in deficits.
    Meanwhile, neither Congress nor the last two administrations have 
addressed the impending explosion in spending on mandatory entitlement 
programs. Social Security, Medicare and Medicaid now consume over 40 
percent of the Federal budget, and without reform they will balloon to 
nearly 80 percent as more baby boomers retire in the next 30 years. To 
pay for this expansion, Federal taxes will have to double by the year 
2040.
    Instead of making tough choices today to reform these programs and 
to protect our grandchildren from a crushing Federal tax burden, 
Congress and the President recently enacted the Medicare Prescription 
Drug Bill--the largest entitlement expansion in the last 3 decades. In 
fact, CBO now estimates that over the next 20 years this program will 
cost America over $2 trillion.
    The result of the lack of fiscal discipline in Washington is that 
the American people are increasingly buried under an avalanche of red 
ink. While the Administration has taken steps in its fiscal year 2005 
budget to slow the growth of spending, its proposal is still over $365 
billion in deficit.
    Clearly, Congress must improve on the President's efforts to reign 
in spending.
    We can start by holding the line on overall nondefense domestic 
discretionary spending in the fiscal year 2005 budget, while keeping 
our commitment to the Veterans who have courageously served our 
country. We can do this by allowing reasonable increases in Veterans 
Benefits and Services, and offsetting those costs with reductions in 
spending on foreign aid and the Department of Education.
    Furthermore, the reality is that efforts to control discretionary 
spending will be meaningless in the long term unless Social Security 
and Medicare are reformed in the near future. Therefore, Congress must 
demand that the Administration make entitlement reform a priority, and 
then work with the Administration to pass reform into law.
    Finally, I'd like to remind the Committee that the defense of our 
nation remains the single most critical function of the Federal 
Government. This is especially true as we protect America against the 
forces of terrorism around the world. As such, we need to ensure that 
the operational requirements of our Armed Forces are met, and that the 
needs of our men and women in uniform and their families are adequately 
provided for. Therefore, I strongly oppose reducing or diverting the 
President's defense budget request for other purposes, and I would feel 
compelled to vote against a budget resolution that contained such 
action.

   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. 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.
    Three years ago, the Administration and Congress were predicting 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.
    Those tax cuts, coupled with unpredictable circumstances, including 
the attacks of September 11, corporate scandals, and a recession, have 
erased the projected surplus and created a projected $1.9 trillion 
deficit. Unfortunately, when Congress and the Administration had an 
opportunity to improve the budget outlook with sound fiscal policy, the 
majority opted for more irresponsible tax cuts for the wealthy, more 
IOUs to be repaid by our children and grandchildren.
    This year, the President's budget proposal, would result in a 
record $521 billion deficit, the largest in our history. To reduce this 
deficit, we must make difficult choices, and both spending and taxes 
need to be on the table. Unfortunately, the President's budget does not 
reflect this reality, and the budget uses fuzzy math that even John 
Nash could not decipher.
    During the 1990's, Congress and the White House made tough 
decisions and enacted smart policies that led to the longest sustained 
growth in the history of this country. Now that the successful fiscal 
restraint of the last decade has vanished, we need to make protecting 
the strong economic foundation of this country Congress's top priority.
    Interest on the national debt is becoming an increasingly large 
portion of the Federal Government's spending, and like anyone in debt, 
we should be focused on paying it off rather than applying for more 
loans. This year, a family of four owes nearly $4,500 in interest on 
the national debt. Under the President's own optimistic scenario, the 
debt will increase so rapidly that the same family will owe more than 
$10,000 per year in interest alone by 2014! Anyone with a credit card 
understands that once you rack up that kind of debt, it is very hard to 
pay off.
    The President proposes cutting the deficit in half by fiscal year 
2007. While deficit reduction is the right path, our goal should be a 
balanced budget, not cutting a huge deficit to a ``more manageable'' 
large deficit.
    I stand united with the President and my colleagues on both sides 
of the aisle in our commitment to winning the war on terror and 
preserving national security both at home and abroad. However, despite 
the many new security and economic challenges confronting us, the war 
and our homeland protection efforts should not, and need not, 
shortchange our domestic priorities.
    I urge my colleagues on the committee to craft a realistic and 
responsible budget that adequately funds priorities we share, including 
No Child Left Behind, job training, the COPS program, clean drinking 
water, housing assistance for low-income workers, transportation 
improvements, veterans' health care, and college grants, just to name a 
few.
    I hope my colleagues share my concerns and work to develop a budget 
that will ensure security at home and abroad, without dramatically 
increasing our debt, borrowing against Social Security and Medicare, or 
abandoning our commitments to children, workers, veterans, senior 
citizens and all Americans.
    Thank you Mr. Chairman.

  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 in crafting a fiscally 
responsible and also workable budget.
    In addition, I appreciate the difficulty of the demands made of you 
and the members of your committee. We are faced with difficult 
circumstances in trying times, including the war on terror, rebuilding 
in Iraq, and maintaining domestic safety. It is the third task, that of 
maintaining homeland security, that concerns me today.
    As you are aware, the Administration has wisely included $178 
million for renovations and improvements to the National Animal Disease 
Center (NADC), the National Veterinary Services Laboratory (NVSL) and 
the Center for Veterinary Biologics (CVB) in its fiscal year 2005 
Budget Request to Congress. The importance of this much needed 
facility--to be called the National Centers for Animal Health--has been 
underscored by the recent Bovine Spongiform Encephalopathy (BSE), and 
Avian Influenza (AI) incidents. Animal health, as we have seen, affects 
our food supply and the stability of our markets. According to a recent 
General Accounting Office (GAO) report, the economic effect of foot-
and-mouth disease in the United Kingdom resulted in over $10 billion in 
economic losses. Were foot-and-mouth to strike in the United States, 
economic losses could be as high as $24 billion. The previous example 
is a hypothetical example, but with the U.S. agriculture sector 
accounting for nearly 13 percent of the gross domestic product and 18 
percent of domestic employment, the threat of agricultural terrorism is 
real and frightening.
    The $178 million included in the Administration's request 
represents the final installment of funding necessary for construction 
of the facility. The completed facility will provide the nation with a 
single center to combat the threat of food-borne illness, whether 
intentional or unintentional. In these times, with threats constantly a 
possibility in the United States, I believe that expedited completion 
of the National Centers for Animal Health represents a wise investment 
in our nation's health and homeland infrastructure.
    From my position as vice chairman of the Agriculture Appropriations 
subcommittee, I assure you that I will do everything in my power to 
make my colleagues on the Appropriations Committee aware of the need 
for this facility.
    Again, I emphatically support the administration's far-sighted 
request for the final phase of National Centers for Animal Health and 
urge that the House fiscal year 2005 budget resolution reflect this 
request. In addition, I ask that the report accompanying the budget 
resolution include the following language:
    The Department of Agriculture National Animal Disease Center plays 
a critical role in responding to, and addressing, numerous animal 
diseases such as Mad Cow disease. The importance of the Center has 
become more pronounced in the context of potential terrorist acts 
against food production assets, as well as random disease outbreaks. 
The Committee emphasizes the fact that the administration budget 
request for fiscal year 05 includes the final funding amount necessary 
to finish the overall Animal Disease Center modernization project. 
Accordingly, the Committee believes that the request should be fully 
funded so that the modernization project can be finished in a timely 
manner.
    Thank you Mr. Chairman. This concludes my testimony.

Prepared Statement of Hon. Jon C. Porter, a Representative in Congress 
                        From the State of Nevada

    Thank you for inviting me to testify to express my concerns with 
the proposed fiscal year 2005 budget. I appreciate this opportunity and 
regret that another committee hearing prevents me from testifying in 
person.
    My first concern is that the President's budget proposes to take 
funding for the proposed Yucca Mountain Nuclear Waste Repository off 
budget. As you know, I and my constituents share an absolute opposition 
to opening this proposed civilian nuclear waste repository. Allowing 
funds to be spent on this project without congressional oversight would 
deny my constituents their right to be represented when taxpayer 
dollars are spent and violate the budget practices that the Congress 
has worked so hard to establish. I urge you to oppose any inclusion of 
language authorizing the civilian nuclear waste program spending to be 
off-budget and not subject to congressional oversight.
    My second concern with the President's budget is a proposal to 
require gaming establishments to collect unpaid child support debts 
from winning wagers. Every Member of Congress is committed to making 
sure dependent children receive the support they need, and that parents 
fulfill their obligations to their children and community. However, 
imposing a costly new regulatory requirement on hundreds of 
establishments, and establishing a national database requiring massive 
amounts of personal data and financial records would not significantly 
increase collections while threatening the privacy of millions of 
gamers and imposing massive costs on businesses and their employees. 
This provision was rejected by the Congress in the fiscal year 2004 
budget, and I urge you to oppose any attempt to include projected funds 
from this measure.
    I strongly support a third provision in the President's budget, to 
appropriate $50 million dollars to establish Personal Reemployment 
Accounts in states that volunteer to do so. This program would help 
more than ten thousand long term unemployed people get back to work, 
and accelerate our ongoing economic recovery. I am the sponsor of 
similar legislation, HR 444, reported by the House Education and the 
Workforce Committee in 2003, and am hopeful to pass legislation this 
year authorizing funds to begin this program. I urge you to work with 
me to retain the funding for this program in the fiscal year 2005 
budget resolution, and to pass legislation authorizing Personal 
Reemployment Accounts into law.
    I also request that funding be restored to the fiscal year 2004 
level, of $50 million, for the United States Travel and Tourism 
Promotion Advisory Board (USTTAB). The USTTPAB was created to help an 
international travel and tourism marketing and promotion campaign in 
the fiscal year 2003 Omnibus Appropriations bill.
    The travel and tourism industry is one of the nation's largest 
employers, and the third largest retail industry in the United States. 
The tragic events of September 11 affected nearly every business sector 
in America, but they hit those in the hospitality industry particularly 
hard. We in Nevada have united and come a long way to overcome the 
devastating effects but we still have a long way to go. My hometown of 
Las Vegas continues to attract visitors and business delegates despite 
the effects of September 11, and the tempestuous economy underscores 
the destination's resilience relative to other destinations throughout 
the world. I respectfully ask that you consider this request to restore 
funding to such a vital marketing and promotional campaign for U.S. 
travel and tourism, which affects every congressional district.
    I urge you to keep all of these items in mind when working with 
fellow members of leadership and the House Budget Committee in drafting 
the fiscal year 2005 budget. I look forward to the passage of a budget 
resolution that reflects all of these concerns while fulfilling our 
commitment to sustaining economic growth and protecting veterans, 
seniors, children and the defense of our nation.

  Prepared Statement of Hon. Jim Saxton, a Representative in Congress 
                      From the State of New Jersey

    Thank you Chairman Nussle and Ranking Member Spratt, for giving me 
the opportunity to convey two of my highest priorities for the fiscal 
year 2005 appropriations cycle before the House Budget Committee. 
Specifically, I want to call your attention to funding for programs 
relating to the Department of Veterans Affairs and veterans health care 
programs as well as ensuring the Army Corps of Engineers has adequate 
resources within its budget for beach replenishment and other important 
projects.
    First, in terms of funding for veterans programs, I am sure you are 
aware, the President has requested $67.7 billion in total budgetary 
authority for the Department of Veterans Affairs, including $32.1 
billion for discretionary programs. That request represents an increase 
of $5.2 billion in total budget authority and a $1.2 billion increase, 
or 3.8 percent, over the fiscal year 2004 enacted funding level for 
discretionary funding. While I am pleased that the President's request 
continues to reflect the need for increased funding to the Department 
of Veterans Affairs, I am concerned that the proposed budget will be 
insufficient to meet the needs of the Department of Veterans Affairs 
and our nation's veterans.
    With a new generation of our veterans returning home from war 
everyday, it is imperative that we provide the VA with the funding it 
necessitates in order to adequately provide the care and services that 
our veterans need and deserve. The number of veterans turning to the VA 
for services continues to increase annually, and it is again expected 
to rise this year, particularly for health care.
    Congress has appropriately responded to that growth by increasing 
VA medical care funding to meet the demand. In fact, Congress has 
increased VA medical care funding by 50 percent in the past 5 years. 
Funding for the current fiscal year, provided through the Consolidated 
Appropriations Act, has continued to demonstrate Congress' support of 
our veterans by providing an increase of $2 billion, or 9 percent, over 
the previous year's funding for veteran's health care. The fiscal year 
2005 budget request from the Administration, however, provides only a 
2.7 percent increase over the fiscal year 2004 enacted funding level 
for those health care programs, and Congress must continue to provide 
the VA with the budgetary resources it needs to match the increased and 
increasing levels of demand for its services.
    The House Veterans Affairs Committee has concluded, after careful 
consideration of the budget submission, testimony received, and other 
resources, that an additional $2.478 billion will be required in 
discretionary budget authority in order for the VA to maintain current 
services. I believe that we have an obligation to provide for our 
veterans, and I join the committee in requesting and recommending an 
increase in VA discretionary budget authority of $2.478 billion. We 
must continue provide the VA with funding to maintain the current 
levels of service, health care, and benefits to those veterans who seek 
them.
    Our veterans have made tremendous sacrifices for our great nation, 
and we have an obligation to provide them with the health care, 
services, and benefits they need and deserve. There are more than 
250,000 veterans in South Jersey, plus another 100,000 military 
retirees and their families who have settled in communities near the 
three joint installations here, namely Fort Dix , McGuire Air Force 
Base and Lakehurst Naval Air Engineering Station. They have done their 
duty; now we must do ours. As a Member of the House Armed Services 
Committee, I feel we must show today's volunteer service members that 
we take care of our veterans.
    Second, I want to also discuss the issue of the lack of funding for 
beach replenishment projects. There are many Members whose districts 
include coastal areas that will be affected by the proposed 
Administration policy for the fiscal year 2005 budget, which calls for 
doing construction on existing beach projects only and does not seeking 
funding for any renourishment. Also, the proposal has reductions for 
dredging work that impacts navigational safety.
    In my own district, there is a critical need to enable the Corps of 
Engineers to move forward with beach replenishment. As a result of 
several storms over the last 10 years, significant erosion has 
occurred, causing the narrowing and lowering of the beaches and dunes. 
As a result, storm protection that would otherwise have been available 
has significantly been reduced and numerous homes are in critical 
danger. On our largest barrier island, where 7500 people live and 
hundreds of thousands more vacation, public and private properties are 
now subject to extensive storm damage from erosion, wave attack, and 
tidal inundation. East coast beaches and other beaches on the west 
coast and in gulf states are a tremendous economic asset to national 
economy. In fact, tourism in New Jersey is the largest sector of the 
economy. If beaches are not replenished, the tourist industry will 
dwindle, posing a significant threat to local economies across the 
nation.
    Additionally, funds for dredging channels and inlets have been 
proposed to be reduced, which could result in navigational hazards to 
commercial fishing and recreational boating in my and other districts. 
In many cases, such as the New Jersey Intercoastal Waterway, these 
funds have been used for annual maintenance and should be included in 
the budget.
    As a Federal Representative of a coastal area in dire need of 
funding for replenishment, I know firsthand that these projects 
represent an important part of these communities as a whole, with wide-
ranging implications should these projects be forced to come to a halt, 
without the funding to move forward. Therefore, I urge you to provide 
the Corps of Engineers adequate funding within the House budget 
resolution to begin, continue with, and complete beach replenishment 
projects. Districts like mine are in critical need of this funding.
    Thank you for the opportunity to present both of these issues to 
the Committee, and I look forward to working with you as we proceed 
forward on the fiscal year 2005 budget cycle.

 Prepared Statement of Hon. Greg Walden, a Representative in Congress 
                        From the State of Oregon

    Federal funding is important to communities and regions nationwide; 
however, I contend that such funding is crucial to the district that I 
represent. Although our nation's economy is showing signs of 
rebounding, this recovery has yet to take root in Oregon. Oregon's 
current fiscal crisis is exacerbated by the state's dubious distinction 
of maintaining one of the highest unemployment rates in the country, 
with 7.7 percent of our workforce out-of-work, including counties in my 
district with unemployment rates as high as 16.4 percent. During such 
challenging periods, it is imperative to my constituents that the 
Federal Government maintain its commitment to cost-effective, 
worthwhile programs and projects, such as those listed below. As the 
Committee on Budget continues to develop the budget resolution for 
fiscal year 2005, I wish to share with you the principal interests of 
the Second Congressional District of Oregon.

  DEPARTMENT OF ARMY, ARMY CORPS OF ENGINEERS, CIVIL WORKS, COLUMBIA 
                        RIVER CHANNEL DEEPENING

    In the President's budget there was a placeholder for the Columbia 
River Channel Improvement Project, so that once the Office of 
Management and Budget has reviewed the project they can recommend a 
funding amount. I would like to encourage the inclusion of $15 million 
in the House budget to enable the Corps of Engineers to initiate 
dredging in approximately 54 percent of the Columbia River deep draft 
navigation channel to a new depth of 43-feet in fiscal year 2005. 
Deepening of the Columbia River Channel will allow commerce from ports 
along the Columbia and Snake Rivers to be shipped to markets abroad.

   DEPARTMENT OF ARMY, ARMY CORPS OF ENGINEERS, CIVIL WORKS, FEDERAL 
                      COLUMBIA RIVER POWER SYSTEM

    Please support adequate funding for the operation and maintenance 
of Federal dams that are part of the Federal Columbia River Power 
System (FCRPS). The U.S. Army Corps of Engineers (``Corps'') and the 
Bureau of Reclamation (``Bureau'') have to use scarce operation and 
maintenance funds for necessary homeland security enhancements at dams 
along the FCRPS. As a result, dams, including The Dalles Dam, John Day 
Dam and McNary Dam, have not been able to implement routine operation 
and maintenance projects like lock maintenance. Please support adequate 
funding for the Corps and the Bureau that would reverse this trend. 
Operation of the locks and dams on this system is crucial for transport 
of commercial goods along the Columbia and Snake River systems.

  DEPARTMENT OF AGRICULTURE, FOREST SERVICE, NATIONAL FOREST SYSTEM, 
              HEALTHY FORESTS RESTORATION ACT (PL 108-148)

    This comprehensive piece of forest health legislation, which was 
crafted to combat the plague of wildfires and insect infestations that 
have ravaged our Federal forestlands, authorized $760 million annually 
to implement the hazardous fuels reductions projects which are an 
integral part of carrying out the intent of this act. The President 
requested approximately $480 million for both the U.S. Forest Service 
and the Bureau of Land Management to fund these projects. It's 
imperative that the House not only meets the President's request, but 
also exceeds it and funds this act at the fully authorized amount of 
$760 million. Supporting this request would not only restore the health 
of our Federal forestlands, but also provide well-paying jobs to 
depressed rural and frontier communities surrounding these lands.

DEPARTMENT OF AGRICULTURE, FARM SECURITY AND RURAL INVESTMENT PROGRAMS, 
                         KLAMATH BASIN, OREGON

    The administration's budget request includes $103 million for a 
variety of activities to be conducted in the Klamath Basin. Those 
activities include finding additional water storage, improvements to 
fish habitat and the implementation of a ``water bank'' to ease the 
demand on the supply of water within the Basin. Please support the 
President's funding request for these activities. Funding of the 
initiatives in the Basin is essential to help the local economy recover 
from the Federal Government's detrimental decision to shut off the 
water supply to 1,200 family farms in the Basin in 2001.

DEPARTMENT OF HEALTH AND HUMAN SERVICES, HEALTH RESOURCES AND SERVICES 
    ADMINISTRATION, RURAL HOSPITAL FLEXIBILITY GRANT (FLEX) PROGRAM

    The FLEX Program preserves rural Oregonians' access to inpatient 
and emergency hospital services through the establishment of Critical 
Access Hospitals (CAHs). As a result of the 2003 reauthorization of the 
FLEX Program, additional hospitals throughout my district are in the 
process of converting to CAHs status. The FLEX Program provides 
resources to these small rural hospitals to assist them with the 
administrative, regulatory, technical and logistical challenges 
presented by the CAH conversion process. Without such support, small 
rural hospitals would not be able to undergo the restructuring required 
to achieve CAH designation and provide much needed care to already 
underserved areas. I urge the Committee to include $39.7 million for 
the FLEX Program in the fiscal year 2005 House budget resolution, an 
amount equal to what the House allocated in its version of the fiscal 
year 2004 Labor, Health and Human Services, and Education 
Appropriations Act.
    I appreciate your thoughtful consideration of the requests outlined 
in this letter. I look forward to working with you as the budget 
process unfolds.

    Mr. Young, chairman of the Transportation Committee, you 
are recognized to address the committee.

STATEMENT OF HON. DON YOUNG, A REPRESENTATIVE IN CONGRESS FROM 
                      THE STATE OF ALASKA

    Mr. Young. I thank you, Mr. Chairman, for allowing me to 
testify today. I will try to make this as short as possible. I 
will ask unanimous consent to submit my written statement for 
the record.
    Mr. Shays. Without objection, so ordered, all statements 
will be submitted without objection. I will also ask unanimous 
consent that members may be allowed 7 days to submit statements 
for the record, as well.
    Mr. Young. Mr. Chairman, economic growth depends on a 
transportation system that moves people and goods effectively. 
Unfortunately, some people have not recognized that recently in 
the United States. Yet, China is going to build as many roads 
as we have in the United States in the next 15 years to improve 
their ability to be the economic power in the world.
    The committee, very frankly, recognizes congestion 
problems, because we have not addressed it correctly. It has 
affected our competitiveness; and very frankly, one out of 
every three of the 43,000 highway fatalities each year is 
caused by roads that are inefficient and, very frankly, in 
decay.
    Congestion now extends to more time than most people have 
for holidays, sitting still in traffic. It creates a tremendous 
backlog and burns a considerable amount of fuel.
    It really costs about $69.5 billion each year in wasted 
time and in fuel. Considering that, last week, the committee 
unanimously approved its views and estimates for the 2005 
budget, including a recommendation that highway, highway 
safety, motor carrier safety, and transit programs be funded at 
the levels in H.R. 3550, the Transportation Equity Act: A 
Legacy for Users.
    The programs actually go to $53.6 billion that are needed 
annually to maintain our highways and transit systems in the 
current condition, just to maintain, including keeping 
congestion from getting worse; not any better, but from getting 
worse.
    However, to improve the condition of these systems, we 
believe that we have to have a Federal program size of $74.8 
that is needed annually. The TEA-LU total investment of $375 
billion from 2004-09 would not only maintain the condition of 
our Nation's transportation infrastructure, but also improve 
these conditions, so we can decrease congestion and improve 
safety.
    The $55 billion in combined highway, transit and highway 
safety funding that the committee adopted as its recommended 
fiscal year 2005 funding level, in our view, necessarily 
reflects the TEA-LU funding levels.
    The Transportation Infrastructure Committee stands by its 
belief that $55 billion is the right investment level for the 
fiscal year 2005. However, the committee recognizes the lack of 
consensus on this issue. Therefore, the important part of my 
testimony today, Mr. Chairman, is I am requesting a contingency 
procedure for surface transportation again to be included in 
the budget resolution this year as it was last year.
    As in last year's resolution, this contingency procedure 
should allow spending for surface transportation programs to be 
increased as new receipts are added to Highway Trust Fund. This 
will provide the flexibility we need to reauthorize these 
programs, once consensus on funding levels is achieved.
    In addition to the surface transportation funding needs I 
have already discussed, I would like to highlight the 
committee's recommendations regarding aviation. The committee 
supports the administration budget of $3.5 billion for the 
FAA's Airport Improvement Program, which is the funding level 
guaranteed in Vision 100, Century of Aviation Reauthorization 
Act, that came out of my committee.
    However, the committee is dismayed by the 14 percent 
decrease proposed for the FAA facilities and equipment program, 
from $2.893 billion in fiscal year 2004 to $2.5 billion in 
fiscal year 2005. This proposed reduction is extremely 
shortsighted.
    To ensure our Nation's air traffic control system remains 
safe, efficient, and able to accommodate the increased number 
of passengers anticipated in the near future, the committee 
recommends the facilities and equipment program be funded at 
least at the $2.993 billion level guaranteed in Vision 100. 
This guaranteed funding level is based on the administration's 
own FAA reauthorization proposal, transmitted to Congress last 
year.
    It is important that Vision 100 extended through 2007 the 
Capital Priority Point of order initially established by the 
Aviation Investment and Reform Act for the 21st Century. The 
$493 million shortfall between the President's budget and the 
Vision 100 guaranteed level must be corrected, or the entire 
Transportation-Treasury Appropriations Bill would be subject to 
a point of order.
    While the cost of meeting our infrastructure investment 
needs may seem high, the cost of not meeting them is greater 
still. Increased investment in transportation makes sense for 
our economy, our business, and our citizens. I urge your 
support for my committee's proposal as you develop the 2005 
budget resolution. I am through, Mr. Chairman, and will gladly 
answer any questions.
    [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 
to testify before you on transportation and infrastructure funding 
needs. I appreciate your committee's assistance in ensuring that last 
year's budget resolution provided the flexibility necessary to 
reauthorize surface transportation programs. I look forward to 
continuing to work cooperatively with you as the surface transportation 
reauthorization process moves forward this year.
    Economic growth depends on a transportation system that moves 
people and goods efficiently. We know this to be true, yet we allow our 
economy to be strangled more and more each year by ever-increasing 
traffic congestion, putting our economy, global competitiveness, and 
quality of life at risk.
    In the nation's 75 largest urban areas, traffic congestion levels 
have increased in every area since 1982. Congestion now extends to more 
time of the day, more roads, affects more trips, and creates more extra 
travel time than in the past.
    In fact, the extra time needed for rush hour travel has tripled 
over the last two decades. This problem is not restricted to the 
largest cities. In small urban areas, the extra time needed for rush 
hour travel has nearly quadrupled over these same years.
    The cost of congestion is continuing to climb. In 2001, traffic 
congestion cost motorists in the nation's 75 largest urban areas a 
staggering $69.5 billion in wasted time and fuel, $4.5 billion more 
than in 2000.
    Last week, the Transportation and Infrastructure Committee 
unanimously approved its views and estimates for the 2005 budget, 
including a recommendation that highway, highway safety, motor carrier 
safety and transit programs be funded at the levels set forth in H.R. 
3550, the Transportation Equity Act: A Legacy For Users.
    The program levels in H.R. 3550 are based on data from the 
Department of Transportation that indicate a combined Federal highway 
and transit program of $53.6 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.
    The Tea Lu total investment level of $375 billion from 2004-09 
would not only maintain the conditions of our nation's transportation 
infrastructure, but also improve these conditions, so we can decrease 
congestion and improve safety. The $55 billion in combined highway, 
transit and highway safety funding the Transportation and 
Infrastructure Committee adopted as its recommended fiscal year 2005 
funding level in our views and estimates reflects these Tea Lu funding 
authorizations.
    The Transportation and Infrastructure Committee stands by its 
belief that $55 billion is the right investment level for fiscal year 
2005.
    However, the committee recognizes there is a lack of consensus on 
this issue. Therefore, I am requesting that a contingency procedure for 
surface transportation again be included in the budget resolution to 
allow spending to be increased over and above a base allocation for 
highway, highway safety, motor carrier safety and transit programs, to 
the extent such spending is offset by new receipts to the highway trust 
fund. This will provide the flexibility we need to reauthorize surface 
transportation programs, once consensus on funding levels is achieved.
    It is critical to ensure that the user revenues in the highway 
trust fund are adequate to meet highway and transit investment needs, 
and are actually made available to be 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 seek your cooperation on this key 
component of the reauthorization effort.
    In addition to the surface transportation funding needs I have 
already discussed, I would like to highlight the committee's 
recommendation regarding aviation funding needs.
    By the year 2005, the number of air travelers 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. In 
that year of extraordinary delays, demand simply outstripped the 
capacity that our aviation system could supply. Without improvements in 
aviation system capacity, airline delays will quickly return to the 
levels experienced in 2000. Increased capital investment is necessary 
to increase aviation system capacity and avoid gridlock in our skies. 
The committee supports the administration's budget request of $3.5 
billion for the FAA's airport improvement program, which is the funding 
level guaranteed by the Vision 100--Century of Aviation Reauthorization 
Act. However, the committee is dismayed by the 14 percent decrease 
proposed for the FAA's facilities and equipment program, from $2.893 
billion in fiscal year 2004 to $2.5 billion in fiscal year 2005.
    This proposed reduction is extremely shortsighted. To ensure that 
our nation's air traffic control system remains safe, reliable, 
efficient, and able to accommodate the increased number of passengers 
anticipated in the near future, the committee recommends the facilities 
and equipment program be funded at least at the $2.993 billion level 
guaranteed by Vision 100.
    This guaranteed funding level is based on the administration's own 
FAA reauthorization proposal, transmitted to Congress just last year.
    It is important to note that Vision 100 extended through fiscal 
year 2007 the ``capital priority'' point of order initially established 
by the aviation investment and reform act for the 21st century. This 
point of order ensures that aviation capital needs are not shortchanged 
in a budget process that tends to defer needed long-term investments 
while focusing on meeting more immediate needs.
    The $493 million shortfall between the President's budget request 
level for facilities and equipment and the Vision 100 guaranteed level 
must be corrected in the fiscal year 2005 Transportation-Treasury 
Appropriations Bill or the entire Appropriations Bill will be subject 
to this point of order in both the House and the Senate. Therefore, it 
is important that the fiscal year 2005 budget resolution assume $493 
million above the President's budget for the facilities and equipment 
program.
    In summary, we are significantly under funding many of our 
transportation and infrastructure investments, from surface 
transportation and aviation to ports, inland waterways, clean water 
infrastructure, and public buildings. For more comprehensive 
information on the committee's recommendations, I refer you to the 
views and estimates adopted by the committee last week.
    While the cost of meeting our nation's transportation and 
infrastructure investment needs may seem high, the cost of not meeting 
them is greater still. 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 2005 budget 
resolution.

    Mr. Shays. Thank you, let me just quickly ask you to verify 
your reference to China. What was your point about China?
    Mr. Young. China is becoming our strongest, I call, 
competitor worldwide. Because they did not have an 
infrastructure system in place, they are now building an 
infrastructure system to equal the amount of miles of road in 
the United States to connect all their provinces together, so 
they will be a united China, instead of when they had the 
warlord trivial area. They will be a united China.
    They recognized the reason the United States was so strong 
and it was able to win the cold war. It is because we have a 
transportation system in place, bar none. We did have, and 
Russia had none. Russia collapsed because they could not 
deliver food, they could not deliver product, and they 
collapsed because of that. It was not because of our military 
might; it was because they did not have the transportation 
system in place.
    That is the strength of this nation. The reason we won all 
our wars is not because of the military. It is because we were 
able to provide the necessary equipment, provide the necessary 
materials, provide the necessary food for not only troops, but 
our citizenry itself; and the key to our economy is 
transportation. We have to recognize that, the sooner the 
better, because if we do not do that, we get further behind.
    We are being penny wise and pound foolish today in this 
present climate, because this is a true investment and returns 
dollars back. I do not want to be in a position of a third rate 
nation, which we will be if we do not do what I suggest today, 
and China will be ahead of us.
    Mr. Shays. Thank you; Mr. Garrett, do you have any 
questions before we go on to Mr. Hunter?
    Mr. Garrett. Just one question, in the long term picture, 
not the immediate concerns you have right now, can we save some 
additional money on the transportation side by looking to say 
that the people who are closet to the action, the people who 
are actually going to be literally using the transportation 
facilities, infrastructure, are in the best position to make 
the decisions as far as the engineering and the safety aspect, 
as opposed to those who are far away from it; in other words, 
the people down at the county and the State level versus the 
people down here in Washington?
    Mr. Young. We believe that is occurring now, because under 
the formula program, the money under my programs goes to the 
Department of Transportation. Of course, the State DOTs may 
have to work with the local communities. We cannot directly 
appropriate monies to local communities. But it is supposed to 
go through the formula process.
    Now if you are referring to the earmarking process, that is 
the only area which we possibly could do differently. The 
earmarking process is done for a purpose, because many of our 
Congressmen are in districts of two Senators and many 
Congressmen, where those Congressmen are in what we call less 
populated areas, and the State Department of Transportation 
puts all the money in the more populated areas, and earmarking 
is the only time any member can have what I call a fair shot of 
getting some of it done in their local community.
    Mr. Garrett. I agree with that. I am in one of those areas, 
wondering whether I get a fair shot. But now my question 
actually goes to just once the dollars are allocated, for 
whatever program it is, whether it is at the State or local 
level, sometimes there is a divergent point of view.
    Mr. Young. Not down here, because we do not have anything 
to do with it. Once the money is delivered to the State 
Department of Transportation under the formula program, it is 
under the State Department of Transportation. They decide how 
it shall be spent.
    I agree, sometimes they do not listen to the local people. 
But that is not our responsibility. That is the responsibility 
of the State Department of Transportation. I do not think we 
should get into the total management of what should be built or 
should not be built here at the Washington level. So it has to 
go back to the State Department of Transportation.
    Mr. Shays. Mr. Hensarling.
    [No response.]
    Mr. Shays. OK, thank you, Mr. Young.
    Mr. Young. Thank you very much, and if you will excuse me, 
I have got to go to another hearing.
    Mr. Shays. You may be on your way, sure.
    Mr. Young. Thank you.
    Mr. Shays. Thank you very much.
    Duncan Hunter, chairman of the Armed Services Committee, 
you are recognized. Thank you for being here.

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

    Mr. Hunter. Mr. Chairman and members of the committee, 
thanks for letting me be with you and be here with my 
colleague, Ike Skelton, the ranking member of the Armed 
Services Committee, to give you our views of the defense 
requirements in the President's defense budget.
    First, I think it would be a mistake for this country to 
cut a dime out of the President's defense budget. Right now, 
and if you could look over at our posters that we have over 
here depicting Operation Iraqi Freedom, we have 157,000 uniform 
personnel in theater right now in one of the most massive troop 
rotations since World War II. When that settles in, we will 
have about 129,000 folks there.
    We are in the middle of a shooting war. We have ongoing 
operations that are sucking up ammunition, sucking up readiness 
dollars, and Mr. Chairman, this administration has put together 
their best requirement, their best case, and their best 
estimate of what we need over this coming year. Let me tell you 
why we are still short, because we are still short.
    First, we have aging equipment. The average Army helicopter 
is about 18 and-a-half years old. Two-thirds of our Naval 
aircraft are over 20 years old. We have bomber aircraft that 
average over 30 years old.
    We asked the Congressional Budget Office a couple of years 
ago to analyze our trucks, tanks, ships, planes, all the big 
systems, and figure out how many we had to buy each year on a 
steady state basis, to make sure that we had a halfway modern 
force.
    When they did that, they came up with a figure in 2002 of 
$110 billion to be spent on modernization, buying new 
equipment. It is the same as if you were a taxicab driver and 
you had 100 taxicabs. You figure out how many you have to buy 
each year to keep your fleet halfway modern, so you do not end 
up with a bunch of 1956 Chevys.
    We are in danger of ending up with a bunch of 1956 Chevys, 
because we are only spending this year about $74.9 billion in 
what are known as the modernization accounts. That means we are 
$35 billion short of what the Congressional Budget Office says 
is the requirement on a ready state basis to keep our forces 
halfway modern.
    That is why we have old helicopters. That is why we have 
old jet aircraft. That is why we have old trucks. That is why 
we have old bomber aircraft. So we have about a $35 billion 
shortfall with respect to modernization.
    The munitions accounts are largely classified. But I can 
tell you that this year, on an unclassified basis, we are $2.9 
billion short with respect to munitions, $2.9 billion, and that 
is monies that could be executed this year if we had the money. 
That is everything from M-16 rounds up to these precision-
guided rounds that we use, coming off of our major aerial 
platforms.
    We spend a lot for people now. But you know, this is an all 
volunteer military, and we do not have many people. In 1991, we 
had 18 Army divisions when we went into Iraq the first time. 
Today, we have roughly 10 Army divisions. That means we have 
cut the U.S. Army by almost 50 percent since 1991.
    That means, very simply, when your constituents ask you why 
their husband or their son or their father has to be over in 
Iraq for such a long period now, whether he is in the National 
Guard, the Reserve, or the active component, one reason is, we 
cannot afford to send somebody else over there replace him, 
because there is no one else.
    To prove that, as we undertake this massive troop 
redeployment, we are pulling out the 101st Airborne from 
Northern Iraq. We are pulling out the 82d Airborne from the 
Western Zone, west of Baghdad. We are pulling out the Fourth 
Infantry Division that is north of Baghdad, and we are pulling 
out the 1st Armored Division that is in Baghdad.
    We are going to replace all of those. We are going to 
replace the 82d, for example, with the First Marine Division, 
or MEF, Marine Expeditionary Force, made up primarily of that 
division.
    You might ask, are the Marines not the guys we send in on 
an emergency basis; are they not the cops, or the guys you dial 
when you dial 911, they are the first ones to arrive at the 
scene; the guys who ``kick in the door'' so to speak? Why are 
they going over in an occupational role? The reason they are 
going to go over in an occupational role, Mr. Chairman, is 
because there is nobody else to go over, because we have such a 
small force.
    So we have cut the Army from 18 to 10 divisions, cut it 
roughly in half. We have cut our active air wings from 24 air 
wings to only 13. We cut those roughly in half for the Air 
Force, and we have cut our Navy from almost 600 ships to under 
300 ships. By numbers, we have cut that force in half.
    So, Mr. Chairman, beyond that, the military has cut 
severely on the civilian side. We have gone down from one 
million civil servants to 660,000. So of all the branches of 
Government, we made the only massive cut in civil service 
personnel. We have now eliminated two of the major weapons 
systems that were in the plan, in the blueprints over the last 
several years.
    We have canceled the Crusader, the biggest artillery 
system, and we have now canceled our newest helicopter, the 
Comanche. We also have a base closing round coming up in 2005, 
after four base closing rounds, which could cut as much as 20 
to 25 percent of America's bases, eliminate those numbers of 
bases.
    So the facts are that we have a Secretary of Defense in Mr. 
Rumsfeld who is frugal, who is a budget cutter, who has been in 
there trying to figure out how to do more with less, and he has 
so far resisted any efforts to try to add an extra couple of 
Army divisions, which lots of experts think we may need. He 
thinks he can produce more brigades by re-configuring the Army 
and he is working hard at that.
    The point is, we made lots of cuts, Mr. Chairman. We are in 
a shooting war, with the biggest deployment since World War II. 
It would be a mistake to cut a dime out of the President's 
defense budget; thank you.
    [The prepared statement of Mr. Hunter follows:]

Prepared Statement of Hon. Duncan Hunter, a Representative in Congress 
                      From the State of California

    Mr. Chairman, Mr. Spratt and members of the committee, I appreciate 
the opportunity for Mr. Skelton and I to appear before you this 
afternoon to testify on the critical importance of the defense budget 
at this point in our nation's history.
    I realize you have a long day ahead of you, so I will attempt to 
keep my comments brief and to the point.
    Let me begin with the bottom line. It is the strongly held 
bipartisan view of the Armed Services Committee that the funding level 
requested by the President for the national defense budget function 
should be the absolute minimum that you consider for inclusion in the 
budget resolution.
    You will hear a lot of facts today from our colleagues who will be 
making a case for their priorities and programs. I would also like to 
present you with some important facts for your consideration.
    I would submit that the most critical fact that you must consider 
as you sit down to write the budget is this--under our system of 
government, defense and the national security function are the most 
fundamental and overriding responsibilities assigned to the Federal 
Government by the Constitution. Nothing else comes close.
    I raise this because the budget process, by definition, pits one 
priority against another and forces us to make difficult choices among 
them. However, this approach tends to assume that in the competition 
for Federal dollars, all competing priorities are entitled to some 
standard of ``equity.'' Since the defense of the nation is an 
inherently Federal responsibility and the fact that all other 
activities of our nation would essentially cease or be significantly 
disrupted without a secure national environment, I believe such notions 
of equitable treatment are fundamentally flawed.
    Let's review some other facts. A casual observer of the evolving 
budget debate could assume that our nation's military has been living 
high on the hog for several years without regard for the taxpayer and 
the defense needs of the nation. References to defense getting a ``free 
ride'' and must be put ``back on the table'' are being thrown around 
with increasing frequency.
    The fact is that defense has been and remains the only function of 
government that has endured steady and significant reductions over the 
past decade. For the purpose of this discussion, I believe that the 
incremental costs of ongoing combat operations in Iraq and Afghanistan 
must be set aside as these are mostly fact-of-life expenses that have 
traditionally been funded outside of the baseline defense budget.
    These reductions have taken many forms. First, the past decade 
resulted in dramatic reductions in the overall size of the defense 
establishment in terms of size and funding. This post-cold war 
contraction of the U.S. military cut the size of our combat forces 
essentially in half, while reducing investment in new equipment to 
historical lows.
    I believe there is now bipartisan agreement that, as a nation, we 
cut back too fast and too deep in the mistaken belief that the collapse 
of expansionist global communism would usher in a new era of reduced 
international tension and threats to American interests around the 
world. Wars in the Persian Gulf, Balkans and other simmering hot spots 
proved this thesis to be overly optimistic.
    Thus, while the geopolitical assumptions didn't work out as 
planned, our military was pressed to make do and carry out the nation's 
interests with a reduced set of capabilities. We are still paying for 
this miscalculation today, particularly given the realities visited 
upon our shores the morning of September 11, 2001.
    That said, I give tremendous credit to the Bush administration for 
inheriting a very difficult situation but resolving to make the tough 
decisions necessary to transform our military into a force more 
effectively organized and oriented to today's realities. All while 
having to fight the scourge of international terrorism in Afghanistan, 
Iraq and around the word.
    As it has gone through these evolutions, the Department of Defense 
has been more aggressive and effective in eliminating infrastructure, 
personnel and programs than any other Federal agency, bar none.
     In 1990, DOD had 2 million active-duty personnel in 
uniform, today it has 1.390 million;
     In 1990, DOD had roughly one million civilian employees, 
today it has around 660,000. By comparison, nondefense Federal civilian 
employment has stayed largely flat during this same period;
     Since the late 80s, DOD has closed nearly 100 major 
military installations and is preparing for another significant round 
of closures next year;
     In the past 3 years, DOD has cancelled or cut back dozens 
of major acquisition programs, as detailed in the chart attached to the 
end of my prepared remarks.
    Further, there is a mistaken notion that Congress has been giving 
the Department of Defense budget a ``free ride'' since the beginning of 
this administration. In fact, the appropriations process has cut the 
President's baseline budget in each of the past 3 years for a total of 
$8 billion, or by $17 billion if you count total reductions through 
rescissions in supplementals.
    So, where are things today?
    As we meet this afternoon, there are close to 157,000 Americans 
deployed in Iraq to bring democracy to that troubled country. Another 
contingent of over 100,000 fresh American troops is starting to flow 
into the Iraqi theater to replace the current force and carry out this 
difficult duty for the next year. It is entirely likely that this 
second force will have to be replaced by another in 1 year and yet 
another following that.
    At the same time, our forces continue to take casualties from a 
shadowy enemy who is seemingly content to harass and terrorize hoping 
that it can inflict enough casualties on coalition forces to cause a 
loss of political support for the operation.
    The Pentagon is supporting this conflict based on the resources it 
asked for and Congress provided through last fall's supplemental 
appropriations bill. DOD received $65 billion for this purpose based on 
the planning assumptions known and used at the time.
    But the nature of war, particularly an unconventional war such as 
the one we face in Iraq, is highly unpredictable and subject to 
constant change. Thus, it is already apparent that the $65 billion in 
supplemental funds Congress provided for fiscal year 04 may not be 
enough to fully cover the growing costs of this war.
    With the fiscal year only half over, the military services are 
already having to resort to borrowing against normal programs and 
activities to pay higher priority bills to properly equip and support 
our troops in the field. I am strongly pushing all of the services to 
leave no stone unturned and to take every step needed to make sure we 
push forward all available equipment and technology options to protect 
our men and women in uniform. But this takes money, and it is clear to 
me that these expenses are going to continue to grow as the year goes 
on and the situation on the ground evolves.
    Already, the Navy estimates that it is short $1.6 billion for this 
purpose. A preliminary similar number from the Army appears to be $3 
billion. And an additional $1.4 billion is needed by the Army to begin 
its innovative restructuring plan for the future. The Armed Services 
Committee has been notified that we will start receiving a steady 
stream of requests to reprogram a significant amount of funds for the 
remainder of the year as the services determine how to best rob Peter 
to pay Paul.
    Mr. Chairman, the point here is that war is expensive and the 
Department of Defense has already started to cannibalize itself to pay 
these bills. That is exactly what they should be doing because there is 
no other option but to make sure our soldiers are properly resourced.
    I find it surreal that while the military is scrambling to make 
ends meet and pay for the life-and-death needs of our soldiers in the 
field, Washington is engaged in this detached debate over whether or 
not Defense is getting a ``free ride'' and needs to join other Federal 
claimants on the altar of budget solvency.
    To me it's a simple matter of whether or not we are resolved to 
behave as a nation at war and are willing to muster the sacrifice and 
conviction to devote the resources necessary to win this war. While 
some may argue that the amount of funds under consideration for 
reduction from the President's request is insignificant, its not 
insignificant to a Department that today is already facing serious 
budget challenges in getting through the remainder of this year. And it 
is certainly not insignificant in light of the likelihood that the 
Department will likely start next fiscal year having dug itself into a 
serious fiscal hole to make up for the widening gap between available 
resources and the reality on the ground in Baghdad, Kabul and now Port 
Au-Prince.
    In closing, I strongly urge you to consider the full and serious 
impact that any reduction to the President's defense budget request 
would have on the fiscal challenges facing the Department of Defense 
and ultimately the war effort. I can assure you that what may make 
political sense in the minds of some in Washington, will be largely 
lost on both our brave men and women in uniform and our adversaries who 
will puzzle over the spectacle of Congress cutting the President's 
defense budget in the midst of this difficult conflict.
    Thank you once again for allowing me to appear and I stand prepared 
to answer any questions you may have.

    Mr. Shays. Thank you, you are a powerful spokesman for the 
Armed Services. Let us hear from your ranking member, Mr. 
Skelton, and then we will ask questions.

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

    Mr. Skelton. Mr. Chairman, actually, I could stop right 
there and say, ditto, sail on, Chairman Hunter, that is exactly 
the way I feel. I think it would be very, very inappropriate to 
not fully fund the request of the National Defense.
    Let me tell you, I had a young man, a sergeant in my office 
from Missouri, Sergeant Buxton, who was one of the three on 
Time Magazine's cover as the soldier of the year, or one of the 
three mentioned. The next time I see him, I would hate to say, 
oh, by the way, Sergeant, we cut the military budget, despite 
the fact you are over there risking your life and your 
comrades' every day.
    According to Congress, they do not understand this 
committee's concern of a .5 percent cut to Defense spending. I 
think, Mr. Chairman, that is unconscionable. On the 
discretionary side, I think I would go a little further than 
the administration, the temporary end-strength increase of 
30,000 that the Department of Defense is seeking and they are 
paying for with the supplemental should be a permanent 
increase, not a temporary one.
    I do not think 30,000 goes far enough. Actually, since 
1995, we have been recommending increasing the Army alone by 
40,000. Back then, we were just beginning to go into Bosnia and 
look at the deployments we have had since that time. Today, we 
have Iraq, Afghanistan, and now we are beginning to go into 
Haiti. We just cannot afford the small forces for Armed 
Services.
    I have several important personnel items. Chief among these 
would be the Department of Defense health program which is 
called Tri-Care, continuing to target pay raises for certain 
personnel, extending last year's increase in danger pay and the 
family separation allowance.
    Regarding military spending, Chairman Hunter and I, in our 
joints views letter to you, argued that we should eliminate the 
Social Security offset to the Survivor Benefit Program. 
However, I think the tenure fees could be and should be speeded 
up immediately, but that is on track.
    If the Congress Daily report is accurate, I want to say a 
word of commendation that this committee's planning on 
including the $50 billion more in the President's request as a 
good faith estimate of the likely costs of the war in Iraq and 
Afghanistan. When the President sent his recommendation over, 
that was to be funded by a supplemental, months from now.
    So I think it is doing the American taxpayer right by 
putting it in the budget. If the only way to get it in there is 
the estimate of the likely cost, I think that is the proper way 
to do it.
    Other than that, I appreciate the Budget Committee hearing 
us out. But more than anything else, take a good look at 
cutting this budget. It would be pretty hard for any Member of 
Congress to explain to any sergeant or any petty officer in the 
United States military why we cut the budget when we are at 
war.
    We have a guerilla warfare in Iraq, a real one. We know 
what is happening there. We read the headlines every day. We 
are going after the genesis of the terrorists in Afghanistan. 
We must persevere and we must win. If we cut the capability of 
our Armed Forces, I think, by two cents, I think we are doing 
them a great disservice. I agree with Chairman Hunter on that 
point very much, 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: I 
appreciate the opportunity to join my friend and colleague, Duncan 
Hunter, the Chairman of the Armed Services Committee, to give you our 
thoughts on the national security function of the Federal budget.
    As Chairman Hunter indicated, we both believe that it would be 
inappropriate to not fully provide for the President's request for 
national defense in the budget resolution. Yesterday, the Congress 
Daily reported that the Budget Committee is considering a 0.5 percent 
cut to defense funding. While a 0.5 percent cut does not sound 
significant, that would mean a $2.1 billion cut in discretionary budget 
authority for the national security function, most of it surely falling 
on the Department of Defense.
    With our troops engaged in large operations and on the front line 
in Iraq, Afghanistan, and now perhaps Haiti, now is not the time to cut 
the Defense Budget.
    In fact, Mr. Chairman, I urge you to increase defense funding in 
the budget resolution, both on the discretionary and mandatory side of 
the ledger.
    On the discretionary side, I would go further than the 
Administration; the temporary end strength increase of 30,000 that the 
Defense Department is seeking should be a permanent increase, not a 
temporary one. Frankly, I don't think 30,000 goes far enough, but it is 
a step in the right direction. Iraq and Afghanistan are stretching our 
forces thin, and now we may have to deal with Haiti. As I have been 
arguing for about a decade, our Armed Forces are too small in number. 
We are asking a lot of them. If we don't relieve some of the pressure 
on our forces, recruiting, retention and the quality of our great force 
will decline. We can't afford to let that happen; the adverse impact on 
the security of our nation outweighs the budgetary cost.
    In addition, several important discretionary personnel benefits 
were omitted from the President's budget request. Chief among these are 
allowing increased reservist participation in the DoD's health program 
(TRICARE), continuing targeted pay raises for certain personnel, and 
extending last year's increases in Imminent Danger Pay and Family 
Separation Allowance.
    Turning to mandatory spending, Chairman Hunter and I in our joint 
Views and Estimates letter to you argued that we should eliminate the 
Social Security offset to the Survivor Benefit Program. However, I 
think the 10 year phase-in we advocated is the minimum the budget 
resolution should provide. A more equitable solution for SBP 
beneficiaries would be immediate elimination of the Social Security 
offset, and I urge you to include an allocation to our committee 
sufficient to do so.
    Mr. Chairman, I do not see how we can possible reduce defense 
funding when the Department of Defense has needs like these that are 
not addressed in the President's budget. I urge you not only to not cut 
defense in the budget resolution, but to add to it along the lines I 
have suggested.
    Mr. Chairman, if the Congress Daily report is accurate, I do want 
to commend you on planning to include $50 billion more than the 
President's request as a good faith estimate of the likely costs of the 
war in Iraq and Afghanistan. While it may be difficult to foresee the 
exact nature of what costs may be incurred in Iraq and Afghanistan, it 
is important to budget for them as best we can. I believe that Congress 
as a whole must have some estimate of the impact these operations will 
have on the government's bottom line, and I encourage you to include 
these costs.
    According to the Pentagon itself, the ``burn rate'' of our 
operations in Iraq and Afghanistan are about $5 billion per month. 
Assuming some reduction in personnel and operational tempo associated 
with fewer troops in Iraq once we transfer sovereignty to the Iraqis at 
the end of June, I believe a good faith estimate of $50 billion is 
about right. If we end up spending less, it means that progress in Iraq 
has gone well. We will all be able to celebrate fewer casualties, the 
return of National Guard and Reserve forces to their families, and a 
better deficit picture. If we end up spending more, then at least we 
have put forth a good faith estimate.
    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. I ask permission to submit my full written statement 
for the record.

    Mr. Shays. I thank the gentleman very much. Chairman 
Hunter, maybe you would just respond to the concept, because I 
thought you made such a strong case on so many different 
levels. But we are hiring a lot of outside contractors, and is 
that not something you have got to give credit for on the other 
side of the equation?
    Mr. Hunter. You are talking about the reduction in the 
number of the civil service workers with DOD, the 660,000 down 
from one million?
    Mr. Shays. Yes, but we are replacing.
    Mr. Hunter. Some of them.
    Mr. Shays. You know, the folks guarding some of our bases, 
et cetera, are outside contractors.
    Mr. Hunter. Yes, I would simply say that ever since 1980, 
we have had the substantial battle and, in fact, probably long 
before that, Mr. Chairman, on so-called contracting out; how 
much, for example, for ship repair, guarding, other support 
activities, how much of that work load you give to the private 
sector, how much you give to the public sector. We have had 
lots of arm wrestling over that in Congress and elsewhere.
    So you have always had a large part of the Defense sector 
supported by private industry, sometimes more than others. So I 
would say that we took down the civil service force from 
roughly a million to 660,000.
    I would say maybe a percentage of those, in my estimate 
which would be less than 20 percent, is attributable to 
contracting out. In other words, did that guy simply take off 
his civil service uniform and go over and put on a Boeing 
uniform and come back as employee of Boeing Aircraft, for 
example, instead of the U.S. Government?
    In a few cases, that is the case, but in other cases, we 
have just massively cut, Mr. Chairman. When you cut the Army 
from 19 to 10 Army divisions, I mean, if those people are gone, 
then the support function is cut with them.
    Mr. Shays. Yes, I know that part of it. Let me just ask one 
other part. Mr. Skelton, feel free to jump in, as well. It is 
really to both of you. Do you want to address the first 
question?
    Mr. Skelton. Yes, you know, people speak about doing 
studies and analysis, and the best analysis that I can think of 
is going to any post, whether it be in country or out of 
country, talking with the young men and young women in uniform, 
and asking how they are stressed and strained. They are.
    There is a shortage almost everywhere you go with the young 
folks in uniform. To say, hey, sergeant, we are going to take 
that corporal away from you, you know, that just does not make 
sense.
    Mr. Shays. Let me just quickly ask on the concept of bases, 
if I was required to have a base in every community I 
represent, I would not even be able to hire staff. I would just 
have rent for all the different spaces.
    There are a number of us who would view the extension of 
bases that we have as endangering the military, taking away 
precious resources, and that it really is Members of Congress, 
frankly, who are not willing to give up these bases even if, in 
fact, it was to our Nation's benefit.
    Mr. Skelton. Mr. Chairman, that is not correct. We have 
been through several base closures, facility base closure 
situations, already which Congress passed. You know, the 
Department of Defense did not pass that. We did that, and they 
have been successful so far, and I think we are going to have 
one more round of it.
    Of course, we have to trust the judgment of the base 
closing commission. But the purpose is to streamline, 
consolidate. I think if the past is any recommendation, I think 
they are doing it right.
    Mr. Hunter. Mr. Chairman, I would agree with what Mr. 
Skelton said. But also, this budget that we have before you 
contemplates this round of base closing. In fact, the DOD 
budget, it is now law that we will have a round, and DOD is 
starting to solicit information for that round of base 
closures.
    So I offered that up as evidence of the fact that you have 
a frugal cost-cutting, conservative Secretary of Defense, who 
has been out eliminating major weapons systems. He has been 
trying to make do with the number of personnel that he has, 
instead of trying to add new divisions, and he is going forward 
with this round of base closings.
    So this is a situation where a very sharp pencil has been 
put to the Defense budget that is before you, and what we have 
to do now is win this war.
    Mr. Shays. Are there any members who want to ask questions 
before we go to Mr. Evans; Mr. Baird?
    Mr. Baird. Just very briefly, Mr. Chairman, first of all, I 
thank the gentlemen for the great testimony and for your 
leadership on these issues. I share your concerns about 
particularly our troops on the ground. We have got soldiers 
over there in canvas-sided Humvees without adequate body armor 
still. I think it was really shameful that we sent them over 
under those conditions.
    But I do have a question that comes up a lot when I am back 
home talking to constituents. A year ago on this committee, a 
message was given repeatedly; can we not look at agencies and 
expect an across-the-board 1 percent cut in their budgets? In 
other words, do all of us not have some waste, fraud, and abuse 
in our budgets?
    While I respect the need to make sure we take care of our 
troops, is that question not applicable at all in any way to 
this Defense budget that has been proposed? Because I am not 
talking about a cut from the current budget. But could we shave 
1 percent off from the President's proposed increase, as we 
have often said other agencies could do?
    Mr. Skelton. I think it would be a major mistake to do 
that. The Defense budget is glued together quite well. The 
authorization in our committee and the appropriators do very, 
very well.
    At the end of the day, there is always room for improvement 
in helping the troops more. I listed some of them in my 
testimony. I do not think we are doing enough for them, and to 
even contemplate or think about cutting anything, whether it is 
.5 or 1 percent, I think is a major mistake, because if 
anything, we should add a bit to it to cover some of these 
items that I mentioned that are not being addressed already.
    Mr. Baird. I would agree with you on taking care of the 
troops. My question is, you know, we have got ballistic missile 
defense. There are other systems that are mightily expensive, 
that maybe there is some savings to be had there.
    Mr. Hunter. Let me just ask that with a real example. We 
did not contemplate that the First Marine Division would be 
going in, in an occupation role, into Iraq. It is now going in. 
When we put that plan together for this last supplemental, for 
example, we did not plan for funding the First Marine Division 
with a lot of the stuff that they need, like night scopes and 
other things.
    Now they are going in. So a few weeks ago, in real life, 
the First Marine Division was asked to come up with the 
equipment list that they need to survive in Iraq. They came up 
with a list. It is about $300 million. It is not funded for in 
the supplemental. They are taking that out of hide.
    That means that the vast majority of that money, they are 
going to have to find it by cutting their own accounts. So that 
means, and I have asked some of the Marines, ``where are you 
going to cut?'' They said, ``well, we think we can cut down on 
ammunition procurement. We think we can cut down on maintenance 
for the stuff that is coming back that has been heavily used in 
the last year when they made the first attack on Baghdad.'' 
That stuff has got to come back and be reworked.
    So the real life problem with cutting, with the so-called 
waste, fraud, and abuse argument is, there is no line item that 
says, $1 billion, waste, fraud, and abuse, take it now. The 
problem is that in everything that we do, whether it is in the 
civil sector or the Government sector, there is a waste element 
imbedded in everything we buy.
    Everything we could buy could probably be bought more 
efficiently and effectively. But because we are the Government, 
when we have to cut down a budget or we have to take money from 
some place, you have to have a readily identifiable line item 
to take it from. So I would just say that trying to go through 
that exercise right now, when you have got troops in a shooting 
war is the wrong time.
    But secondly, the point is, you have got a Secretary of 
Defense who thinks he can cut up to 25 percent of existing 
bases out. I mean, this guy likes to find places where cuts can 
be made. I think that is, in some places, cutting more than we 
should cut.
    But right now, you knock this budget down, and this money 
is going to come out of the fast spend accounts, and that is 
ammunition, fuel, operations, and maintenance, and the things 
that are important.
    Mr. Baird. I concur wholeheartedly with making sure they 
are well supplied over there on the ground. There may be some 
areas where we could some from some systems not so urgently 
needed and of less demonstrable efficacy.
    I guess the only other question I would ask is, it seems to 
me that we are trying to do this without telling the American 
people they have to pay for it. My question would be, do we 
need to talk to the American people and say exactly what you 
have said; look them in the eye and say, and it is going to 
cost money and there may be some other things we have to 
sacrifice, possibly including tax cuts for the very top level, 
possibly including other spending? Is there merit to that?
    Mr. Hunter. If one of my staff folks could put up my GNP 
illustration up there, I think that answers the question fairly 
effectively.
    We did a study on where defense is, in terms of percent of 
GDP, gross national product or gross domestic product. Defense 
spending today is 3.6 percent of GDP. That is the lowest it has 
ever been, with the exception of the last year of the Clinton 
administration, since World War II. Under John Kennedy, this 
country spent 9 percent of GDP on defense. Under Ronald Reagan, 
it was 6 percent of GDP. Now we are down to 3.6 percent.
    So the idea that defense cannot be funded at 3.6 percent, 
to me, makes no sense, whatsoever. Now if your question is, 
well, do we take tax cuts out to pay for defense? I think that 
is not the tradeoff you want to make. I think you want to start 
with defense. I think defense should be 4.5 percent of GDP, and 
then wrap the rest of the budget around the most important 
function, which is securing our defense.
    Mr. Baird. I thank the gentleman and I thank the Chair.
    Mr. Shays. Thank you; Mr. Hensarling.
    Mr. Hensarling. Thank you, Mr. Chairman.
    Chairman Hunter, thank you very much for your testimony. I, 
for one, believe there is no greater line item in our budget 
than national defense.
    I read in your written testimony that the budget process, 
and I am quoting, ``* * * by definition, pits one priority 
against another, and forces us to make difficult choices among 
them.''
    In my limited time in Congress, that has not been my 
observation, but we do make difficult choices and prioritize. 
Instead, we make a choice between the Federal budget and the 
family budget, and unfortunately the family budget tends to 
lose. For only the fourth time in the history of America, we 
are spending over $20,000 per American household.
    I do understand that we are in a shooting war, and we need 
to fund the budget to whatever is necessary to win that war. 
There are many of us here who do want to protect the family 
budget from the Federal budget, many of us would like to freeze 
the Federal budget or actually see a reduction in spending.
    There has been some historical precedent for that. During 
the Korean conflict and World War II, nondefense spending was 
curtailed significantly as we ramped-up defense spending.
    So my first question is, for those of us in Congress who 
are interested in either freezing the Federal budget at last 
year's level or actually seeing reductions in spending but are 
sympathetic to increasing the Department of Defense budget, do 
you have any suggestions where we might make other reductions 
in the Federal budget?
    Mr. Hunter. Let me take a whack at that and let Ike speak 
for himself here. First, if you look at the GNP slide we have 
got off to the right and the Korean Conflict, it was 11.6 
percent spent on defense of GDP, and now we are down to 3.6 
percent. So we are down to the lowest figure we have had since 
Pearl Harbor, except for the last year of President Clinton's 
administration.
    So my point is, I think we should start with defense. Do 
what you have to do with security. I could live with the freeze 
on the rest of the budget. I think if you do not have national 
security, you are not going to have Social Security; and when 
you are in a shooting war, there is one thing you have got to 
do and that is win. There is no substitute for victory.
    So I would fully fund the President's budget. My 
recommendation was that they spend, and again, I went through 
this early on, I think we need to be spending upwards of $50 
billion a year more to replace this outdated equipment. But I 
could live with doing what is necessary without, as you said, 
crowding out the very private sector that makes this economy 
run. That is, having less for the private side and more for the 
public side.
    In the year since 1980 when I have been here, we voted for 
lots of tough budgetary measures that have been called 
draconian, from Gramm-Rudman on, at various times. So I think 
there are times when you have to take tough measures.
    I would say this though, Mr. Hensarling. I think that 
anybody who suggests you can have a balanced budget in a war 
time is not looking at the lessons of history. I think saying 
we should have a balanced budget this year is like saying we 
should have a balanced budget in 1942.
    We had, with 911, according to many economic analysts, 
hundreds of billions of dollars of economic damage as a result 
of 911. You had entire industries, like the airline industry, 
collapse.
    Then you had to go get the guys that did this to us, and we 
had to spend a ton of money on mobilization. So the idea that 
somehow in the middle of this shooting war, we can be balancing 
the budget is, I think, not workable.
    Mr. Hensarling. One other question, Mr. Chairman, I 
understand there is no line item in the budget that says waste, 
fraud, and abuse. Perhaps it is bad timing to be rooting it out 
during a shooting war.
    Mr. Hunter. No, it is never a bad time to be rooting it 
out. But what you do not want to do is, you do not want that 
next supply of ammunition to be dependant on some other 
condition occurring where they find some pot of money that had 
been lost in the Department of Defense. Get the ammunition 
first, but keep working on waste, fraud, and abuse.
    Mr. Hensarling. Well, I am looking at a GAO report from a 
couple of years ago where the Pentagon made $4.4 billion in 
disbursements and they could not attach a payment to a bill. 
GAO says we can save $100 million a year lax credit card 
processes. We run three different systems on providing retail 
services.
    How can we tell the American people that we are trying to 
be efficient when we have experience such as there examples 
from the Pentagon?
    Mr. Hunter. OK, here is what I have done and, once again, 
when I finish this monologue, I will give the mike back to my 
colleague, Mr. Skelton.
    In 1994, we had approximately 300,000 people in DOD who 
were what I called ``the shoppers.'' That is, they did the 
paperwork for acquisition of weapon systems. That is two U.S. 
Marine Corps of people doing paperwork.
    I put in a provision in the defense law every year after 
that, mandating a reduction of at least 25,000 paperwork folks; 
that is, procurers or acquisition people or shoppers, every 
year. We have now taken that number down to about 175,000. I 
think we can take that down lower. I think that can be done.
    But my point is, you have got probably the toughest fiscal 
hawk you have ever had running DOD right now in Don Rumsfeld. 
He has forced the Army to go back and choke up an extra 10 
brigades out of the current force structure. So you are not 
going to get more force structure. You get me 10 more brigades 
with what you have got. Start cutting your own in-house 
bureaucracy. Get those bayonets on the front lines.
    He has canceled major weapons systems like the Comanche 
helicopter, the number one helicopter program. He canceled the 
number one artillery program. He just killed them. He said, you 
do not have enough money. You are going to have to fix the ones 
you have got. You are going to have to do new stuff; you are 
canceled.
    He has now got a base closing round coming up that may cut, 
after four rounds of base closings, another 25 percent of what 
is left after the four rounds. So you have a guy who is really 
going after waste, fraud, and abuse.
    On the other hand, having done all that, he put this budget 
together and said, this is what I need to win the war and 
balance the future; that is to keep the modernization programs 
going, so that one of our fighter aircraft can take down 10 of 
the bad guys, when we get into the next shooting war.
    Mr. Shays. I think that we are going to have to be a little 
more heads-up with our time. Mr. Brown, I am sorry, do you have 
questions?
    Mr. Brown. I have a 30 minute answer. [Laughter.]
    Mr. Shays. I am sorry. Do you know what, Mr. Skelton? I 
would prefer to have you give the longer answers; so fire away 
here, sir.
    Mr. Skelton. I will make it very, very, very brief, Mr. 
Chairman. Every time you use the phrase ``difficult choices,'' 
it usually means, friend, we are going to cut your budget. I 
wish you would not use that phrase any more.
    But I have got to agree with the chairman. The number one 
priority, and it has been ever since we became a nation, is 
national of one sort or another. It is different today than it 
was then. It is different today than it was during most of our 
history.
    You have to give that priority. You know, when you are 
speaking about what are you going to cut, there are those of us 
that say, hey, be careful with veterans. Be careful with 
education. There are other areas that, my goodness, you had 
better think twice before you give them the difficult choice, 
cutting answers.
    I will not get into the tax cut debate here. But the answer 
is, we need to give priority to securing the people of our 
nation.
    Mr. Shays. I thank both of you a great deal. I would like 
to say there are 435 Members of Congress, and the Comanche is 
in my district. You said it three times, and I wanted to 
scream.
    Gentlemen, thank you so much.
    Mr. Brown. Mr. Chairman, if I might just have a quick 
moment?
    Mr. Shays. Mr. Brown, you have the floor.
    Mr. Brown. Thank you very much, Mr. Chairman. Mr. Chairman 
and ranking member, we certainly are glad to have you all here, 
and we are glad that you are setting the pace for defense for 
this Nation.
    I had the privilege to go to Iraq back in January. It was 
amazing to me, as we flew those Black Hawks around the 
countryside, to see the limited damage, which I know was 
generated by those smart missiles and smart bombs.
    So I know that we are in a different technology war than we 
were back during World War II. I know we have lost some men, 
but I recognize that in comparison to other wars, I think the 
fighting machine that we have now is absolutely the best in the 
world, and it was good for me to go and witness firsthand. I 
applaud you for being the advocate for our troops and for the 
defense of this nation.
    Mr. Hunter. Thank you very much, Henry, and it is great to 
be here, too, with Frank LoBiondo and Lane Evans, who are great 
members of our committee. So we appreciate being with you, 
thanks for your efforts, thanks for going over.
    Mr. Shays. Thank you, gentleman.
    Lane Evans, I admire you a great deal. You have the floor. 
You are just a very valued member of this Congress. You are a 
ranking member of the Veterans Committee. At one time, I think 
you were chairman?
    Mr. Evans. I am sorry?
    Mr. Shays. You have got the floor. You are just a very 
valued member of this Congress. You are a ranking member of the 
Veterans Committee. At one time, I think you were chairman?

STATEMENT OF HON. LANE EVANS, A REPRESENTATIVE IN CONGRESS FROM 
                     THE STATE OF ILLINOIS

    Mr. Evans. Mr. Chairman, thank you for this opportunity to 
address the issues of mine and Chris Smith in the 2005 budget 
for the VA.
    Veterans are disappointed, even insulted, by the 1.2 
percent increase in fiscal year's 2004 funding for VA medical 
care proposed by the administration. Increasing veterans' 
copayments and adding the new enrollment fee has greatly 
enhanced revenues.
    The Congress has previously rejected these proposals. I 
hope it will do so again. Views and estimates submitted by me 
and Chairman Smith will provide VA with a true, current service 
level budget. It is a fair budget. I have proposed a new way to 
fund veterans' health care that would result in a process which 
is less adversarial to our veterans.
    I ask this committee to consider the need for this change, 
as you consider the budget resolution for fiscal year 2005.
    Often, Congress funds VA at a level that allows it to tread 
water. This does not occur, even without a prolonged and bloody 
battle. My bill, H.R. 2318, would make VA's funding process 
more consistent with VA health programs, such as Drive Care for 
Life.
    H.R. 2318 would establish and process the Veterans' health 
care by the growth in VA's enrolled patient population and 
projected medical inflation.
    In my view, and that of every other veteran organization, 
this would result in a fair and vastly improved budget for all 
of our veterans. The resolution should reflect the sense of 
these priorities.
    I implore to demonstrate that veterans are a priority in 
this Congress. Veterans' needs must be recognized as part of 
the continuing costs of war. I thank you for your time and your 
attendance, Mr. Chairman.
    [The prepared statement of Mr. Evans follows:]

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

    Chairman Nussle and Ranking Member Spratt, I thank you for the 
opportunity to express my views on the fiscal year 2005 budget request 
for the Department of Veterans Affairs. I know you have received the 
Views and Estimates Chairman Smith and I sent last week, so I will only 
briefly touch upon those recommendations.
    Mr. Chairman, it is fair to say that veterans are disappointed, 
even insulted, by the 1.2-percent increase to fiscal year 2004 funding 
for VA medical care proposed by the administration. I know that the 
administration has proposed increasing veterans' copayments and a new 
enrollment fee to enhance revenues, but these are proposals Congress 
has previously considered and rejected. I hope it will do so again.
    The Views and Estimates submitted by me and Chairman Smith improve 
the budget and make it a true ``current services level'' budget. 
Indeed, some on my side of the aisle want to go even further and 
endorse the Independent Budget as their budget guidance. But I believe 
the bipartisan Views and Estimates will correct some of the most 
glaring budget deficiencies and allow us to overturn budget proposals 
that may prove as unpopular with Congress this year as they were last 
year.
    The Committee's budget proposal will restore funding to allow the 
VA's research program to function at the same level as it did in the 
previous fiscal year. It will make some modest enhancements in mental 
health services to allow VA to prepare for the needs of troops 
returning from Iraq and Afghanistan. It will allow VA to comply with 
the law by restoring some of its nursing home beds. It is an adequate 
and fair budget.
    Mr. Chairman, as you may know, I have proposed a new way to fund 
veterans' health care that would hopefully result in a process that is 
less adversarial and fairer to veterans than the one we now have in 
place. In many fiscal years, Congress eventually funds VA at a level 
that allows it to continue to tread water, but this is usually after a 
prolonged and bloody battle. For the last two fiscal years, VA has 
received its budget well into its second quarter of operation.
    My bill, H.R. 2318, would relieve Congress of having to address our 
veterans' needs in the same way we address discretionary non-health 
programs and make its funding process more consistent with that of 
other Federal health programs, such as TRICARE for Life. It operates 
under a simple premise--increase funding for veterans health care by 
the growth in VA's enrolled patient population and projected changes in 
medical inflation. I know this revised process would challenge the way 
we traditionally do business around here, but in my view and that of 
every major veterans' service organization, it would result in a fairer 
and vastly improved budget for veterans' health care. I ask this 
Committee to consider the need for this change as you consider the 
budget resolution for fiscal year 2005.
    In closing, our budget resolution will reflect a sense of this 
Congress's priorities. The President's budget clearly sets its 
priorities on continuing tax cuts, and making modest improvements in 
homeland security and defense. Chairman Nussle and Ranking Member 
Spratt, I implore you to demonstrate that veterans are a priority of 
this Congress and that their needs must be recognized as part of the 
continuing costs of war.
    Thank you for your time and attention.

    Mr. Shays. Thank you; can you give us an amount that you 
are requesting?
    Mr. Evans. $2.5 above on the administration's proposal.
    Mr. Shays. Thank you very much; I am going to proceed this 
way; that we are going to listen to members, unless a member on 
the committee chooses to just get my attention to ask for a 
question. So Lane Evans, thank you very much; I think we are 
all set. We have got your statement, and I appreciate that. 
Thank you, Mr. Chairman.
    Mr. Shays. Thank you.
    Mr. Baird. Mr. Chairman, if I could, I want to thank Mr. 
Evans for his leadership in standing up for American's 
veterans. I share his concerns about the potential cuts; what I 
believe are cuts.
    Even if you were having an increase, but it does not keep 
up with inflation, a demographic increase in your demand, that 
is an effective cut, and we do a disservice to the people we 
are serving our country and have served our country. I thank 
you for raising this concern before this committee.
    Mr. Shays. I thank the gentleman.
    Mr. LoBiondo, thank you, sir.

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

    Mr. LoBiondo. Thank you, Mr. Chairman; I appreciate the 
opportunity to be here with you today to discuss budget 
priorities. I have a complete statement I would like to submit 
for the record. But I would like to briefly touch on these 
critical issues.
    The first has to do with the Coast Guard. I am rather 
pleased that I am rather fast on the heels of Congressman 
Hunter. Because in talking about national defense and homeland 
security, the Coast Guard is key in this very critical role.
    Mr. Shays. Could the gentlemen suspend for a second? You 
are chairman of the committee that oversees the Coast Guard?
    Mr. LoBiondo. Yes, I am Chair of the Coast Guard 
Subcommittee and Transportation. As the committee is probably 
aware, the President has requested a 6.1 percent increase in 
overall funding for the Coast Guard in their budget. I am very 
pleased with the President's continued commitment to increased 
funding for the Coast Guard, but I am very concerned with the 
requested level of funding for the integrated Deepwater 
Program.
    The Deepwater Program is the program that Congress agreed 
to and started a couple of years ago that replaces the aging 
assets of the Coast Guard, some of which were commissioned in 
World War II and were expected to keep operating today, and are 
having to be decommissioned because, in fact, we cannot keep up 
with maintenance, and we are putting lives at risk by keeping 
them in the water.
    So as you know, this is an ambitious procurement program, 
and what we are finding is that the successful and timely 
implementation of Deepwater is necessary to ensure that 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 $678 million requested by the 
administration for Deepwater, the recapitalization project, is 
well below what is needed to keep this critical procurement 
issue on track. Expanded responsibilities went into the 
Department of Homeland Security, and the need to sustain core 
mission effectiveness have resulted in significantly higher 
operation tempos and a severe strain on aging assets.
    Therefore, the Deepwater Program and Coast Guard, for their 
inventory of major cutters, air craft, and supporting systems, 
is a very near-term national priority. We really cannot do 
without it, and it is now more critical than ever.
    I respectfully request the committee strongly endorse a 
minimum level of $1.5 billion in capital acquisitions funding, 
and accommodate a total of $1.1 billion for the Integrated 
Deepwater System in order to sustain the on-time delivery of 
these important issues.
    If, in fact, we do not go along with these increases I 
requested, Mr. Chairman, the Deepwater Program is going to slip 
by years in implementation. It was originally designed to be a 
20 year program. We slipped behind initially. We caught up a 
little bit last year. This will put us years behind and it has 
a dramatic impact on homeland security and national defense.
    I will add that the Coast Guard has recently released a 
Congressionally mandated report on the benefits of expediting 
Deepwater's procurement schedule, as they found a modest, near-
term increase in the annual level of funding for Deepwater will 
result in approximately a $4 billion savings to the taxpayer 
and will deliver the full capability of these vital homeland 
security assets 10 years ahead of schedule. That is real money, 
real savings, and a real commitment to our national security 
and homeland defense; so in addition to homeland security and 
other national priorities, improving our economic opportunity.
    There is a program in my district and across the country 
known as Empowerment Zone. This is a Federal assistance program 
that is a job creation program. It is a comprehensive 
revitalization of designated communities across the country. It 
is a 10 year program that targets Federal grants to distressed 
communities and creates jobs.
    The original Empowerment Zone designation in 1994 received 
full funding as an entitlement. But unfortunately, the Round 
Two zones have not received the funding necessary.
    The grants were promised to be $100 million over 10 years. 
That is not what has taken place, Mr. Chairman. Unlike the 
Round One zones, we have only received a small fraction of the 
funding. As a result, our zones lack the certain and 
predictable funding stream to implement our strategic plans, 
and we must seek an annual appropriation for a Federal grant.
    It is unfortunate that the President did not request 
funding for the Empowerment Zone in his budget; and this is a 
great partnership that we have developed, that for every 
Federal dollar we put into the program, we are leveraging many 
more private sector dollars.
    That is, in real terms, creating jobs, and at a time when 
we are looking to stimulate our economy and, in fact, stimulate 
our tax base which will, in fact stimulate revenue to the 
Government and help us out of the bind we are in. This is 
exactly the type of program that we should be continuing.
    In fact, there is about $12 in private investment for every 
single dollar of Federal investment. That is a big ratio. I do 
not know how many other areas of government we can say that in.
    So for future success and viability of these programs, it 
really hinges on the ability to continue and to attract private 
investment. It is imperative that Round Two zones receive their 
full multi-year funding to facilitate this implementation.
    As I said, unfortunately, the President did not request 
that. I am asking that the committee look, and it would be 
extremely helpful, to secure $15 million in funding for the 
program for 2004; and that this would be, again, a job creation 
program.
    The last point I would like to make, Mr. Chairman, and I 
will wind up very quickly, is to stress the importance of the 
Army Corps and the projects that they do when there are coastal 
communities.
    As you know, they work with State and local coastal 
communities to replenish eroded beaches and dunes, and protect 
residents and business owners from hurricane and storm damage.
    I know with your State, you are well aware of the benefits 
that are received from this. Building these projects has a true 
economic benefit for the Federal Government. It reduces the 
amount we have to pay in flood insurance claims and disaster 
relief when storms hit these areas.
    Unfortunately, the administration has cut shore protection 
by 47 percent over 2004 enacted levels, and has placed a series 
of new arbitrary restrictions on funding these projects. I 
strongly urge the committee to reject the administration's 
budget request for the Army Corps Shore Protection Program, and 
encourage you to continue funding at least at the fiscal year 
2004 level.
    I recognize, as all the other folks testifying do, that we 
have significant problems that we are facing, Mr. Chairman. I 
thank you for listening and thank you for your consideration in 
these vital matters.
    [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 and the Army Corps shore protection 
program, a proposal in the President's budget to increase child support 
payment collections, and funding for Veterans Healthcare.
    As the committee is well aware, the President requested a 6.1 
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 $678 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 $322 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 endorse a minimum level of 
$1.5 billion in Capital Acquisitions funding to accommodate a total of 
$1.1 billion 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 recently released a 
Congressionally mandated report on the benefits of expediting 
Deepwater's procurement schedule. As they found, a modest near term 
increase in the annual level of funding for Deepwater will result in 
approximately $4 billion in savings to the taxpayer and deliver the 
full capability of these vital homeland security assets 10 years ahead 
of schedule. I hope the committee will embrace the findings of this 
report and support my efforts to 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 initiative provides special Federal 
assistance to support the comprehensive revitalization of designated 
communities across the country. It is a 10 year program that targets 
Federal grants to distressed 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. 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 Zone 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. 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.
    In my District, the Cumberland County Empowerment Zone is a 
collaborative revitalization effort between the communities of 
Bridgeton, Millville, Vineland and Port Norris. Cumberland has 
committed nearly 100 percent of the $23 million that has been made 
available by HUD so far. Over 360 jobs have been created to date with 
an additional 1,400 anticipated over the next 18 months, if the Federal 
funding source continues. Over 166 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 120 initiatives through 
the EZ program, utilizing over $17 million. These projects are 
estimated to leverage a total of over $238 million in private, public 
and tax exempt bond financing. Put plainly, the Cumberland EZ has 
leveraged nearly $12 in private investment for every one dollar of 
public funding, a remarkable achievement that demonstrates the success 
and promise of the Zone. The future success, viability and 
sustainability of the Empowerment Zone 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 multi-year funding to facilitate the implementation of 
the long term strategy plan as required by each Zone.
    Unfortunately, the administration did not request funding for Round 
II EZs in the fiscal year 2005 budget. Last year, when the 
administration did not include funding for this initiative in the 
fiscal year 2004 budget, the Budget Committee included supportive 
language in the committee report accompanying H.Con. Res. 95, the 
fiscal year 2004 budget resolution. This language was extremely helpful 
in our efforts to successfully secure $15 million in funding for the 
program in the fiscal year 2004 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. (108th Congress, 
Conference Report 108-71).
    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 2005, I am 
very concerned with the continued prohibitions on ``new starts'', and 
the new restrictions on periodic renourishment and construction funding 
when a signed Project Cooperation Agreement is not in place. I have 
several projects that have either made it through the feasibility stage 
favorably, but are now delayed from moving to construction due to 
insufficient ``new start'' funding, or are awaiting their contractually 
assured periodic renourishment, or are otherwise ready for construction 
pending a PCA. These projects are critical to my district. I urge the 
committee to reject the administrations budget proposal for the Army 
Corps shore protection program and encourage you to restore funding to 
at least the fiscal year 2004 enacted level.
    Another important budget priority for my district is the defeat of 
a proposal in the administrations's fiscal year 2005 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 childsupport, 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 2005 budget 
resolution.
    Finally, I would like to express my continued disappointment with 
the administration's request for Veterans' healthcare and benefits. The 
Veterans Committee found the budget request falls approximately $2.5 
billion short of what is needed to maintain the current level of 
service to our veterans. The administration again proposes to increase 
copays, implement new enrollment fees and shut down nearly 5,000 of the 
12,000 nursing home beds at a time of rising demand. Cutting funding 
for these programs and forcing our veterans to pay out-of-pocket for 
these services is indefensible. Congress should be expanding access to 
healthcare and other services for our veterans.
    During my time in Congress, I have made it a priority to ensure 
adequate access to veterans' health care in my District. Veterans in 
Southern New Jersey are often still forced to make long trips, often 
out of state, to access their inpatient health care needs. Therefore, I 
am working with several Federal and State leaders in an effort to 
establish an inpatient health care facility at South Jersey 
Healthcare's new hospital in Vineland. On December 6, 2003, we took an 
important step forward when President Bush signed S. 1156, the Veterans 
Health Care Facilities Capital Improvement Act into law. S. 1156 
contains language to require the Secretary of Veterans' Affairs to 
develop a plan to establish an inpatient VA facility in Southern New 
Jersey. At a time when our servicemen and women are fighting overseas 
to protect this nation from terrorism, Congress should be willing to 
fulfill the commitment to those who fought so bravely before by 
ensuring an adequate level of funding for veterans' programs.
    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. Shays. Chairman LoBiondo, you have been a wonderful 
chairman of the committee, and we appreciate the input you are 
giving to the committee.
    Mr. LoBiondo. Thank you.
    Mr. Shays. Thank you very much.
    Chairman Hayes, you are chairman of the Agricultural 
Subcommittee on Livestock and Horticulture. I am assuming that 
is why you are here, but you can speak on any issue you want.

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

    Mr. Hayes. I am here supporting my friend, Henry Brown. Mr. 
Chairman, thank you for allowing me to testify today. I am 
grateful for the chance to highlight three of my priorities for 
the budget for fiscal year 2005: funding for economic 
development, veterans, and impact aid.
    Mr. Chairman, as you know, my district has been one of the 
hardest hit in the Nation with manufacturing job losses. One of 
the keys to improving our local economy is to encourage new 
economic development.
    With that in mind, nearly 2 years ago, I began working with 
the Commerce Department's Economic Development administration 
and local officials to develop a comprehensive economic 
development strategy, CEDS, for my district.
    While every county in America is working to attract new 
businesses, the vast majority are not working together in a 
regional effort to maximize their strengths. Their strategy 
will literally serve as a blueprint for regional economic 
development for the entire region, and will help these counties 
attract investment and create jobs in North and South Carolina.
    Mr. Chairman, the top priority identified by these counties 
working together was improved transportation infrastructure; 
specifically, our interstates and highways. The identified 
highway improvements, such as the completion of Interstate 73 
and 74, will allow local communities in North and South 
Carolina, all the way through West Virginia and into Michigan, 
to maximize existing resources and economic assets.
    Improved infrastructure will also provide strong incentives 
for the expansion of local businesses and recruitment of 
business and industry. I firmly support an increase in 
transportation funding in an effort to provide economic 
development and opportunity for citizens of the 8th District 
and all across the Nation.
    I additionally ask that you would fully fund the Economic 
Development Administration which, through the CEDS process, is 
working to create investment in our Nation's hard-hit areas.
    Mr. Chairman, you also know that our veterans are the heros 
who have helped define our American heritage. They are living 
evidence that freedom has a high cost, and they carry the honor 
of hundreds of thousands who left their last breath on the 
field of battle.
    The memory of those we lost and the sacrifice of those who 
lived to tell the tale must be held in high esteem by Congress. 
We must extend to our veterans our utmost respect and gratitude 
by funding their needs.
    This past year, direct appropriations for veterans' medical 
care increased by $2.4 billion, which represented a 10 percent 
increase over the fiscal year 2003. Overall, veterans funding 
rose to $63.3 billion in 2004.
    As you and your committee begin assembling the budget 
resolution for 2005, I ask that you do everything in your power 
to adequately fund programs for our Nation's veterans. I am 
aware that Secretary Principi and the House Veterans' Affairs 
Committee have asked for at least $1.2 billion more than the 
administration's request.
    As you proceed with preparing the 2005 budget, I urge you 
to fully consider and support these requests for additional 
funding. We must adequately fund and care for our Nation's 
heros. They safeguarded our future, and now it is our duty to 
safeguard theirs.
    Additionally, during this time, when we are calling on our 
military to do so much, it sends a strong message that we will 
take care of them by adequately funding veterans programs.
    As you craft the budget resolution for 2005, there are many 
challenges are there to overcome. Funding the global war on 
terrorism, reducing the deficit, providing for our men and 
women in uniform, and taking care of our domestic needs, all 
must be priorities.
    In balancing these priorities, I ask that you consider 
reducing the funding for certain foreign operations. Sending 
hard-earned American taxpayer dollars overseas to fund programs 
in other countries and international organizations must be 
weighed against our needs here at home.
    I urge you to fund America first, to increase funding for 
veterans programs, and fully fund our military requirements, 
before allocating money toward foreign programs.
    To support our Nation's military further, you must 
adequately fund Impact Aid. This program began in 1950, as the 
Federal Government accepted it has responsibility to reimburse 
local public school districts for local tax revenues lost due 
to a Federal presence, such as a military base.
    Impact Aid funds are sent directly to local school 
districts, making Impact Aid one of the most efficient programs 
that the Department of Education administers. Students in the 
8th District of North Carolina depend on this funding, as do 
the teachers and the administrators in the school districts 
adjacent to Fort Bragg.
    As you know, Cumberland County, North Carolina, is the 
proud home of Ft. Bragg and Pope Air Force Base, the largest 
military installation in the world. Last year, Cumberland 
County received over $5 million in payments from the Federal 
Government to make up for lost taxes caused by the presence of 
the post.
    Giving the large number of troops being deported from Ft. 
Bragg, there is a good chance that additional local tax 
revenues will be diminished. Needless to say, this loss of 
funding represents a devastating blow to the Cumberland County 
school system.
    The President's budget does not adequately fund Impact Aid. 
Due to a cost of living adjustment, this is automatically 
triggered by the Impact Aid formula, and these school districts 
actually receive less money in real dollars, as a result of 
level funding for the program.
    I urge you to increase funding for the support of the 
program to $1.414 billion, a 15 percent increase over last 
year's conference funding level. Also, I am hopeful that there 
will be a full $50 million allocated from the Department of 
Defense for Impact Aid.
    I urge the committee to send a message loud and clear to 
our military families and the communities in which they reside, 
that we support them and we are willing to provide the 
resources they need to educate their children.
    Mr. Chairman, thank you for the opportunity to come and 
share some of my priorities with you today which are, in these 
trying times, both for economic and national security, second 
to none. As you and your committee develop the budget 
resolution for 2005, I urge you to provide adequate funding for 
economic development, veterans' programs, Impact Aid. I know 
you will; thank you very much.
    [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, Thank you for the opportunity to testify in front of 
you today. I am grateful for the chance to highlight three of my 
priorities for the budget for fiscal year 2005: funding for economic 
development, veterans and impact aid.
    Mr. Chairman, as you know, my district has been one of the hardest 
hit in the nation with manufacturing job loss. One of the keys to 
improving our local economy is to encourage new economic development. 
With that in mind, nearly 2 years ago, I began working with the 
Economic Development Administration and local officials to develop a 
Comprehensive Economic Development Strategy (CEDS) for my district. 
While every county in America is working to attract new businesses, the 
vast majority are not working together in a regional effort to maximize 
their strengths. This strategy will literally serve as a blueprint for 
regional economic development for the entire region that will help 
these counties attract investment and create jobs.
    Mr. Chairman, the top priority identified by these counties working 
together was improved transportation infrastructure--specifically our 
interstates and highways. The identified highway improvements, such as 
the completion of Interstate 73/74, will allow the local communities to 
maximize existing resources and economic assets. The improved 
infrastructure will also provide strong incentives for the expansion of 
local businesses and recruitment of new business and industry. I firmly 
support an increase in transportation funding in an effort to provide 
economic development and opportunity for the citizens of the 8th 
District of North Carolina and the nation. Additionally I ask that you 
fully fund the Economic Development Administration which, though the 
CEDS process, is working to create investment in our nation's hard-hit 
areas
    Mr. Chairman, you also know that our veterans are the heroes who 
helped define our American heritage. They are living evidence that 
freedom is never free, and they carry the honor of hundreds of 
thousands who left their last breath on the field of battle. The memory 
of those we lost and the sacrifice of those who lived to tell the tale 
must be held in high esteem by a Congress that extends our veterans its 
utmost respect and gratitude.
    This past year direct appropriations for veterans' medical care 
increased by $2.4 billion, which represented a 10-percent increase over 
fiscal year 2003 funding. Overall veterans funding rose to $63.3 
billion in fiscal year 2004. As you and your committee begin assembling 
the budget resolution for fiscal year 2005, I ask that you do 
everything in your power to adequately fund programs for our nation's 
veterans.
    I am aware that Secretary Principi and the House Veterans Affairs 
Committee have asked for at least $1.2 billion more than the 
administration's request. As you proceed with preparing the fiscal year 
2005 budget, I urge you to fully consider and support these requests 
for additional funding. We must adequately fund and care for our 
nation's heroes. They safeguarded our future and now it is our duty to 
safeguard theirs. Additionally during this time when we are calling on 
our military to do so much, it sends a strong message that we will take 
care of them to adequately fund veterans programs.
    As you craft the budget resolution for fiscal year 2005, there are 
many challenges to overcome. Funding the Global War on Terrorism, 
reducing the deficit, providing for our men and women in uniform and 
taking care of our domestic needs all must be priorities. In balancing 
these priorities, I ask that you consider reducing the funding for 
certain foreign operations. Sending hard-earned American taxpayer 
dollars overseas to fund programs in other countries and international 
organizations must be weighed against our many needs here at home 
first. I urge you to increase funding for veterans programs and fully 
fund our military requirements before allocating money toward foreign 
programs.
    To further support our nation's military, we must adequately fund 
Impact Aid. As you know, this program began in 1950 as the Federal 
Government accepted that it has a responsibility to reimburse local 
public school districts for local tax revenue that is lost due to a 
Federal presence such as a military base. 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.
    Students in the 8th District of North Carolina depend on this 
funding, as do the teachers and administrators in the school systems 
adjacent to Ft. Bragg. As you know, 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 over five 
million dollars in payments from the Federal Government to make up for 
the lost taxes caused by the presence of the Post. Given the large 
number of troops being deployed from Fort Bragg, there is a good chance 
that local tax revenues will be further diminished. Needless to say, 
this loss of funding represents a potentially devastating blow to the 
Cumberland County school system.
    The President's budget does not adequately fund Impact Aid. Due to 
a cost of living adjustment that is automatically triggered by the 
Impact Aid formula, many school districts actually receive less money 
in real dollars as a result of level funding for the program. I urge 
you to increase funding for this important program to $1.414 billion, a 
15-percent increase over last year's conference funding level. I am 
also hopeful that there will be a full $50 million allocated from the 
Department of Defense for Impact Aid. I urge the committee to send a 
message loud a clear to our military families and the communities in 
which they reside--that we support them and are willing to provide the 
resources they need to educate their children.
    Mr. Chairman, thank you for the opportunity to come and share some 
of my priorities with you today. During these trying times, bolstering 
economic and national security should be second to none. As you and 
your committee develop the budget resolution for fiscal year 2005, I 
urge you to provide adequate funding for economic development, veterans 
programs, and impact aid. Thank you.

    Mr. Shays. Thank you, Chairman Hayes; thank you very much. 
Mr. Kirk.

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

    Mr. Shays. Thank you for being here. I know you are a new 
member, but you have been on the staff so long, you look like a 
veteran to me.
    Mr. Kirk. Thank you; Mr. Chairman, I ask unanimous consent 
that my written statement be included in the record.
    Mr. Shays. Done.
    Mr. Kirk. I want to speak to you with a unique title I just 
got last Friday from the National Journal, I am now regarded as 
the Center of the House, 217 Members of Congress are more 
liberal than me; 217 members are more conservative.
    So what I might say might surprise you, because I think we 
need to gather a group together of what I would call ``budget 
huns`` to bring this budget back in the process. I know you are 
one. My colleague, Mr. Ryan, over on Wisconsin, is another.
    I think we have got to build a bipartisan commitment to 
balance the budget faster than the President has. The last time 
we faced this was in 1985. You refer to my staff's service. I 
was here in 1985 as a staffer. Very few elected Members of 
Congress serving now were here, when we faced this problem the 
last time.
    One of the lessons I learned is that we have an extremely 
difficult time cutting specific programs, because the key 
battle is not between Democrats and Republicans. The key battle 
is between bipartisan budget balancers and K Street.
    Regularly, the Congress loses that battle on specific 
programs; but has won that battle if we have a systemic attack 
against the deficit, and not identifying specific programs. 
What do I mean?
    In 1985, we looked at the budget deficit using specific 
amendments attached to budget related legislation, we developed 
a bipartisan agreement behind Gramm-Rudman-Hollings, which was 
agreed to by Speaker O'Neill and President Ronald Reagan.
    That systemic attack generated great downward pressure on 
the budget at the time, and built the ground work for the 
budget surpluses of the 1990s.
    We need to do that again, and we need to base that around 
key budget reform principles, built from the center out. These 
principles will look something, I hope, like what the 
Republican Study Committee, which represents a number of 
conservative members in the Congress, and the Republican 
Tuesday Group, which represents the moderates, have already 
agreed to.
    These 12 principles, which are outlined here, represent a 
series of budget reforms that stand for the following 
principle. Whatever budget you work between Mr. Spratt and Mr. 
Nussle, it should be enforced.
    That is a critical principle that I think we should rally 
around; that we can have our battles here on the Budget 
Committee. Once you decide what the plan is, it is vital that 
we stick to the plan, because the record in the past is, we 
have not. We have not under Democratic Congresses. We have not 
under Republican Congresses. This is a bipartisan concern for 
us all.
    There are a couple of rules in the House Rules, which are 
unwaivable. There is a rule allowing a member to raise a point 
of personal privilege. It cannot be waived.
    There is another rule, always allowing the minority to 
offer a motion to recommit. That cannot be waived, either. 
There might be two or three key budget points to make sure that 
we head toward a balanced budget; that go into the unwaivable 
section of the House rules, to make sure that we instill 
discipline, regardless of who runs this institution or who is 
in power.
    The second set of ideas is behind the automatic reductions. 
I think that you need to set a key targets on discretionary 
spending and on nondiscretionary spending. Then if we exceed 
those targets, as we appear to, then an automatic set of 
spending reductions goes into place.
    When it happened before, I was here as a staffer in 1986 
and 1987. It generated enormous political pressure to make the 
key decisions, and we need to do that again.
    In all of these ideas, and we laid out 12 of them--I will 
not belabor the point. There is one less that I want to 
mention, which is the ability to have a real recision package.
    The rescission package that we have had before would be an 
automatic spending mechanism triggered by the President of the 
United States. However that would be an automatic action of the 
Executive Branch, so it would be ruled unconstitutional by the 
Supreme Court of the United States. The real way to make 
rescissions work is to model our rescissions package after the 
base closing legislation. To have the President send up a 
rescission package, full of pork that the Congress approved, 
like the rain forest in Iowa, and then to have that package 
proceed on an expedited basis to the House and Senate for an up 
and down unamended vote. You can believe that ``sturm nach 
drang'' in the political process that will be an overwhelming 
popular vote to cast on behalf of taking those appropriations 
back out of the process. It would introduce a welcome 
discipline into the process.
    I hope that as we consider your budget resolution, which I 
will support, we also have a reform package which carries the 
idea that once you make your decisions, we set up some 
procedural forms to actually make them stick to the long term. 
I thank you very much, Mr. Chairman.
    [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 and Ranking Member Spratt, with this year's budget 
resolution, Congress faces the challenge of managing scarce resources 
during a time of war and national economic recovery. This challenge is 
compounded by the need to nurture our economy as it continues to 
recover from recession and produce jobs. The Congressional Budget 
Office has just revised its budget projections, anticipating an 
accumulated $1.4 trillion deficit from 2005 through 2009. To keep 
deficits as low as possible, Congress must enact budget enforcement 
rules that provide the backbone to control spending and reduce 
deficits.
    Realizing the urgency of this task, members of the moderate 
Republican Tuesday Group and the conservative Republican Study 
Committee joined together to discuss each group's budget priorities. On 
February 11, the Tuesday Group and the Republican Study Committee 
announced twelve consensus principles for the Federal budget:
    1) If Federal spending exceeds the amount set by Congress, OMB 
should use the sequester requirements put into law by the Gramm-Rudman-
Hollings Balanced Budget Act to implement across-the-board spending 
cuts
    2) Budgets should have the force of law, passed by both houses of 
Congress and signed by the President
    3) The 20 budget functions now used in our budget resolution should 
be replaced by four broad spending categories: mandatory programs, 
defense and homeland security, non-defense discretionary programs, and 
emergency spending
    4) The current emergency appropriations procedure will be replaced 
by a ``rainy day fund'' reserve account for emergencies, which is built 
up over time and drawn down as needed
    5) Social Security and Medicare should be exempt from sequesters, 
and should be given full inflation increases every year
    6) Budget projections for the next fiscal year will be compared to 
actual spending for the previous year, not inflation-adjusted 
``baselines''
    7) Congressional procedures will allow the President to propose a 
package of recommended spending recissions. Congress will consider the 
President's proposed recission package though expedited debate and an 
up-or-down vote
    8) The President will appoint a bipartisan Commission to make 
recommendations on proposals to eliminate waste, fraud, and abuse in 
the Federal budget
    9) The President would be given authority to eliminate wasteful 
spending, subject to congressional approval of his action
    10) Using accrual accounting, Federal funding of pensions and 
retirement benefits for Federal employees and uniformed services 
personnel will be properly accounted for in the annual budget
    11) Federal debt to the public would break out a separate 
accounting of intra-governmental debt
    12) Points of order to block spending proposals that exceed budget 
caps would be protected from waivers included in rules adopted for 
floor action
    We all agree that budget discipline must be a high priority for 
Congress this year. However, this is not a new initiative. It is the 
second step toward building a vibrant economy in which Federal spending 
does not crowd out private investment. Let's review the success of our 
first step.
     Unemployment is falling, and we have 1.4 million more 
civilian jobs that a year ago
     Inflation-adjusted retail sales are up 3 percent--an all-
time high
     The Institute for Supply Management tells us that 
manufacturing activity is operating at the fastest rate in 20 years
     Last year, non-farm productivity grew at its fastest rate 
in 23 years
     The Dow Jones Industrial Average jumped 35 percent during 
the past year
     The average sales price of new homes rose 10 percent in 
2003
     Corporate profits hit an all-time record high in the 
fourth quarter of 2003
     Interest rates are at a 45-year low
    The economy is getting back on track, and I look forward to the 
time when the recession of 2000 is nothing more than a bad memory for 
American workers.
    Now on to step two--budget discipline. Mr. Chairman, these 
consensus principles are a precursor to legislation that will continue 
the initiative you undertook in 2000, when you brought ``The 
Comprehensive Budget Process Reform Act'' to the House floor. Your 
ideas are as sound today as they were in 2000, but with one important 
addition: updated PAYGO rules. These enforcement mechanisms will again 
act as a means to keep the budget under control. This bill will contain 
the following provisions:
     Renewed Federal spending disciplines
     A simple and binding budget with the force of law
     Provisions to trim pork barrel spending
     Incentives to eliminate waste, fraud, and abuse
     An expedited budget process that can't get bogged down in 
special rules or floor procedures
     Truth in accounting for accrued expenditures and Federal 
Debt Held by the Public
    One key reform, strongly endorsed by moderates and conservatives 
alike, is that both discretionary and mandatory spending should be 
subject to a sequester ax--provided that Social Security and Medicare 
remain fully funded. Discretionary programs cannot bear the full impact 
of spending cuts needed to control Federal deficits. In fiscal year 
2005, funding for discretionary programs represents only 38 percent of 
the administration's total $2.1 trillion of projected outlays; 
mandatory spending outside of Social Security and Medicare represents 
another 31 percent.
    Consensus will prevail if we continue to listen to each other and 
focus on reforms that we all find imperative. I look forward to 
participating in this process.

    Mr. Shays. I thank the gentlemen very much. I am just 
curious, were you page in 1985?
    Mr. Kirk. That is right, thank you.
    Mr. Shays. Thank you; yes, Mr. Baird?
    Mr. Baird. I appreciate your commitment to balancing the 
budget. I think that is very meritorious. However, it has 
probably not escaped your notice that the prior speakers before 
this committee today, I do not think, have called for budget 
cuts, to a significant degree. In fact, most have called for 
spending increases to one program or another.
    There is a quite understandable belief, I suppose, that 
whatever committee you are on is the committee that needs the 
increase. I wonder if you could comment on that observation?
    Mr. Kirk. You know, there is a bipartisan compact here to 
spend. But if we agree to everyone, then we will dramatically 
misserve the American people. I am couching my comments to be 
as bipartisan as possible.
    In this election season, we have seen that negative 
campaigners have lost. Now the reason why John Edwards did so 
well is, he stayed positive in the whole campaign. He came from 
no where and became the last guy standing before Senator Kerry 
won.
    I think that rule, that political atmosphere, will 
hopefully infuse this place, as well; that the American people 
are not interested in blame. They are interested in a 
bipartisan solution.
    After yelling at each other in 1985, when we had a 
Democratic Congress and a Republican President, President 
Reagan and Tip O'Neill sat down and approved Gramm-Rudman-
Hollings, and an enormous downward pressure then began on the 
budget. That is what we need to do again, and that is what I am 
hoping that we will encourage the leadership to do.
    Mr. Baird. I agree with that and I have got to ask one 
follow-up, if I might. We had Chairman Greenspan here last 
week, and he talked about reinstating PAYGO rules. One of the 
points that I thought I heard him say was that the PAYGO rules 
should apply not only to spending increases, but also to 
revenue cuts in the form of tax cuts. Have you any observation 
or thoughts on that matter?
    Mr. Kirk. If we do this right, a number of key 
constituencies will lose on both sides.
    Mr. Shays. I thank the gentleman very much.
    Mr. Tiahrt.

  STATEMENT OF HON. TODD TIAHRT, A REPRESENTATIVE IN CONGRESS 
                    FROM THE STATE OF KANSAS

    Mr. Tiahrt. Thank you, Mr. Chairman, I want to talk to you 
about saving time and money. I have got a statement that I will 
submit for the record and just summarize. I also want to thank 
you for not having a quorum called, that way the Q & As will go 
much quicker.
    I want to talk to you about the Commission on 
Accountability and Review of Federal Agencies Act. It is H.R. 
3213, and basically it is a BRAC-like commission for the 
remainder of the Government.
    It is a 12 member commission that is appointed by the 
President. They will meet for 2 years. It is funded for 2 years 
under the bill, and they will make recommendations for an up or 
down vote on inefficiencies in the Government, on redundancies. 
It will be a way for us to extend our oversight capability when 
we do not have time to do it today.
    I think one of the most frustrating things that I have is 
the ability to spend enough time to obtain the oversight 
information and meetings that are necessary. This is a way that 
we can extend our own efforts.
    All of us have constituencies. We have our committee 
meetings. We have travel time, and it is difficult for us to 
really look at Government agencies in the detail that we need 
in order to find the inefficiencies and the redundancy.
    I have heard several earlier members talk about how we 
could reduce the budget. Well, this is one way that we could 
help balance the budget, get rid of the waste and the 
redundancy, something that we all have as a common goal, bring 
it to the Floor for an up or down vote, and then move on.
    The way this is structured in the bill, it is funded for 
fiscal year 2004, 2005, and 2006, and then it is sunsetted 
unless it is further continued. So it is really experiment, and 
it is an experiment as to how we can reach beyond our own 
capability and the capability of our offices and our committees 
and our leadership, and find areas of the Government that are 
wasting taxpayer dollars. It will help us keep the cost of 
Government down and become more efficient.
    As I said, it is based on a proven model of the Base 
Realignment Closure Committee, and it is something I would like 
to see you incorporate into the budget resolution.
    I spoke with my own Senators today. They believe that the 
budget has a good opportunity to be passed in the Senate, one 
of the few things they are looking forward to seeing passed.
    So I think this is a very good vehicle for us to get this 
experiment into law, help us save money, and achieve our goal 
of balancing the budget more quickly than we would without 
this. I would be glad to take your questions.
    [The prepared statement of Mr. Tiahrt follows:]

 Prepared Statement of Hon. Todd Tiahrt, a Representative in Congress 
                        From the State of Kansas

    Mr. Chairman, thank you for the opportunity to testify before the 
committee today.
    As I think you would agree, the President's tax cuts are to be 
commended for getting our economy moving in a positive direction again. 
However, the other half of the formula for economic success is to cut 
wasteful and unnecessary spending. It is certainly no secret that the 
Federal budget is filled with examples of duplicative, inefficient, and 
failed Federal agencies and programs. I am here today to discuss 
legislation that I have introduced that I believe would eliminate much 
of the fraud and abuse that persists in our Federal Government in a 
politically viable manner.
    When Republicans gained control of Congress in 1994, we proposed to 
eliminate wasteful and deficit spending. In fact, in the Contract with 
America, which several of us in this room signed, we pledged to (and I 
quote) ``restor(e) fiscal responsibility to an out-of-control Congress, 
[by] requiring them to live under the same budget constraints as 
families and businesses.'' For several years, we held to that promise 
by modestly curtailing spending growth and balancing the budget in 1998 
for the first time since the 1960s. Since that time, however, Federal 
spending has jumped drastically and we have returned to a time of 
massive budget deficits.
    Some of this increased spending is understandable--especially in 
the defense budget, considering the one-two punch of being under-funded 
by the previous administration and the exigencies of 9/11. But these 
events do not justify the fact that nondefense discretionary outlays 
have increased by over 30 percent over the past 3 years. These 
tremendous spending increases have been a significant cause of the 
massive deficits that we now face.
    Another factor behind these deficits can be traced to the billions 
of taxpayer dollars that go every year to Federal programs and agencies 
that are redundant, wasteful, and altogether irrelevant. I certainly 
support a 1 percent cut in nondefense, non homeland security 
discretionary spending as well as a cap of 1 percent percent on the 
rate of growth of mandatory spending. These are measures that we must 
take given our current fiscal climate. I also think there are other 
meaningful ways that we can confront the deficit, including by rooting 
out fraud and abuse in our government.
    Some say that a growing national debt will force us to curtail 
government growth. So far we have seen none of that. It is also 
commonly believed that economic growth will reverse the effects of 
running up the national credit card. Although the economy is perking 
up, we cannot become complacent. As a matter of fact, Federal Reserve 
Chairman Alan Greenspan warns us that ``impressive gains'' in our 
economy will not outshine the negatives of our growing budget deficits. 
Mr. Greenspan promised that the Fed will hold short-term interest 
rates; now at a 45-year low of 1 percent, then he warned that these 
rates ''will not be compatible indefinitely'' with the Fed's fight 
against inflation.
    If interest rates go up, what will happen to the stock market, the 
housing market and personal credit card debt? A rise in interest rates 
could stall economic growth by damaging fledgling business projects and 
cause other complications.
    We now have just about $380 billion left to spend before we have to 
start borrowing again! We are spending a few billion dollars a day, so 
it won't be long. As you know, deficits REQUIRE the Treasury to borrow 
money to raise cash needed to keep the Government operating. Yes, our 
economy is rebounding, but we are simply not keeping pace with our rate 
of spending--therefore the deficit is growing like a gelatinous monster 
from a ``B grade'' movie.
    Concerned grassroots conservative organizations including The Club 
for Growth, The Free Congress Foundation, Citizens Against Government 
Waste, The Heritage Foundation, The American Conservative Union, 
Citizens for a Sound Economy have been vocal in their criticism of the 
rate of growth of the deficit and the large spending increases that we 
have witnessed over the past few years. It is mystifying that many 
otherwise ``reasonable'' conservatives want to ignore the fact that all 
this spending is endangering our economic stability. The government 
cannot spend or give anything until they have collected the money to do 
so. Magic does not happen. Taxes and borrowing happen.
    It has become increasingly clear that Congress' normal procedures 
cannot address the spending and waste problems that persist within our 
Federal Government. Time and again, we see congressionally authorized 
programs become institutionalized, ultimately becoming a permanent 
fixture at the expense of taxpayers. This ties up precious Federal 
resources that could be used toward paying down the national debt or 
higher Congressional priorities.
    By cutting out unnecessary Federal programs and agencies, we will 
send a strong message that we are serious about exercising fiscal 
responsibility and controlling government spending. With this in mind, 
I have introduced a bipartisan piece of legislation that will 
accomplish this very purpose.
    A first step toward a stable financial future for this country 
currently can be found in H.R. 3213, which is also known as the 
Commission on the Accountability and Review of Federal Agencies Act 
(CARFA). CARFA is based on a process with an established record of 
successful program elimination and prioritization of spending--the Base 
Realignment and Closure Commission (BRAC). H.R.3213 will ``establish a 
commission to conduct a comprehensive review of Federal agencies and 
programs and to recommend the elimination or realignment of 
duplicative, wasteful, or outdated functions * * *'' CARFA provides for 
a disciplined spending review process for nondefense, nonentitlement 
programs. Congress will have to simply vote up-or-down on the 
commission's recommendations in their entirety. The congressional log-
rolling that normally bogs down the process will be short circuited. In 
this way, real reform can emerge, and the deficit and debt problems can 
be brought under control. H.R.3213 offers Congress and the 
administration a unique opportunity: rather than simply refund and 
increase funding for every Federal program, CARFA will eliminate 
unproductive, duplicative and outdated programs.
    Here's how CARFA would work. The Commission would consist of 12 
members, appointed by the President, no later than 90 days after the 
enactment of this Act. Members would be appointed for the life of the 
Commission, and would be required to meet no later than 30 days after 
the date on which all members of the Commission have been appointed. 
CARFA's duties would then include conducting a top to bottom review of 
all Federal programs and agencies--excepting the Department of Defense 
and any agency that solely administers entitlement programs. CARFA 
would seek to identify those programs or agencies that could be 
considered duplicative in mission, grossly wasteful or inefficient, 
outdated, irrelevant, or failed. The assessment of these programs would 
be based primarily upon the achievement of common performance measures, 
financial management, and other factors determined by the President. No 
later than 2 years after the enactment of this Act, the Commission 
would be required to submit to the President and Congress a plan with 
recommendations of the agencies and programs that should be realigned 
or eliminated and propose legislation to implement this plan. The 
Commission itself would terminate 90 days after the date on which it 
submits this report and accompanying legislation. CARFA would require 
congressional consideration of the review's findings under expedited 
legislative rules. In short, Congress would be voting ``up or down'' to 
continue or stop wasteful spending.
    CARFA's main focus would be to make our government smarter and more 
efficient, and also to ensure that taxpayer dollars are not used to 
support programs such as the ``Federal Tea taster,'' who until 1995 
headed the ``Board of Tea Experts'' which was created by the Imported 
Tea Act of 1897. Until this program's elimination just 8 short years 
ago, the Federal Government was spending $120,000 in salary and 
operating expenses per year to taste tea. Obviously this is only one 
example of the type of programs that CARFA would target, but I am 
convinced that our Federal Government is replete with programs such as 
this that make a mockery out of the hard-earned tax dollars that we are 
responsible for administering. Other examples of government waste that 
CARFA would target include surplus lands owned by the Department of 
Energy, which if sold would save taxpayers $12 million over 5 years. In 
addition, eliminating four duplicative bilingual education programs at 
the Department of Education would save taxpayers over $800 million over 
a 5 year period. We could save $1 million dollars every year by simply 
eliminating overlapping responsibilities and reducing administrative 
positions at the Consumer Product Safety Commission. The examples of 
inefficient and wasteful government practices that CARFA could target 
are far too numerous to cite in this short amount of time. However, it 
is clear to me that the need for CARFA is very real.
    The strict time limits governing the Commission would ensure that 
its costs are kept to a minimum. I believe that the savings that would 
occur as a result of the Commission's findings will more than justify 
the minimal expenses that the study might incur. In addition, it is 
worth noting that CARFA requires that ALL funds saved by the 
implementation of this plan can ONLY be used for supporting other 
domestic programs or paying down the national debt.
    H.R.3213 offers Congress and the administration a test: Can we 
address a real and present crisis by adopting a method that has been 
successful in the past? The answer will tell us much about the 
prospects for our country in the 21st century. CARFA offers an idea 
other than hiding our heads in the sand and ignoring the problem. CARFA 
is a realistic plan that will make genuine reform possible. It takes 
LEADERSHIP to point out hard truths and LEADERSHIP to find and 
implement a workable answer. We welcome support to this politically 
viable solution to government spending gone awry: If the CARFA 
commission comes to fruition, it will give Congress arms length 
distance to do the right thing and vote down ridiculous, redundant and 
outdated programs. Over 45 of my colleagues in the House have agreed to 
cosponsor this legislation and our numbers are growing stronger. We 
hope to see the CARFA commission hard at work cutting wasteful spending 
by this by this time next year, if not sooner.
    Thank you for your time.

    Mr. Baird. I appreciate the intent, I think, of the 
measure. We have received some letters about this, so maybe I 
can ask a question. Did I hear you correctly, that the Congress 
would direct the Executive Branch to nominate members for this 
panel?
    Mr. Tiahrt. Yes, we would basically fund 12 people, give 
them an office and staff and travel expenses. Then if they are 
a Government employee, they do not get a pay raise for being on 
the commission. If they are a non-governmental employee, they 
would simply be volunteering their time. I think there probably 
would be plenty of candidates out there available. They would 
then make recommendations to us on an up or down vote.
    So, yes, it is appointed by the administration. We would 
simply fund the travel expenses, basically, and office 
expenses. So it is not a great investment. It has not been 
scored yet, so I do not know the exact dollar amount. But I 
assure you that if they could just find a small amount of 
savings, it would be more than worth our time. As I said, right 
now, it is set up like an experiment and we ought to try it.
    Mr. Baird. Yes, now when we receive the President's budget 
every year, well, not every year, but particularly of late, 
there have been these score cards for various agencies. To some 
degree, at least, there is a justification. Mr. Bolton spoke to 
us of some effort to justify various cuts or increases, based 
on those score cards. Would your proposal be redundant with 
that, or would it be complimentary?
    Mr. Tiahrt. I think it would be complimentary and not 
redundant, in that they would look at not the score card; but 
inside the Agency, what they are doing, what is efficient and 
what is not.
    If I was running the commission, I would say, OK, where are 
the last 2 years with the GAO reports; where are the last 2 
years of Inspector General reports for each of the agencies? 
That would be a good place to start, because they are good at 
uncovering problems. We are not very good at having the time to 
deal with those problems they uncover.
    Just from my personal experience, I would like to spend 
more time on oversight, because I think we waste more money 
than we should. This is an extension that would not be 
duplicated by what Josh Bolton is doing or CBO or OMB, either 
one. It would be one way for us to look beyond just the top 
numbers, down into the depths of the agency and eliminate waste 
and redundancy.
    Mr. Baird. Why vest this authority with the Executive 
Branch rather than Article One?
    Mr. Tiahrt. It probably is for convenience sake. You know, 
I got together with Senator Sam Brownback and we came up with 
this structure. We could have done it a lot of ways.
    As you know, it is open to the amendment process. But we 
thought this would be one way where an administration, whoever 
they are in the future, could get the people they have 
confidence in to go and look at the details of our Government. 
So it was a way, I think, to expedite the process, since it is 
only 2 years and 3 months, basically, that it is funded for.
    Mr. Baird. This is a somewhat lighthearted questions. Would 
you still support this if there is a significant turnaround on 
November 2?
    Mr. Tiahrt. Sure, I think this is good for any 
administration. It is good for us. It is good for the American 
public and the taxpayer dollars, so absolutely.
    Mr. Shays. I thank Mr. Baird.
    Mr. Ehlers, you sat down after Mr. Ryan, but you are 
technically ahead of him and you have more seniority.
    One of you go; smart decision, Mr. Ryan. Mr. Ehlers.

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

    Mr. Ehlers. Thank you, I appreciate that, because I am 
supposed to be in a meeting in the Senate at 4:00, so thank 
you, Mr. Ryan.
    I will submit my comments for the record in detail and I 
will try to make this somewhat more brief. Thank you, Mr. 
Chairman, for allowing me to testify before the committee 
today. I realize that the fate of many of the specific programs 
I mentioned in this testimony lies with the appropriators and 
not with you.
    While the budget does not spell out exact funding for these 
programs, I believe you can send a strong signal about their 
importance to the Appropriation Committee by making basic 
science funding in Function 250 top priority in the fiscal year 
2005 budget. Behind your lead I, along with many colleagues who 
also support science funding, will fight for these programs 
throughout the appropriations process.
    When faced with the difficult choices you must make this 
year, I urge you to remember that we cannot afford to sacrifice 
the research and education which current and future generations 
need to ensure their economic prosperity and domestic security.
    On the first slide, I am simply making some comments. We 
obviously have a very austere budget environment, and the 
priorities, as I see them discussed, are to maintain fiscal 
responsibility, economic development, and national security. 
Science and technology, I would maintain, underpins all of 
these priorities.
    I believe you were present this morning, Mr. Chairman, when 
Former Speaker Gingrich made the comment that he thought the 
most important thing that the Budget Committee and the Congress 
can do this year would be to triple the research budget in 
science, and he has ascribed it that importance.
    I could also quote from the Hart-Rudman Commission; that is 
that they made the comment that they could not imagine any 
higher priority of this Nation and any greater danger to the 
national security, other than nuclear war, than failing to fund 
science and technology appropriately. It is that important for 
our future.
    My science and technology priorities in the fiscal year 
2005 budget, first of all, basic research, for the simple 
reason that no one else is going to fund it. Industry no longer 
can fund basic science, because they are in such a competitive 
situation with other countries, that they can only do the 
applied and developmental research.
    If you look at what has happened to the budget, NIH has 
done very well, as you heard Mr. Gingrich say this morning, 
over the past few years. If you look at the other departments, 
however, NASA, DOE, NSF, the largest research organizations, in 
constant dollars, they have been relatively constant or have 
gone down. NSF is the only one that has steadily gone up at a 
very slow pace. Overall, in total, they have not improved their 
position in the past decade.
    In addition to basic research, science and math education 
is extremely important, and we have passed the math/science 
partnership program in both the Department of Education and in 
the National Science Foundation, and we do have to continue 
providing appropriate funding for that. I will not get into all 
the details of that.
    But just to illustrate the importance of this, because we 
do not do a good job in K-12 education, engineering enrollments 
have declined for the past two decades, and the number of 
Bachelors Degrees has declined. Math and computer science, 
declined for most of that time, and recently started improving. 
Physical sciences, in general, have declined. We are simply not 
producing the scientists and engineers that we need.
    Let me just skip over to the final slide, correlation of 
Federal R&D spending and bachelors degree students. It shows 
that the students do follow the money. If we put money into 
research, we get more students, and there is a direct 
correlation here for one particular field.
    The President's request, I find to be very sparse, and I 
understand the difficulty he has had. But he puts each of these 
departments and agencies in difficulty with his request. My 
request to you is a higher priority in Function 250, so that we 
can then proceed through the appropriations process to seek 
better funding for science.
    I would point out one item I have added here that the 
President did not include, but should have, under the 
Department of Energy, Office of Science, the last item. They 
desperately need $200 million to develop a leadership class of 
super computers. I will be working with the appropriators on 
that. I would appreciate it if you would take that into 
account, as well.
    If we get that money and it is followed-up in the next few 
years, we can once again achieve supremacy in the field of 
computing; whereas, we lost it about 6 years ago to another 
nation and we are still following them.
    My request, to make basic research, math, and science 
education and Function 250 top priorities in fiscal year 2005 
budget. I appreciate your listening to this, and we will be 
happy to answer any questions.
    [The prepared statement of Mr. Ehlers follows:]

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

    Thank you, Mr. Chairman, for the opportunity to testify as the 
committee considers a fiscal year 2005 budget resolution. I know the 
committee must weigh several pressing national priorities as you 
prepare the fiscal year 2005 budget resolution, including the 
continuing war on terrorism, facilitating economic stimulus, and 
maintaining fiscal responsibility.
    Mr. Chairman, I very strongly support your determination to 
carefully scrutinize all discretionary spending, including the proposed 
increases in defense and homeland security funding, and to curb overall 
spending in this year's budget resolution. The committee faces many 
difficult choices in order to balance these priorities, control the 
deficit and perhaps review our considerable mandatory and discretionary 
spending commitments within this year's austere budget environment.
    In making these choices, we must not overlook the fact that 
scientific research and development underpins our economic and national 
security. Scientific research and development forms the foundation of 
increased innovation, economic vitality and national security. 
Scientific research is an investment that promises, and has 
historically delivered, significant returns on that investment. As you 
begin the budget process, I strongly urge you to give high priority to 
scientific research and development and math and science education.
    For the past several years, research and development funding for 
defense, weapons development, biomedical sciences, and national 
security has increased while other areas of Federal research and 
development, especially basic research in the physical sciences, has 
remained flat or declined in real terms. The President's fiscal year 
2005 request of $132 billion for research and development continues 
this trend.
    Basic research and science education are essential to advances in 
medicine, military applications and continued economic prosperity, 
including the development of cancer therapies, GPS- or laser-guided 
missiles, and the Internet. As a nation, we cannot afford to starve 
basic science research and education.
    With this in mind, I urge you to make the basic research components 
of Function 250 a top priority in the fiscal year 2005 budget. I want 
to particularly emphasize several basic science research and 
development programs that deserve Congress' utmost attention: the 
National Institute of Standards and Technology, the National Science 
Foundation, the Department of Energy's Office of Science, and the 
National Aeronautics and Space Administration.
    Much of the technology we use every day can be tied to research 
done by scientists at the National Institute of Standards and 
Technology (NIST). For example, work at NIST's labs supports our 
nation's efforts to improve cybersecurity, building safety, and voting 
technology. The President's fiscal year 2005 request of $422 million 
for NIST's labs is an $85 million (22 percent) increase over the levels 
enacted in fiscal year 2004. But, it is important to note that NIST's 
fiscal year 2004 enacted budget was $22 million below the fiscal year 
2003 appropriation, primarily due to significant cuts in NIST's core 
laboratory account. I believe that the fiscal year 2005 request for 
NIST's labs should be considered the absolute minimum required for NIST 
to carry out its critical research activities.
    I am very concerned about the fiscal year 2005 request for the 
Manufacturing Extension Partnership (MEP) program. The fiscal year 2004 
appropriation cut the funding for MEP by more than 65 percent. 
Manufacturers throughout the country have expressed dismay that the 
fiscal year 2005 request did not seek to restore this cut. I fear that 
if we embrace this request, it will cripple this program's ability to 
promote innovation among small and medium-size manufacturers as they 
adapt to the globalized economy, and further antagonize the beleaguered 
manufacturers.
    The National Science Foundation (NSF) is the only Federal agency 
dedicated solely to supporting basic scientific research. NSF 
represents 4 percent of the total Federal R&D budget, yet it accounts 
for 45 percent of non-life science basic research at U.S. academic 
universities. NSF is also the primary Federal supporter of science and 
math education; it underwrites the development of the next generation 
of scientists and engineers. The NSF fiscal year 2005 budget request of 
$5.75 billion is a 3 percent increase; however, it is $1.6 billion 
below the authorized funding level necessary to complete the commitment 
Congress made to double NSF funding in 2002. I continue to support this 
doubling commitment, and I regret that in this austere budget 
environment it may not be immediately possible to fulfill this 
obligation. I urge the committee to provide NSF with the highest 
possible budget allocation this year.
    The Department of Energy's, Office of Science funds 40 percent of 
our nation's physical science research. Research in these areas has led 
to new economic and medical advancements including new energy sources, 
cell phones and laser surgery. To maintain our economic, technical, and 
military pre-eminence, the Federal Government must continue to support 
research in these areas. Yet, the fiscal year 2005 budget request for 
the Office of Science is $3.43 billion--a decrease of 2-percent from 
the fiscal year 2004 enacted level. I respectfully request that the 
committee provide the Office of Science with a budget that reflects the 
critical role that it plays in maintaining our economic and military 
pre-eminence. Of special importance is the need to provide an 
additional $200 million to the Office of Science to develop the 
leadership class of supercomputers and regain our lost lead in that 
field.
    The National Aeronautics and Space Agency (NASA) is an agency in 
transition. The President has challenged NASA to begin a new era in its 
history and accept a mission that will take it beyond low-earth-orbit 
and the space station. This mission will be costly and will pose 
significant technical obstacles that will only be solved through basic 
research. Although NASA's fiscal year 2005 budget request of $16.2 
billion includes an increase of $866 million dollars, most of the 
increase would go to returning the shuttle to flight and building the 
International Space Station. NASA research and development would 
increase by 3.8 percent to $11.3 billion; however, development and R&D 
facilities construction would take priority while basic and applied 
research funding would actually decline (down 3.4 percent). Basic 
science and engineering research underpin all of NASA's major 
accomplishments as well as many of the technologies you and I use 
everyday. I urge you to protect NASA's future by supporting its basic 
research accounts and making the Function 250 budget a significant 
concern.
    I realize that the fate of many of the programs I have highlighted 
in this testimony lies not with you, but with the appropriations 
committee. While the budget does not spell out exact funding for these 
programs, I believe that you can send a strong signal about their 
importance to the appropriations committee by making basic research 
funding in Function 250 a top priority in the fiscal year 2005 budget. 
Behind your lead, I, along with many colleagues who also support 
science funding, will fight for these programs throughout the budget 
process. When faced with the difficult choices you must make this year, 
I urge you to remember that we cannot afford to sacrifice the research 
and education which current and future generations need to ensure their 
economic prosperity and domestic security.
    Thank you again for allowing me to testify.

    Mr. Shays. Vern, let me just say that your continual 
education of all the members, I think, will ultimately pay off, 
I hope, sooner rather than later.
    Mr. Ehlers. Thank you, I appreciate that comment. It is, 
unfortunately, a lonely task, since I am the only physicist on 
the Republican side.
    Mr. Shays. Right, I hate to use this comment, but in our 
hearts, we know you are right. So now we have just got to 
figure out how to do it.
    Mr. Ehlers. I would appreciate that very much, thank you.
    Mr. Shays. Thank you; we will also point out that Newt said 
that if he had it to do over again, that besides the 
significant increases in NIH, he felt it needed to go into the 
sciences in general. He regrets that he did not do it when he 
had the power to.
    Mr. Ehlers. That is correct; thank you very much.
    Mr. Shays. Thank you; while you were a classmate and 
technically Ranking, Paul, do we let him go next, or what do we 
do here?
    Mr. Ryan. You are the chairman. [Laughter.]
    Mr. Shays. Paul.

STATEMENT OF HON. PAUL RYAN, A REPRESENTATIVE IN CONGRESS FROM 
                     THE STATE OF WISCONSIN

    Mr. Ryan. I will be brief. I have prepared remarks. I would 
like to ask that that just be included in the record without 
any objection.
    Mr. Chairman, I want to basically come to you and say, I do 
not want more spending. We have a deficit problem that we have 
to deal with, an economic problem.
    The President did a good job of sending a fairly lean 
budget to the Congress. I think we can improve upon that 
budget. So while you are preparing the budget resolution, I 
hope that this committee looks at improving upon the 
President's budget in the nature of reducing the amount of 
discretionary spending, and even considering mandatory 
spending.
    Let me just be a little more clear. No. 1, the President 
proposed, I think it is a .4 percent increase for domestic 
discretionary spending. I think we can do better than that and 
go beyond a freeze and perhaps somewhat of a cut, like 1 
percent across the board.
    No. 2, we do not have to have homeland security and defense 
spending off the table. I think that there are some areas of 
waste, fraud, and abuse that should not be immune to the 
budgeting process; that those two should be things that the 
Budget Committee looks at.
    We recognize the fact that we will have to increase 
spending on homeland security and defense, but that does not 
mean that we cannot scrutinize the numbers and perhaps provide 
an even more frugal budget than the administration on that 
point.
    No. 3, I serve on the Ways and Means Committee. That is the 
committee that is in charge of probably two thirds of the 
Federal budget, the entitlement side of our budget. We should 
not have to take those off the table.
    I believe that in the budget resolution you should consider 
for unearned entitlements--not earned entitlements like Social 
Security and parts of Medicare, but for unearned entitlements--
an across-the-board cut of something in the nature of 1 
percent, in addition to sending to the committees the 
instructions so that the committees look after waste, fraud, 
and abuse.
    One of the subcommittee chairmen on Ways and Means is 
sitting to my right, Congressman Herger. He has done an 
excellent job on the human resources side of the budget.
    Mr. Shays. That is the gentleman that you inserted yourself 
in front of?
    Mr. Ryan. Exactly, so I am kissing up right now.
    Mr. Shays. Good luck. [Laughter.]
    Mr. Ryan. But I am going to be brief, because I, too, have 
meetings and constituents waiting for me right now in my office 
who flew all the way out from Milwaukee.
    So I hope that the budget resolution that you are preparing 
can do more than the President's budget, can do more especially 
in discretionary spending, and should entertain the possibility 
of actually reducing some mandatory spending to achieve a 
better result in getting the balance faster than the 
President's budget allows. That is what I hope that we can 
achieve, getting to balance faster than the President's budget 
provides for.
    Now I want to also associate my comments with my colleague, 
Congressman Kirk. Mark and I are among the group that 
negotiated the 12 budget reform principles that the Tuesday 
moderate ``lunch bunch'' group and the Republican Study 
Committee negotiated. Those two groups alone account for over 
100 members of the Republican caucus. We are also talking with 
the Blue Dogs as well to make sure that this is a bipartisan 
effort.
    What we are hoping to do, after the budget resolution is 
completed, which is what you are in the midst of doing, is 
really take seriously the issue of budget process reform.
    I will put it in a nutshell. The budget process is broken. 
I served on this committee in the 106th Congress. I was budget 
associate staffer on this committee in the 104th Congress.
    I have been watching this budget process for 10 years now. 
The budget process does not work. It is an unenforceable 
process, to the extent where every single year we usually break 
through our spending caps that really are not enforceable, that 
can get waived at the Rules Committee before they come to the 
Floor.
    So I really hope that this committee, like it did in the 
106th Congress, can mark up a good budget reform bill that has 
teeth, that has a budget law with the force of law, a 
resolution that is signed by the President, is codified in law, 
and therefore has more enforcement mechanisms that can be 
attached to it.
    I believe an enhanced rescission power for the President is 
very important. I believe there are a lot of things that we can 
do to change the rules to get spending accountability back into 
the system.
    I will not bore you with the details. My colleague, Mark 
Kirk, went into that. I will only say that there are many of 
us, on our bill that we introduced. I introduced a bill with 
Congressmen Hensarling, Cox, and Chocola. We already have over 
60 cosponsors on our bill, and we just began soliciting 
cosponsors.
    So this is an issue that is clearly coming down the pike, 
with a lot of support. The Tuesday ``lunch bunch'' group has 
their own bill, very similar to our bill. Probably seven out of 
ten items from our bill are in their bill. They are getting 
great cosponsorship.
    So I hope that this is an issue the committee can really 
address very soon. With that, I want to thank you for hearing 
us, and I would like to yield to my colleague, my more senior 
colleague from the Ways and Means Committee, Congressman 
Herger. Thank you for your indulgence, Mr. Chairman.
    [The prepared statement of Mr. Ryan follows:]

Prepared Statement of Hon. Paul Ryan, a Representative in Congress From 
                         the State of Wisconsin

    In 2003, the Federal Government ran a deficit of $374 billion. 
Based on Congressional Budget Office (CBO) estimates, including the 
unexpected costs of increasing national security and stabilizing our 
economy, the Federal Government is on track to reach government 
surpluses by 2012. However, even this less-than-optimal timeframe 
hinges on Congress's ability to control spending. Unfortunately, as we 
have seen with the Senate this year, the lack of fiscal discipline 
leads to unchecked spending and legislative deadlock.
    Stop excessive government spending and clean up government 
accounting.
    The past 5 years, fiscal year 2000-04, were some of the highest 
spending years in American history. If you took the total amount of 
Federal spending in 2003, $2,156,536,000,000, in $1 bills, it would 
stack halfway to the moon, weigh 10 times as much as the Sears Tower, 
and blanket the State of New Jersey. Less than half of the increase in 
spending since 2001 can be attributed to defense and the attacks on 
September 11, 2001. The rest went toward a myriad of small- and medium-
sized government programs.
    Additionally, the Federal Government is as guilty as some large 
companies have been when it comes to fudging the books and accounting 
mistakes. When determining the Federal budget overall, the government 
uses accounting tricks to make it more difficult to determine true 
spending levels. For example, Social Security and Medicare surpluses 
are used to balance the budget. The inclusion of these funds in our 
balance sheet gives Congress cover to keep spending after discretionary 
funds are gone. Further, Congress can break its own spending rules by 
declaring appropriations an ``emergency,'' even when they are not. For 
all of these reasons, I strongly support making dramatic changes to the 
Federal budget process and the way Congress spends taxpayer money.

                         FIX THE BUDGET PROCESS

    The biggest obstacle facing government officials when prioritizing 
spending decisions is the budget process. Changing the tax and spend 
nature of Congress is one of my highest priorities. Right now, there is 
little motivation to reduce spending. In the House of Representatives, 
16 committees authorize spending and one appropriates, which means that 
every Member of Congress has a hand in the spending process at some 
point. The committee on Appropriations has 13 subcommittees overseeing 
each of the 13 appropriations bills. Each subcommittee has the 
incentive to spend as much as it can because any money not spent by one 
subcommittee must be spent by another. According to current budget 
rules, spending during the appropriations process cannot be saved and 
returned to the taxpayer or used to pay down government debt; it can 
only be spent. I believe Members of Congress should be able to cut 
money from appropriations bills through the amendment process and 
return it to taxpayers.
    The budget process also allows for supplemental emergency spending, 
which is money spent above annual budget caps. Under the current budget 
process, the definition of ``emergency'' is subjective. Emergency 
spending is not necessarily sudden, urgent, unforeseen and temporary, 
as it should be defined. Nor does the process allow for a point of 
order if an emergency spending item violates common sense. Instead, it 
allows supplemental bills to be loaded up with non-emergency spending, 
such as increased support payments to mohair wool and peanut farmers. 
Even if these initiative were valid spending items, they should be 
decided during the normal appropriations process and not passed under 
the guise of emergency spending.
    However, with the current 1-year budget process cycle, it is hard 
to determine what is necessary spending and what is not. Many States 
like Wisconsin work under a biennial (two-year) budget, which gives 
legislatures time to focus on government performance reviews and 
increased oversight of agency efficiency. Currently, Congress does not 
have the time to review how taxpayer money is spent. A biennial budget 
for the Federal Government would allow Congress to appropriate in 1 
year and conduct oversight hearings the next. A longer budget process 
would ensure that taxpayer money is being spent effectively, without 
agency duplication or waste.
    A better budget process would also allow enhanced rescission for 
the President. In other words, the President could carve out pork and 
send it back to Congress to be voted on again--separate from the 
appropriations bill in which it was contained. While this would be a 
painful process for legislators accustomed to bringing home the bacon, 
Members of Congress who request funds for legitimate district projects, 
on the other hand, would have an easy time defending their 
appropriation requests.
    Taxpayer money spent on new or expanded discretionary programs 
should instead be spent on shoring up Social Security and Medicare, 
which face bankruptcy when the baby boomers start to retire. 
Additionally, money could be used for tax relief to boost economic 
growth.
    I have introduced legislation with Congressman Hensarling, Chocola, 
and Cox, the Family Budget Protection Act (HR 3800), to fix many of the 
problems associated with the congressional budget process, including 
the ones listed above. I will continue to fight for responsible 
spending and greater accountability for taxpayer money sent to the 
Federal Government.

                              THE DEFICIT

    I am a strong supporter of paying down our national debt, but I 
also believe that the Federal Government needs to balance this priority 
with winning the War on Terrorism and encouraging growth in our 
economy. Based on Congressional Budget Office (CBO) estimates, 
including the unexpected costs of increasing national security and 
stabilizing our economy, the Federal Government is on track to reach 
government surpluses by 2012. I favor paying down as much debt as 
possible over the next 10 years to prepare for the inevitable 
demographic change as the baby boom generations begin to retire.
    Some observers argue that the tax relief packages of the last 3 
years are the primary reason that budget deficits have replaced 
surpluses. This is incorrect. In fact, the large deficits reflect the 
near ``perfect storm'' that has rocked the Federal Government's budget: 
1) revenues plummeted due to a weak economy and a sharp drop in the 
stock market, 2) spending increased due to two wars and new homeland 
security requirements, and 3) fiscal discipline weakened following the 
emergence of budget surpluses.
    Government revenue is directly tied to the health of the U.S. 
economy. The weak economy reduced the size of the tax base, increased 
spending on programs like Medicaid, and revealed technical adjustments 
that needed to be made to the budget estimates. In all, those factors 
account for 53 percent of the changes in OMB's projections, none of 
which are due to legislation.
    Ensuring that the economy comes out of this period of slow growth 
is one of my top priorities. As long as the economy grows, Americans 
work. A growing economy is the only way to increase revenue 
collection--except for increasing taxes, which I oppose. In addition, 
the more money that comes into the Federal Government, the more quickly 
we can pay down the national debt and shore up the Social Security 
Trust Fund.
    Congress can ensure economic growth by protecting the pro-growth 
tax reductions signed into law and by reducing unnecessary government 
spending. The new tax laws focus on making it easier for small 
businesses to grow and invest, and workers to save more for their 
retirement and keep more of what they earn. This policy will help 
ensure our economy grows.

    Mr. Shays. Let me just say, Mr. Ryan, the challenge we have 
with the procedural budget processes, we cannot put it in the 
budget resolution.
    Mr. Ryan. Right.
    Mr. Shays. That is the challenge. It has got to be signed 
ultimately by the President.
    Mr. Ryan. That is correct, and that is why after you are 
finished with your resolution, I am hoping that that is the 
next order of business before this committee.
    Mr. Shays. Thank you for your very good work in this area. 
You have been an extraordinarily consistent member over the 
life of your time in Congress. It is quite remarkable.
    Mr. Ryan. Thank you.
    Mr. Shays. Thank you.
    Wally, you are the man.

 STATEMENT OF HON. WALLY HERGER, A REPRESENTATIVE IN CONGRESS 
                  FROM THE STATE OF CALIFORNIA

    Mr. Herger. Thank you very much, Congressman Shays and the 
entire committee, for allowing me to testify before you today. 
As you know, I served for 8 years on the Budget Committee, 4 
years of which we had a balance, unified Federal budget. I 
fully understand the extreme challenges that all of you face in 
constructing a fiscally responsible budget resolution.
    I believe our current Federal budget deficit constitutes 
one of the greatest threats to the future of our Nation. The 
Office of Management and Budget predicts a $521 billion deficit 
for just this year alone, and over a $1.3 trillion deficit over 
the next 5 years.
    While much of this deficit is a result of the economic 
downturn in 2001 and the period of slow growth that has 
immediately followed the attacks of September 11th, 2001 and 
the costs of the war on terrorism, some of it is a result of 
increases in other discretionary and mandatory spending.
    I have supported some of this spending in the past, but the 
current situation is much different, and now is the time to put 
a lid on spending. We can do better. We should do better, and 
for the sake of our country, we must do better. The task would 
be a difficult one and many hard decisions will have to be 
made.
    One month ago, the President submitted his fiscal year 2005 
budget request. His budget makes great strides toward more 
fiscal responsibility through calling for only a one-half 
percent increase in nondefense, non-homeland security 
discretionary spending, and for cutting the deficit in half 
within 5 years.
    I believe the President's budget gives Congress a great 
starting point. I believe this budget resolution should build 
upon the President's budget request by incorporating the 
following four principles.
    First, the budget resolution should reflect a 1-percent 
overall decrease in nondefense, non-homeland security 
discretionary spending from last year's enacted levels. 
Although some would say that reducing spending by 1 percent is 
unacceptable, I believe the current budget deficit is 
unacceptable. We have to tighten our belts and find places to 
save taxpayers' dollars.
    State budgets around the Nation have faced deficits, 
relative to the Federal budget, and have made hard choices. The 
State of Tennessee recently made a 9-percent across-the-board 
cut in discretionary appropriations in order to balance the 
budget.
    We can make the hard choices, as well. All Federal agencies 
have some ways. Surely, we can find 1 percent, one penny out of 
every dollar to reduce.
    I also believe that defense and homeland security funding 
should be closely examined. I strongly support the war on 
terrorism and our defense of the homeland, but even this 
essential spending, is not immune from ways.
    Second, I believe that the budget resolution should not 
take into account funding for any new programs. The best way to 
reduce funding for programs is to not start them. Many of the 
proposed new programs may very well have merit. The question is 
not whether the program is well intentioned, but rather whether 
the Federal Government should continue to expand when faced 
with a $521 billion deficit. It is clear that there is no room 
for new programs in this year's budget.
    Third, we must give greater scrutiny to all existing 
mandatory and discretionary programs that have been slated for 
increases. Massive increases in programs seem imprudent, 
considering our current budget situation. It is not without 
precedent to freeze or limit increases in a program in order to 
re-evaluate its purpose and effectiveness within a prioritized 
Federal budget.
    In 1996, for example, Congress took an aggressive approach 
toward reforming the aid for dependent children or AFDC 
program. Congress froze spending, consolidated it into a block 
grant, and gave more flexibility to the State. The reforms 
created the temporary assistance to needy families or TANF 
program that has reduced Welfare roles by over one-half and 
saved taxpayers billions of dollars.
    The success of welfare reform proves that there are better 
ways of running programs, and that not every program is 
destined for perpetual spending increases.
    Fourth, we must make fundamental reforms in the budget 
process in order to help force fiscal discipline. Testifying 
before this committee last week, Federal Reserve Chairman Alan 
Greenspan expressed his concern that the expiration of the 
rules laid out in the Budget Enforcement Act of 1990, 
especially PAYGO rules, have further eroded the will to control 
spending.
    He stated, ``The data actions that would lower forthcoming 
deficits have received only narrow support, and many analysts 
are becoming increasingly concerned that without a restoration 
of the budget enforcement mechanisms and the fundamental 
political will they signal, the end bill political bias in 
favor of red ink will once again become entranced.''
    I urge this committee to pursue the reinstatement of the 
PAYGO and pursue budget process reform such as those contained 
in H.R. 3800 that was introduced by our colleague and a member 
of your committee, Jim Hensarling.
    This bill would give the budget resolution the force of law 
allowed for by biennial budgeting, eliminate the practice of 
base line budgeting, and address waste, fraud, and abuse.
    None of these four principles are easy to implement. We all 
know that it is always much easier to say yes than it is to say 
no to spending, but we must have loftier goals. We must show 
the courage to restrain spending, to be better caretakers of 
taxpayer dollars and to make tough choices regardless of the 
consequences. The consequences of not pursuing an aggressive 
agenda of fiscal discipline, will be far more disastrous.
    Again, I thank you, Mr. Chairman, for inviting me to 
testify today. I appreciate your attention and work on this 
Federal budget.
    [The prepared statement of Mr. Herger follows:]

 Prepared Statement of Hon. Wally Herger, a Representative in Congress 
                      From the State of California

    Good afternoon and thank you Chairman Nussle, ranking member Spratt 
and all of the committee members for allowing me to testify before you.
    I served 8 years on the Budget Committee--4 years of which we had a 
balanced unified Federal budget--and I fully understand the extreme 
challenges that all of you face in constructing a fiscally responsible 
budget resolution.
    I believe our current Federal budget deficit constitutes one of the 
greatest threats to the future of our nation. The Office of Management 
and Budget predicts a $521 billion deficit for just this year alone and 
over a $1.3 trillion deficit over the next 5 years. While much of this 
deficit is the result of the economic downturn in 2001 and the period 
of slow growth that immediately followed, the attacks of September 11, 
2001, and the cost of the war on terrorism, some of it is the result of 
increases in other discretionary and mandatory spending.
    I have supported some of this spending in the past, but the current 
situation is much different and now is the time to put a lid on 
spending.
    We can do better. We should do better. And for the sake of our 
country, we must do better.
    The task will be a difficult one and many hard decisions will have 
to be made.
    One month ago, the President submitted his fiscal year 2005 budget 
request. His budget makes great strides toward more fiscal 
responsibility through calling for only a .5 percent increase in non-
defense/non-homeland security discretionary spending and for cutting 
the deficit in half within 5 years. I think the President's budget 
gives Congress a great starting point.
    I believe this budget resolution should build upon the President's 
budget request by incorporating the following four principles.
    First, the budget resolution should reflect a 1-percent overall 
decrease in nondefense, non-homeland security discretionary spending 
from last year's enacted levels. Although some would say that reducing 
spending by 1 percent is unacceptable, I believe the current budget 
deficit is unacceptable. We have to tighten our belts and find places 
to save taxpayer dollars.
    State budgets around the nation have faced deficits relative to the 
Federal budget and have made hard choices. The State of Tennessee 
recently made a 9-percent across-the-board cut in discretionary 
appropriations in order to balance the budget.
    We can make the hard choices as well. All Federal agencies have 
some waste. Surely we can find 1 percent to reduce.
    I also believe that defense and homeland security funding should be 
closely examined.
    I strongly support the war on terrorism and our defense of the 
homeland, but even this essential spending is not immune from waste.
    Second, I believe that the budget resolution should not take into 
account funding for any new programs. The best way to reduce funding 
for programs is to not start them. Many of the proposed new programs 
may very well have merit. The question isn't whether the program is 
well intentioned but rather whether the Federal Government should 
continue to expand when faced with a $521 billion deficit. It is clear 
that there is no room for new programs in this year's budget.
    Third, we must give greater scrutiny to all existing mandatory and 
discretionary programs that have been slated for increases. Massive 
increases in programs seem imprudent considering our current budget 
situation.
    It is not without precedent to freeze or limit increases in a 
program in order to reevaluate its purpose and effectiveness within a 
prioritized Federal budget. In 1996, Congress took an aggressive 
approach toward reforming the Aid For Dependent Children--or AFDC 
program. Congress froze spending, consolidated it into a block grant, 
and gave more flexibility to the states. The reforms created the 
Temporary Assistance to Needy Families--or TANF program that has 
reduced welfare rolls by over half and saved taxpayers billions of 
dollars. The success of welfare reform proves that there are better 
ways of running programs and that not every program is destined for 
perpetual spending increases.
    Fourth, we must make fundamental reforms in the budget process in 
order to help force fiscal discipline.
    Testifying before this committee last week, Federal Reserve 
Chairman Alan Greenspan expressed his concern that the expiration of 
the rules laid out in the Budget Enforcement Act of 1990--especially 
Pay/Go rules--have further eroded the will to control spending.
    He stated:
    ``To date, actions that would lower forthcoming deficits have 
received only narrow support, and many analysts are becoming 
increasingly concerned that, without a restoration of the budget 
enforcement mechanisms and the fundamental political will they signal, 
the inbuilt political bias in favor of red ink will once again become 
entrenched.''
    I urge this committee to pursue the reinstatement of Pay/Go and 
pursue budget process reforms such as those contained in H.R. 3800 that 
was introduced by our colleague Jeb Hensarling.
    This bill would give the budget resolution the force of law, allow 
for biennial budgeting, eliminate the practice of baseline budgeting, 
and address waste, fraud, and abuse.
    None of these four principles are easy to implement. We all know 
that it is always much easier to say yes than it is to say no to 
spending. But we must have loftier goals. We must show the courage to 
restrain spending, to be better caretakers of taxpayer dollars, and to 
make tough choices regardless of the consequences.
    The consequences of not pursuing an aggressive agenda of fiscal 
discipline will be far more disastrous.
    Thank you again for inviting me to testify today and I appreciate 
your attention and work on the Federal budget.

    Mr. Shays. Thank you, Congressman Herger. You have been so 
consistent for 18 years on this issue. It is, as well, very 
remarkable. I appreciate your willingness to come here and to 
address just one member of the Budget Committee. Thank you very 
much.
    Mr. Herger. Thank you.
    Mr. Shays. Mr. Radanovich.

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

    Mr. Radanovich. Thank you so much, Mr. Chairman, not only 
for having this hearing, but for the good work that you do on 
the budget proposal year after year, including this year.
    I did want to come to you today and discuss, on behalf of 
numerous farmers in my district, to request that the fiscal 
year budget resolution provide funding for the settlement of a 
lawsuit, called the Summner Peck Ranch, Incorporated versus the 
Bureau of Reclamation from the Department of Justice Judgment 
Fund established under Title XXXI of the United States Code, 
Section 1304, and not out of the Bureau of Reclamation of 
Budget. The Bureau of Reclamation's responsibilities to the 
plaintiffs in this lawsuit stems from the Federal Government's 
commitment to provide drainage for farm land under the San Luis 
Act of 1960. I know of no appropriation fund or other provision 
in the San Luis Act that would be used to compensate the 
plaintiffs in this litigation.
    Given that payment is not other provided for, the judgment 
funds should be used to cover the Government's debt in the 
Sumner Peck settlement, which totaled about $107 million. In 
the President's fiscal year 2005 budget, it includes $34 
million for the Sumner Peck settlement payment within the 
Bureau of Reclamation, Central Valley Project, Water and Energy 
Management and Development Account.
    I, along with many other members from California am 
concerned about using this account because it has funding for 
so many valuable water projects, such as water conservation, 
watershed and drainage management, and water quality efforts. 
Instead, the $34 million should be left in this account for 
critical water programs in my home State, and the settlement 
funding should come from the DOJ Judgment Fund.
    By specifying the use of the Judgment Fund in the fiscal 
year 2005 budget resolution, to make the final $34 million 
payment to the Sumner Peck plaintiffs, we ensure that the 
Federal Government fulfills its settlement commitment to the 
farmers in the lawsuit. At the same time, we prevent the 
Federal Government from tapping into funds authorized for 
needed California water projects.
    Mr. Chairman, I encourage you to seriously consider this 
request which has bipartisan support within the California 
delegation. I appreciate you allowing me to bring this issue to 
you. Thank you.
    Mr. Shays. Thank you. Just a point of clarification. This 
is not a question of whether they will be paid. The Court will 
require that. It is just a question of where it comes from?
    Mr. Radanovich. Correct. It was a $107 million lawsuit. 
There was an installment of $5 million, and two $34 million 
installments out of the DOJ fund. This is the last installment, 
$34 million. In the President's budget it was slated to come 
out of the Bureau of Reclamation Budget. We are saying, no, it 
should come out of the DOJ Judgment Budget which is my request 
of you today.
    Mr. Shays. Thank you. I am sure you will just touch base 
with staff on this as well.
    Mr. Radanovich. Absolutely.
    Mr. Shays. Thank you very much.
    Mr. Radanovich. Thank you very much, Mr. Chairman.
    Mr. Shays. Mrs. Blackburn, and then Mr. Shaw we will get to 
you.

    STATEMENT OF HON. MARSHA BLACKBURN, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF TENNESSEE

    Mrs. Blackburn. Thank you, Mr. Chairman. Thanks for the 
opportunity to be with you today. You know, I like the 
discussion that I am hearing about Chairman Nussle and the 
proposed budget that would freeze fiscal year 2005 nondefense, 
non-homeland security discretionary spending. I think it is a 
great start, and to be quite frank, given our budget situation, 
I do not see any other responsible option less than a freeze or 
an actual reduction.
    Right now we are talking about a projected deficit of 
somewhere between $471 billion and $521 billion this year. I 
believe we would be well served to follow the example of 26 
States, including Tennessee, that have enacted across-the-board 
cuts to get their financial house in order.
    While serving in the Tennessee State Senate, I proposed 
across-the-board cuts as the most effective approach to 
balancing our budget. Newspapers from one end of the State to 
the other complained that my plan was too simple. It would not 
work. Special interests bemoaned the thought of losing even one 
single cent of spending.
    As Mr. Herger mentioned, this past year Tennessee enacted 
cuts to widespread acclaim similar to those that I had 
proposed, and even a few of those newspapers recognized that 
perhaps my calls for across-the-board cuts were on target. 
Clearly, it is possible to make the necessary reductions. 
Sometimes good ideas, and the right idea, require time to take 
shape. Spending reductions are an idea that has had ample time 
to take shape.
    In the spirit of fiscal responsibility and discipline that 
so many of our States have adopted, and that Chairman Nussle is 
supporting, and this committee is supporting, I will be 
proposing three bills this year to support the Budget 
Committee's efforts. The first bill would require a 1-percent 
across-the-board cut in nondefense, non-homeland security, to 
discretionary spending in fiscal year 2005 and a spending 
freeze at that level thereafter. The second is a 2-percent cut, 
and the third is for those of us who believe that we can do 
better, a 5-percent reduction.
    These are three options and three choices. All of us should 
be able to commit to some level of reduction. Our objective 
should be to help speed up the President's goal of reducing the 
deficit. If we passed the 5 percent proposal and froze 
spending, it would cut $20 billion from the deficit this year 
alone. Over 5 years we would save $243 billion.
    I found that a few phrases in the English language inspire 
the sort of reaction like across-the-board cuts do. But we have 
reached a point where it becomes necessary. Across-the-board 
cuts ensure that all entities within the Federal Government 
shoulder the burden of reducing rampant spending and give each 
agency the opportunity to find within their budgets the 
spending that they would choose to live without.
    It provides an opportunity for the agencies to walk through 
a self-evaluation process and for managers, to exercise a 
little performance based budgeting, and for division heads, 
maybe a little zero-based budgeting. I find it difficult to 
imagine that there is not at least 5 percent in Government 
waste that could be cut from departmental operations.
    Over the past 12 months the Government Reform Committee has 
held hearing-after-hearing in which we have investigated 
hundreds of millions of dollars worth of waste, fraud, and 
abuse. Too frequently, there is little to no serious action to 
address the drain on taxpayers dollars.
    An across-the-board cut would serve two purposes. It would 
force a better accounting of appropriated funds and it would 
strengthen our agencies' oversight of the dollars we send them. 
In short, it would do much to restore our overall fiscal 
health.
    Thank you, Mr. Chairman. Thank you for the opportunity to 
be before you today.
    [The prepared statement of Mrs. Blackburn follows:]

   Prepared Statement of Hon. Marsha Blackburn, a Representative in 
                  Congress From the State of Tennessee

    The debate over the Federal budget is not simply an argument about 
numbers. It's a debate about our values, our priorities, and not least 
our discipline as lawmakers. This is how our constituents view the 
issue, and it's exactly how we should approach the subject.
    Chairman Nussle gets it. His proposal to freeze fiscal year 2005 
nondefense, non-homeland security discretionary spending is a fantastic 
start. To be quite frank, given our budget situation, I don't see any 
other responsible option less than a freeze or an actual reduction.
    Right now we're talking about a projected deficit of somewhere 
between $471 and $521 billion this year.
    I believe we'd be well served to follow the example of 26 states, 
including Tennessee, that have enacted across-the-board cuts to get 
their financial houses in order.
    While serving in the Tennessee State Senate, I proposed across the 
board cuts as the most effective approach to balancing our budget. 
Newspapers from one end of the state to the other complained that my 
plan was too simplistic and wouldn't work. Special interests bemoaned 
the thought of losing even a single cent in spending.
    This past year Tennessee enacted cuts to widespread acclaim similar 
to those I proposed--even a few of those newspapers recognized that 
perhaps my calls for across the board cuts were on target. Clearly it 
is possible to make the necessary reductions. Sometimes good ideas, the 
right idea, require time to take shape--spending reductions are an idea 
that has had ample time to take shape.
    In the spirit of fiscal responsibility and discipline that so many 
of our states have adopted, and Chairman Nussle is supporting, I will 
be proposing three bills this year to support the Budget Committee's 
efforts:
    The first bill would require a 1 percent across the board cut in 
nondefense, non-homeland security discretionary spending in fiscal year 
2005 and a spending freeze at that level thereafter.
    The second, a 2 percent cut,
    And the third is for those of us who believe we can do better--a 5 
percent cut.
    These are three options, three choices--all of us should be able to 
commit to at least some level of reduction. Our objective should be to 
help speed up the President's goal of reducing the deficit.
    If we passed the 5 percent proposal and froze spending, it would 
cut $20 billion from the deficit this year alone. Over 5 years, we'd 
save $243 billion.
    I've found that few phrases in the English language inspire the 
sort of reaction that 'across the board cuts' does, but we've reached a 
point where it becomes necessary to be blunt.
    Across the board cuts ensure that all entities within the Federal 
Government shoulder the burden of reducing rampant spending and give 
each agency the opportunity to find within their budgets the spending 
they can live without. It provides an opportunity for the agencies to 
walk through a self evaluation process and exercise a little 
performance-based budgeting and a little zero-based budgeting.
    I find it difficult to imagine that there is not at least 5 percent 
in government waste that could be cut from each departmental 
operations. Over the past 12 months the Government Reform Committee has 
held hearing after hearing in which we investigated hundreds of 
millions of dollars worth of waste, fraud, and abuse. Too frequently 
there is little to no serious action to address this drain on taxpayer 
dollars. An across the board cut would serve two purposes--it would 
force a better accounting of appropriated funds, and it would 
strengthen our agencies' oversight of the dollars we send them. In 
short, it would do much to restore our overall fiscal health.

    Mr. Shays. Thank you very much for your patience. Thank you 
for your testimony. Mr. Scott is recognized.
    Mr. Scott. Thank you. What percent across-the-board cuts 
would be talking about?
    Ms. Blackburn. There is a 1 percent, 2 percent, or 5 
percent, discretionary, nondefense, non-homeland security.
    Mr. Scott. Non-defense, non-homeland security, 
discretionary?
    Ms. Blackburn. Correct.
    Mr. Scott. What is 1 percent of that amount?
    Ms. Blackburn. One percent would be $3.997 billion. Two 
percent would be $7.994 billion. Five percent would be $19.995 
billion.
    Mr. Scott. You indicated that the deficit may be as much as 
$521 billion?
    Ms. Blackburn. Correct.
    Mr. Scott. Thank you.
    Ms. Blackburn. You are welcome.
    Mr. Shays. Thank you very much.
    Ms. Blackburn. Thank you, Mr. Chairman.
    Mr. Shays. Chairman Shaw is obviously a very senior member 
of the Ways and Means Committee and also chairman of the 
Committee on Social Security. Thank you for your patience and 
thank you for your testimony.

 STATEMENT OF HON. E. CLAY SHAW, A REPRESENTATIVE IN CONGRESS 
                   FROM THE STATE OF FLORIDA

    Mr. Shaw. I appreciate, Mr. Shays, you and Mr. Scott being 
here to listen to my testimony. I will try to be brief.
    There has been a great deal of media attention regarding 
the Federal Reserve System's Chairman Alan Greenspan's 
testimony before this committee last week on how to extend the 
life of Social Security. I issued a statement in response which 
would I would like to submit for the record. I would ask 
unanimous consent to submit that statement.
    Mr. Shays. Without objection, so ordered.
    [The information referred to follows:]

   Prepared Statement of Hon. E. Clay Shaw, Jr., a Representative in 
                   Congress From the State of Florida

    Washington, DC: Today, Federal Reserve System Chairman Alan 
Greenspan provided testimony to the House Budget Committee and 
discussed his perspective on how to extend the life of Social Security. 
Chairman E. Clay Shaw, Jr., of the Subcommittee on Social Security 
provided the following comments:
    ``Chairman Greenspan is right to point out the demographic 
challenges facing Social Security and Medicare. Modern medicine is 
enabling people to live longer, and families are having fewer 
children--in the long run that means fewer workers supporting each 
retiree.''
    ``Chairman Greenspan is also right that tax increases are not the 
answer to securing Social Security's future. We cannot risk slowing 
economic growth.''
    ``However, I respectfully disagree with the Chairman's 
recommendation to cut promised benefits by reducing the cost of living 
adjustment and increasing the retirement age. Those proposals are not 
the right answer.''
    ``My message to seniors and those nearing retirement: You will 
receive nothing less than 100 percent of what you've been promised. 
Your benefits are safe and secure.''
    ``There is a viable alternative that doesn't require tax increases 
or benefit cuts. Allow workers to save today through voluntary personal 
accounts that back Social Security with real assets. These accounts 
would help workers build a retirement nest egg and deliver real 
retirement security.''
    ``My Social Security Guarantee Plus Plan (H.R. 75) illustrates how 
personal accounts would ensure payment of full promised benefits, and 
even provide enhanced benefits, without tax increases and without 
individual investment risk,'' said Shaw.

    Mr. Shaw. It includes the following key points.
    Chairman Greenspan is right to point out the demographic 
changes facing Social Security and Medicare. Chairman Greenspan 
is also right that tax increases are not the answer to securing 
Social Security's future. We cannot risk slowing the economic 
growth. However, I respectfully disagree with the Chairman's 
recommendation to cut promised benefits by reducing the cost of 
living adjustment and increasing the retirement age. These 
proposals are not the right answer.
    My answer to seniors and those nearing retirement is you 
will receive nothing less than 100 percent of what you have 
been promised. Your benefits are safe and secure. American 
workers deserve better. My Social Security Guaranteed Plan, 
H.R. 75, illustrates how personal accounts help enhance 
payments of full promised benefits and even provide enhanced 
benefits and without increases and without individual 
investment risk. The Social Security debate will and should 
continue as Americans, particularly younger Americans, learn 
more about Social Security challenges and options to strength 
the program's future.
    I might add here, Mr. Chairman, that the accounting system 
of the Federal Government is badly flawed. It is something that 
you and this committee should spend some time looking at. If we 
set up individual retirement accounts and pay into it from the 
Federal Government, it is likely that every dime put into this 
would be counted against the deficit, even though that money 
will be available to assist the Social Security Administration 
in paying benefits later when the individual retires.
    That is a flawed process. We should get more toward a 
business-type of accounting, an accrual-type accounting. This 
also affects capital expenditures and right on down the line. 
It is something that I think its time has come and we should be 
concentrated on.
    Second, the Social Security Administration's core workloads 
have grown significantly in the last year and will increase 
steadily with the aging of the Baby Boom generation. The 
President's budget proposes to dedicate $561 million for the 
Social Security Administration to conduct continuing disability 
reviews. These reviews of an individual's eligibility for 
disability benefit ultimately saves taxpayers $10 for each $1 
invested. Some disability recipients are found no longer 
eligible for Supplemental Security Income or Social Security 
Disability Insurance benefits.
    In 1996, the Republican Congress recognized the importance 
of funding these reviews and provided $3.68 billion over the 
1996-2002 period to allow the Social Security Administration to 
conduct the CDRs. Now that this special funding has expired, 
review backloads are climbing again. Denying the Agency's 
special funding for these reviews undermines public confidence 
and disability programs and costs taxpayers money.
    It is imperative that the budget resolution follows the 
lead of the administration and sets aside funds for these 
reviews. The President has done his part by requesting a budget 
that will allow the Agency to keep its commitment to seniors, 
individuals with disabilities, and to survivors. Even in this 
tight budget environment, Congress must fulfill its 
responsibility to the Social Security beneficiaries.
    I thank you, Mr. Chairman.
    Mr. Shays. Thank you, Mr. Shaw.
    Mr. Scott. I have no questions other than I was intrigued 
by his use of the word ``cut.'' I tried to get the chairman to 
use that word and he would not do it--cutting benefits. 
[Laughter.]
    Thank you.
    Mr. Shaw. Well, the younger workers are going to pay more 
into Social Security than my generation. It is basically unfair 
that we do not craft a system that will guarantee them at least 
as good, if not a better, retirement than we are looking 
forward to. Social Security is nearing a crisis. There were 40 
workers per retirees when it was put on line back in the late 
1930s and 1940s. There is now a little over three workers per 
retiree. Soon it is going to be two. Obviously we have to do 
something more than we are doing if we are going to keep this. 
In its present form it cannot continue as a pay-as-you-go 
system. Why should not we be taking this surplus right now that 
is coming into Social Security and putting it into individual 
accounts for American workers?
    Mr. Scott. Well, I can tell you why, because we are using 
it for something else. But I was intrigued by your 
categorization of a reduction in the cost of living and an 
increase in the retirement age would constitute a cut.
    Mr. Shaw. I agree with you. I can tell you that to those 
beneficiaries they will certainly think it is a cut.
    Mr. Scott. I agree with you.
    Mr. Shaw. Why should we go through this notch thing again? 
That is what we would be looking at.
    Mr. Scott. Thank you, Mr. Chairman.
    Mr. Shays. Thank you. I recognize myself to just say that I 
think by the time I retire I get benefits at age 67. I do not 
think it is a cut because I was given enough of time to 
anticipate it. I could be wrong, but my mom is a healthy 
tennis-playing woman who drives a car. She was born a long time 
ago. I just think many people live much longer. I cannot 
imagine why we try to encourage people to retire at age 65 and 
then live for another 30 years.
    Mr. Shaw. We are raising the retirement age slowly. That is 
not a bad thing right at this particular point. But what the 
chairman was talking about was further modification of the 
program. If it was the only way to do it, I would say do it. 
But in that I have a model right now that is online and that 
has been filed by both the Clinton and the Bush administration 
as saving Social Security for all time without increasing 
taxes, and without cutting benefits, and creates a surplus, why 
would we not do it? Why do we not do it? If you have to make 
modifications to save the program, so be it. But you do not. 
That is the bottom line. I have demonstrated that. This is what 
we need to go forward.
    I would say to you, Mr. Scott, I am looking for some 
assistance on the Democrat side of the aisle. I would be glad 
to spend some time with you to go over this program because it 
is something that I think the Democrats should really support. 
I think they would like it. In fact, I think they may be easier 
to sell on it than some of my Republican friends.
    Mr. Shays. I thank the gentleman. He is right. He has been 
advocating this a long time. I would think we would do what he 
suggests, plus some other things as well and really nail it 
down nicely.
    Mr. Shaw. We will leave those other things for another day. 
Thank you, gentlemen.
    Mr. Shays. OK. Thank you, Mr. Shaw.
    At this time, Mr. Rogers, I think you are next. We will 
recognize you. Thank you for being here.

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

    Mr. Rogers. Thank you, Mr. Chairman, and members of the 
Budget Committee for allowing me to come before you today and 
share a few of my thoughts with you.
    Mr. Chairman, I come before you once again with a message 
of fiscal restraint, personal responsibility, and sacrifice. 
The events of the past year have reminded us once again of our 
need to sacrifice at the Federal level. Right now in 
Afghanistan and Iraq, tens of thousands of soldiers, including 
National Guardsmen and Reserves, are fighting for our country 
and the cause of liberty. These brave Americans understand the 
meaning of sacrifice and have said goodbye to their families, 
their loved ones, and their communities to serve our country 
for extended periods of time.
    As we speak, thousands of Alabamians all across my home 
State are looking for work. To these families, tight budgets 
and unpaid bills are facts of life, not political slogans, and 
serve as daily reminders of the challenges of unemployment. For 
many of these Alabamians, sacrifice means not being able to pay 
for groceries or get gas for their car. It means putting off 
home repairs. Sacrifice means having to make a choice between 
the things you want and the things you can afford. That is the 
choice we have in Congress, Mr. Chairman.
    While the demands placed on the Federal Treasury were 
unique in this past year, we must now look to the future with 
clear and sober eyes. We must get the Federal budget squarely 
on track toward a balanced budget and resist the urge to spend 
beyond our means. That said, we are still a Nation at war. 
Fiscal discipline in Washington must be practiced but not on 
the backs of our fighting men and women defending liberty 
overseas. We must meet our responsibility to fully fund the 
Defense and Homeland Security Departments.
    Mr. Chairman, I said last year the sacrifices should not 
stop in Washington. You and your colleagues on the Budget 
Committee will continue to face pressures to drastically 
increase spending. I respectfully urge you not to relent on 
your commitment to keep our fiscal priorities in line. It will 
not be easy, but I firmly believe we are up to the task.
    On behalf of the Alabamians sacrificing at home and abroad, 
I commend you, Mr. Chairman, as well as the other members of 
the Budget Committee, for your past efforts in remembering our 
fiscal responsibilities. Once again, I 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 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 you once again with a message of fiscal 
restraint, personal responsibility, and sacrifice.
    The events of the past year have reminded us once again of our need 
to sacrifice at the Federal level. Right now in Afghanistan and Iraq, 
tens of thousands of soldiers, including National Guardsmen and 
Reserves, are fighting for our country and the cause of liberty. These 
brave Americans understand the meaning of sacrifice, and have said 
goodbye to their families, their loved ones, and their communities to 
serve our country for extended periods of time.
    As we speak, thousands of Alabamians all across my home state are 
looking for work. To these families, tight budgets and unpaid bills are 
facts of life, not political slogans, and serve as daily reminders of 
the challenges of unemployment.
    For many of these Alabamians, sacrifice means not being able to pay 
for groceries, or get gas for the car. It means putting off home 
repairs. Sacrifice means having to make a choice between the things you 
want, and the things you can afford.
    That's the choice we have in Congress, Mr. Chairman. While the 
demands placed on the Federal Treasury were unique in this past year, 
we must now look to the future with clear and sober eyes. We must get 
the Federal budget squarely on track toward a balanced budget, and 
resist the urge to spend beyond our means.
    That said, we are still a nation at war. Fiscal discipline in 
Washington must be practiced, but not on the backs of our fighting men 
and women defending liberty overseas. We must meet our responsibility 
to fully fund the Defense and Homeland Security Departments.
    Mr. Chairman, as I said last year, the sacrifices should not stop 
in Washington. You and your colleagues on the Budget Committee will 
continue to face pressures to drastically increase spending, but I 
respectfully urge you to not relent on your commitment to keep our 
fiscal priorities in line. It will not be easy, but I firmly believe we 
are up to the task.
    On behalf of the Alabamians sacrificing at home and abroad, 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 once again urge you to 
continue the practice of fiscal restraint in the coming year.
    Thank you, Mr. Chairman.

    Mr. Shays. I thank the gentleman. Are you talking about the 
National Guard?
    Mr. Rogers. Our guardsmen and reservists serving overseas 
are making sacrifices for their families.
    Mr. Shays. And the challenge is in some cases is that their 
mortgage may be higher than their actual salary in the 
military?
    Mr. Rogers. Not just the mortgage. I am just talking about 
many of them take dramatic paycuts to go overseas away from 
their full-time jobs, just as was the case when my legislative 
director, who just spent 11 months in Iraq. He took a dramatic 
pay cut to serve his country.
    Mr. Shays. But my sense is that because they are used to a 
higher level of income, they probably have brought their 
expenses up.
    Mr. Rogers. Exactly.
    Mr. Shays. Such as a higher mortgage, and so on.
    Mr. Rogers. Correct.
    Mr. Shays. The challenge I wonder, though, is how do we pay 
them more than we pay the active forces? That is what I wrestle 
with. I happen to agree with your comment. I am not looking to 
have a long debate on this, but I am wondering if you have 
given some thought to that?
    Mr. Rogers. No, sir.
    Mr. Shays. But you raised the point that is well taken, 
especially when they are called more than once.
    Mr. Scott?
    Mr. Scott. I introduced a bill a couple of days ago that 
would increase salaries for Reservists, National Guards, and 
anyone deployed away from home more than 6 months $1,000 a 
month.
    Mr. Rogers. I like that. You say you introduced that?
    Mr. Scott. Right.
    Mr. Rogers. I will get a copy of it. Thank you very much 
for bringing that to my attention.
    Mr. Shays. Mr. Rogers, thank you very much for being here. 
I appreciate your testimony. It is a very important issue.
    Mr. Case, and then we will go to you, Mr. Issa.

 STATEMENT OF HON. ED CASE, A REPRESENTATIVE IN CONGRESS FROM 
                      THE STATE OF HAWAII

    Mr. Case. Mr. Chair, colleagues, and members of the Budget 
Committee, good afternoon and aloha'.
    First of all, I wish you a Happy Girls Day. In the Japanese 
tradition which we follow in Hawaii, this is Girls Day when we 
celebrate the special qualities of young women. So, to all of 
the girls in our lives, Happy Girls Day. By the way, the boys 
get their own day on May 5th in the Japanese culture, so we 
will have to wait a little longer.
    Thank you for the opportunity to testify on the fiscal year 
2005 Federal budget. I did give you written testimony which I 
ask be inserted into the record. In the interest of time, I 
would simply highlight and summarize my testimony.
    We are engaged in a great debate over our Federal finances 
and budget and everything inbetween--taxes, economic 
performance, spending, efficiencies, priorities--as well we 
should be. In fact, that debate is long overdue. There are 
incredibly difficult decisions to be made. I hope we make them 
this year. I hope we make them in the coming years rather than 
putting them off.
    But what I find too often missing in this debate is really 
the real-life human dimension. How this great debate actually 
translates to our States, our communities, our families, and 
the people we represent; what the decisions we make here 
actually mean to the everyday lives of those that we represent.
    I would like to use my time to tell you, then, a little bit 
about the perspective from which I take this debate, and the 
context in which I view it, and the people in my district view 
it so that you will understand it and perhaps the Budget 
Committee will have the human dimension, at least, from one 
representative's perspective.
    Let me tell you about my district, briefly. I represent 
Hawaii's Second Congressional District. That is all eight of 
the major islands of Hawaii, plus all of the Northwestern 
Hawaiian Islands. It stretches out over 1,500 miles of the 
Pacific. There are many islands. The only part of that 
archipelago that I do not represent is urban Honolulu.
    In many ways this district is like other comparable 
suburban or rural districts. It relies on a smaller scale 
economy. It has challenges in terms of access to Federal and 
State services that are primarily provided and increasingly 
provided in centralized urban areas.
    But my district is also virtually unique in some very 
special ways that make the challenges even more unique and 
special. First of all, just basic geographic isolation. Just 
think that once you travel from Washington, DC to the west 
coast, you are only halfway home. You have to go that much 
farther across the Pacific before you reach Hawaii, one of the 
most remote if not the most remote archipelagos in the world.
    Second is the fact that it consist of islands. This creates 
special challenges from the perspective of transportation, of 
access to services. I will talk a little bit more about this 
later. But these are islands here separated by water. You 
cannot just hop a bus. You cannot just hop rail. You cannot 
just hop a ship. It does not work that way.
    Third, basic ethic diversity, the most ethically diverse 
district in the entire country. The largest population of 
native Hawaiians nationwide, the largest population of 
Filipino-Americans nationwide, one of the two largest 
populations of Asian-Americans nationwide, and the third 
highest percentage of residents that are foreign born Statewide 
in the United States.
    Fourth, just basic environmental diversity--a really unique 
ecosystem with the most unique and endangered flora and fauna 
anywhere in the world. We love to show off to fellow Members of 
Congress our scenic resources if they want to come to do some 
work with us in Hawaii.
    This combination of factors creates some circumstances 
leading to unique challenges. I just want to give you a couple 
of examples to give you the flavor of what we deal with on the 
ground from a budget perspective.
    Let me take the first example of the community of 
Kalaupapa. Kalaupapa is well known as one of the few Hansens 
Disease settlements in our country. Father Damien's colony, for 
those of you familiar with it, is located on a peninsula on the 
island of Molokai, which is a very remote island. It is only 50 
miles by air from Honolulu International Airport, but it is a 
world away. Kalaupapa, therefore, suffers from the fact that it 
is totally remote. Sometimes the rules do not apply to a place 
like Kalaupapa.
    For example, the amendment last year that proposed to cut 
off essential air services to any community within 100 miles, I 
think it was, of a major international airport. Well, Kalua 
Paupa is half that distance, but you cannot get there from 
here, as they say.
    Another example is Native Hawaiian education. What works 
for us education-wise in Hawaii is education in the Native 
Hawaiian language for Native Hawaiian people. Education that is 
culturally relevant. It works for them. Yet that is something 
that is really foreign from the perspective of Washington.
    So, as we look for programs from our Federal Government to 
assist us, we have to tailor them to the unique challenges of 
our district.
    Some specific areas of need that arise from these 
challenges include education. We have all debated long and hard 
on No Child Left Behind and IDEA full funding. I want to be on 
record as fully endorsing that. Either we fund them to the 
level of commitment that the Federal Government undertook, or 
we do not have the mandate to start with. I think that is a 
virtually uniform judgment and political philosophy.
    I want to respond briefly to the comment from some that the 
problem with education is that the money from the Feds is going 
to the States and the States are not spending it. In fact, I 
asked my State whether that was the case and was told that 
there is about $800,000 from fiscal year 2003 that went to the 
State of Hawaii, but was not spent. That is a drop in the 
bucket, really. Yes, it is still a lot of money, and we have to 
understand why they did not spend it. But it is not a 
significant portion of the amount that is coming. I think the 
problem is, in fact, funding.
    I dealt briefly with transportation and essential air 
services. For my communities in an island State, that is a 
lifeline, not an option. The communities of Hawaii that rely 
upon essential air services rely upon it for their virtual 
community life and not as just another way to get to the other 
areas.
    Health care has its own unique challenges for those of us 
representing rural isolated communities. The emphasis on 
community health centers by the President in his budget is 
welcome.
    I spoke about an environment and the environmental 
protection needs of my State. This is not just a matter of 
protecting these resources for Hawaii. It is a matter of 
protecting them for our country and our world. Again, not just 
as an obligation that we all bear to try to preserve the 
endangered species of our world, but also for future research 
in medicinal purposes. Just as we often talk about Brazil, the 
same is true of a place like Hawaii.
    We are under threat in terms of our endangered places, and 
our endangered species. So the provisions of the budget that do 
not adequately fund Federal acquisition protection of natural 
resources, I believe, should be beefed up, and similarly in the 
area of invasive species where we have a tremendous problem in 
Hawaii with such things as the brown tree snake, the Loqui 
frog, and other unique and exotic, in the true scientific sense 
of the word, species coming into Hawaii.
    I really have only just touched the surface. There are many 
other areas like small business, veterans, Native Hawaiian 
issues, and traffic that have unique needs. But what does all 
these mean really in the big picture of our budget?
    First of all, we can talk all we want here in Washington, 
DC, but these are the needs. These are real needs. These are 
not just wants. These are not just wishes. They are needs. 
These are people, counties, and State needs. They should get 
help from our government, provided that our government can 
provide them. This is not abstract thinking.
    I think the challenge we all have--and I try to take it 
from a nonpartisan perspective--is how do we afford what we 
need as opposed to what we want or what we just desire. Over 
time, how do we afford what is needed? Not just next year, not 
just 2 years down the road, but over time.
    In my sense what we are all looking for is the recognition 
of the needs of our communities, not the wants, but the needs. 
How do we provide them, and how do we arrive at a balance 
between a fair, appropriate, and adequate level of taxation and 
revenues, and appropriate and justified spending.
    I am not on the Budget Committee, and although I follow the 
debate closely, I think the number one challenge for our 
Congress is balancing this budget. Everything else starts there 
and ends there. We have to do it. I see the debate unfolding as 
a relatively junior member of this body. I see a bunch of 
exclusivity cropping up where some people say the solution is 
here and some people say the solution is there. But very few 
people are saying the solution is all of the above.
    I think that is where we are going to end up. I think we 
all need to give a little bit. I think we need to curb revenue 
reduction. I think we need to curb spending increases. I think 
we need to curb Federal borrowing. I think we need to curb 
inefficiency and waste in Government. I think all of them have 
a place to play. Most of all, we need a long-term vision.
    I appreciate the time of the committee today.
    [The prepared statement of Mr. Case follows:]

 Prepared Statement of Hon. Ed Case, a Representative in Congress From 
                          the State of Hawaii

    Chairman Nussle, Ranking Member Spratt, and members of the 
committee:
    Thank you very much for providing me with an opportunity to appear 
before you today.
    As we evaluate the President's fiscal year 2005 Federal budget and 
make the difficult choices we must, I believe it is critical that we 
remember many of the important domestic programs that are vital to the 
quality of life and well-being of our nation's citizens. I also believe 
it is my obligation to provide this committee with an understanding of 
the needs of my district--Hawai'i's second--and the extent to which our 
needs and concerns are similar to those of the rest of the country and 
where our needs are unique given Hawai'i special circumstances. In 
other words, I want to put a human face on this budget debate from the 
perspective of those I represent.

               I. SECOND CONGRESSIONAL DISTRICT OF HAWAII

    I represent the Second Congressional District of Hawai'i, which 
encompasses the eight major islands of the State of Hawai'i, including 
the Big Island of Hawai'i, Maui, Kaho'olawe, Moloka'i, Lana'i, Kaua'i, 
Ni'ihau, and O'ahu (except for urban Honolulu), as well as the 
Northwestern Hawaiian Islands.
    The State of Hawai'i generally and the Second District specifically 
are among the most ethnically diverse political jurisdictions in the 
nation. Minorities account for over half the population, including the 
highest percentage of Asian and Pacific Islanders. Native Hawaiians, 
the State's indigenous people, account for 20 percent of the 
population. Hawai'i also ranks third among the States for having the 
highest percentage of persons born outside the United States. 
Accordingly, the delivery of Federal services is most effective when it 
takes into account, and is designed with an understanding of, the 
language and cultural barriers that exist in Hawai'i and my Second 
District.
    The 600,000 residents of the Second District, which is suburban and 
rural, are separated by water and almost entirely dependent on 
expensive commercial aviation to get from one island to another. 
Because its residents are unequally distributed among the islands, 
parts of the district are relatively sparsely populated. The Island of 
Hawai'i, for example, covers an area of 4,000 square miles yet has only 
160,000 people. The Island of Moloka'i covers 260 square miles and has 
just 7,800 people. There are communities in my district, particularly 
on the islands of Maui and Moloka'i, that are very isolated and depend 
on essential air services.
    In addition, the Hawaiian Islands, which are even more 
geographically isolated than the Galapagos, are home to numerous native 
plant and animal species, many of which are increasingly threatened by 
invasive plants and animals.
    For all the reasons noted, when I speak of the needs of my 
district, I also speak of the needs of the different ethnicities, the 
different islands, and the different environments that make up my 
district.

                            II. UNIQUE NEEDS

    Many of the needs and concerns in my district are similar to those 
found in other congressional districts across the country. The dominant 
concerns, like elsewhere, are the economy and jobs (especially small 
businesses), education, health care, crime and drugs, traffic and 
infrastructure, and the environment. But Hawai'i, especially my rural 
district spread over many islands, also has some special needs that I 
want to bring to your attention.
    Education: Education is and should be our primary challenge and our 
top priority. I strongly support the goals of the No Child Left Behind 
(NCLB) Act and the Individuals with Disabilities Education Act (IDEA). 
However, the government's failure to fully fund these programs has 
placed a heavy burden on the States, which are unable to fulfill what 
they consider an unfunded Federal mandate. I urge this committee to 
focus on the need to fully fund NCLB and IDEA in the consideration of 
the fiscal year 2005 budget.
    I would like to note, however, that NCLB's structure does not 
necessarily work in my district. I believe there must greater 
flexibility for rural areas, like Hana, an isolated community on the 
Island of Maui that qualifies for essential air services. Teacher 
retention is a major issue for Hana Elementary and High School. Under 
NCLB, a teacher who has a degree in only one content area is not 
considered to be ``highly qualified'' to teach anything other than that 
content area. This particular NCLB regulation should not be applied to 
isolated rural communities where a limited teacher pool often results 
in one teacher teaching a multitude of subjects.
    Transportation: I am very concerned with the cuts in the 
President's fiscal year 2005 budget to the essential air service (EAS) 
program. Due to their remoteness and isolation, the Second District 
communities of Kalaupapa, Hana, and Kamuela currently qualify for EAS. 
Kalaupapa on Moloka'i is the perfect example of the unique needs of my 
district. Located on the north coast of the Island of Moloka'i on a 
peninsula at the foot of some of most spectacular sea cliffs in the 
world, Kalaupapa is just 50 miles from Honolulu. However, there are no 
roads, bridges, tunnels, or ferries linking this remote and isolated 
community to other islands or to the rest of Moloka'i. Accordingly, 
residents and visitors to Kalaupapa must rely on EAS. While Kalaupapa 
clearly qualifies for EAS designation, a credible case could be made 
that all of Hawai'i's communities, both urban and rural, qualify for 
EAS given the State's near total reliance on the airplane for travel 
from island to island and the difficulties facing its interisland air 
carriers, one of whom remains in bankruptcy. I want to impress on the 
committee that EAS is indispensable to States such as Hawai'i and would 
urge the restoration of funds for this program.
    Army Corps of Engineers Water Projects: With regard to water 
projects, the President's fiscal year 2005 budget focuses on completing 
work already started and on reducing the backlog of such civil works 
projects. However, the President's budget zeroes out funds for several 
ongoing projects in my district. I ask Congress to restore funding for 
the Army Corps' overall budget and for the following projects in my 
district. These include:
    Ma'alaea Harbor Construction on the Island of Maui. The Army Corps 
of Engineers is modifying the harbor's breakwater to eliminate the 
harbor's adverse navigation conditions and increase its berthing 
capacity for commercial craft.
    Kaumalapau Harbor on the Island of Lana'i. The Corps is improving 
the State's Kaumalapau Harbor to construct a 350-foot long breakwater 
and to deepen the harbor to make it less dangerous for barge traffic to 
enter and berth in the harbor when rough seas and surge conditions 
prevail. The harbor is the only berthing facility of the Island of 
Lana'i, which has a population of 4,600 and is entirely dependent on 
ocean traffic for the delivery of goods and supplies.
    Kikiaola Small Boat Harbor Construction on the Island of Kaua'i. 
The Corps is modifying the Kikiaola Small Boat Harbor, which was built 
in 1959 on Kaua'i by the State of Hawai'i, to provide additional wave 
protection for boats and to prevent shoals from forming. The harbor has 
a shallow and narrow entrance, and it often experiences overtopping at 
its east breakwater. These conditions severely limit maximum 
utilization of the facility.
    Small Business: Microloan Program. Low-income communities in need 
of revitalization will be negatively affected by the administration's 
decision to terminate several programs designed to foster economic 
development, especially the Microloan program. It makes no sense to cut 
the one program that is designed to make loans to extremely small firms 
and entrepreneurs. Last year, the Microloan program provided $26.5 
million in loans and $15 million in technical assistance.
    Hawai'i has many extremely small and isolated communities that 
depend on mircoenterprises. For example, the 7,800 residents of the 
Island of Moloka'i do not have any shopping malls or even fast-food 
restaurants. New small businesses on the island do not need the larger 
loans typically provided by other Small Business Administration 
assistance programs. In fact, the typical Microloan borrower would not 
qualify for a 7(a) loan due to any number of reasons including lack of 
collateral and formal business training. These businesses only need a 
few thousand dollars and technical assistance to bring their 
entrepreneurial dreams to reality.
    By eliminating the Microloan program and other similar economic 
development initiatives in the fiscal year 2005 budget, we are hurting 
those who only need a small helping hand to bring them to economic 
self-sufficiency.
    Manufacturing Extension Program. Many communities have been hurt by 
the loss of manufacturing jobs, yet due to the administration's budget 
priorities an effective program for helping our small manufacturers, 
the Manufacturing Extension Partnership (MEP) program, is in danger of 
being rendered ineffective. The funds in the President's fiscal year 
2005 budget are two-thirds less than what are required to maintain the 
existing MEP network of centers and services. As the country struggles 
to expand upon the positive economic indicators we have seen the past 
year, we must maintain the Federal support needed for the manufacturing 
sector, not cut it.
    MEP is especially crucial in Hawai'i, where the small manufacturing 
sector does not have the traditional support network found on the 
mainland. Many local businesses depend on the MEP because they have 
very few alternatives.
    This program has repeatedly proven itself in Hawai'i. For example, 
Kapala Ahu, a local company from Kane'ohe, came to the Hawai'i MEP for 
help in developing its strategic plan. Working closely with a local 
consultant, the Hawai'i MEP helped Kapala determine its strategic 
direction. By avoiding expansion costs and loss of revenue associated 
with products with low profit margins and instead focusing on the 
company's optimum potential, Kapala Ahu saved nearly $100,000 in short-
term costs and developed a strategy for the future. This is only one 
example of the MEP's many success stories.
    Clearly, supporting the MEP allows the government to ensure the 
survival and health of our economy by making businesses more 
productive, profitable, and globally competitive.
    Health: We in Hawai'i face many challenges, many of them unique to 
our State or specific communities, in providing quality healthcare to 
our citizens, including our veterans. My Second Congressional District 
shares the concerns other smaller, more isolated areas in our nation 
cope with in terms of basic healthcare access, delivery, and quality. 
However, our geographic isolation, not only from the contiguous U.S., 
but also from our neighbor islands to the Island of O'ahu, as well as 
our multicultural population and commitment to Native Hawaiians, 
creates challenges requiring specially tailored solutions.
    Community Health Centers. We all know that community health centers 
improve the health of our nation by providing comprehensive primary and 
preventive health care services to underserved populations, regardless 
of ability to pay. I believe that our community health centers play an 
even larger role in our rural communities where options and access are 
severely limited. I support President Bush's fiscal year 2005 budget 
request of $219 million to help our community health centers extend 
services to an additional 1.6 million individuals. New health centers 
in remote communities need our continued support, and I am hopeful that 
such funds will aid in the establishment of community health centers in 
West Hawai'i and North O'ahu or further the development of Moloka'i 
'Ohana Health Care.
    Telehealth. We are all familiar with many of the types of 
technologies used in telehealth, such as videoconferencing, the 
internet, and wireless communications. However, full use of these 
technologies to maximize resources and collaborative communication in 
healthcare has not been fully realized by many of our rural, 
underserved populations. To that end, I wholeheartedly support 
increased funding for the Telemedicine Grant Program and the Federal 
Office for the Advancement of Telehealth.
    Substance Abuse. General drug abuse, of course, has plagued many of 
our communities for decades. We know that the roots of drug abuse lie 
largely where educational and economic opportunity are lacking and the 
social and community fabric are torn. Thus, in the big picture and long 
term, our best efforts to stamp out drug abuse lie in fixing our 
economy, improving our schools, and strengthening our families and 
communities.
    I fully support providing additional assistance for a major rural 
health concern in Hawai'i: fighting the crystal methamphetamine 
epidemic. The true solution to end the scourge of crystal 
methamphetamine, also known as ice, lies in supporting the efforts of 
our law enforcement officers, preventing drug use through education, 
and providing local rehabilitation options to treat the disease of 
addiction. It is uniquely up to our Federal Government to lead on this 
issue as it is the only entity with the full resources and ability to 
coordinate this indispensable multi-pronged approach to stamping out 
drug abuse.
    Most encouraging, whole communities are rising up across our State 
to say: yes, ice is our problem, and we must all be part of the 
solution. Kahalu'u on the Island of O'ahu was the first community to 
hold ``ice breaker'' meetings and start sign waving efforts. My own 
home island, the Big Island of Hawai'i, recently held its third 
islandwide ``Hugs Not Drugs'' sign waving campaign, which in the past 
has had the support of over one thousand citizens from 23 communities 
and neighborhoods.
    Veterans' Healthcare: Mr. Edward S. Banas, commander in chief of 
the Veterans of Foreign Wars, recently called the VA's health care 
spending proposal ``a disgrace and a sham.'' The Veterans of Foreign 
Wars and other veterans' groups realize that the fiscal year 2005 
budget request threatens the fiscal solvency of the VA health care 
system.
    Even though the VA Under Secretary for Health testified last year 
that it requires an average yearly increase of 12 percent to 14 percent 
to meet the cost of inflation and mandated salary increases for VA 
medical care, the administration only increased the VA health care 
budget by $310 million, a meager 1.2 percent more than the fiscal year 
2004 amount. In additional to this derisory increase, the 
administration's budget proposal relies far too heavily on budget 
gimmicks and higher out-of-pocket costs for veterans. For example, the 
President wants to establish a $250 enrollment fee and impose a $15 
prescription drug copayment fee for some veterans along with preventing 
category 8 veterans from even enrolling for medical care.
    The 120,000 veterans in Hawai'i already pay too much to receive 
their benefits, and the proposed policy changes will only make it more 
expensive for them to receive the health care benefits they earned by 
honorably serving our nation. The budget does nothing to account for 
the geographic isolation of veterans in Hawai'i and many rural areas 
through the United States. This geographic isolation is one of the 
largest cost drivers for the veterans I represent. Hawai'i is an island 
State with people spread across seven islands, yet the VA only has 
facilities on four islands. Moreover, only the Island of O'ahu has a 
full service medical facility. To obtain the benefits our veterans 
rightly deserve, many veterans have to take expensive flights from 
their home islands to the Island of O'ahu and sometimes they must fly 
to the West Coast to receive critical medical care. Why should we ask 
our veterans to pay even more when they already pay too much to even 
reach a VA facility?
    It is time to refocus our budget priorities so that our veterans do 
not suffer. We need to place them outside the partisan budget fights.
    Environment: Hawai'i's environmental concerns are another area 
where our challenges are somewhat different than those faced on the 
mainland United States. Although anyone visiting Hawai'i will be 
impressed by our beautiful beaches, green mountains, and clean air, we 
face significant challenges in protecting our unique environment.
    As one of the most remote areas geographically in the world--more 
than 2,000 miles from a major land mass--Hawai'i developed a unique 
ecosystem of native plants and animals that are particularly vulnerable 
to extinction. In fact, more species have become extinct in Hawai'i 
over the past 200 years than in the whole of North America from the 
time of Columbus. Some 100 native Hawaiian plant species have fewer 
than 20 known individuals remaining.
    The major threats to Hawai'i's environment are invasive species and 
rapid development, which often threatens irreplaceable ecosystems and 
coastal lands.
    Invasive Species. I ask the committee's support for efforts by the 
USDA Wildlife Services, U.S. Fish and Wildlife Services, the Department 
of Defense, and the Office of Insular Affairs to address invasive 
species problems in Hawai'i.
    Of particular concern is preventing introduction of the brown tree 
snake to Hawai'i. This pest has virtually eliminated the native bird 
and lizard populations on Guam. Over the years, several snakes have 
stowed away on army transports and civilian flights from Guam and 
arrived live in Hawai'i. Efforts to control the snake population on 
Guam and to prevent introduction in Hawai'i are a top priority. 
Introduction of the snake into Hawai'i would be a monumental ecological 
disaster. I therefore appreciate the slight increase in fiscal year 
2005 funding for brown tree snake funding out of the Office of Insular 
Affairs at the Interior Department.
    Another concern is a recently introduced invasive species, the 
coqui frog. This frog, which is native to Puerto Rico, has spread 
rapidly in Hawai'i, where it has no natural enemies. The frog is about 
the size of a quarter but has a call that ranges from 70 to 90 decibels 
(comparable to a lawnmower) and is repeated by male frogs all night 
long. Concentrations are 5 times higher in Hawai'i than in Puerto Rico. 
Aside from being a major noise nuisance, coqui frogs have a voracious 
appetite that puts Hawai'i's unique insects and spiders at risk. They 
can also complete with endemic birds and other native fauna that rely 
on insects for food. The economic impacts include constraints on the 
ability of Hawai'i's important nursery industry to export its product, 
as well as potential damage to our vital tourist industry and land 
values throughout the State.
    Other major risks to Hawai'i include the West Nile Virus, which 
would endanger our native birds; the Red Imported Fire Ant, the 
Africanized Honey Bee (Hawai'i has one of the purest and most disease 
and parasite-free populations of honey bees in the world), and so on. 
Other invasives, like the Mediterranean fruit fly, have damaged not 
only our ecosystem but prevent Hawai'i from exporting much of its 
tropical fruits and vegetables to the U.S. mainland and 
internationally.
    Protecting Unique Places. Land conservation is another vital tool 
for protecting our endangered species and unique environments. I 
encourage the committee to provide the highest possible level of 
funding for the Land and Water Conservation Fund, and specifically to 
support the president's fiscal year 2005 funding request for land 
acquisition by the National Park Service.
    At the end of the 107th Congress, H.R. 1906 (P.L. 107-340) 
authorizing expansion of Pu'uhonua o Honaunau National Historical Park 
was signed into law. This was the last bill to become public law that 
was introduced by my predecessor, Congresswoman Patsy T. Mink. The 
acquisition of 238 acres to expand this park is a high priority for the 
National Park Service and for the people of the Big Island of Hawai'i. 
I would be grateful for any assistance you could provide in this 
regard.

                          III. THE BIG PICTURE

    So where do all of my requests fit in the big picture as your 
committee works to prepare a budget resolution? Clearly my district has 
needs in common with the rest of the nation and unique needs given our 
location, geography, population characteristics, and history. These 
needs are real, and can and should be serviced by the Federal 
Government.
    If the Federal Government is to fund its core programs and to help 
our districts address critical needs, it will have to find a balance 
between an appropriate and justifiable level of taxation and an 
appropriate and justifiable level of spending. It is critical, however, 
that we not fail to make prudent investments today in our children's 
education, in preventive health care, in transportation infrastructure, 
in small businesses, and in protecting our environment that will not 
only save money in the future but will ensure the quality of life and 
natural heritage of future generations of Americans, for both Hawai'i's 
Second District and our entire country.
    Mahalo!

    Mr. Shays. I appreciate the gentleman's time. I had the 
opportunity to train in the Peace Corps in Molokai. I consider 
Hawaii one of the most beautiful places I have ever seen in the 
world. It is in a magnificent place. But it is as diverse as 
you can imagine. I think it is important that you come and 
share this with us. I thank you for doing that.
    Mr. Case. Thank you, Mr. Chair.
    Mr. Shays. Thank you very much.
    Congressman Issa, you are a force to be reckoned with. It 
is great to have you here.

STATEMENT OF HON. DARRELL E. ISSA, A REPRESENTATIVE IN CONGRESS 
                  FROM THE STATE OF CALIFORNIA

    Mr. Issa. Thank you, Mr. Chairman, and Ranking Member 
Scott. I would ask that my formal statement be put in the 
record. I will be brief. I am in complete support of the talk 
that we are talking here in Washington that we are going to 
have a strong budget, that we are going to force 
reconciliation, and we are going to live within our means.
    September 11th is now a bitter memory. It is time that we 
fiscally move on from many of the challenges that we faced and 
answered with dollars in the days following that terrible 
attack. Obviously we have a continued commitment to homeland 
security and the war on terrorism. To that extent, I would like 
to take just a moment to thank the President's budget people 
for their proposal.
    I support the proposal that we create homeland security 
fairness. The formula will now ask Congress to reallocate 
monies based on need and not based on simply every State 
getting the same amount. That resulted in California getting 
about $5 per capita, while States like North Dakota and Wyoming 
getting $29 to $35 per capita. I do not believe that my fellow 
members from those States would feel that that was just. 
Hopefully, this rearrangement will bring some much needed funds 
to our ports in California, but again, being fund neutral.
    I do have a couple of areas of specific concern. I do not 
want to be a budget buster, but one of them specifically is 
SCAAP funding, and impact aids. These are not areas that I 
believe that are really discretionary. The Federal Government 
has a responsibility to deal with immigration, deal with our 
borders, and deal with the effects of those failures. SCAAP 
funding is what reimburses law enforcement when we incarcerate 
criminal aliens we catch. We are only talking about the worst 
of the worst.
    We are not talking about the medical costs for indigents 
who come from other countries illegally and become wards. We 
are talking strictly about criminal aliens that, to be candid, 
would cost the Federal Government much more money if we simply 
demanded them to be transferred to Federal prison to serve out 
their terms. In many ways, it is saving the Federal Government 
money. I assure you that the people of California would be 
happy if they could empty those prisons in some legitimate way, 
but for public safety, they need to be kept.
    The $300 million that was in the previous year that has now 
been zeroed out, is a significant cut because California 
incarcerated a huge amount of these illegal aliens. I ask that 
that be put back in at last year's level, recognizing that we 
have not done immigration reform and until we do, we certainly 
cannot ask the States to bear the cost of something which we 
are not even dealing with.
    Secondly, when it comes to impact aid, impact aid is not a 
discretionary expense. As the chairman knows, we do not pay 
property tax on Camp Pendleton with 43,000 Marines, and 
basically 30,000 of them are on rotation right now to Iraq. We 
have onbase housing. Children living in that onbase housing go 
to public schools. Impact aid simply helps defray the cost of 
educating these children in public schools when, in fact, we 
are not paying the property tax that normally pays for that. 
Actually some of the public schools are on base, but if we 
started paying directly for those schools, hiring Federal 
workers to be teachers, and so on, it would cost us more.
    Again, this is a reimbursement for an expense that the 
children of fighting men and women very often deployed overseas 
are being educated in these schools. We are simply reimbursing 
a portion of the cost. I must tell you that the calculations 
are that we reimburse less than a quarter of what the property 
tax would be on the built-up home areas.
    Even though my Governor has made it very clear that at 77 
cents on the dollar, California is about $30 billion under 
return the monies that we send to Washington, I am not here 
today on that issue. That is an issue of redoing formulas that 
are well above one hearing or one meeting in order to get a 
little bit of fairness in those formulas.
    I am here to say that when it comes to obligations the 
Federal Government makes, if they are not being reimbursed for 
at least part of it, that is not meeting a commitment that is 
undeniable. I would hope that those two areas would receive the 
highest priorities.
    I thank the chairman and the ranking member for your 
indulgence.
    [The prepared statement of Mr. Issa follows:]

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

    Thank you for allowing me to testify today. I appreciate all the 
hard work the committee has done to arrange this hearing, allowing 
Members a chance to voice their thoughts on the fiscal year 2005 budget 
resolution.
    Mr. Chairman, once again this year, we are faced with the prospect 
of a record budget deficit. With pressing needs for homeland security 
and defense, it is more important now than ever that we hold the line 
on spending.
    I, along with a number of other members, have pledged to the 
President that I will do my part by voting to maintain a Presidential 
veto of wasteful spending.
    The President's budget request holds the line on spending in some 
areas, increasing spending (excluding defense and homeland security) by 
only 0.5 percent. Mr. Chairman, it is critical that we maintain this 
fiscal discipline for the fiscal year 2005 budget resolution. Changes 
in funding need to be made with offsets, not overall increases.
    One part of the President's budget proposal that marks a 
significant improvement in spending practices is the change in the 
system for homeland security funding that will allocate money to areas 
under the greatest threat.
    Under the current formula, 40 percent of all homeland security 
funding is divided up evenly by State. This results in a horrendous 
distortion, where California receives less than $5 per capita in 
homeland security funding, while lower-risk States like North Dakota, 
Vermont and Wyoming receive between $29-$35 per person.
    Joining California in the list of under-funded States are Texas, 
New York, and Florida--all States with serious homeland security risks.
    If we are serious about creating a real homeland security network 
in this country, we must provide resources to the communities that face 
the greatest risks. The current formula for homeland security funding 
ignores the fact that certain parts of the country are under greater 
threat than others. I urge the committee to include the President's 
change to homeland security funding in the budget resolution so that 
the States that need this funding most, receive it.
    Having said this, I remain concerned about certain aspects of the 
President's budget request, which need to be addressed in the budget 
resolution.
    Over the past decade, California, the largest contributor of 
revenues to the Federal budget, has suffered a steady decline in its 
share of the Federal budget. Last year, California reached a new low in 
Federal funding, receiving only 77 cents for every dollar it sent to 
the Federal Government in taxes and fees. There are only five other 
States, all of which are far wealthier than California, that do worse.
    Despite its above-average per capita income, California has high 
levels of poverty and a Federal tax burden that continues to grow. It 
also has special needs that are often overlooked by the Federal budget 
process.
    One of the programs that received no funding in the President's 
Budget Request was the State Criminal Alien Assistance Program (SCAAP), 
which provides funding for States that have to use their own resources 
to carry out border enforcement. Every time an illegal alien is 
detained by California State authorities, the State of California is 
left with the bill for the detainee's food, transportation, lodging, 
etc. This program is essential for border States, particularly as 
homeland security threats increase the budget pressures on State and 
local law enforcement agencies.
    If Congress fails to fund SCAAP, it will be turning its back on 
efforts to enforce our immigration laws. At a time when the President 
has called on Congress to consider changes to our immigration laws and 
we examine how to best address the millions of illegal aliens already 
residing here, depriving State and local authorities of the funds 
needed to detain criminal aliens would be significant step in the wrong 
direction. I urge your committee to return SCAAP funding to a minimum 
of last year's level of $300 million, plus inflation.
    Furthermore, I want to express my concern for the funding level in 
the President's Budget Request for Impact Aid. Last year, Impact Aid 
was funded at just over $1.1 billion--$100 million less than fiscal 
year 2003. This level of funding is simply not enough for the schools 
that serve our military children and Native American reservations. In 
the face of a serious budget crunch for education in California, Impact 
Aid schools are in dire need of Federal assistance.
    Mr. Chairman, my district includes Camp Pendleton, the home of the 
First Marine Expeditionary Force, which is in the process of deploying 
to Iraq. The schools that serve the children of Camp Pendleton and the 
surrounding military communities provide vital educational and 
counseling services to help ease the problems associated with combat 
deployments. Military communities need our support. We should be 
bolstering our military families and strengthening educational 
resources for our military children, not shortchanging communities that 
have already been asked to carry the greatest burden of the war on 
terror.
    I urge you to increase funding for Impact Aid to $1.25 billion. 
Again, I would like to thank the committee for its work in preparing 
the fiscal year 2005 budget resolution and making the decisions to 
control spending that have to be made.

    Mr. Shays. I just have a comment to the member that I do 
agree with him that these are obligations that really should 
not involve discretion. If you are successful in increasing the 
return from, what is it, 77 cents?
    Mr. Issa. Seventy-seven cents. Texas, for example, the home 
of the President, is 92 cents.
    Mr. Shays. Connecticut is 67 cents. I would like you to put 
us in your package.
    Mr. Issa. I was very aware of that, Mr. Chairman. I chose 
not to include it in my statement. I will say that Connecticut 
also has poor in addition to the super rich. That is part of 
the reason that neither your State nor my State will ever get 
to the same level as States which seem to have no rich, and 
maybe less poor.
    The whole system of reimbursement favors not having rich 
people in your State. Connecticut's success and successful 
people probably will make that impossible. California, we would 
say, has an unusual situation in that we are the home of more 
undocumented and uncounted immigrants than any other State. 
That tends to create a poverty that is unaccounted for.
    Mr. Shays. Thank you. I thank Mr. Scott for not getting 
encouraged to join this conversation. [Laughter.]
    Mr. Scott, what do you get back?
    Mr. Shays. Wait a second. Do not go there. He would keep 
you here an hour. [Laughter.]
    Mr. Miller, you have the floor. Thank you for being here. 
Thanks for your patience.

  STATEMENT OF HON. JEFF MILLER, A REPRESENTATIVE IN CONGRESS 
                   FROM THE STATE OF FLORIDA

    Mr. Miller. I thank the chairman and members of the 
committee. I would also ask that the full text of my remarks be 
entered into the record.
    I appreciate the opportunity to present my views on the 
fiscal 2005 budget resolution. I do, too, applaud this 
committee's continued efforts of fiscal responsibility, and do 
look forward to a budget which this entire body can be proud 
of.
    As many may know, since I came to this Congress a little 
over 2 years ago, I have been working on a specific issue of 
particular interest to the surviving spouses of our military 
retirees, and that is restoration of the Minimum Survivor 
Benefit Plan basic annuity to 55 percent for survivors age 62 
and older.
    Under present law, surviving spouses are subject to a 
reduction of 35 percent, as part of the initial SBP law enacted 
in 1972. But this critical piece of information did not find 
its way into military retirement briefings and SBP election 
forms until many years later. Large numbers of our retirees and 
survivors feel betrayed by what they perceive as a bait-and-
switch under which they were asked to sign an irrevocable 
contract to pay lifetime SBP premiums without being told what 
annuity level they were actually buying into.
    This is just one of the many flaws in the SBP plan, but one 
that affects approximately a quarter of a million survivors of 
America's finest service members. Think of Dottie Welch, whose 
husband was Lieutenant Colonel Roger Welch, United States Army, 
Retired. He signed up for SBP years ago. He signed the 
irrevocable agreement, paid for premiums the rest of his life, 
and upon his death, Dottie's SBP benefit is actually one-third 
less than what they were led to believe.
    SBP election forms from the 1970s and 1980s illustrate why 
the Welches and so many others were misled. I have provided for 
the committee copies of this form for you to look at today.
    Why should the spouses of career military members, many of 
whom sacrificed their own retirement security in order to fully 
support their transient military families, be unknowingly 
penalized in the autumn of their lives? In the First Session of 
the 108th Congress, I introduced H.R. 548, which will restore 
the SBP annuity to the understood 55 percent. Just 1 month ago 
I introduced H.R. 3763, which accomplishes the very same 
objective, but with a more appropriate balance between equity 
and cost consideration. Both bills have received strong 
bipartisan support with 291 members sponsoring at least one or 
both of these legislative measures. I am pleased that 31 
members of this committee have cosponsored either H.R. 548 or 
H.R. 3763.
    My own thanks to your committee member, Mario Diaz-Balart, 
who became our newest cosponsor just today. Senate companion 
bills, S. 451, and S. 1916, have also received strong 
bipartisan support.
    As many of you know, the 106th Congress took steps toward 
addressing this inequity via the fiscal year 2001 Defense 
Authorization Act, which included a provision in asserting the 
sense of this Congress that there should be enacted legislation 
to reduce, and eventually to eliminate the different levels of 
SBP for surviving spouses who are under 62, and those who are 
62 years of age or older.
    But we have failed as a Congress to follow though on that 
commitment. It is time to fix this problem and the budget for 
that fix. I commend this committee's deliberation on restoring 
the SBP annuity last year, and regret that we were not more 
successful. Following the close vote on last year's committee 
amendment, I went back to the drawing board with the service 
associations and tried to address the concerns that this 
committee brought forward.
    Together, we crafted H.R. 3763 and we have cut the cost by 
an estimated two-thirds with an amended phase-in plan for 
restoring the annuity. It is an inexpensive option to address 
this long-standing problem, and probably the most inexpensive 
as we are ever likely to see. It is my hope that this committee 
will acknowledge and respond to this significant level of 
bipartisan cooperation and seize this opportunity to address 
this issue at such a low cost.
    A few key points that are worth making that I hope you will 
use as you deliberate the budget authority on this issue is 
that some 35 associations known as the Military Coalition, have 
made this their top initiative or legislative priority for this 
year, and that the view of SBP reform would mean a double 
windfall for the recipients of last year's concurrent receipt 
reform, is just plain false. The fact is that SBP affects 
survivors, actually three times as many people as concurrent 
receipt. There are 1.2 million retirees and 250,000 survivors 
at a fraction of the cost.
    Due to the inclusion of an 1-year open enrollment period, 
as provided by the new bill, the effective date is October 1, 
2005, eliminating many first-year costs. On the matter of costs 
in subsequent years, in the 5-year scoring window, I am 
committed to working with this committee to identify the 
appropriate offset. While we await a formal CBO scoring, the 
cost should be less than $800 million over a 5-year period with 
the potential for offsetting cost savings of $500 million due 
to the bill's option to let current unenrolled retirees opt 
into the program. This will reduce retired payout lays due to 
SBP premium deductions.
    Mr. Chairman, I urge your committee to include the 
appropriate language in the fiscal year 2005 budget so that the 
surviving spouses of the brave men and women who served our 
Nation can finally receive the annuity that they expected and 
for which their spouses believed they were paying. I would urge 
the entire committee to address this issue in your 
deliberations over the fiscal year 2005 resolution. I am 
committed to working again with this committee to help you find 
the appropriate offset.
    Our Nation is calling upon the members of the Armed Forces 
today to defend democracy and freedom. We have no doubt that 
these brave men and women will rise to the challenge. However, 
for those of them who have selected to make their career in our 
military, they face the unknown risk. It is time for us to show 
our appreciation to the men and women who made the ultimate 
sacrifice.
    The supporters and I stand ready to work with you on this 
matter. I appreciate the time.
    [The prepared statement of Mr. Miller follows:]

 Prepared Statement of Hon. Jeff Miller, a Representative in Congress 
                       From the State of Florida

    Mr. Chairman and members of the committee: Thank you for giving me 
an opportunity to present my views on the fiscal year 2005 budget 
resolution. I applaud this committee's continued efforts at fiscal 
responsibility and look forward to a budget of which this body can be 
proud.
    As many of you know, since coming to Congress a little over 2 years 
ago, I have been working on an issue of particular interest to the 
surviving spouses our nation's military retirees--restoration of the 
minimum Survivor Benefit Plan basic annuity to fifty-five percent (55 
percent) for survivors age sixty-two (62) and older.
    Under present law, surviving spouses are subject to a reduction to 
thirty-five percent (35 percent) as part of the initial SBP law enacted 
in 1972. But this critical piece of information didn't find its way 
into military retirement briefings and SBP election forms until many 
years later. Large numbers of retirees and survivors feel betrayed by 
what they perceive as a bait and switch, under which they were asked to 
sign an irrevocable contract to pay lifetime SBP premiums without being 
told what annuity level they were actually buying.
    How can we possibly expect to maintain a viable national defense--
the fundamental role of the Federal Government, and by extension, this 
Congress--if Servicemembers and their spouses feel misled and betrayed?
    This is just one of the many flaws in the Survivor Benefit Plan, 
but one that affects approximately a quarter of a million survivors of 
America's finest Servicemembers. Think of Dottie Welch, whose husband, 
Lt. Col. Roger Welch, United States Army-retired, signed up for SBP 
years ago, signed the irrevocable agreement, paid premiums for the rest 
of his life, and upon his death, Dottie's SBP benefit is actually one-
third less than they were led to believe. SBP election forms from the 
1970s and 80s illustrate why the Welches and so many others were 
misled, copies of which I have brought with me today.
    [The information refered to follows:]

    
    
    Why should the spouses of career members of the U.S. Armed Forces, 
many of whom sacrificed their own retirement security in order to fully 
support their transient military families, be unknowingly penalized in 
the autumn of their lives? The impact of this inequity is devastating 
to many survivors, because SBP isn't exactly a king's ransom at 55 
percent of retired pay. At 35 percent, SBP provides only a poverty-
level--or lower-annuity for most survivors, even those of relatively 
senior officers.
    In the first session of the 108th Congress, I introduced H.R. 548, 
which will restore the SBP annuity to the understood fifty-five percent 
(55 percent). Just 1 month ago, I introduced H.R. 3763, which 
accomplishes the very same objective, but with a more appropriate 
balance between equity and cost considerations. Both bills have 
received strong bipartisan support with 291 Members sponsoring one or 
both. I am pleased that 31 members of the Budget Committee have 
cosponsored either H.R. 548 or H.R. 3763. My thanks to your own Mario 
Diaz-Balart, who became our newest cosponsor today. Senate companion 
bills, S. 451 and S. 1916, have also received strong support with 45 
cosponsors of one or both measures.
    As you may know, the 106th Congress took the first steps toward 
addressing this inequity via the fiscal year 2001 Defense Authorization 
Act, which included a provision asserting the ``sense of Congress that 
there should be enacted legislation * * * to reduce (and eventually 
eliminate) the different levels of [SBP] annuities * * * for surviving 
spouses who are under age 62 and those who are 62 and older.'' But we 
have failed to follow through on that commitment. It is time to fix 
this problem--and to budget for that fix.
    I commend this committee's deliberations on restoring the SBP 
annuity last year, and regret that we were not more successful. 
Following the close vote on last year's committee amendment, I went 
back to the drawing board with the service associations to try and 
address this committee's cost concerns. Together, we crafted H.R. 3763, 
and we have cut the cost by an estimate two-thirds with an amended 
phase-in plan for restoring the annuity. This is as inexpensive an 
option to address this long-standing problem as we are ever likely to 
see, and it is my hope that your committee will acknowledge and respond 
to this significant level of bipartisan cooperation and seize this 
opportunity to address this issue at such a low cost.
    A few key points that are worth making that I hope you will use as 
you deliberate budget authority on this issue:
     Numerous military organizations, including the thirty-five 
(35) associations of The Military Coalition, have made this initiative 
a top legislative priority for the year.
     The view that SBP reform would mean a ``double windfall'' 
for recipients of last year's concurrent receipt reform is just plain 
false. In fact, SBP affects survivors, and three times as many people 
as concurrent receipt--1.2 million retirees and 250,000 survivors--at a 
fraction of the cost of concurrent receipt.
     Due to the inclusion of a 1-year open enrollment period as 
provided by H.R. 3763, the effective date is October 1, 2005, 
eliminating any first-year costs. On the matter of cost in subsequent 
years in the 5-year scoring window, I am committed to working with this 
committee to identify the appropriate offset.
     While we await a formal CBO scoring, the cost should be 
less than $800 million over 5 years, with the potential for offsetting 
cost savings of $500 million due to the bill's option to let current 
unenrolled retirees opt into the program. This will reduce retired pay 
outlays due to SBP premium deductions.
    Mr. Chairman, I urge your committee to include the appropriate 
language in the fiscal year 2005 budget resolution so that the 
surviving spouses of the brave men and women who served our nation can 
finally receive the annuity they expected and for which their spouses 
believed they were paying. I urge the entire committee to address this 
issue in your deliberations over the fiscal year 2005 budget 
resolution, and am committed to working together with you to identify 
the appropriate offset.
    Once again, our nation is calling upon the members of the U.S. 
Armed Forces to defend democracy and freedom. We have no doubt that 
these brave men and women will rise to the challenge. However, for 
those of them who have selected to make their career in the U.S. 
military, they face an unknown risk. It is time for us to show our 
appreciation to the men and women who have made the ultimate sacrifice 
for our great nation. So noble a cause, with so small a price tag, SBP 
reform should have all of our full support. We must not allow this to 
slip through the cracks yet again.
    I, and the supporters of H.R. 548 and H.R. 3763, stand ready to 
work with you on this important matter.
    Thank you.
     h.r. 3763: military survivor benefits improvement act of 2004
    FAQ
    Q: Why is The Military Survivor Benefits Improvement Act of 2004 
necessary?
    A: We must keep faith with older retirees and survivors. We must 
restore the intended 40 percent Federal subsidy. And we must put SBP on 
an equal footing with its Federal civilian equivalent. Congress already 
has acknowledged the need for this legislation. The fiscal year 2001 
Defense Authorization Act included a provision asserting the ``sense of 
Congress that there should be enacted legislation * * * to reduce (and 
eventually eliminate) the different levels of [SBP] annuities * * * for 
surviving spouses who are under age 62 and those who are 62 and 
older.'' But we have failed to follow through on that commitment. It is 
time to fix this problem. Military widows and widowers have waited long 
enough in their fight for fairness. Now is the time for Congress to 
step up and enact relief for the aging survivors of our ``Greatest 
Generation'' World War II and Korean War retirees and for the following 
generations of retirees and survivors who deserve no less than the SBP 
deal they were promised--and the one the government already provides 
for other Federal survivors.
    Q: What is the ``BENEFIT REDUCTION SHOCK''?
    A: Actual SBP Election Forms signed by service members of the 1970s 
and 1980s specify that SBP will pay the survivor 55 percent of the 
member's retired pay. Nowhere, even in the fine print, did the forms 
mention any lower figure (see 1982 SBP Election Form 5002). The age-62 
annuity reduction to 35 percent was part of the initial SBP law enacted 
in 1972. But this critical piece of information didn't find its way 
into most military-retirement briefings and SBP election forms until 
many years later, after complaints started to roll in. Large numbers of 
retirees and survivors feel betrayed by what they perceive as a bait 
and switch, under which they were asked to sign an irrevocable contract 
to pay lifetime SBP premiums without being told what annuity level they 
were actually buying.
    Q: What is the ``BROKEN PROMISE''?
    A: When SBP was enacted in 1972, Congress set the premium formula 
in law with the intent that retirees' monthly premium payments would 
cover 60 percent of the long-term cost of the survivor benefits, with 
the government paying the remaining 40 percent. Because retiree 
premiums were locked in law and covered a greater portion of program 
costs than had been projected, the government reaped an economic 
windfall and found its share of the cost for the SBP program was much 
lower than expected. As of 2003, the government's share has dropped to 
17 percent--leaving retirees once more paying a higher-than-intended 
share of the benefit. Congress should restore the government's intended 
40 percent cost share by raising the benefit for survivors, and the 
Military Survivor Benefits Improvement Act of 2004 will do just that.
    Q: What is the ``MILITARY-CIVILIAN INEQUITY''?
    A: In contrast to the military SBP subsidy of 17 percent, the SBP 
for Federal civilian employees under the post-1984 Federal Employees 
Retirement System (FERS) provides a 33 percent subsidy. For those under 
the pre-1984 Civil Service Retirement System (CSRS), the subsidy (at 48 
percent) is nearly three times as high as the military's.
    Even more important, FERS survivors receive 50 percent of retired 
pay-and CSRS survivors receive 55 percent for life, with no benefit 
reduction at age 62. Although Federal civilian premiums are higher, 
military retirees pay SBP premiums for far longer than most civilians 
because they are required to retire at a younger age. Because their 
mortality rates aren't much different, this means Federal civilian 
retirees have a far more advantageous benefit-to-premium ratio. 
Military retirees typically pay SBP premiums about twice as long as 
Federal civilians because they retire at younger ages. But their 
spouses' longevity is about the same, so military SBP enrollees see a 
lower return, and a much lower government subsidy.
    Q: How does The Military Survivor Benefits Improvement Act of 2004 
restore equity?
    A: This measure will balance equity and cost considerations by 
phasing out the SBP age-62 benefit reduction over 10 years. Upon 
enactment, the age-62 benefit increase phase-in will begin October 1, 
2005, and continuing through 2014, until the benefit is restored to 55 
percent. In order to offset part of the cost of the benefit increase, 
the bill authorizes an open season provision in the legislation that 
would allow more retirees to participate, generating SBP program 
savings and significantly reducing outlays.
    Q: Why this bill versus HR 548?
    A: Obviously, we want to eliminate the SBP benefit cut as soon as 
possible. But despite 290 bipartisan House cosponsors, the hard reality 
is that we did not make progress last year, due in large part to the 
cost of a 5-year phase-in. We need to increase our chances of making 
progress and reduce the risk of coming away with nothing again. The 
Military Survivor Benefits Improvement Act of 2004 strikes a reasonable 
balance between cost considerations and the need to eliminate this 
inequity for the 250,000 military survivors nationwide in the SBP 
program.
    Q: Who supports the Military Survivor Benefits Improvement Act of 
2004?
    A: SBP reform is the number one legislative priority of the 
Military Officers Association of America (MOAA) in the 108th Congress. 
In addition, the measure is strongly supported (see 01/23/04 support 
letter) by The Military Coalition, a consortium of 33 nationally 
prominent military and veterans organizations representing more than 
5.5 million members of the uniformed services--active, reserved, 
retired, survivors, veterans, and their families.
    Q: How much more cost-effective is the Military Survivor Benefits 
Improvement Act of 2004?
    A: Preliminary estimates suggest a 70 percent savings. This bill is 
estimated at $2.6 billion over 10 years, versus a preliminary estimate 
of $8.5 billion for HR 548.
    Q: Is there companion legislation in the Senate?
    A: S. 1916, introduced by Senator Mary Landrieu of Louisiana, also 
proposes a 10-year phase-in to increase the minimum Survivor Benefit 
Plan basic annuity for surviving spouses age 62 and older, and likewise 
includes a 1-year open season under that plan, and for other purposes. 
All are encouraged to contact their respective Senators to urge 
cosponsorship of the measure.
    Q: How many survivors stand to benefit from H.R. 3763?
    A: 250,000 survivors currently draw SBP, and 88 percent of these 
are over age 62. These survivors are all over the country; Florida, for 
example, has 25,300 survivors drawing SBP.

    Mr. Shays. Thank you, Mr. Miller.
    Mr. Scott, would you like some dialogue here?
    Mr. Scott. Thank you. Your total cost at most is $800 
million and could get as low as net $300 million; is that what 
I understand?
    Mr. Miller. That is correct. With the open enrollment for 
those that are not enrolled of $500 million, the cost could be 
as low $300 million over 5 years.
    Mr. Scott. Let me get this straight. Do you cover anybody 
that did not sign the form that had the wrong information?
    Mr. Miller. No, not currently. Those that signed the form 
that you have in front of you, it would cover them. But there 
is now a new form that is being given out. That form includes 
the disclosures that were not provided the first time.
    Mr. Scott. So basically what we would be doing would be 
fulfilling the promise that people signed up for?
    Mr. Miller. That is correct.
    Mr. Shays. I thank the gentleman for bringing this to our 
attention. It is pretty surprising.
    Mr. Miller. Thank you, Mr. Chairman.
    Ms. Bordallo, thank you for being here. It is a pleasure to 
have you testify. Thank you for your patience.

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

    Ms. Bordallo. Thank you very much, Chairman Shays, and 
Ranking Member Scott. Thank you for allowing me to testify 
before the House Budget Committee regarding the 
administration's fiscal year 2005 budget proposal.
    While the administration's proposed budget adequately funds 
the Department of Defense in its mission to protect our Nation 
from exterior targets, I respectfully request that the Budget 
Committee consider augmenting the administration's DOD budget 
to include more funding for weapons of mass destruction civil 
support teams in every State and territory.
    Furthermore, I am looking to your leadership to help me 
address three other nondefense issues that will be important to 
Guam in this year's budget resolution, including Federal 
responsibility for the earned income tax credit on Guam and the 
Virgin Islands, funding for the Department of Housing and Urban 
Development's Section 108 Loan Guarantee Program and disparity, 
gentlemen, in the application of Federal health programs on 
Guam.
    First, I would like to address defense issues. Much like 
this year and last, our National Guard will continue their 
service in defending our freedom at home and across the world 
in fiscal year 2005 and beyond. In fighting the war on 
terrorism, these volunteers have demonstrated the value of our 
investment in their training, their facilities, and their 
equipment. They are trained professionals that our small island 
community relies upon for health services. They are going to be 
deployed. The 1224th Engineering Detachment and the 294th 
Military Intelligence Detachment are composed of service men 
and women who are also policemen, firemen, and emergency 
services personnel on Guam.
    If this trend is occurring on Guam, it is happening, I am 
sure, across the Nation and we must account for it in the 
budget resolution. Given this demand on our emergency 
specialists, we must do all that we can to bolster emergency 
response capabilities in the field.
    Specifically, I would like to see the budget fully fund the 
requirement under Public Law 107-314, that each State and 
territory have a weapons of mass destruction civil support 
team. This budget includes funding for only four additional 
teams. These units enter the site of a terrorist attack to 
detect the use of chemical, biological, or nuclear weapons. 
Without them, our first responders may themselves become 
victims.
    In 2002, Congress authorized each State and territory to 
have a team, but this budget does not reflect our intent. At 
this rate, it will be at least another 3 years before it is 
close to completion. So I ask you: Does your State have a team? 
Even if the answer to that question is yes, what will you do 
when that unit is called away to a place that does not have 
one, like Guam?
    To make sure that the answer is yes, I respectfully urge 
the Budget Committee to consider increasing the President's 
request for the Department of Defense by $54.4 million. This 
will buy eight more teams to ensure each State and territory 
has a team. That way our National Guard can head to Iraq, 
knowing someone is guarding the home front.
    In its fiscal year 2005 budget, the administration proposes 
to make permanent both the Economic Growth and the Tax Relief 
Reconciliation Act of 2001, and the jobs and Growth Tax Relief 
Reconciliation Act of 2003. As the Guam tax code mirrors that 
of the Internal Revenue Code, it is important to me that the 
budget resolution takes into account the impact of any 
legislation affecting the Internal Revenue Code on the 
territories under the Mirror Code arrangement.
    The cost of implementing the earned income tax credit on 
Guam is estimated today at about $25 million per year. This tax 
credit constitutes approximately 6 percent of the projected 
Government of Guam revenues for fiscal year 2005. As a Mirror 
Code jurisdiction, the Virgin Islands must also bear the 
disproportionate burden of the EITC for its taxpayers. The EITC 
provides important tax relief to low-income families. However, 
given the current strain on the Government of Guam's treasury, 
I am hopeful that this year Congress will address the long-
standing issue of the Federal sharing of financial 
responsibility for the EITC on Guam and the Virgin Islands.
    The Virgin Islands has proposed a regulatory solution that 
would result in a 60-40 cost-sharing arrangement between the 
Federal Government and the Mirror Code territories, utilizing 
provisions in existing law. Additionally, I have proposed a 
legislative solution as part of a more comprehensive Insular 
Areas Tax Fairness Proposal, H.R. 2186. Therefore, I 
respectfully request that the budget resolution takes into 
account the Federal responsibility for earned income tax credit 
for territories, such as Guam and the Virgin Islands, whose tax 
codes mirror that of our Federal Tax Code.
    The administration has proposed zero funding for new 
guaranteed loans under the Department of Housing and Urban 
Development's Section 108 Loan Guarantee Program. This program 
is a very useful tool for State, territorial, and local 
governments to utilize their Community Development Block Grant 
allotments to address larger and longer-term projects. I am 
hopeful that the budget resolution will take into account 
funding to continue this important HUD program.
    Last year I worked with my colleagues to pass legislation 
that now allows the territories to participate in the Section 
108 program. Section 108 is a highly successful program that is 
very popular in cities and municipalities throughout the 
country. I look forward to the Government of Guam being able to 
utilize its new authority to apply for these loans. I urge 
Congress to continue providing sufficient funding to support 
Section 108 in this year's budget resolution.
    Finally, gentlemen, I want to call your attention to the 
continuing health disparities facing Guam and the other 
territories. The lack of adequate facilities, reliable funding 
streams, up-to-date equipment, and the shortage of providers 
and specialists, make it difficult to provide quality health 
care to all our residents.
    Adding to this problem is the cap on Federal Medicaid and 
the new cap on Medicare payments for prescription drug 
programs. I respectfully request that the Budget Committee work 
with the territories to address a fair and equitable solution 
to this issue in the fiscal year 2005 budget resolution.
    Gentlemen, the territories are often forgotten in the big 
scheme of things, not intentionally, but we are very, very 
important assets of the United States. I want to thank you for 
considering my views with regards to the administration's 2005 
budget.
    Thank you.
    [The prepared statement of Ms. Bordallo follows:]

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

    Thank you very much Chairman Nussle and Ranking Member Spratt for 
allowing me to testify before the House Budget Committee regarding the 
administration's fiscal year 2005 budget proposal. While the 
administration's proposed budget adequately funds the Department of 
Defense (DOD) in its mission to protect our nation from exterior 
targets, I respectfully request that the Budget Committee consider 
augmenting the administration's DOD budget to include more funding for 
Weapons of Mass Destruction--Civil Support Teams in every State and 
Territory. Furthermore, I am looking to your leadership to help me 
address three other nondefense issues that will be important to Guam in 
this year's budget resolution including Federal responsibility for the 
Earned Income Tax Credit (EITC) on Guam and the Virgin Islands, funding 
for the Department of Housing and Urban Development's (HUD's) Section 
108 Loan Guarantee Program, and disparity in the application of Federal 
health programs on Guam.
     national guard weapons of mass destruction civil support teams
    Much like this year and last, our National Guard will continue 
their service in defending our freedom at home and across the world in 
fiscal year 2005 and beyond. In fighting the War on Terrorism, these 
volunteers have demonstrated the value of our investment in their 
training, facilities and equipment. As I review the list of those from 
Guam called upon to serve, I notice a disturbing trend: Colonel Cruz, a 
surgeon; Captain Garces, a nurse; and Major Valles, a dentist. Each is 
a trained professional that our small island community relies upon for 
health services, and each is going to be deployed. The 1224th 
Engineering Detachment and 299th Military Intelligence Detachment are 
composed of servicemen and women who are also policemen, firemen and 
emergency services personnel on Guam. If this trend is occurring on 
Guam, it is happening across the nation, and we must account for it in 
the budget resolution.
    Given this demand on our emergency specialists, we must do all we 
can to bolster emergency response capabilities in the field. 
Specifically, I would like to see the budget fully fund the requirement 
under Public Law 107-314, that each State and Territory have a Weapons 
of Mass Destruction--Civil Support Team. This budget includes funding 
for only four additional teams. These units enter the site of a 
terrorist attack to detect the use of chemical, biological, or nuclear 
weapons. Without them, our first responders may themselves become 
victims. In 2002, Congress authorized each State and Territory to have 
a team, but this budget does not reflect our intent. At this rate, it 
will be another 3 years at least before it is close to completion. So, 
I ask you, does your State have a team? Even if the answer to that 
question is yes, what will you do when that unit is called away to a 
Territory that does not have one, like Guam? To make sure that the 
answer is yes, I respectfully urge the Budget Committee to consider 
increasing the President's request for the Department of Defense by 
$54.4 million to ensure each State and Territory has a team. That way 
our National Guard can head to Iraq, knowing someone is guarding the 
home front.

                                TAX CUTS

    In its fiscal year 2005 budget, the administration proposes to make 
permanent both the Economic Growth and Tax Relief Reconciliation Act of 
2001 (EGTRRA) and the Jobs and Growth Tax Relief Reconciliation Act of 
2003 (JGTRRA). As the Guam Tax Code mirrors that of the Internal 
Revenue Code, it is important to me that the budget resolution takes 
into account the impact of any legislation affecting the Internal 
Revenue Code on the territories under the ``Mirror Code'' arrangement.
    The cost of implementing the Earned Income Tax Credit (EITC) on 
Guam is estimated at $25 million per year. This tax credit constitutes 
approximately 6 percent of the projected Government of Guam revenues 
for fiscal year 2005. As a ``Mirror Code'' jurisdiction, the Virgin 
Islands must also bear the disproportionate burden of the EITC for its 
taxpayers.
    The EITC provides important tax relief to low-income families. 
However, given the current strain on the Government of Guam's treasury, 
I am hopeful that this year Congress will address the longstanding 
issue of the Federal sharing of financial responsibility for the EITC 
on Guam and the Virgin Islands. The Virgin Islands has proposed a 
regulatory solution that would result in a 60/40 cost sharing 
arrangement between the Federal Government and ``Mirror Code'' 
territories, utilizing provisions in existing law. Additionally, I have 
proposed a legislative solution as part of a more comprehensive insular 
areas tax fairness proposal (H.R. 2186). Therefore, I respectfully 
request that the budget resolution takes into account the Federal 
responsibility for Earned Income Tax Credits (EITC) for territories 
such as Guam and the Virgin Islands, whose tax codes mirror that of our 
Federal tax code.

                 HUD SECTION 108 LOAN GUARANTEE PROGRAM

    The administration has proposed zero funding for new guaranteed 
loans under the Department of Housing and Urban Development's (HUD's) 
Section 108 Loan Guarantee Program. This program is a very useful tool 
for State, territorial and local governments to utilize their Community 
Development Block Grant (CDBG) allotments to address larger, long-term 
projects. I am hopeful that the budget resolution will take into 
account funding to continue this important HUD program.
    Last year, I worked with my colleagues to pass legislation that now 
allows the Territories to participate in ``Section 108'' (P.L. 108-186, 
Title V). ``Section 108'' is a highly successful program that is very 
popular in cities and municipalities throughout the country, and I look 
forward to the Government of Guam being able to utilize its new 
authority to apply for these loans. I urge Congress to continue 
providing sufficient funding to support ``Section 108'' in this year's 
budget resolution.

                 HEALTH DISPARITIES IN FEDERAL PROGRAMS

    Finally, I want to call your attention to the continuing health 
disparities facing Guam and the other Territories. The lack of adequate 
facilities, reliable funding streams, up-to-date equipment and the 
shortage of providers and specialists make it difficult to provide 
quality health care to all residents. Adding to this problem is the cap 
on Federal Medicaid and the new cap on Medicare payments for 
prescription drug programs. I respectfully request that the Budget 
Committee work with the Territories to address a fair and equitable 
solution to this issue in the fiscal year 2005 budget resolution.
    Thank you for considering my views with regards to the 
administration's 2005 budget.

    Mr. Shays. Thank you. That was a very thoughtful statement. 
I appreciate you spending the time with us.
    I think you guys are going to go in tandem. We are going to 
have Mike Ross and Rodney Alexander both speak. We will 
recognize you first, Mr. Ross.

STATEMENT OF HON. MIKE ROSS, A REPRESENTATIVE IN CONGRESS FROM 
                     THE STATE OF ARKANSAS

    Mr. Ross. Mr. Chairman, thank you very much for giving this 
opportunity. I would ask that my statement be entered into the 
record. As a result of that, I am not going to bore you with 
this typed statement. I would much rather come and speak from 
the heart. This is the first time I have ever appeared before 
the House Budget Committee. I am not here to be able to issue a 
statement so I can do a press release or say that I have done 
something just for the sake of saying that I have done it. I am 
here begging for your help.
    Mr. Shays. What you are doing is educating us.
    Mr. Ross. Whatever you want to call it, Mr. Chairman, is 
fine with me. I just need some money back. [Laughter.]
    Within the President's fiscal year 2005 budget, they 
decided to define low-use waterway systems and determine which 
of those low-use waterway systems should no longer be funded. 
Someone pulled a number out of a hat and decided if there was 
not a billion ton miles on that low-use waterway, then they 
should be cut.
    Mr. Shays. Would you define low-use waterway?
    Mr. Ross. Basically, for example, you have the Mississippi 
River. Barges go down the Mississippi. Many of them do not stop 
on the Mississippi. They enter other rivers that are considered 
low-use waterways. It is like when you get on an interstate, 
but to get to the house you end up on a city street. Many 
rivers out there help move from major rivers, like the 
Mississippi, to the ports in smaller towns by way of smaller 
rivers. They are called low-use waterway systems.
    They decided that any low-use waterway system, basically 
any river that did not have a billion ton miles on it in a 
year, they would stop funding. We are the largest low-use water 
system in America--800 million ton miles. We missed it by a 
couple hundred thousand based on this billion ton mile number 
they pulled out of the air.
    The bottom line is they have cut 100 percent. They have 
totally eliminated navigation on the Ouachita Black River. A 
few other rivers were also impacted, but no other river that 
was impacted has 800 million ton miles of barge traffic on it 
each year.
    This concerns us because they have been maintaining 
navigation of the Ouachita Black River just about since the 
beginning of the Corps. Some would argue that they were doing 
that before there was a Corps. It has been going on forever. I 
believe it would be a huge mistake to see navigation stopped on 
the Ouachita Black River. That is exactly what is in the 
President's budget this year. It cuts it 100 percent.
    I have three concerns. One is the economic impact. It will 
impact economically 11 counties and parishes in Arkansas and 
Louisiana. I could give you many examples, but just one example 
is Cross Oil is the main employer in Smakover, Arkansas. It is 
a small town in my district. About 2,000 people live there. 
Shutting down the river system would dissolve 125 jobs with an 
annual payroll of $6 million, a company that has sales 
exceeding $100 million.
    That is one of many examples we could give you. At a time 
when we have nine million people out of work, I am hoping that 
the President and OMB did not realize when they were doing 
this, they were talking about peoples' livelihood. I would 
think that if they knew it was cutting jobs, they would change 
this. I am hoping you will find a way to try to help me to 
change it. There is a huge economic impact. We could give you 
dozens, but that is one example of a business that will no 
longer exist. The business has been around for many, many 
years.
    There are families in South Arkansas tonight going to bed 
worried about whether they are going to have a job come next 
year if this budget is passed and the Ouachita Black River is 
no longer navigable.
    The second issue is water supply. Many cities and 
industries in that area of the State, depend on the Sparta 
Aquifer. The Sparta Aquifer is drying up. Cities have taxed 
themselves. They have created Commissions. They have created 
boards to now get water out of the Ouachita River to supply 
water for cities and for industries. Industries have invested 
millions of dollars building a pipeline to the river. They will 
no longer be able to count on water from the river if it is not 
being maintained with the locks and dams that are in place now, 
as it always has been.
    The final thing is the environmental impact. We have the 
Felsenthaw National Wildlife Refuge. The Felsenthaw National 
Wildlife Refuge is in Arkansas and Louisiana and was created by 
and large because of the water opportunities available from 
flooding and so forth related to the Ouachita Black River 
system. We do not know. No one knows what the environmental 
impact will be on wildlife as well as opportunities for 
sportsmen if those four locks and dams on the Ouachita Black 
River are no longer maintained and is basically mothballed as 
is proposed in the fiscal year 2005 budget.
    For some reason they did throw us $1.974 million for 
recreation. Recreation is a good thing. We want to continue to 
have recreation on the Ouachita River, but $1.974 million is 
not going to be nearly enough for recreation if they totally 
mothball the four locks and dams on the river. Not only do we 
lose the jobs, we lose the water supply for cities and 
industries, and the environmental impact, and perhaps the 
demise of Felsenthaw National Wildlife Refuge.
    We are here today to ask that you consider restoring the 
$10 million that has been in the budget forever for the 
maintenance and operation of the locks and dams. Mr. Chairman, 
we spend $1 billion a day simply paying interest on the 
national debt. We are talking about $10 million here, a few 
minutes interest on the national debt to keep people working in 
Arkansas and Louisiana.
    In closing, let me just say that I do not think that any of 
us would build an interstate system and not have exits that get 
you to your house or to get you to your business. The river 
system is the same way. Barges come from the ocean to the 
Mississippi River, and from the Mississippi River they make 
their way up the Ouachita Black, bringing products that create 
the raw materials needed. The end result is a lot of jobs.
    Cross Oil cannot operate without receiving 8 to 12 barges a 
month in crude oil. They make the specialty oil that you buy 
for your weeder and those kinds of things. There is not enough 
of a profit margin to be able to truck it by truck or by rail. 
They have already done the numbers. We need to have this money 
restored, as it has been for nearly 100 years. We just need the 
Ouachita River to be navigable again, as it always has been. We 
want to maintain that funding and try to get it restored in 
this budget. This is the first year it has ever been cut.
    Again, we fell through the cracks with the other low-use 
waterways, but we are the largest low-use waterway out there 
with 800 million ton miles a year. The cut-off was one billion.
    With that, I would yield, if I may, to my colleague.
    [The prepared statement of Mr. Ross follows:]

Prepared Statement of Hon. Mike Ross, a Representative in Congress From 
                         the State of Arkansas

    I am here today to talk to you about the dire need to adequately 
fund the Ouachita/Black River Navigation System. The President's 
proposed budget for fiscal year 2005 cuts funding for the Navigation 
project by 81 percent--from $10 million to just under $2 million. If 
passed, this significant reduction in funding would essentially 
``mothball'' the river system, leaving insufficient resources for the 
Corps to operate the four locks and dams it currently maintains, and 
that permit the river to be navigable. In other words, the waterway 
would be forced to shut down if the President's proposed budget request 
for the Ouachita Black River Navigation System is passed.
    Shutting down this Ouachita Black River Navigation system would 
have dire consequences on South Arkansas's economy, which is part of my 
district. This part the region employs numerous businesses associated 
with the agriculture and paper industries, oil and gas refineries, and 
power plants, all of which heavily depend on the waterway to operate. 
And in fact, many of these companies have spent millions of dollars to 
expand their businesses, based on the assurance that the navigation 
system would remain in tact. Case in point is Cross Oil, the main 
employer of Smackover, Arkansas, population 2000. Shutting down the 
river system would dissolve 125 jobs, with an annual payroll of $6 
million.
    As a member of the fiscally conservative Blue Dog coalition, I am a 
strong supporter of maintaining fiscal responsibility within our 
government. I understand when times are tough, cuts have to be made, 
some of which we don't like to make. But colleagues, the President's 
budget priorities are misplaced. When 9 million Americans are out of 
work today, why does his budget propose to slash funding for the 
Ouachita/Black River system to the point that the system is inoperable, 
thereby destroying hundreds of jobs in Arkansas and Louisiana that are 
dependent on waterway transportation?
    I urge all of you to please consider what I, and my colleague Rep. 
Rodney Alexander, have told you today. Shutting down this Ouachita/
Black River Navigation System would do the very opposite Congress needs 
to do to stimulate the economy and get people back on their feet in 
this country. Jobs would be lost, and people would be out of work.

    Mr. Shays. We will recognize Mr. Alexander, but we will 
have a question or two for you.

    STATEMENT OF HON. RODNEY ALEXANDER, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF LOUISIANA

    Mr. Alexander. Thank you, Mr. Chairman, and ranking member. 
I have never had the opportunity to sit at the witness table 
with someone as influential as Mike Ross. I wanted to tell my 
grandkids about it. That is the main reason I am here.
    Mr. Shays. Are you having pictures taken?
    Mr. Alexander. I hope so. [Laughter.]
    I will not take up a lot of time. I will just echo what Mr. 
Ross has said. He has done an excellent job of presenting our 
argument. He represents the southern part of Arkansas. I 
represent the Northeastern part of Louisiana where the Ouachita 
and Black Rivers are located. I agree with him. We desperately 
need funding restored there.
    If we lose the ability to be creative and use that river as 
a source of infrastructure improvements to move our goods and 
products, then we will be depriving the poorest area in the 
Nation of the right to use that river, not just the State of 
Louisiana or Southern Arkansas, but it is the poorest region in 
the Nation. We need to do all that we possibly can, again, to 
restore that money if at all possible.
    Thank you.
    Mr. Shays. Are you saying it is the poorest area in the 
country?
    Mr. Alexander. Yes, sir.
    Mr. Shays. Based on what?
    Mr. Alexander. That is what we are told, the Fifth 
Congressional District.
    Mr. Shays. Based on income?
    Mr. Alexander. Yes, sir. One of the poorest regions in the 
Nation. The area running along the Mississippi River up through 
North Louisiana and into Arkansas.
    Mr. Shays. Let me just understand. Of the $10 million, how 
much is for dredging and how much is to run the locks? How many 
locks do you have? How many people are employed, if you know?
    Mr. Ross. I can tell you that in the past they have been 
getting about $10 million. Quite frankly, they need more about 
$16 million. The first 3 years I was in Congress, I spent that 
time getting the money to repair what is called the Jonesville 
lock and dam. I finally got the money to repair it. It is now 
in the process of being repaired, only to learn that in the 
fiscal year 2005 budget, they are going to mothball all four 
locks and dams.
    Mr. Shays. So it is four locks?
    Mr. Ross. Four locks and dams I believe is correct; and the 
dredging. All that comes to a total of about $10 million. They 
do maintain a 9 foot channel.
    Mr. Shays. How much more commerce would you have to have on 
the river in order for them not to meet this threshold of a 
billion ton miles?
    Mr. Ross. Well, through fiscal year 2004, we have always 
had plenty of commerce. They just changed the rules on us. 
While the Corps will not testify to this, I can tell you that 
they do not agree with what OMB is proposing here. OMB this 
year, for the first time ever, just decided that they pull a 
billion out of the air and say that any river that does not 
have a billion ton miles on it a year, they are just going to 
mothball.
    Mr. Shays. They said a billion ton miles?
    Mr. Ross. One billion ton miles. We are running 800 million 
ton miles. While there are other rivers impacted in this, we 
are the most impacted because we are the closest to reaching a 
billion than any of the other rivers.
    Mr. Shays. Is it one business or more than one businesses?
    Mr. Ross. There are a number of businesses. Cross Oil is 
just one good example.
    Mr. Shays. OK, that is what I was wondering.
    Mr. Ross. They get 8 to 12 barges a month and take crude 
oil and turn it into specialty oils.
    Mr. Shays. It is pretty surprising. We guarantee everybody 
their mail in the farthest reaches, but it seems to me that we 
would want to find a way to deal with this issue.
    Mr. Ross. Just one last point on that. In this year's 
transportation reauthorization bill, in my discretionary money, 
I am requesting money to build a road to the port in Camden. 
The lock and dam that needed to be repaired is now being 
repaired. We have roads being built to ports. It used as an 
economic tool to locate new industries in that area. There are 
a lot of jobs in Arkansas and Mississippi impacted. We just 
picked Cross Oil as a good example of the 125 families tonight 
that are worried about whether they are going to have a job 
from now.
    Mr. Shays. I hear you.
    Mr. Scott.
    Mr. Scott. Just very briefly. Do you have legislation 
pending on the authorizing committees on this? You come into 
the Budget Committee to get funding. Is the funding authorized?
    Mr. Ross. It always has been. The Ouachita Black River has 
always been navigable. It has always been funded. I do not 
believe the energy and water appropriation deadline is even 
here yet, but it will be our top priority, as it is every year. 
It has been funded every year. But the problem we have is in 
the budget framework. For the first time in the history of our 
country, they zero out navigation on the Ouachita Black River. 
Did I miss something?
    Mr. Scott. Listening to what I thought was an authorization 
problem, but this is actually the money is authorized of 
spending, but it is just not in the budget. If it is not in the 
budget, it is unlikely to be appropriated. So that is why you 
are here?
    Mr. Alexander. Yes, in other words, in the budget, the 
Corps has been cut something like 12 or 13 percent overall. But 
on the rivers designated as low-use, they are cut more. The 
Ouachita is 80 percent, which does away with the dredging 
operations.
    My argument is that we ought to factor in and put something 
in the equation that a ton of material on one river might 
benefit ten people. A ton of products on another river may 
benefit 1,000.
    Mr. Scott. The question before us, then, would be priority 
of funding. There is no question that this is authorized if we 
can find the money.
    Mr. Alexander. It has been authorized in the past.
    Mr. Ross. In the past. In this year's budget it is zeroed 
out. That is the challenge that we have.
    Mr. Shays. What was the threshold before?
    Mr. Ross. There was not one.
    Mr. Shays. It was zero?
    Mr. Ross. Yes. It is my understanding there was not one. 
Someone in OMB just decided to pick a billion ton miles a year 
out of the air and decided that anything below that would be 
zeroed out.
    Mr. Shays. I think it would be wise to make sure that you 
determine whether it is the Transportation Committee or not. I 
would think you would want a hearing on whether this, in fact, 
is arbitrary as it sounds. It sounds pretty outrageous. I 
marvel at your patience, frankly.
    Mr. Holt will solve this problem somehow.
    Gentlemen, thank you both very much.
    Mr. Ross. Thank you.
    Mr. Alexander. Thank you.
    Mr. Shays. Thank you, Rush, for coming here. You have the 
floor.

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

    Mr. Holt. Thank you, Mr. Chairman. I thank the committee 
for staying to hear our testimony. If I were still serving on 
the Budget Committee, I would take that opportunity to make the 
case, but since I am not now, I thank you for the opportunity 
to come and testify.
    I am coming really as the co-Chair of the Caucus on 
Research and Development. My co-Chair, Judy Biggert, was unable 
to be here at this time. But I want to make the case for 
Function 250. Our Nation's investments in basic and applied 
research have led to so many familiar technologies, industries, 
and job growth. Federally funded R&D helps maintain U.S. 
technological superiority. It ensures our safety and our 
ability to defend ourselves. I can cite any number of samples 
that have not only created new industries and jobs, but have 
changed the quality of our lives for the better.
    Let me just touch on a few that should be obvious and 
should make the need for increasing Function 250 obvious. 
Because of the determination of scientists to understand 
Einstein's theory of relativity better, Federal funding through 
the National Science Foundation, the National Institutes of 
Standards and Technology, and the Department of Defense, funded 
research for the development of precise atomic clocks. What use 
of that is to you?
    Well, no doubt you use and benefit from global positioning 
systems now. It certainly has helped defend this country. But 
it is also a multi-billion dollar consumer industry now with 
70,000 units produced per month. You are familiar with what 
Federal research in semiconductor processing materials, 
magnetic materials, lithography, and plasma physics has done to 
create circuitry and processors. This is one of the largest 
industries in America. In energy research, the fruits of 
Federally funded research are the Department of Energy, the 
Department of Defense, the National Science Foundation. They 
have made our homes warmer, our offices brighter, and have 
saved billions of dollars. Environmentally friendly research-
based technologies are making our lives better. There are real 
improvements that could be made.
    In all of those areas, and in other areas of energy 
research and telecommunications, there is example after example 
where Federally funded research has resulted in payoffs far, 
far beyond the investment. Economists will argue about the 
payback on investments in research and development. They will 
argue whether it is maybe 40 percent or 60 percent. Whatever it 
is, it is a huge investment. We need to do better.
    The R&D Caucus chaired by Judy Biggert and I recently 
briefed Members of Congress on the digital human, whereby the 
entire body will eventually be simulated in software. For 
example, virtual surgery can be done on a simulated body before 
the actual operation.
    If all of these payoffs are coming, it is very nice, you 
say, so everything must be just fine. No. What I am here for 
today is to ask you to beef up Function 250 well beyond the 
budget request. We are underfunding research in nearly every 
sector. Let me just give one example. We spend in the United 
States about $800 billion a year on energy--energy goods and 
services all told. We are not spending 1 percent of that amount 
in public and private research on developing alternatives to 
fossil fuels.
    Now, whether you were a cobbler or a candlestick maker, if 
your raw input was in jeopardy for whatever reason, you would 
spend some of your receipts in finding other sources. We are 
not doing that in energy. We are grossly underfunding energy 
research. I could go down in area after area where we are 
underfunding research. The National Science Foundation is not 
on the doubling path as promised--I should not say promised--as 
expected. There are no promises in the budget business. I 
understand that having served on the Budget Committee.
    But once again this year the President's budget makes 
optimistic predictions about future economic growth so the 
deficit will not be as bad as some people say it will be. 
Without more investment in research and development we have, I 
would say, a minimal chance of achieving that kind of growth.
    Would an increased investment in research and development, 
Function 250, be well spent? Well, again, I would say in almost 
every sector, we are currently underinvesting in research and 
development. So the payoff really is there for us. This is not, 
as you can tell, a parochial request. I do not think there is a 
Congressional district in the country that would not benefit 
from a better investment in Function 250.
    Thank you.
    [The prepared statement of Mr. Holt follows:]

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

    Our Nation's investments in basic & applied research have lead to 
our explosive growth in innovative technologies, new industries and job 
growth. In addition, federally funded R&D helps to maintain U.S. 
technological superiority, ensuring our safety and ability to defend 
ourselves against a military or terrorist threat. I will cite several 
examples that have not only created new industries and jobs, but have 
changed the quality of our lives for the better.

                      GLOBAL POSITIONING SYSTEMS:

    Because of the determination of scientists to test Einstein's 
theory of relativity, the U.S. Government through the National Science 
Foundation, the National Institute of Standards and Technology, and the 
Department of Defense funded research in the development of precise and 
accurate atomic clocks. These timepieces now are critical components of 
the Global Positioning System that broadcasts location coordinates to 
receivers anywhere on Earth. These units are now employed in the 
conduct of airline, trucking and maritime businesses in the United 
States and throughout the globe. They are used to monitor earthquake 
zones and observe shifts in the earth's geological plates. This 
investment has resulted in a powerful tool for military applications 
safely guiding our troops in navigating over unknown lands in 
Afghanistan and Iraq. It has spawned a multi-billion dollar consumer 
industry estimated at $2.3 billion, with over 70,000 units produced per 
month.
     NIST: Advanced Technology Program $171 million in fiscal 
year 2004 and fiscal year 2005 $0
     DOD:Basic research decrease by 4 percent in fiscal year 
2005, applied research decrease of 13 percent.

                       MATERIAL SCIENCE RESEARCH

    Federally funded work in materials research such as semiconductor 
processing, magnetic materials, lithography, and plasma physics created 
the integrated circuit and microprocessor and one of the largest 
industries in America. Today, computers and microprocessors are found 
everywhere from our desktops to our cars, cellular phones, TVs, traffic 
lights, gas pumps and ATM machines, influencing our daily lives in ways 
too numerous to count. 25 years ago the price of one megabyte of memory 
was a half a million dollars. Today it is $38, a reduction in price by 
over 10 thousand. A computer circuit the size of a pencil eraser has 
millions of transistors, processing over a billion computer 
instructions per second. The electronics and semiconductor industries 
account for 6.5 percent of the gross domestic product, representing 
over $400 billion and 2.6 million jobs.

                            ENERGY RESEARCH

    In the area of energy, the fruits of research in the Departments of 
Energy and Defense and National Science Foundation have made our homes 
warmer and offices brighter, while saving billions of dollars. New thin 
film coatings on windows reflect heat back into houses instead of 
losing it to the outdoors. Results of plasma physics research enable 
the development of new energy-efficient light sources. Because of more 
efficient motors and new lightweight materials the costs of wind 
turbines and components have been cut by 90 percent since 1981, making 
electricity generation rates competitive with that of coal fired 
plants. Wind turbine and component manufacturing contributed directly 
to the economies of 44 states.
    In DOE:
     Solar energy has dropped [$82 million to $80.3 million] by 
-2 percent.
     Geothermal energy R&D has dropped [$28.3 million to $25.8 
million] by -9 percent
     Biomass and Biorefinery dropped -15 percent.
     While wind energy budget has remained constant.
     From 2003 to fiscal year 2005, the hydrogen budget has 
grown from $ 38.1 million to $95.3 million an increase of +150 percent.

                              ENVIRONMENT

    Energy research and the health of the planet's environment are 
closely coupled. From the detection of environmental effects to the 
implementation of environmental solutions, R&D is helping to keep the 
planet clean while building a $400 billion worldwide environmental 
technology market. Again plasma physics is used instead of fossil fuel 
combustion to extract large volumes of metal from ores. Basic research 
in laser physics and computing technologies has resulted in the ability 
to monitor levels of air pollutants, while materials processing and 
design has led to the development of more efficient energy generation 
methods and recycling techniques. For instance, lasers and computers 
are used in remote monitoring of air pollutants, with adequate 
sensitivities. Electrostatic precipitators are used in factories and 
homes to filter out pollutants before being released into the 
atmosphere. Environmentally friendly research-based technologies are 
making our lives better.
    Department of Commerce:
     Oceanic & Atmospheric Research [climate change]: -14 
percent DOE;
     Clean Coal Technology; Phase out; -42.9 percent in fiscal 
year 2005
     Biological and environment research: -21 percent in fiscal 
year 2005
     Real time electrical grid monitoring and remove barriers 
to energy distribution;
    --Electric transmission reliability: -8.5 percent in fiscal year 
2005
    --Electric Distribution Transformation: -63 percent in fiscal year 
2005
    NASA:
     Earth Sciences: -3 percent in fiscal year 2005

                             PLASMA PHYSICS

    From integrated circuits and energy efficient light sources to 
methods of coating razor blades with new thin film materials, the 
applications arising from the field of plasma physics have permeated 
all aspects of our lives. Plasma physics is the basis for controlled 
thermonuclear fusion energy generation, powered by fuels readily 
available for thousands of years. Its energy advantages are numerous. 
Today, the United States has taken the critical and important decision 
to partner in the International Thermonuclear Experimental Reactor, 
ITER, with funding levels from $3 million in fiscal year 2004 to $7 
million in fiscal year 2005.
    In DOE:
     PPPL is 85 percent of DOE funding in NJ].
    --Spherical Torus: -$5 million.
    --Compact Stellarator -$5 million result in delay in fabrication 
and assembly.
    --Fusion Simulation Project: $3 million
     Argonne Fusion Energy Science program: $1.3 million in 
fiscal year 2003 to $0.9 million in fiscal year 2005

                           TELECOMMUNICATIONS

    The telecommunications industry, which earns $1.5 trillion each 
year and employs 360,000 Americans, got a boost from early physics and 
electrical engineering research on radio signals and circuit behavior 
funded by the Department of Energy, DARPA and the Office of Naval 
Research. World Wide Web, designed by particle physicists as a way to 
collaborate scientifically, now provides 30-50 million people with 
everything from earthquake help lines to online fast food orders. 
Physics research at universities, Federal and industrial labs continues 
to move society even faster along the information superhighway. The 
development of new materials, electronics and lasers makes fiber optic 
communications faster, cheaper, and less noisy than copper wire. For 
instance, from 1956 the cost for a transatlantic phone channel has 
decreased from $60,000/yr to $60/yr. The market for local 
telecommunications services is $100 billion/year.

                                 HEALTH

    Federally funded research is used to develop new cures for disease 
and new ways to quickly diagnose health problems. The dynamics of blood 
flow through veins and arteries is modeled using computers, leading to 
new treatments for disease, and an understanding of circulatory 
disorders unavailable from experiments. In just the past 2 years, 
supercomputers have reduced the time needed to model blood flow through 
veins and arteries from weeks or months down to minutes. In addition, 
particle beams and detectors used in highenergy physics research have 
led to the development of new proton and neutron cancer therapies. And 
fiber optics, the telecommunications tool, has enabled the use of novel 
probes in noninvasive surgery and cancer detection techniques. Research 
is helping us to live longer, healthier lives.
    The R&D Caucus chaired by me and Rep. Judy Biggert recently briefed 
Members of Congress on the ``Digital Human'' whereby the entire body 
will eventually be simulated in software. Henceforth, virtual surgery 
can be done on the simulated body before actual operations.
    I hope the committee takes these points to heart and reconsiders 
the positive affects of federally funded R&D on our nation's economy.

    Mr. Shays. Thank you, Mr. Holt.
    I would just point out that Mr. Alyer has made this message 
to the Republicans ad infinitum. He is gaining adherence. Newt 
Gingrich addressed a group of members and said that his biggest 
regret was that when we increased the NIH budget that we did 
not increase that part of the budget that you make reference 
to. He feels that it should have been funded at three times the 
amount. I wish he had done it when he was Speaker.
    Mr. Holt. If I may say, Mr. Chairman, without doubling or 
something of the sort in the National Science Foundation, the 
NIH will be ill-prepared to deal with its increased budget. Not 
only the scientists themselves and the training they get, but 
also the instrumentation and the techniques have generally come 
from the National Science Foundation funded research.
    Mr. Shays. Thank you.
    Mr. Scott.
    Mr. Scott. Rush, what is the total of Function 250 now? How 
much money are we talking about? In round numbers?
    Mr. Holt. I hurried here from another function and I am 
sorry I do not have the number with me.
    Mr. Shays. I thank the gentleman very much. It is an 
important message. It is nice you took the time to share it.
    Mr. Culberson, I am going to have you go before Mr. Simmons 
partly because you came first, and partly because we need to 
put him in his place. [Laughter.]

  STATEMENT OF HON. JOHN ABNEY CULBERSON, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF TEXAS

    Mr. Culberson. Well, I will be as brief as possible, Mr. 
Chairman.
    Thank you very much for having me. This is the beginning of 
my second term. You have watched me in my first term. I think I 
had one of the highest fiscal conservative ratings in the 
House. I want to echo Rush Holt's testimony of how vital it is 
really for the future of the Nation that we invest in the 
National Science Foundation and the National Institutes of 
Health.
    I do hope the Budget Committee will see to it that there is 
an increase in funding for both the National Science Foundation 
and the National Institutes of Health. If not a doubling, 
certainly just a predictable path that is fairly stable. I 
think that, more than anything else, would help our scientists 
to know that there was a predictable stable glide path of 
increases so that as they do their research, they know that 
from year-to-year that we will be there behind them. I would 
certainly include the JPL and NASA in that.
    I have been vigorous in trying to say no to new 
appropriations requests. But when it comes to the sciences, 
that is our insurance policy for the future. I echo your 
sentiments, Rush, strongly, and hope that the committee will 
see to it that we take care of the National Science Foundation, 
the National Institutes of Health, NASA, and JPL.
    Mr. Chairman, I also wanted to be sure, if I could, just to 
bring you a couple of ideas that I hope will be helpful to the 
Budget Committee and in the appropriations process as well. I 
am a new member of the Appropriations Committee. It has been 
quite an experience to see the number of people that have shown 
up with all kinds of ideas and ways to spend money.
    I have been diligent in prioritizing those appropriations 
requests. This last year I said no to over $340 million of new 
Federal spending. The only things that I said I would support 
would be in scientific research, medical research, essential 
flood control and cost-effective transportation projects in 
other people's districts. There are no earmarks for my district 
in this year's appropriations bill. I have done my best to walk 
the walk and live up to what we are all trying to do which is 
balance the budget.
    The frustration I have, as I know all of us do, is that the 
money that I say no to and try to save, somebody else is 
spending somewhere else.
    Mr. Shays. Also in the Senate, sir.
    Mr. Culberson. And the Senate. Well, if I could, let me 
toss out a couple of ideas for you that I will hope will help. 
I have a chart that I will not give the committee because I do 
not want to agitate people. This is an internal chart that I 
had my office prepare of all the things that I have said yes 
and no to.
    So far this year, only in the last 2 weeks, I have already 
said no to about $60 million of new Federal spending. Again, I 
am trying to stay on track. My frustration is if I say no to 
these folks, I know they are going to go up the hall to 
somebody else. They are going to earmark the money some other 
way.
    Mr. DeLay has suggested that earmarks have to be signed off 
on, that we ought to put our name on an earmark and justify it. 
I think we need intelligent earmarks. You cannot just blanket 
it and say no to all of them.
    A good example is this: A radar control facility in Houston 
is 30 years old. It was built below sea level. It floods every 
time it rains. Over the last several years, Mr. DeLay and 
others had put money in the FAA budget that was not earmarked 
to build a new radar control facility for the Houston airports. 
The FAA used it for personnel, or pay raises. In the current 
appropriations bill, I put most of my effort behind getting a 
$25 million earmark for a new radar control facility in 
Houston. I earmarked it specifically.
    Jeff and I are pretty close in our fiscal conservative 
ratings. But the earmark was essential because if I had not 
earmarked it, FAA would have just turned around and used the 
money for payroll or something else. We cannot just blanket and 
say no earmarks. But we ought to sign our names to them and 
justify them. They ought to be done intelligently.
    I have given you language that I had legislative counsel 
draft for me. I discovered that there was an executive order 
signed in August 1993 to create a deficit reduction fund so 
that any money that we cut out of the appropriations bill, if 
you add this language to the budget resolution, would go into 
an automatic deficit reduction account to reduce the deficit. 
It would be nice if this $340 million that I said no to, and I 
could keep other people from earmarking it or spending it, 
would actually go to reduce the deficit by $340 million. I 
offer that language for your consideration.
    Mr. Shays. Let me ask you, though. Are not those requests 
for the increase?
    Mr. Culberson. Yes, these were requests for increases and 
also asking me to support spending within the President's 
budget request. I have really done my level best as an 
appropriator to vigorously reject not only new spending but to 
cut wherever I can.
    Finally, what I want to throw out to you is an idea that I 
have been kicking around with some legal scholars. It is one 
that I know will work to restore the Tenth Amendment. I think 
it will also have a dramatic impact on helping us control 
mandatory spending.
    As a State legislator, I discovered in Texas that there 
were many Federal Block Grant programs. For example, the Texas 
Education Agency had signed us up while we were at a session. 
We came back from the legislation session and all of a sudden 
we have all these Federal restrictions on the way we run our 
schools in Texas. The legislature never agreed to it. We were 
taking all this Federal money. I did not have anything to do 
with it. The legislature is in session every other year for 6 
months. We were just stuck with the decision of this State 
agency.
    I have had language drafted and I have had several legal 
scholars to look at this with me. This works. What this is 
designed to do is to say basically that Federal grant programs 
go away after the next regular session of the legislature in a 
State, unless the legislature has specifically approved it.
    There are vast quantities of Federal grant programs out 
there that just go flying out the door. We do not know whether 
they are working or not. The legislature is no better than 
anybody of whether a grant program is actually working or 
achieving its intended purpose.
    I am handing out to the committee a few of the internal 
State grant programs and social programs. There is a total of 
$41 billion worth of grant programs. They are still preparing 
the list for me. It is such a huge long list that the 
Congressional Research Service has not been able to get it all 
to me yet.
    I intend to work on putting this in the appropriations bill 
as well. This is designed to do two things. First, to allow the 
legislatures to be sort of a sunset review agency for these 
grant programs. It would decide whether or not, for example, in 
Arizona or in Connecticut, is this grant program achieving its 
purpose? Is it underfunded or unfunded? Do we really want this 
money with all the strings attached to it? And if the 
legislature of Texas, or Arizona, or Connecticut decide that 
they do not want the money and it is not worth it, then they 
can reject it.
    That does two things. That will help us, I believe, to 
control Federal spending. It will allow us to get a handle on 
which one of these programs are working. It also puts the State 
legislators on the hook equally and politically for unfunded or 
underfunded mandates. Finally, the other part of this that I am 
really particularly interested in achieving is the restoration 
of the Tenth Amendment by statute, giving real authority back 
to the States over areas that have traditionally been left to 
the States, for example, in education. The language I have 
given you, Mr. Chairman, can be used on any grant program you 
wish. You could make it apply blanket to all Federal grant 
programs, but essentially the idea is that no Federal officer, 
employee, or other authority can enforce against an authority 
of the State any requirement imposed as a condition to 
receiving Federal assistance under whatever grant program you 
want to list, unless the State legislature has passed a law and 
says, ``We want the money and we accept all the strings that go 
with it.''
    I believe this will help us control spending. This again, 
finally, will put those State legislatures in the position of 
reviewing these programs. They are the ones that know best 
whether or not they work. It puts them on the hook politically 
with us as to whether they are unfunded or underfunded.
    Most importantly, I believe this language--and judicial 
scholars have looked at this agree--restores the Tenth 
Amendment by statute which is an extraordinarily important 
thing that we need to pay more attention to up here.
    I hope you will take a look at it. I hope it is helpful. 
Thank you.
    Mr. Shays. It is helpful. Thank you. I appreciate all of 
the work that you spent on this. I appreciate what you do to 
try to control spending.
    Mr. Simmons, you are the alpha and the omega. You are an 
awesome Member of Congress. You just also happen to be from my 
State.

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

    Mr. Simmons. Thank you, Mr. Chairman. You also are an 
awesome person from an awesome State.
    Mr. Shays. This is true.
    Mr. Simmons. With that love feast, I should probably just 
turn over my testimony and leave.
    Mr. Shays. You have to convince Mr. Scott. [Laughter.]
    Mr. Simmons. Thank you, Mr. Chairman, for giving me the 
opportunity to testify today. I appear here today, I guess, in 
my capacity as chairman of the Veterans Health Subcommittee of 
the Veterans Affairs Committee. I have been honored to serve in 
that capacity for the past year, and look forward to another 
productive year serving our country's veterans.
    I have some fairly substantial testimony that I want to 
submit for the record. If I can, Mr. Chairman, what I will 
simply do is summarize my written statement and make a few 
comments based on the attachments and request unanimous consent 
that they all be included as part of the record.
    The President has submitted a veteran's budget request 
which, in my opinion, and in the opinion of most members of my 
committee, falls below what is necessary to adequately fund 
veteran's health care needs in the coming fiscal year. I use 
the word ``adequate.''
    This concept of adequate funding is derived from testimony 
by the Veterans Administration before our committee. It is 
derived from an analysis of the independent budget, which is a 
budget put together in great detail by certain veteran service 
organizations and, in fact, by members of the Veterans Affairs 
Committee.
    Following hearings that we had earlier this year on the 
budget, as submitted, my chairman and my ranking member 
submitted a letter and a summary of where we felt the 
President's proposal fell short in the area of veteran's health 
care funding as well as other veteran's funding areas.
    Let me just highlight briefly a couple of items that 
concern the committee and the subcommittee. First and foremost, 
on January 17, 2003, the Secretary of Veterans Affairs 
suspended all further enrollment of Priority 8 veterans. These 
are veterans with non-service connected disabilities whose 
incomes are at or above the regionally adjusted means test.
    What that means as a practical matter is that somebody like 
myself who served on active duty for 4 years with 20 months in 
a war zone, put in an additional 34 years of Reserve service, 
and retired with 37 years, 7 months, and 24 days of service in 
the U.S. Army, active and reserve, as a Priority 8 veteran is 
not eligible to receive services from the VA. Thirty-seven 
years, 7 months, and 24 hours, but is not eligible to receive 
services from the VA because I am a Priority 8.
    What that essentially means is that literally millions of 
veterans like me with long and substantial service cannot 
access the VA because Priority 8s have been shut out. I think 
that this is a serious matter that needs to be considered. I 
personally am not seeking that service, but there are others 
that are. That is part of the challenge we face.
    Secondly, capacity and demand for long-term care services. 
Veterans 85 years or older are increasing in size and number. 
In fiscal year 1998, there were 387,000 of them; in fiscal year 
2002 there were 640,000 of them. These are veterans 85 years 
and older. Currently, in fiscal year 2003-04, we expect to see 
870,000 of them; in other words, a 100 percent increase, and 
over the next decade this population will rise to about 1.3 
million.
    So this growing population of aged veterans demanding long-
term health care represents the future of what we anticipate in 
VA health care in the future, and yet it is not adequately 
funded today and certainly is not going to be adequately funded 
in the outyears.
    The statement of the committee chairman and the ranking 
member has been submitted to the committee, and I call it to 
your attention.
    We have a GAO report that deals with changes in service 
delivery and the issue of the aging veteran population. We have 
a President's Task Force Report on Improving Health Care 
Delivery for our Nation's Veterans which states, up front and 
personal in the executive summary, ``Congress and the Executive 
Branch must work together to provide full funding to meet 
demand. Even though the Veterans Administration budgets have 
been increasing by substantial percentages, the demand for 
veterans' health care services has outstripped those funding 
increases,'' and that presents the problem that we face today. 
Over the last six or 7 years, veterans' funding has increased 
upwards of 50 percent for health care, but the numbers of 
patients seeking services has increased by almost 100 percent, 
and that is the challenge we face.
    I simply will conclude, Mr. Chairman, by saying that I was 
gratified this year when Time Magazine selected the American 
soldier as ``Person of the Year.'' I felt that was an 
appropriate selection, given what our young men and women are 
doing in the war against terrorism around the world. But I also 
remind the members of the Budget Committee that these soldiers 
who are Person of the Year this year will be veterans next 
year, and will be asking for benefits and will be asking for 
health care, and we have to be prepared to honor them with more 
than a cover of Time Magazine.
    I thank the chairman and would be happy to answer any 
questions.
    [The prepared statement of Mr. Simmons follows:]

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

    Mr. Chairman and members of the Committee on the Budget: I 
appreciate the opportunity afforded me by the Committee on the Budget 
to offer my testimony on the needs of the Department of Veterans 
Affairs for fiscal year 2005. While veterans benefits and services, 
Function 700 of the annual Resolution on the Budget, constitutes needs 
across a broad spectrum of discretionary and mandatory accounts, I am 
confining my testimony today primarily to the needs of the VA health 
care system over which my Subcommittee on Health has primary 
jurisdiction.
    On February 4, 2004, the Committee on Veterans Affairs held a 
hearing to receive the testimony of the Secretary of Veterans Affairs 
and national veteran's organizations on the proposed budget for 
veterans programs. The Committee also heard testimony from the authors 
of the Independent Budget proposed by the Veterans of Foreign Wars, 
Disabled American Veterans, AMVETS, and Paralyzed Veterans of America. 
The Secretary presented the Administration's fiscal year 2005 budget 
request for a total of $67.324 billion, an increase of $5.27 billion in 
budget authority. Entitlement programs would receive $35.3 billion and 
discretionary programs would receive $32.1 billion. The overall 
increase in discretionary funds would be $517 million.
    In my view and that of my Committee, Congress must provide VA with 
sufficient funding to maintain current levels of service for veterans 
health and benefits programs. After carefully considering the VA's 
budget submission, the Independent Budget submission, and the testimony 
presented at the budget hearing, we have concluded that an additional 
$2.524 billion in budget authority for VA's discretionary programs 
would be needed to ensure a current services budget. A current services 
budget would enable the VA to continue providing the level of services 
it provides today and be responsive as well to known and expected 
increases in demand and cost in the budget year.
    The budget requested by the Administration for veteran's medical 
care is $29.1 billion in total resources. Of this amount, $26.646 
billion would come from appropriated funds, an increase of $708 million 
over the adjusted appropriated level for the fiscal year 2004. The 
balance of the request for medical care consists of an estimated $2.4 
billion in collections from veterans' private insurers and from 
veterans themselves, an increase of $667 million over the fiscal year 
2004 projection.
    The Administration also proposes that Congress authorize VA to 
impose a $250 annual enrollment fee for priority 7 and 8 veterans 
seeking VA medical care, and to approve an increase in drug and primary 
care copayments. Similar fee increases requested by VA last year were 
rejected by Congress, and my Subcommittee will not report legislation 
imposing them this year. Also, Mr. Chairman, this budget would cause VA 
to close 5,000 of its current 12,000 nursing home beds. Given the 
expected number of elderly veterans from World War II and the Korean 
War who are expected to seek nursing home care over the next 10 years, 
these proposals are illogical and indefensible. I call to the 
Committee's attention testimony my Committee received on January 28, 
2004 from the General Accounting Office concerning the status of VA's 
long term care programs versus known and expected needs over the next 
several years. I ask that that testimony by GAO be included in the 
record of today's hearing.
    Last year, the Committee favorably considered an Administration 
legislative proposal to provide VA with additional health care 
resources. Acting on the proposal, the Committee reported H.R. 1562, a 
measure that would increase VA medical care collections by holding 
insurers responsible for the cost of covered care provided by VA. The 
Congressional Budget Office estimated that this authority would boost 
collections by almost $800 million over 5 years. However, our efforts 
to have the House consider this measure have been unsuccessful thus 
far. We will continue working toward this goal, because VA truly needs 
these funds to promote high quality care for the nation's veterans.
    I want to call this Committee's attention to views and estimates my 
Committee Chairman Smith and Ranking Member Evans filed last week with 
this Committee. We provided a detailed justification for your 
consideration in disposing of the Administration's request for 
budgetary authority for all VA's programs. I commend our report to you, 
and ask that a copy of that report be included in the record of this 
hearing. Also, Mr. Chairman, last summer, the President's Task Force to 
Improve Health Care Delivery for Our Nation's Veterans delivered its 
final report. My Committee conducted two hearings on the work of the 
Task Force. The Task Force clearly and succinctly recognized that VA 
health care is subject to chronic underfunding by the Congress. The 
Task Force made a series of recommendations dealing with budgetary 
support for veterans' health care. I commend the report of the 
President's Task Force to Members of this Committee, and I ask that the 
complete text of the report be made a part of the record of this 
hearing. Finally, Mr. Chairman, today's Washington Post carries a 
significant article on funding for the VA health care system, 
crystallizing many of the arguments raised in both the views and 
estimates of my Committee and issues discussed in the President's Task 
Force report. I ask that a copy of the Post article also be included in 
the record of today's hearing on the VA health care system.
    Mr. Chairman, I believe I have served in the United States Army 
longer than any current sitting House Member, over 37 years altogether. 
I am proud of that service to my country. Earlier today I addressed 
members of the Paralyzed Veterans of America, here in Washington to 
testify tomorrow before a joint hearing of my Committee and its sister 
Committee in the other Body. If you ever had a question about the 
rights of veterans to expect this Congress to support adequate funding 
for VA health care programs, one need do no more than stand before a 
group of veterans in wheelchairs and on permanent crutches, who 
sacrificed their bodies in the service of their nation. As a veteran of 
service in Vietnam and one who has served his nation in both war and 
peace, I am committed to fight every day for every dollar this Congress 
can spare, to care for him who shall have borne the battle and for his 
widow and his orphan.
    I thank the Committee on the Budget for its consideration of my 
recommendations and concerns, for inclusion in the record of the 
materials I have requested, and I ask that you do the right thing for 
veterans in this budget.

    Mr. Shays. Thank you, Mr. Simmons. As always, you are a 
very eloquent and very forceful speaker on this issue, and I 
know you have spoken publicly on this and privately to 
individual Members of Congress, to the leadership, and I know 
you have won their love and affection for doing that. 
[Laughter.]
    Mr. Simmons. Do you know that for sure? [Laughter.]
    Mr. Shays. And with that--we do have a vote, so I am going 
to make sure that Mr. Flake has an opportunity to speak and 
that Mr. Bradley also has an opportunity to speak as well.
    Mr. Simmons. I thank the Chair for your courtesy, and I 
thank the Ranking, Mr. Scott.
    Mr. Shays. Mr. Flake.

STATEMENT OF HON. JEFF FLAKE, A REPRESENTATIVE IN CONGRESS FROM 
                      THE STATE OF ARIZONA

    Mr. Flake. Thank you, Mr. Chairman. I will just summarize 
very quickly and submit my statement for the record, if I 
could.
    I just want to echo what has been said already about the 
moratorium on earmarks that Chairman Nussle has proposed. I 
think that is extremely important. One man's steak is another 
man's pork. I don't think that we can say that ``pork'' is 
defined as something that is essential, only that, only this--
we just need to simply say, ``Let's have a moratorium for a 
year.'' Certainly the crisis that we are under in terms of 
deficit ought to persuade us that we need to go that route, so 
I commend the chairman and I will support him and volunteer my 
services to that effect.
    In particular, on transportation--I don't so much care how 
many earmarks people get for their own States on 
transportation, so long as that money would come out of their 
own States' transportation formulas. If that were the case, I 
would have no problem at all, and people could earmark to their 
hearts' content. But when one Member of Congress gets a $50 
million earmark to relieve tolls on a toll road in his 
district, and that comes out of Arizona's formula--as well as 
Connecticut's and Virginia's and everyone else's--that is 
unfair. There are a handful of Members who get most of the 
earmarks, and the rest of us are left wanting. Arizona this 
year is supposedly guaranteed 90.5 percent of what we send to 
Washington, and we're supposed to be happy with that. Yet this 
year, we will probably get about 86 percent, because over a 
billion dollars was removed from the formula by virtue of all 
the earmarks in the omnibus bill with regard to transportation 
earmarks. We have to stop that. It is out of control, and the 
Republican's aren't ashamed to say that in 1994, the number of 
earmarks in all the appropriations bills was about 2,000; this 
last year, it was over 10,000----
    Mr. Shays. Over 10,000 what?
    Mr. Flake. Over 10,000 earmarks in all the appropriations 
bills together. In 1994, it was only 2,000. President Reagan 
vetoed a transportation bill because it contained 187 earmarks. 
The transportation bill, I believe, that was part of the 
omnibus had over 600 last time. So it is really out of control 
by any definition.
    If we are going to keep this budget under control, we have 
to control earmarks, because it is greater than the sum of its 
parts. It is more than just the money for the earmarks. Once 
you have an earmark in a bill, you are presumed to vote for 
that bill, so Members are voting for bills that they would 
otherwise oppose, and spending is driven higher because you 
have an earmark you are trying to protect. So we have to do 
that.
    On a second issue, very briefly, I would propose that we 
fully fund the PILT program. This ``Payment In Lieu of Taxes'' 
is extremely important for States like mine, that has 87 
percent of all land publicly owned. This is for counties that 
can't----
    Mr. Shays. You are saying 87 percent?
    Mr. Flake. By the Federal and State governments. So only 
about 13 percent is privately owned. So in counties with all 
that Federal and State ownership--Federal ownership in this 
case--Payment In Lieu of Taxes is used.
    I would suggest that we ought to offset this by taking 
funds out of the President's request for more Federal land 
acquisition. The President has authorized $340 million--I'm 
sorry, the PILT has been authorized at $340 million. It has 
only received $226 million. We need to take--if we cut $170 
million out of the Federal land acquisition, and I have it all 
in my notes here, I'm just trying to get the numbers--we can 
find savings of $170 million in combined Federal land 
acquisition money in the Land and Water Conservation Fund for 
both the Department of the Interior and the U.S. Forest 
Service. We can take that and apply it toward PILT funding, and 
then we would save--and actually be able to apply $56 million 
against the deficit. So this is actually a savings of money. 
This has been endorsed by the Western Caucus, of which I am a 
member, and I am proud to submit this, and thank you, Mr. 
Chairman.
    [The prepared statement of Mr. Flake and accompanying 
documents follow:]

  Prepared Statement of Hon. Jeff Flake, a Representative in Congress 
                       From the State of Arizona

    Thank you for this opportunity to offer my views on the budget 
today. I believe the President's budget provides funding in many key 
areas, most especially in providing funding to fight the War on 
Terrorism, as well as providing funding to combat the threat of 
wildfires in the West.
    I would also like to thank the chairman for his efforts to control 
Federal spending by proposing a 1-year moratorium on earmarks in this 
year's budget resolution. I whole heartedly support the chairman's 
proposal, and I volunteer to help in the effort.
    There is broad consensus that earmarks are out of control. Not only 
do they lead to wasteful spending, but they are increasingly used to 
lock in Members' votes on bills they would otherwise oppose.
    With the deficit at an unprecedented high, we ought to take 
unprecedented steps to address spending. Some may argue for the merit 
of earmarks in their own districts, but I doubt they would argue that 
their projects are more important than the financial health of the 
country.
    While the Federal transportation program is not the only offender, 
I am concerned about the level of Member-specific, 1-year earmarking in 
transportation legislation.
    This year, House Members were told that something in the 
neighborhood of 15 million dollars would be available to each of them 
for transportation projects in their districts. Once requests were in, 
was Leadership was presented with the cost of the bill along with all 
the Member requests.
    Do the math, and you quickly realize that in a single bill, we are 
talking about billions of dollars of earmarks that we call ``high 
priority projects.'' And yet, several States, including Arizona, are 
getting less than their fare share of the formula funding. To add to 
the inequity problem, some of these States are not even getting the 
supposed guaranteed minimum of transportation funding.
    Again, Federal transportation programs are only part of the 
problem. Similar earmarking is done in other authorizing and spending 
bills.
    Unfortunately, much of the earmarking is done in conference 
committees, after the committees of jurisdiction have debated and after 
each chamber has debated. Only on their last opportunity to vote for or 
against a bill do Members see the earmarks--that is if there's been 
enough time to dig through hundreds or thousands of pages in some of 
these bills. The troubling trend of grouping spending bills into 
omnibus packages makes identifying earmarks even more difficult.
    This kind of earmarking needs to stop.
    Shifting gears * * * I would also like to highlight the need to 
fully fund the Payment-in-Lieu-of-Taxes program or PILT by reducing 
funding for more Federal land acquisition.
    I believe this can be accomplished by finding savings of $170 
million in the combined Federal land acquisition money in the Land and 
Water Conservation Fund account for both the Department of Interior and 
the U.S. Forest Service and then shifting $114 million of that money to 
fully fund the PILT program.
    This shift in funding would raise PILT funding from $226 million in 
the President's fiscal year 2005 budget to $340 million, which is the 
fully authorized level. The remaining savings of in Federal land 
acquisition money would be used to reduce overall discretionary 
spending in Function 300 by $56 million, thus contributing to deficit 
reduction.
    It is important to note that under this proposal fifty million 
would remain for Federal land acquisition authority in the budget for 
emergency Federal land acquisition to protect private property owners 
who must sell their land.
    The need for fully funding PILT over continuing to fund more 
Federal land acquisition is clear. As you know, PILT funding goes to 
counties with high percentages of Federal land. Counties can not draw 
tax revenue from these Federal lands, and PILT funds provide the 
funding for schools, roads, and public safety programs that local tax 
revenue would usually pay for.
    Although the PILT program has been authorized at $340 million, it 
is only receiving $226 million in the President's budget for fiscal 
year 2005. That is one million more than last year's level, but 
woefully short of what is needed.
    At the same time, the President has provided over $220 million for 
new Federal land acquisition in his budget, which would further create 
the need to counties to receive more PILT funding.
    It is important to note that cutting the $170 million for new 
Federal land acquisition would not affect the remaining $730 million in 
the President's budget for the Land and Water Conservation Fund, which 
includes State LWCF money as well as the President's Cooperative 
Conservation Initiative.
    The Western Caucus, of which I am a member, is supportive of this 
request.
    Again, I thank the chairman.

    Mr. Shays. Thank you.
    We thought as an incentive for our State, for this whole 
hearing, that we would each be entitled to at least one 
earmark. [Laughter.]
    That was a joke, for the record, please.
    Jeb Bradley, you are going to finish up.
    Thank you, Mr. Flake.

  STATEMENT OF HON. JEB BRADLEY, A REPRESENTATIVE IN CONGRESS 
                FROM THE STATE OF NEW HAMPSHIRE

    Mr. Bradley. Thank you very much, Mr. Chairman. I will be 
very brief. Has the 15-minute bell gone off?
    Mr. Shays. Yes.
    Mr. Bradley. OK, and I will take advantage of the 
opportunity to submit written remarks for the record.
    Mr. Chairman, as a member of the House Veterans' Affairs 
Committee, I know--as Congressman Simmons just stated--how 
important it is that the Congress provide the VA with 
sufficient funding to maintain the current level of services 
for veterans' health and benefits programs. When it comes to 
the health care and the benefits provided to our Nation's 
veterans, I believe it is imperative that the Congress account 
for the sacrifice that these men and women have made for our 
country, defending our liberties, as we debate providing budget 
authority for the VA's discretionary program.
    I want to stress that the recommendation of the Veterans' 
Committee that an additional $2.524 billion in budget authority 
for the discretionary programs needs to be appropriated to 
ensure the current levels of service.
    With that said, I am here today to also comment on the 
administration's proposal for a $250 annual enrollment fee for 
Priority 7 and 8 vets seeking VA care, and an increase in drug 
and primary copayments. Attempts were made last year to 
increase fees and copayments, and for the second year in a row, 
I disagree with these copayments because they provide an 
additional burden on our Nation's veterans.
    We need to increase the budget authority to ensure that the 
8 million Priority 8 veterans that have been denied coverage, 
as Congressman Simmons just explained in his case, that they 
have ample resources to expand the coverage----
    Mr. Shays. You said over 8 million for Priority 8?
    Mr. Bradley. Yes, yes, it is. This is wrong, as I am sure 
you are aware, and hopefully our budget is going to reflect 
ample funding to correct the situation.
    Mr. Chairman, thank you very much, and I will walk quickly 
with you over to the hall.
    [The prepared statement of Mr. Bradley follows:]

 Prepared Statement of Hon. Jeb Bradley, a Representative in Congress 
                     From the State of New Hamshire

    Mr. Chairman, as a member of the House Veterans' Affairs Committee, 
I know how important it is that Congress provide the VA with sufficient 
funding to maintain current levels of service for veterans' health and 
benefits programs. I also know how important it is to the approximately 
135,000 veterans who call New Hampshire their home--roughly 10 percent 
of the State's total population--many of which are forced to travel 
great distances to receive the care promised to them. I certainly 
recognize our current fiscal situation and I share the desire of most 
members of this body to rein in spending. However, when it comes to the 
health care and benefits provided to our nation's veterans, I believe 
it is imperative that Congress account for the sacrifice these men and 
women made for their country when providing budget authority for VA's 
discretionary programs.
    Mr. Chairman, we have made significant progress funding veterans' 
health care and benefit programs. Overall veterans' spending has 
increased to more than $63 billion in 2004, a $5.6 billion increase 
over the previous year. In addition, spending on veterans medical care 
has risen from $17.3 billion to $26.7 billion--a 54 percent increase--
over the past 5 years. We have enacted numerous measures to enhance and 
expand compensation such as the landmark progress we made last year on 
concurrent receipt. However, we must continue to improve these services 
as Congress has greatly expanded the number of veterans who are 
eligible for health benefits. While spending has increased 
substantially, so too have the number of eligible veterans, causing 
long wait times and the inability of some veterans--the priority 8 
veterans--to be able to access VA medical care. At this time, when so 
many men and women are sacrificing so much in the defense of our 
nation, we should not, in my opinion, be denying health care benefits 
to many veterans.
    I carefully examined the VA's budget submission, the Independent 
Budget submitted by the veterans' service organizations (VSOs), and the 
testimony provided at the budget hearing. I want to stress the 
recommendation of our committee that an additional $2.524 billion in 
budget authority for VA's discretionary programs would be needed to 
ensure current levels of service.
    With that said, I am also here today, Mr. Chairman, to comment on 
the administration's proposal for a $250 annual enrollment fee for 
Priority 7 and 8 veterans seeking VA medical care, and an increase in 
drug and primary copayments. Similar attempts were made last year to 
increase these fees and copayments, and for the second year I do not 
agree with these additional burdens on our nation's veterans.
    Furthermore, additional budget authority is needed to maintain 
current levels of staffing in the Veterans Benefits Administration and 
to support initiatives to improve claims processing. Approximately 8 
million Priority 8 veterans have been denied coverage because of recent 
changes in their eligibility, and the veterans that are eligible are 
burdened by extremely long wait lines for even the most basic 
appointments. This is wrong, and Congress must provide ample funding to 
correct this.
    I want to thank you, Mr. Chairman and the Committee on the Budget 
for hearing my testimony today, and I look forward to continued 
discussion on these important issues.

    Mr. Shays. Thank you. I appreciate your testimony. That's a 
nice way to end this hearing. Thank you.
    With that, we stand adjourned.
    [Whereupon, at 5:45 p.m., the committee was adjourned, to 
reconvene at the call of the Chair.]

                                  
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