[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]



                              MEMBERS' DAY

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

                                HEARING

                               before the

                        COMMITTEE ON THE BUDGET
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION

                               __________

             HEARING HELD IN WASHINGTON, DC, MARCH 4, 2005

                               __________

                            Serial No. 109-6

                               __________

           Printed for the use of the Committee on the Budget


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


                                 ______

                    U.S. GOVERNMENT PRINTING OFFICE
20-555                      WASHINGTON : 2005
_____________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov  Phone: toll free (866) 512-1800; (202) 512ï¿½091800  
Fax: (202) 512ï¿½092250 Mail: Stop SSOP, Washington, DC 20402ï¿½090001

                        COMMITTEE ON THE BUDGET

                       JIM NUSSLE, Iowa, Chairman
ROB PORTMAN, Ohio,                   JOHN M. SPRATT, Jr., South 
  Vice Chairman                          Carolina,
JIM RYUN, Kansas                       Ranking Minority Member
ANDER CRENSHAW, Florida              DENNIS MOORE, Kansas
ADAM H. PUTNAM, Florida              RICHARD E. NEAL, Massachusetts
ROGER F. WICKER, Mississippi         ROSA L. DeLAURO, Connecticut
KENNY C. HULSHOF, Missouri           CHET EDWARDS, Texas
JO BONNER, Alabama                   HAROLD E. FORD, Jr., Tennessee
SCOTT GARRETT, New Jersey            LOIS CAPPS, California
J. GRESHAM BARRETT, South Carolina   BRIAN BAIRD, Washington
THADDEUS G. McCOTTER, Michigan       JIM COOPER, Tennessee
MARIO DIAZ-BALART, Florida           ARTUR DAVIS, Alabama
JEB HENSARLING, Texas                WILLIAM J. JEFFERSON, Louisiana
ILEANA ROS-LEHTINEN, Florida         THOMAS H. ALLEN, Maine
DANIEL E. LUNGREN, California        ED CASE, Hawaii
PETE SESSIONS, Texas                 CYNTHIA McKINNEY, Georgia
PAUL RYAN, Wisconsin                 HENRY CUELLAR, Texas
MICHAEL K. SIMPSON, Idaho            ALLYSON Y. SCHWARTZ, Pennsylvania
JEB BRADLEY, New Hampshire           RON KIND, Wisconsin
PATRICK T. McHENRY, North Carolina
CONNIE MACK, Florida
K. MICHAEL CONAWAY, Texas

                           Professional Staff

                     James T. Bates, 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 4, 2005....................     1
Statement of:
    Hon. Thomas E. Petri, a Repesentative in Congress from the 
      State of Wisconsin.........................................    24
    Hon. Jim Gibbons, a Repesentative in Congress from the State 
      of Nevada..................................................    28
    Hon. Cathy McMorris, a Repesentative in Congress from the 
      State of Washington........................................    32
    Hon. Frank A. LoBiondo, a Repesentative in Congress from the 
      State of New Jersey........................................    34
    Hon. Shelley Berkley, a Repesentative in Congress from the 
      State of Nevada............................................    39
    Hon. Jeff Flake, a Repesentative in Congress from the State 
      of Arizona.................................................    43
    Hon. C. L. ``Butch'' Otter, a Repesentative in Congress from 
      the State of Idaho.........................................    44
    Hon. Rob Bishop, a Repesentative in Congress from the State 
      of Utah....................................................    47
    Hon. Chris Cannon, a Repesentative in Congress from the State 
      of Utah....................................................    50
    Hon. Jon C. Porter, a Repesentative in Congress from the 
      State of Nevada............................................    54
    Hon. Robert Simmons, a Repesentative in Congress from the 
      State of Connecticut.......................................    58
    Hon. E. Clay Shaw, Jr., a Repesentative in Congress from the 
      State of Florida...........................................    65
    Hon. Lane Evans, a Repesentative in Congress from the State 
      of Illinois................................................    67
    Ms. Berkley..................................................    69
    Hon. Stephanie Herseth, a Repesentative in Congress from the 
      State of South Dakota......................................    73
    Hon. Michael H. Michaud, a Repesentative in Congress from the 
      State of Maine.............................................    75
    Hon. Madeleine Z. Bordallo, a Delegate in Congress from the 
      Territory of Guam..........................................    80
    Hon. Heather Wilson, a Repesentative in Congress from the 
      State of New Mexico........................................    84
    Hon. Brad Miller, a Repesentative in Congress from the State 
      of North Carolina..........................................    90
    Hon. Shelley Moore Capito, a Repesentative in Congress from 
      the State of West Virginia.................................    94
    Hon. Robin Hayes, a Repesentative in Congress from the State 
      of North Carolina..........................................    98
    Hon. Maxine Waters, a Repesentative in Congress from the 
      State of California........................................   102
    Hon. Rush D. Holt, a Repesentative in Congress from the State 
      of New Jersey..............................................   107
    Hon. Randy Neugebauer, a Repesentative in Congress from the 
      State of Texas.............................................   112
    Hon. Christopher Shays, a Repesentative in Congress from the 
      State of Connecticut.......................................   117
    Hon. Diane E. Watson, a Repesentative in Congress from the 
      State of California........................................   120
    Hon. Linda T. Sanchez, a Repesentative in Congress from the 
      State of California........................................   132
    Hon. Timothy H. Bishop, a Repesentative in Congress from the 
      State of New York..........................................   136
    Hon. Barbara Lee, a Repesentative in Congress from the State 
      of California..............................................   141
Prepared statements, letters, extraneous material submitted by:
    Hon. Joe Baca, a Repesentative in Congress from the State of 
      California.................................................     1
    Hon. Ginny Brown-Waite, a Repesentative in Congress from the 
      State of Florida...........................................     3
    Hon. Julia Carson, a Repesentative in Congress from the State 
      of Indiana.................................................     3
    Hon. Lincoln Davis, a Repesentative in Congress from the 
      State of Tennessee.........................................     5
    Hon. Vernon J. Ehlers, a Repesentative in Congress from the 
      State of Michigan..........................................     6
    Hon. Louie Gohmert, a Repesentative in Congress from the 
      State of Texas.............................................     8
    Hon. Peter T. King, a Repesentative in Congress from the 
      State of New York, along with Mrs. Kelly, Messrs. Walsh, 
      McHugh, Kuhl, Sweeney......................................     9
    Hon. Jim McDermott, a Repesentative in Congress from the 
      State of Washington........................................    10
    Hon. George Miller, a Repesentative in Congress from the 
      State of California........................................    10
    Hon. Collin C. Peterson, a Repesentative in Congress from the 
      State of Minnesota.........................................    11
    Hon. Tom Price, a Repesentative in Congress from the State of 
      Georgia....................................................    12
    Hon. Bennie G. Thompson, a Repesentative in Congress from the 
      State of Mississippi.......................................    12
    Hon. Jerry Weller, a Repesentative in Congress from the State 
      of Illinois................................................    22
    Hon. Frank R. Wolf, a Repesentative in Congress from the 
      State of Virginia..........................................    23
    Mr. Petri....................................................    26
    Mr. Gibbons..................................................    30
    Miss McMorris................................................    33
    Mr. LoBiondo.................................................    37
    Ms. Berkley..................................................    41
    Mr. Flake....................................................    43
    Mr. Otter....................................................    46
    Mr. Bishop of Utah...........................................    49
    Mr. Cannon...................................................    51
    Mr. Porter...................................................    55
    Mr. Simmons of Connecticut...................................    60
    Mr. Shaw.....................................................    66
    Mr. Evans....................................................    68
    Ms. Berkley..................................................    71
    Ms. Herseth..................................................    74
    Hon. Ted Strickland, a Repesentative in Congress from the 
      State of Ohio..............................................    75
    Mr. Michaud..................................................    77
    Ms. Bordallo.................................................    82
    Mrs. Wilson..................................................    86
    Mr. Miller of North Carolina.................................    92
    Mrs. Capito..................................................    96
    Mr. Hayes....................................................    99
    Ms. Waters...................................................   104
    Mr. Holt.....................................................   109
    Mr. Neugebauer...............................................   114
    Mr. Shays....................................................   119
    Ms. Watson...................................................   122
    Ms. Linda T. Sanchez of California...........................   134
    Mr. Bishop of New York.......................................   138
    Ms. Lee......................................................   143

 
                              MEMBERS' DAY

                              ----------                              


                        THURSDAY, MARCH 3, 2005

                          House of Representatives,
                                   Committee on the Budget,
                                                    Washington, DC.
    The committee met, pursuant to call, at 2:30 p.m., in room 
210, Cannon House Office Building, Hon. Rob Portman presiding.
    Members present: Representatives Portman, Conaway, McHenry, 
Lungren, Cooper, Moore, Spratt, Cuellar, and Schwartz.
    Mr. Portman. Good afternoon everyone, and welcome to the 
Budget Committee Members' Day hearing. This is a hearing we 
hold every year to hear from our colleagues. This hearing is 
directed by the Budget Act, and its intent is to bring about a 
forum in which Members can relay their priorities for their 
district, for their State, and indeed for our country. We are 
pleased to have a diverse group of Members from both sides of 
the aisle, and we look forward to receiving their testimony.
    [Prepared statements of Representatives Baca, Brown-Waite, 
Carson, Davis of Tennessee, Ehlers, Gohmert, King of New York, 
McDermott, Miller of California, Peterson of Minnesota, Price 
of Georgia, Thompson of Mississippi, Weller, and Wolf follow:]

Prepared Statement of Hon. Joe Baca, a Representative in Congress From 
                        the State of California

    Chairman Nussle, Ranking Member Spratt, and Members of the 
Committee on Budget, I am here today as the new Ranking Member of the 
Agriculture Subcommittee on Departmental Operations, Oversight, 
Nutrition, Dairy and Forestry to argue for significant changes to the 
President's budget for fiscal year 2006.
    There are many programs that will be adversely affected by this 
budget, but as Ranking Member of the subcommittee with jurisdiction 
over the Food Stamp Program--I am obliged to make the protection of 
that program my top budget priority.
    At best, this budget is harmful to core agriculture programs. At 
worst, the political maneuverings that are taking place to shift cuts 
from commodity programs to key anti-hunger initiatives like the Food 
Stamp Program are unforgivable.
    The Food Stamp Program is one of this nation's most successful 
initiatives. Forty years ago, this country was plagued by malnutrition 
and hunger, especially among children.
    Senators Bob Dole and George McGovern responded by creating a 
``vaccine'' against hunger in the form of a nationwide Food Stamp 
Program. Put simply, food stamps keep America from experiencing the 
kind of severe hunger we still see in much of the rest of the world.
    In the United States, hunger and food insecurity affect 12.1 
million households, nearly 35 million individuals (12.5 percent of all 
Americans), and 13.1 million children.
    It's true that many American families still struggle to pay their 
bills and have enough money for the nutritious food they need. But 
without Food Stamps even more families would struggle.
    Mr. Chairman, this budget recommends structural changes that will 
affect the way people qualify for the food stamp program, and these 
changes will take food off the table for 300,000 American families.
    Representatives Edwards, Hensarling, Cuellar, Sessions and Conway--
the changes to the food stamp program contained in the budget mean 
that, according to some quick estimates, the State of Texas will lose 
$7.8 million in food stamp payments in FY07. This is an average of 
$243,250 per Congressional District.
    Representatives Ryan and Kind--by rough estimates, the State of 
Wisconsin will lose $905,000 in food stamp payments in FY07. This is an 
average of $113,000 per Congressional District.
    Representative McCotter--by rough estimate, the State of Michigan 
will lose $7.4 million in food stamp payments in FY07. This is an 
average of half a million per Congressional District.
    While these are just quick estimates and the number will certainly 
change, it is an indisputable fact that this budget will hurt working 
class and poor families that depend on food stamps to put food on the 
table. Please don't let efficiency be used as an excuse to endanger one 
of our country's most effective programs to combat the symptoms of 
poverty.
    What's more, the Food Stamp Program works better and better each 
year. The rate of mistaken payments has been declining for 6 years and 
hit an all-time low last year.
    This efficiency is due in part to the conversion from paper coupons 
to debit cards, ordered by Congress in 1996. The new ``electronic 
benefit'' system now in place nationwide means food stamps are more 
efficient, more accountable, and user-friendly for consumers, grocers, 
and the government.
    Food stamps have also been crucial during our nation's ongoing 
recovery from economic recession. Food stamps have been there for the 
greater numbers of people who lost their jobs in recent years and are 
earning less.
    Now, nearly 24 million people receive an average of $86 in grocery 
store credit each month to purchase food. These Federal dollars are 
then quickly spent at grocery stores, where they support local economic 
growth.
    So, with all of this good news about Food Stamps, why are we 
talking about cutting back one government program that's working on so 
many levels? Cuts to such an important program don't make sense for 
three key reasons:
    First, cutting food stamps will not cut the deficit. Food Stamps 
and the people who depend on them did not create the deficit. Food 
stamp spending actually decreased in the late 1990's.
    Overall, we've seen only about 1 percent average annual growth for 
the cost of the Food Stamp program for the past 10 years and less than 
2 percent average annual growth is projected for the next 10 years, 
according to the CBO.
    These modest increases are due to more people needing help during 
hard times, and more eligible people connecting with food stamps. The 
increases in food prices play an important part as well.
    Second, the cut the President has proposed targets working people 
with children--precisely those people who are not receiving welfare and 
who are playing by the rules, but still can't afford to feed their 
families.
    Third, food stamps took an almost 20 percent hit in benefits for 
families the last time budget reconciliation instructions came our way. 
More than $28 billion was cut over 7 years, during welfare reform in 
1995 and 1996.
    Since that time--thanks to collaborative leadership from both 
parties, from urban and rural members, and from Congress and the White 
House--about one-third of those cuts have been restored. Thankfully, 
Congress restored eligibility for immigrant children and legal 
permanent residents in the 2002 Farm Bill.
    But, the bulk of those cuts continue to squeeze families and force 
them into the impossible choice each month of either paying the rent, 
filling prescriptions, keeping the lights on, or buying food.
    Food stamps work to help American children, families, and seniors 
get the nutrition they need to learn, work hard, and stay healthy.
    Put simply, the Food Stamp Program is government at its best.
    Food stamps work to help boost food spending, which in turn helps 
farmers, grocers, and the entire food industry. And, food stamps work 
with minimal waste, fraud, and abuse.
    I urge this Committee to reject cuts to our nation's #1 defense 
against hunger. This is certainly a time of tough choices for our 
nation, but taking food from families should not even be an option.
    My message today is clear--any cuts, caps and other structural 
changes to the Food Stamp program will be met with strongest 
opposition.

                                             U.S. Congress,
                                     Washington, DC, March 2, 2005.
Hon. Steve Buyer,
Chairman, Committee on Veterans' Affairs, House of Representatives, 
        Washington, DC.

    Dear Mr. Chairman: I submit this letter to express my concerns 
regarding the Committee on Veterans' Affairs recently proposed Budget 
Views and Estimates for FY 2006.
    To be clear, there are several measures proposed by the Committee 
that I wholeheartedly support. First, I commend the Committee's 
endorsement of the Administration's proposal to eliminate co-pays for 
VA-provided hospice care. I strongly agree with the Committee's 
decision.
    I am also pleased that the President's proposed increase for 
prescription drug co-pays was rejected. The Committee aptly recognized 
that a 100% increase in co-pays would be too steep an increase for 
veterans. The Committee further rejected the President's proposed cuts 
to VA sponsored long-term care in State nursing homes. VA reimbursement 
has been essential to State nursing home maintenance, and consistently 
costs less than VA run facilities. This is a valuable program that 
deserves the Committee's continued support.
    However, I cannot support the Committee's proposal for an 
enrollment fee for Category 7 and 8 veterans. The new four-tiered 
system will be a monetary barrier and unnecessary burden to quality 
healthcare for veterans. Enrollment fees make VA care more expensive 
without making it better. TRWARE recipients pay fees and are guaranteed 
access to care, but veterans are being asked to pay enrollment with no 
such promise. I fundamentally disagree with the position that we, as 
policy makers, should be discouraging veterans from using the VA 
system. At the private meeting we had, I suggested that if there is a 
moderate enrollment fee for veterans, they should have improved access 
in return.
    I am also displeased with the Committee's decision to reject the 
Administration's proposal for reimbursement of veterans' emergency care 
from non-VA facilities. Reimbursement of emergency fees encourages 
veterans to seek health care at the closest facility, so they are 
treated immediately. If a veteran is eligible for VA care but is closer 
to a non-VA hospital, reimbursement is a logical next step. Moreover, 
reimbursement can be a life or death matter for many veterans who need 
emergency care from a closer hospital but can only afford VA care. 
Additionally, most ambulance protocols require that in an emergency 
situation the patient must be taken to the nearest hospital. Hospital-
owned ambulances are further obligated under The Emergency Treatment 
and Labor Act (EMTALA) to bring patients to the closest facility. 
Veterans should not be penalized with financial burdens for situations 
beyond their control. Unfortunately, the Committee did not include this 
proposal in the Views and Estimates and I cannot agree with this 
decision.
    Finally, I am concerned that the Veterans' Committee ignored my 
express disapproval of the proposed Views and Estimates. A Majority 
view was submitted to the Budget Committee, despite the fact that my 
colleagues and I had no opportunity to sign this proposal or even to 
vote on it. My staff expressed in no uncertain language that I had no 
intention of signing the proposal until I had seen the final version, 
and they were told that the document would be ready for my perusal by 
5:30 pm on Wednesday, January 23. Instead, my office was notified of 
the finalized proposal for the first time in a Committee press release.
    I ask that you note for the record my disapproval with these 
specific points in the Budget Views and Estimates. I look forward to 
working with the Committee in the future, but hope that deliberations 
will be more inclusive.
            Sincerely,
                                         Ginny Brown-Waite,
                                                Member of Congress.

 Prepared Statement of Hon. Julia Carson, a Representative in Congress 
                       From the State of Indiana

    Thank you for the opportunity to address the Committee today in 
support of restoring funding for Amtrak in the Budget Resolution for 
Fiscal Year 2006. In recent years Amtrak has demonstrated its continued 
value as a critical public resource unequivocally worthy of our Federal 
funds.
    The past 3 years have been among the most successful in Amtrak's 
34-year history. Despite an overall downturn in the travel industry 
that has resulted in financial disaster for our airlines, Amtrak has 
been making great strides in efficiency while becoming an increasingly 
popular choice for consumers. It remains a vital component of our 
nation's infrastructure, providing an invaluable public service 
unmatched by other means of transportation.
    Amtrak offers mobility to Americans living in small communities and 
areas without access to other transportation options, servicing 106 
cities that have no local access to airports.
    It provides transportation opportunities to low-income Americans 
and people with disabilities across the country. About 42 percent of 
Amtrak users come from households earning less than $50,000 per year. 
An estimated 4 million Amtrak riders do not own cars and would be 
stranded without Amtrak service.
    Amtrak remains our most environmentally friendly form of long-
distance transportation. Passengers traveling by Amtrak save energy 
that would otherwise be expended through air and road travel, lowering 
fuel costs to consumers, reducing air pollution, and easing the strain 
on our already dangerously overcrowded highways.
    Since 2002, our rail system has gone through an exceptional period 
of financial and operating stability. Amtrak has established new 
accounting and financial reporting systems, trimmed mail and express 
operations, truncated long-distance routes, and cut expenses, while 
raising ridership and engaging in the large-scale repair and 
restoration of an aged fleet. Last year the 640 employees of the Beech 
Grove heavy maintenance facility in my district repaired and returned 
to service 15 wrecked Superliners and locomotives, and completed 
overhauls on 30 Superliners, 46 locomotives, 36 baggage cars, and 62 
passenger cars.
    Under the leadership of David Gunn, Amtrak employees continue to 
contribute to the development of a necessary and increasingly viable 
alternative to air and road travel. In the midst of an overall 
depressed travel industry, and in a year where natural disasters in 
Florida, California and elsewhere disrupted long-distance service, 
Amtrak has succeeded in cutting expenses while bringing rail ridership 
levels to an unprecedented 25 million passengers. When airlines were 
grounded during the tragedy of September 11, 2001, it was Amtrak that 
brought stranded Americans home to their families.
    When Amtrak was established by an act of Congress in 1970 to take 
over for the money-losing private passenger rail systems in America, 
then-Secretary of Transportation John Volpe predicted that Amtrak could 
turn a profit, but only if the Federal Government provided enough 
capital to produce high-speed trains in profitable corridors. Yet 
according to the Congressional Research Service, Amtrak's fastest 
train, the Acela, averages 86 miles per hour in the New York to 
Washington corridor, only 6 mph faster than the Metroliner train that 
operated there before Amtrak's creation. Though we have known since its 
inception that further investment is the only key to financial 
independence, Congress has consistently declined to fund Amtrak at 
levels that would allow future self-sufficiency.
    At the same time, Congress has proven more than willing to support 
other money-losing transportation sectors, both public and private. 
Over Amtrak's 34-year history Congress has spent roughly $1.9 trillion 
on airline and highway transportation subsidies, over 63 times the 
approximately $29 billion it has allocated to Amtrak. Rail 
transportation funds generally account for a mere 1.6 percent of the 
yearly budget of the Department of Transportation. Every component of 
our transportation infrastructure has required significant Federal 
investment and each is dependent on the security and operational 
support the Federal Government, but in contrast to our aviation and 
highway systems, passenger rail has no specific dedicated fund for the 
purposes of infrastructure development. This is a double standard that 
neglects to take into consideration the disproportionate social, 
environmental, and other benefits that rail transit provides to our 
nation.
    The Amtrak Reform Council and the Department of Transportation 
Inspector General have recognized $1.5 billion as the funding level 
required to keep Amtrak financially viable. To fund Amtrak below this 
threshold would be reckless and irresponsible. Without proper financial 
support, control of our railroads would be surrendered to a bankruptcy 
trustee with legal responsibility to its creditors, not the American 
public.
    President David Gunn and the 22,000 employees of Amtrak continue to 
overcome considerable obstacles to bring this public service to our 
nation. I can think of no greater acknowledgement of their hard work 
and service to the American public than to commit sufficient funding to 
realize the full promise and potential of Amtrak. I thank the Committee 
for this opportunity and ask for its support of this critical component 
of our national infrastructure.

                                             U.S. Congress,
                                     Washington, DC, March 3, 2005.
Hon. Jim Nussle,
Chairman, Committee on the Budget, House of Representatives, 
        Washington, DC.

Hon. John Spratt, Jr.,
Ranking Member, Committee on the Budget, House of Representatives, 
        Washington, DC.
    Dear Chairman Nussle and Ranking Member Spratt: I am writing out of 
concern that the Administration's Fiscal Year 2006 Budget of the U.S. 
Government cuts or eliminates several programs that are vital to my 
rural constituency in Tennessee's Fourth Congressional District, as 
well as rural areas throughout the United States.
    I am extremely troubled by the Administration's proposal to 
eliminate funding for the Edward Byrne Justice Assistance Grant (EBJAG) 
in the Fiscal Year 2006 Budget. The production and abuse of 
methamphetamine is a widespread problem in Tennessee and is quickly 
becoming a major issue for America. The Drug Enforcement Administration 
estimates for 2004 have Tennessee ranked third nationally for 
methamphetamine arrests and seizures. Methamphetamine production and 
abuse destroys lives, families, property, the surrounding environment, 
and is an incredible burden on local communities and law enforcement 
officials. Now is the time to fight this illicit drug, and all illegal 
substances head-on with increased man power and funding. Drug task 
forces in my district and state rely heavily on EBJAG to fight the 
local war on drugs. Eliminating this grant program gives the criminals 
an even greater advantage over our communities and law enforcement 
offices. Such an elimination of this valuable grant program puts the 
future of our children, families, and friends in grave danger. I 
believe this is completely unacceptable and ask the House Budget 
Committee to restore EBJAG funding to the FY'04 level of $659.1 
million.
    Additionally, rural America has come to depend on the State and 
Local Homeland Security Grants to keep local and volunteer fire 
departments, as well as local law enforcement offices, functioning at 
full capacity. Without these grants many rural communities would not be 
able to fully staff their fire and police departments or provide them 
with updated equipment necessary to keep our communities safe. I was 
very dismayed to see the President's budget propose to cut this grant 
program by $420 million. Congress should not leave rural America 
unprotected and unprepared for day to day emergencies or future 
catastrophic attacks. It is my hope that the House Budget Committee 
will realize the importance of these grants to rural America and 
restore FY'06 funding for the State and Local Homeland Security Grants 
to the FY'05 level of $3.985 billion.
    Another primary concern is the Administration's proposal to move 
the Community Development Block Grant (CDBG) program from the 
Department of Housing and Urban Development (HUD) to the Department of 
Commerce as part of the new ``Strengthening America's Communities'' 
(SAC) initiative. CDBG has been very beneficial in my district and in 
over 3,000 rural communities as a part of HUD. In 2004 the town of 
Oneida, TN received $500,000 from the state of Tennessee through CDBG 
for water and sewer infrastructure development. Without these crucial 
funds the officials in Oneida would be forced to both raise taxes and 
utilities rates on an economically distressed community. Such a 
scenario would be a job killer for the town and greatly impede future 
economic development. That said, I request the House Budget Committee 
leave CDBG as a part of HUD and fund the program at the FY'05 level of 
$4.1 billion.
    Veterans in my district are very apprehensive toward the proposed 
cuts to veterans' benefits. The President's budget proposal calls for 
Priority Group 7 and 8 veterans pay an annual enrollment fee of $250 
and an increase in prescription drug co-payments from $7 to $15 as part 
of their benefits. You may recall that the co-pay amount for these 
veterans was recently increased from $2-$7 in 2000. The Department of 
Veterans Affairs anticipates the new ``out-of-pocket costs'' will 
result in 1.1 million veterans choosing to leave the system. I ask the 
House Budget Committee to ignore this proposal, and additionally, to 
restore funding for state grants for extended care facilities.
    Finally, my constituents and I are concerned about several 
eliminations in the Administration's proposed budget for education 
programs. The cuts in vocational education are particularly harmful for 
constituents in my district, many of whom are not able to attend 
traditional 4 year institutions of higher learning. Vocational training 
provides opportunities for employment in new and exciting fields that 
can lead to rewarding careers. I am sure the House Budget Committee 
will take a hard look at the Administration's proposal to eliminate 
vocational education and investigate which programs are truly wasteful, 
and which are truly necessary for ensuring rural Americans can continue 
to be a part of our country's well trained workforce.
    While I understand the necessity of paying back our deficit and 
working toward a balanced budget, and commend the House Budget 
Committee on its efforts, I think it is wrong to do so at the expense 
of those who have defended our nation in times of war and those who 
have had the hardest lot in life. Veterans and the good people who make 
up rural America are not second class citizens, and they should not be 
treated as such in the President's proposed Fiscal Year 2006 Budget of 
the U.S. Government.
            Sincerely,
                                             Lincoln Davis,
                                                Member of Congress.

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

    Thank you, Mr. Chairman, for the opportunity to testify as the 
Committee considers a FY 2006 Budget Resolution. I know the Committee 
must weigh several pressing national priorities as you prepare the FY 
2006 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. For the 
United States to remain a prosperous country, it must maintain its 
technological leadership in the world. 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 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 FY 2006 request of $132.3 billion for 
research and development continues this trend.
    While our focus on immediate threats is certainly warranted, it is 
necessary for us also to consider longer-term threats to our national 
security. 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. The diversity of the basic 
science research portfolio ensures discoveries that lay the foundation 
for biomedical advances and defense. Researchers at NIH and DOD depend 
on research and the human capital development that takes place at NSF 
to fuel their on-going work to improving the health and safety of our 
country. As a nation, we cannot afford to starve basic science research 
and education and need to make sure that we balance our funding between 
the medical and physical sciences. Historically, our investment in 
physical science research has been slipping, and our overall national 
investment in research and development is at a rate much slower when 
compared to other growing economies. Furthermore, while appropriators 
have often met the President's request for biomedical funding, Congress 
has actually reduced the appropriated funds for physical sciences at 
NSF in recent years, compared to the request.
    With this in mind, I urge you to make the basic research components 
of function 250 a top priority in the FY 2006 budget. I want to 
particularly emphasize several basic science research and development 
programs that deserve Congress' utmost attention: the National Science 
Foundation, the National Institute of Standards and Technology, the 
Department of Energy's Office of Science, the National Aeronautics and 
Space Administration, and math and science education.
    The National Science Foundation's FY 2006 budget request of $5.6 
billion is a 2.4 percent increase over FY 2005 appropriations; however, 
it is $2.9 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, though I realize that in 
this austere budget environment it may not be immediately possible to 
fulfill this obligation. The increase is also tempered by the transfer 
of funds for ice-breaking operations from the Coast Guard budget, 
resulting in a corrected increase of 1.5 percent. Because NSF received 
a 3.1 percent ($180 million) cut in FY05, the overall request level for 
FY06 is approximately 1 percent below the FY04 level.
    NSF is the only Federal agency dedicated solely to supporting basic 
scientific research. NSF funding accounts for one-fifth of all Federal 
support for basic research and 40 percent of physical science research 
at academic institutions. Nearly 90 percent of these awards are made 
through a competitive, merit-review process that ensures that excellent 
and innovative research is being supported. Furthermore, NSF 
consistently receives the highest rating from OMB for the efficiency 
and excellence of its programs.
    The Foundation is also the primary Federal supporter of science and 
math education; it underwrites the development of the next generation 
of scientists and engineers. I am particularly concerned about the 
trend of the current budget request that reduces the Education and 
Human Resources (EHR) budget at the Foundation by more than $104 
million, or 12 percent. This dramatic decrease is unparalleled in other 
parts of the Federal science and technology portfolio, and, indeed 
other parts of the total budget. Decreasing awards in education, or 
eliminating any new awards entirely, seems very shortsighted when we 
are currently facing the challenge of adequately preparing our students 
to enter science and technology fields. I have worked very hard to 
maintain the Math and Science Partnership program at NSF, where grants 
are awarded on a peer-reviewed basis that complements the strengths of 
a research-based organization. The FY 2006 request for the Math and 
Science Partnerships of $60 million will only allow continued funding 
for the programs that were started in previous years, eliminating the 
future of an incredibly important program to determine how our students 
learn the subjects of math and science. I urge the Committee to provide 
NSF with the highest possible budget allocation this year, including 
the EHR budget.
    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. NIST has a proven track record in research and development 
on standards and measurement techniques that help U.S. industries 
become more globally competitive and retain leadership in cutting-edge 
technologies. The President's FY 2006 request of $426 million for 
NIST's labs is a 12 percent increase over the levels enacted in FY 
2005, and I appreciate that.
    I am particularly pleased that the request includes $19 million in 
funding for an Advanced Manufacturing research initiative. This 
initiative is aimed at speeding the development of industrial 
applications of nanotechnology and streamlining manufacturing 
standards. It will help small and medium-sized manufacturers and has 
goals very similar to the Manufacturing Technology Competitiveness Act 
which I passed through the House last Congress.
    However, I am very concerned about other manufacturing programs at 
NIST. The President's FY 2006 budget request cuts the Manufacturing 
Extension Partnership (MEP) program by over 50 percent to $46.8 
million. I have worked very hard over the years to help my colleagues 
in Congress understand that MEP is vital to retaining American 
competitiveness and American jobs, and I believe they appreciate the 
value of this program. Yet each budget cycle the Administration 
proposes to significantly cut this program, which the Department of 
Commerce itself recognized as a valuable program in a 2004 report on 
manufacturing. Diminishing funding for MEP will devastate small and 
medium-sized manufacturers and in the long run severely hurt our 
competitive edge in the manufacturing sector. Furthermore, I continue 
to support the Advanced Technology Program (ATP) and am disappointed 
that the Administration has again included no funds for the program in 
the budget request.
    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 many new economic and medical advancements including, among others, 
new energy sources, the Internet, 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. 
The FY 2006 budget request for the Office of Science is $3.46 billion--
a decrease of almost 4 percent from the FY 2005 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.
    The National Aeronautics and Space Administration (NASA) is an 
agency in transition. In order to align the agency with the President's 
challenge to travel to the moon and Mars, NASA has reorganized and 
streamlined its structure. The proposed mission will be very costly and 
will pose significant technical obstacles that will only be solved 
through basic research. Although NASA's FY 2006 budget request of $16.5 
billion includes an increase of 2.4 percent, more than 40 percent of 
the budget will fund the return to flight of the Space Shuttle and the 
International Space Station. Because of the reorganization at the 
agency, it is difficult to compare from past years, but essentially, 
NASA research and development would increase by 4.9 percent to $11.5 
billion due to the funds freed up by the Space Shuttle's expected 
return to flight in the current year. This overall increase comes at a 
cost to basic scientific research at NASA. In order to shift resources 
toward solar system exploration and research and development focused on 
moon and Mars mission technologies, the budget request cuts aeronautics 
research by 6 percent, in addition to steep cuts in environmental, 
biological, and physical sciences research. Also absent from the budget 
is funding for the proposed repair mission to the Hubble space 
telescope, an instrument which has greatly enriched and expanded our 
limits of scientific discovery.
    Basic science and engineering research underpin all of NASA's major 
accomplishments as well as many of the technologies you and I use 
everyday. Furthermore, basic research at NASA will support the future 
exploration endeavor; if we reduce basic research in the out-years, our 
astronauts will be working with outdated technology. 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 FY 2006 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.

Prepared Statement of Hon. Louie Gohmert, a Representative in Congress 
                        From the State of Texas

    Mr. Chairman, thank you for allowing me to submit a statement today 
before you and the other Members of the Budget Committee about my views 
on the fiscal year 2006 budget resolution.
    As a fiscal conservative I am a strong proponent of a balanced 
Federal budget. As you know, 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. 
Unfortunately, due to an economic recession and necessary increases in 
military/homeland security spending after the September 11, 2001 
terrorist attacks, the Federal Government is now operating in a deficit 
spending environment. I believe we need to work together to accomplish 
a balanced budget again as soon as possible.
    I would like to briefly highlight two areas of the budget that are 
of serious concern: (1) the proposed cuts to and transfer of Community 
Development Block Grant (CDBG) funding from the Department of Housing 
and Urban Development (HUD) to the Commerce Department; and (2) the 
lack of funding for 2,000 Border Patrol Agents to be hired this year as 
required by Public Law 108-458.
    While I am in favor of eliminating wasteful spending, there are a 
number of domestic programs that are quite efficient and essential to 
the livelihood of many low-income Americans that create opportunity and 
advancement. The proposed budget would greatly reduce the amount of 
CDBG program funding that have stimulated the economy and helped real 
people. The proposed budget would cut the CDBG program--the bulk of the 
community planning budget--by as much as 50 percent. Certain cities and 
counties in my district will be particularly hard-hit by these cuts. A 
few examples are: Rusk County, which received $327,660(Non-entitlement) 
in fiscal year 2005, Marshall, which received $473,095 in fiscal year 
2005, Nacogdoches County, which received $250,000(Non-entitlement) in 
fiscal year 2005, and Lindale, which received $365,000(Non-
entitlement). These cities are making good use of this money to 
energize and redevelop their cities and economy, and any significant 
reduction of funds could result in economic disaster for cities 
struggling to stay afloat.
    Last year, Congress passed and the President signed the National 
Intelligence Reform Act of 2004. This bill requires 10,000 new Border 
Patrol Agents to be hired over 5 years. The budget provides enough 
money for only 210 additional agents, falling dangerously short of the 
2,000 agents that are required by law to be hired this year. While I 
understand sacrifices must be made in order to achieve fiscal 
responsibility, this is also not an area where Congress can cut 
corners. I respectfully request that the will of Congress be honored 
and full funding be restored.
    We must fight to make permanent the tax relief measures that were 
enacted in 2001 which, as you know, ensures a healthy national economy, 
which, combined with spending restraint, will help alleviate our 
national deficit. We should not jeopardize the future of our children 
and grandchildren by either unwise spending or unwise cuts. It is true 
cuts will need to be made; however, they should be made where they do 
not devastate economies which also decreases tax revenues.
    In conclusion, the best course to a balanced budget is through both 
economic growth and spending discipline. This strategy will greatly 
assist my constituents of the First 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 other 
Members of the Budget Committee in ensuring that Congress moves toward 
achieving a balanced budget while allocating sufficient funding levels 
to meet our domestic and international needs in those programs that are 
actually providing a healthy return on the Federal Government's 
investment.

                                             U.S. Congress,
                                     Washington, DC, March 3, 2005.
Hon. Jim Nussle,
Chairman, Committee on the Budget, House of Representatives, 
        Washington, DC.
    Chairman Nussle: As the Budget Committee prepares the House budget 
resolution we are concerned by the proposed reductions to the Medicaid 
program. We appreciate the opportunity to work with you to address our 
concerns.
    New York State's Medicaid program has over time developed to cover 
a wider breath of individuals and ``optional'' services than most other 
states. Our state serves a higher proportion of elderly and disabled 
beneficiaries than other states on average. In fact, more than 25 
percent of New York's Medicaid recipients are elderly or disabled, 
accounting for nearly two-thirds of programmatic spending. Virtually 
all of these individuals are also Medicare recipients. At the same 
time, nearly half of New York's Medicaid recipients are children.
    Despite the high number of Medicaid and Medicare beneficiaries in 
New York, our state is home to approximately 3 million uninsured 
individuals. New York's health care delivery system is strained, as 
providers fulfill their mission to care for all. New York hospitals and 
health systems alone provide $1.6 billion in uncompensated care a year. 
For the sixth year in a row, over half of New York's hospitals have 
lost money providing care to patients.
    We agree that reform of the Medicaid program should be addressed 
and recommend a deliberative policy driven discussion to develop 
reforms. Medicaid is more than a budgetary issue. We support our 
colleague Representative Heather Wilson (R-NM) in calling for the 
establishment of a bipartisan commission to study the Medicaid program 
and make informed recommendations for its reform.
    We urge the Budget Committee to refrain from proposing cuts to 
Medicaid spending at this time. We ask you further to protect Medicare 
program funding, as the benefits of each program are increasingly 
dependent upon the other. Additionally, we believe the new Medicare 
prescription drug program we all worked to establish needs to be given 
a chance to work.
            Sincerely,
                                             Peter T. King,
                                                Member of Congress.

                                            James T. Walsh,
                                                Member of Congress.

                                            John M. McHugh,
                                                Member of Congress.

                                              Sue W. Kelly,
                                                Member of Congress.

                               John R. ``Randy'' Kuhl, Jr.,
                                                Member of Congress.

                                           John E. Sweeney,
                                                Member of Congress.

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

    Members of the Budget Committee, as a former member of the 
Committee, I have a special interest in the crafting of the budget 
resolution. Today I would like to share with you some brief thoughts on 
the Fiscal Year 2006 budget.
    I guess the silver lining in all of this is that it seems that the 
President is finally feeling political pressure to acknowledge the 
Federal Government's ballooning deficit is a problem. Yet the 
President's budget and his proposed solutions are a farce.
    When President Bush was inaugurated in 2001, he inherited a $5.6 
trillion surplus over 10 years (2002-2011), as projected by the 
Congressional Budget Office (CBO). At that time, CBO projected a $430 
billion surplus for Fiscal Year 2005. Since then, the fiscal health of 
the Federal Government has rapidly and alarmingly deteriorated. Now 
President Bush and his own accountants have projected a $427 billion 
deficit for Fiscal Year 2005.
    Not only is the $427 billion deficit a reversal of more than $850 
billion from what CBO anticipated the Federal treasury would be holding 
right now; the President's projection also severely underestimates the 
actual deficit the government will run this year. The $427 billion 
projection does not include the $82 billion President Bush recently 
requested for Iraq, Afghanistan, and tsunami aid; it does not include 
the nearly $2 trillion that extending his tax cuts will cost over the 
next 10 years; it does not include the $754 billion that his Social 
Security privatization plan would cost over the next 10 years; and it 
assumes that Congress will go along with his draconian cuts in domestic 
spending.
    On the President's chopping block are more than 150 domestic 
programs, including funding for first responders; health care for 
children; the elderly and people with disabilities; small businesses 
and manufacturers; vocational education; Amtrak; environmental 
protection; and after-school programs. To raise revenue, he proposes to 
raise healthcare co-payments for veterans, to raise electric rates in 
the Northwest and other areas from wholesale to market rates, and to 
drill in the Arctic National Wildlife Refuge. Out of a $2.57 trillion 
budget, all of these mean-spirited domestic cuts and revenue 
enhancements would save about a drop in the bucket.
    To put the depth of the deficit problem in perspective, consider 
this: Even if the President completely shut down all Federal Government 
functions except for Social Security, Medicare, defense, and homeland 
security, the government would still run a deficit of $75 billion, not 
including the $82 billion for Iraq or the costs of extending the tax 
cuts and privatizing Social Security.
    It is essential that Congress exercise fiscal discipline during the 
budget process. We all know the drastic consequences that long-term 
deficits have on the economy, including rising interest rates, and 
decreased capital investment and consumer spending. I urge this 
Committee to take into account the debt-ridden state of the Federal 
Government's finances, and to resist this President's misguided 
proposals.

                                             U.S. Congress,
                                     Washington, DC, March 3, 2005.
Hon. Jim Nussle,
Chairman, Committee on the Budget, House of Representatives, 
        Washington, DC.

Hon. John Spratt, Jr.,
Ranking Member, Committee on the Budget, House of Representatives, 
        Washington, DC.
    Dear Chairman Nussle and Ranking Member Spratt: Thank you for this 
opportunity to submit testimony regarding the fiscal year 2006 budget 
resolution. I am writing to urge you to restore funding to the Land and 
Water Conservation Fund (LWCF). Reductions to LWCF would severely 
impact American families and children that use close-to-home parks and 
open spaces for recreation and physical activity. At a time, when we 
have an obesity crisis, investing in recreation is an investment in 
America's health. Furthermore, LWCF protects special places in our 
national wildlife refuges, parks, and forests, and preserves spaces for 
local communities.
    The LWCF, established in 1964, is one of the greatest tools we have 
to address the increasingly severe problem of loss of open space, 
forests, and wildlife habitat by providing funding for acquisition of 
lands. The state-side portion of the fund (terminated in the 
Administration's budget recommendations) provides wide-ranging benefits 
by meeting citizens' needs for recreation and physical activity. The 
fund does so by acquiring land for recreation, developing new 
recreation facilities, and enhancing existing facilities.
    The results in 2004 certainly demonstrate the importance and need 
for continuing and adequately funding the state-side LWCF:
     572 local and state park and recreation areas were 
enhanced with grants, and 420 of the sites benefited from entirely new 
recreational facilities;
     87 new parks and recreation areas were created, including 
picnic areas, fitness trails, playing fields to accommodate youth 
participation in baseball, basketball, football and soccer;
     645 locations helped by LWCF encouraged active 
participation to strengthen the health and vitality of Americans.
    The President's budget request also woefully under-funds the 
Federal acquisition program for our national wildlife refuges, parks, 
forests, and monuments. The Natural Resources Inventory estimates 2.2 
million acres are lost to development each year; once lost, these lands 
can never be recovered. We must not lose our significant national 
historical and cultural heritage.
    When Congress created the Land and Water Conservation Fund, its 
intent was to set aside $900 million in Federal funds for national and 
state parks, forests, and wildlife areas. The funding supply for these 
places was to have come from a portion of the proceeds of oil and gas 
leasing on publicly owned areas offshore.
    The U.S. Treasury continues to divert these funds toward other 
Federal activities. At the very least, I urge the Budget Committee to 
restore the state-side of LWCF to $100 million and to provide adequate 
funds to purchase Federal projects as identified by the Department of 
the Interior and Agriculture.
    The Federal Government must honor the provisions of the Land and 
Water Conservation Fund, and provide American families and children 
with an investment in their future by providing an unparalleled 
national portfolio of federal, state, and local parks and recreation 
spaces that are safe and accessible for all Americans.
            Sincerely,
                                             George Miller,
                                                Member of Congress.

  Prepared Statement of Hon. Collin C. Peterson, a Representative in 
                  Congress From the State of Minnesota

    Chairman Nussle and Members of the Committee, thank you for holding 
this hearing for Members to express their views on the Congressional 
Budget Resolution for Fiscal Year 2006 that you will write in the 
coming weeks.
    I refer you to the Additional Views and accompanying letter from a 
coalition of agriculture, resource and conservation and nutrition 
interest groups that was submitted as part of the Committee on 
Agriculture's Views and Estimates. I will draw from these Views as part 
of my testimony.
    First, I ask that your Committee recognize how fiscally sound the 
2002 Farm Bill has been. Following the enactment of the 1996 Farm Bill, 
Congress passed 4 years of ad hoc emergency assistance totaling $26 
billion to support farmers when prices fell. The 2002 Farm Bill was 
designed to remove the need for such assistance by structuring basic 
farm programs so that they aid farmers when need actually arises, as 
well as making important investments in conservation, nutrition, trade, 
rural development and energy programs.
    The first 3 years of the 2002 Farm Bill. 2002-04, cost an average 
of $14 billion, which was 40 percent less than program and emergency 
assistance provided in the last 3 years of the 1996 Farm bill (1999-
2001). Over the first 3 years, the 2002 Farm Bill has also cost $15 
billion less than was originally estimated by the Congressional Budget 
Office (CBO) at the time the Farm Bill was passed. The 2002 Farm Bill 
is designed to only pay out the assistance required to meet those 
levels of support set in the statute.
    Farm Bill mandatory spending has, in fact, been reduced by $650 
million in FY 2004 and $1.4 billion in FY 2005 by limitations placed on 
conservation, rural development, research, trade and energy programs in 
appropriations acts. The President's FY 2006 Budget has proposed 
further reduction in these programs in addition to proposed changes to 
commodity, crop insurance, forestry and nutrition programs.
    Second, the United States is currently engaged in multilateral 
trade negotiations that aspire to broadly open markets for U.S. 
agricultural products. Because of relatively low U.S. tariffs on 
agricultural goods, the greatest assets our negotiators have to offer 
are our domestic support programs. If Congress preemptively cuts 
domestic farm programs prior to the successful conclusion of the WTO 
Doha Round, U.S. farmers are likely to receive lesser concessions on 
market access and government support of competitors. That result could 
leave world market prices lower than otherwise might occur and with a 
commensurate increase in Federal spending under reduced levels of 
domestic support.
    Third, I must ask if spending reductions are even necessary for the 
Agriculture Committee. The standard the President has set, cutting the 
deficit in half from FY 2004 to FY 2009, has already been met according 
to CBO's January 2005 Baseline Projections. These projections, which 
assume no new legislation, show the deficit declining from $412 billion 
in FY 2004 to $197 billion (excluding extension of the 2005 emergency 
supplemental) projected for FY 2009.
    Relative to the Administration's 2004 Budget estimate of a $521 
billion deficit, CBO's 2009 projection is 24 percent below the 
President's target of $260 billion. As a percent of GDP, CBO's January 
2005 Baseline deficit falls by more than half, from 3.6 percent of GDP 
in 2004 to 1.4 percent of GDP in 2009. By this standard, no cuts in the 
Committee's jurisdiction are necessary.
    Fourth, and most importantly, The Farm Security and Rural 
Investment Act of 2002 is a contract with American agriculture that 
provides the stability that investment and capital planning require. 
Changes to the Farm Bill, such as those proposed in the President's 
budget, would cause deep reductions in farmer income support, as much 
as 48 percent as reported by Iowa State University for Iowa corn 
growers. Most farmers operate on slim margins, and such changes would 
erase profit margins for many producers.
    Farm families rely on the Farm Bill to make plans and contractual 
obligations for the future. Re-opening the Farm Bill's safety-net 
provisions would create more uncertainty for farmers who must already 
contend with market instability, unpredictable weather, and variable 
supply costs. Interrupting U.S. farm policy at random prevents farmers 
from being able to make long-term operation and investment decisions 
and prudent risk management actions.
    Congress should fulfill its contract with American agriculture and 
its conservation, nutrition, and rural development interests; its 
expiration in 2007 will be soon enough to review and consider changes.

Prepared Statement of Hon. Tom Price, a Representative in Congress From 
                          the State of Georgia

    Mr. Chairman, thank you very much for allowing me to submit this 
testimony to the Budget Committee today. I completely favor the 
Committee's efforts to balance the Federal budget.
    Winning the global war on terrorism should be the highest priority 
of the United States. Maintaining and advancing our military 
capabilities is an essential goal for the protection of Americans at 
home and abroad. The strength of our nation's military relies on 
unparalleled, technologically advanced equipment.
    Assuring our air superiority requires that we continue to support 
the F/A-22 Raptor made by Lockheed Martin in Cobb County. It is the 
most advanced fighter, and clearly no other fighter in the world can 
match the F/A-22 for quality and speed. Without it, our nation's 
defenses would soon be compromised. Yet, within the Defense Department, 
advisors to the Secretary of Defense and the President inappropriately 
recommend cutting $30 billion over the next 6 years from the F/A-22 
program.
    The F/A-22 is the necessary successor to the F-15. Over thirty 
years ago the U.S. Air Force began looking at plans to replace the F-15 
fighter, an aircraft that served our nation well. This process resulted 
in requests for an Advanced Tactical Fighter in 1985, leading to the 
selection and orders for the F/A-22.
    The apparent reason for this recommended cut was the erroneous 
perception that there were no threats to American security that would 
render the F-15 unable to ensure air superiority. However, recent 
studies reveal that the F-15 would lose 90 percent of the time during 
encounters with the newest generation of aircraft currently under 
development by potential enemies. With the F/A-22, however, we would 
gain an era of dominance in the air against both ground and air-based 
threats that would last well into the 21st century.
    Finally, we all know that education and job training are vital 
components to our workforce. Certainly, budget restraint and a sound 
fiscal policy are important. I merely ask that any cuts to mandatory 
spending programs under reconciliation be done in a responsible and 
fair manner.

  Prepared Statement of Hon. Bennie G. Thompson, a Representative in 
                 Congress From the State of Mississippi

    Thank you for affording me the opportunity to address the Budget 
Committee on some of my concerns about the budget as the Ranking Member 
of the House Committee on Homeland Security. As you prepare the budget 
resolution for Fiscal Year (FY) 2006, I believe there will be a lot of 
work to do to correct the security gaps created by the misplaced 
spending priorities in the President's proposed budget.
    For example, the budget fails to fulfill numerous commitments made 
to the Border Patrol in the Intelligence Reform and Terrorism 
Prevention Act (P.L. 108-458), which was just signed by the President 
in December. The risk of terrorists crossing our southern border is one 
of the prime security gaps now, and the Border Patrol is on the front 
line of trying to correct the problem.
    Below is my overall analysis of the funding shortages in the 
budget, as well as specific areas where the budget is wholly 
inadequate. I understand that the answer to securing the homeland 
security cannot just be a ``blank check,'' but there are priorities 
that we can focus on now to make America safer, protect our economy, 
and prepare for the worst.

                        OVERALL SPENDING LEVELS

    For FY 2006, the Department of Homeland Security (DHS) requests 
$40.1 billion in total funding, representing a $48 million--or a one 
tenth of 1 percent--increase relative to the FY 2005 level of $41.0 
billion. After accounting for mandatory programs (such as the Coast 
Guard retirement fund, and disaster relief programs) and certain fee-
funded accounts (such as those used by the Bureau of Immigration and 
Customs Enforcement for portions of their activities), the DHS' total 
discretionary request of $34.2 billion represents an increase of $2.2 
billion, or 7 percent, increase above current year funding. The 
majority of the $2.2 billion increase is due to a $3.00 increase in the 
Aviation Security Passenger Fee, up to a total of a $5.00 increase per 
trip, which is estimated to yield a $1.6 billion increase in revenues. 
If all fee-funded programs are accounted for, DHS' net discretionary 
request is $29.3 billion, representing a $343 million, or 1.2 percent 
increase, above the current year level--less than the rate of 
inflation.
    I support additional resources for the DHS above current year 
levels. However, rectifying critical homeland security gaps that 
continue to exist throughout our nation will, in part, require 
additional resources above what is requested in the President's FY 2006 
Budget. For example, since the tragedy of September 11, our nation's 
first responders still lack the resources they need to ensure they are 
properly equipped and trained to protect our communities from a 
terrorist attack; radiation portal monitors that can detect the 
presence of a weapon of mass destruction are not yet installed at all 
ports of entry and related sites; robust air cargo systems are not yet 
deployed nationwide that can detect the presence of dangerous 
materials, and physical security at our nation's ports is inadequate 
relative to the security threats that exist.
    While requested funds for FY 2006 will assist in closing these 
security gaps, no less than an additional $6.1 billion above the FY 
2006 President's request (not including the Coast Guard's project 
Deepwater) will be necessary to ensure that our homeland is as safe as 
it needs to be relative to the threats we face. If additional funds for 
the acceleration of Project Deepwater are included, no less than $7.0 
billion in additional resources is required.

        THE ADMINISTRATION'S FISCAL POLICY AND HOMELAND SECURITY

    While funding for homeland security has increased since the attacks 
of 9/11, the issue is not whether such funding as risen--the issue is 
whether sufficient resources have been devoted to homeland security 
since 9/11 to ensure that we are as safe as we need to be. By this 
standard, the Administration continues to fall short in its efforts to 
protect the country. Although the threat of renewed terrorist violence 
against our country is real--a fact confirmed a few weeks ago by CIA 
Director Porter Goss in testimony before Congress--the President's 
budget request for the Department of Homeland Security misses an 
opportunity to chart a new course to protect our homeland. Instead of 
tinkering at the margins, the Administration's budget should boldly 
boost funding levels for key DHS programs to provide a greater level of 
protection for Americans. The failure to do so places all of our 
citizens in greater jeopardy.
    In part, the Administration's misguided fiscal policies of the last 
4 years have resulted in resources being channeled to the wrong 
priorities and have frustrated efforts to devote greater funds to 
homeland security. For example, last year the Administration provided 
tax cuts to the wealthiest 1 percent of Americans (those earning more 
than $1 million a year) totaling about $90 billion--three times the 
amount of discretionary funding devoted to the Department of Homeland 
Security. Such tax cuts come at a time when the Council on Foreign 
Relations has estimated that our nation's first responders, alone, 
require upwards of $100 billion to satisfy their critical needs.\1\ The 
President's FY 2006 Budget proposes to continue its tax cut policies, 
which will result, in part, in a projected deficit of $427 billion for 
the current fiscal year--the third year in a row that the deficit will 
reach a record level. While the Administration may take credit for 
increasing the homeland security discretionary budget for next fiscal 
year by 7 percent--or $2.2 billion--relative to the current year level, 
we will spend that amount in about 2 weeks in Iraq. While we must keep 
faith with our military personnel serving in harm's way overseas, we 
must also keep faith with the men and women of the Homeland Security 
Department as they serve on the front lines every day to protect us 
against terrorist and other threats. We must ensure that they--and our 
collective homeland security effort--receive the resources that are 
urgently needed to ensure the United States is as safe as it needs to 
be. We must get our priorities right.

                     FIRST RESPONDER GRANT PROGRAMS

Office of State and Local Government Coordination (OSLGC)
    The President's fiscal year 2006 Budget request for OSLGC-
administered grants for our state and local first responders and 
related homeland security needs totals $3.6 billion, representing a 
$420 million--or nearly 11 percent--decrease from the amounts 
appropriated by Congress for fiscal year 2005. The President's proposal 
also seeks to increase the amount of discretionary grant funds to be 
distributed based on threats and vulnerabilities. Specifically, the 
President's Budget seeks to reduce the percentage guaranteed to each 
state as part of the State Homeland Security Grant Program from 0.75 
percent to 0.25 percent (the same percentage as currently guaranteed to 
all U.S. territories). Such a proposal is consistent with legislation 
supported by the Select Committee on Homeland Security, and enacted by 
the House as part of H.R. 10, during the 108th Congress.
    In aggregate, however, the proposed reductions for FY 2005 for 
first responder funding, as compared to current year levels, are made 
at a time when outside expert panels, such as one assembled by the 
Council on Foreign Relations, note that our nation's first responders 
still lack the training, equipment, and other support required to 
ensure that they are full prepared to prevent or respond effectively to 
any possible terrorist attack. While significant resources have been 
devoted to first responders since September 11, there is a continuing 
need to increase their preparedness. Despite Administration plans in 
Homeland Security Presidential Directive 8 (HSPD-8) to tie the budget 
request to an assessment of first responder needs, HSPD-8 was not 
implemented in time for the budget submission, and funding levels 
requested in the President's budget do not reflect the actual needs of 
our nation's first responders. Given outstanding needs, I strongly 
believe that FY 2006 resources for state and local grant programs 
should be increased above levels proposed in the President's FY 2006 
Budget by at least $2.9 billion as described below.
    The President's fiscal year 2006 request for DHS state and local 
grants proposes a number of changes to individual programs. 

Specifically:
     The President's FY 2006 Budget proposes to reduce funding 
for the State Homeland Security Grant Program by nearly $300 million 
below the current year level. Such a decrease comes as the result of 
two actions: First, the FY 2006 requested level includes an $80 million 
decrease relative to the current year level; second, the President's 
budget stipulates that no less than 20 percent--which amounts to $204 
million--of funds for the FY 2006 State Homeland Security Grant Program 
must be allocated for ``terrorism prevention activities of law 
enforcement.'' The latter adjustment is similar to the stipulation 
placed on the Urban Area Security Initiative (see below), and is 
intended to offset the impact to law enforcement by the President's 
proposal to completely eliminate in FY 2006 the Law Enforcement 
Terrorism Prevention Grant program. Taken together, both adjustments 
will have the effect of reducing the amount of grant funding for 
distribution to states and territories for non-law enforcement-specific 
purposes by $284 million--a 26 percent decrease relative to the FY 2005 
amount. For this reason, I support an increase in funding for the State 
Homeland Security Grant Program to a level no lower than the FY 2005 
enacted level of $1.1 billion.
     The President's request also makes significant cuts to the 
Assistance to Firefighters Grant Program (FIRE Grants). Specifically, 
the President's Budget requests $500 million, representing a cut of 
$215 million--or 30 percent--relative to the current year level. The 
FIRE Grant program was created before September 11 by Congress in order 
to meet basic, critical needs of the firefighting community, which a 
December 2002 study by the U.S. Fire Administration and the National 
Fire Protection Association found to be significant. Also, unlike the 
enacted FY 2005 amount, the President's FY 2006 Budget does not include 
any specific funding for the SAFER (Staffing for Adequate Fire and 
Emergency Response) program to reach the goal of hiring 10,000 new fire 
fighters and help communities attain 24-hour staffing to provide 
increased protection against fire and related hazards. The SAFER Act 
authorizes $7.7 billion over a 7-year period, to include $1 billion for 
FY 2006. For these reasons, I support an increase in funding for the 
FIRE grant program to a level no lower than the fully authorized amount 
of $750 million. Consistent with congressional intent, an additional $1 
billion is needed to support the goals of the SAFER Act.
     The enhancement and acquisition of interoperable 
communications systems remain a critical need for the first responder 
community. However, the President's FY 2006 Budget requests no specific 
funds for grants to enhance interoperability, and eliminates the 
relatively modest $20 million for interoperability as part of DHS' 
Technical Assistance Program (similarly, the President's FY 2006 
request for the Justice Department proposes to eliminate $99 million 
for COPS Interoperable Communications Technology Grants). Additional 
funding to increase interoperability among our nation's first 
responders is urgently needed. In June 1998, the Public Safety Wireless 
Network program estimated that replacing communications systems 
nationwide to achieve interoperability could cost as much as $18.3 
billion.\2\ The Council on Foreign Relations has reported that, in 
virtually every major city and county in the United States, no 
interoperable communications system exists to support police, fire 
departments, and response personnel at all levels of government during 
a major emergency,\3\ and that a minimum, $6.8 billion over 5 years 
would be necessary to ensure dependable, interoperable communications 
for first responders.\4\ For these reasons, I support a dedicated down 
payment of at least $500 million in FY 2006 for first responder 
interoperability purposes.
     The President's FY 2006 Budget proposes to eliminate the 
Law Enforcement Terrorism Prevention Grants, currently funded at $400 
million, as a separate grant program. Instead, grants to support 
terrorism-related law enforcement efforts will be funded as part of the 
State Homeland Security Grant program and the Urban Area Security 
Initiative regional grant program. While the Democrats fully supports 
the needs of law enforcement at the state and local level to prevent, 
prepare for, and respond to a terrorist attack, we believe that law 
enforcement officials should not have to compete for grant funds with--
and at the potential expense of--other first responder entities. For 
this reason, I support funding for a dedicated Law Enforcement 
Terrorism Prevention Grant program at a level no lower than $400 
million.
     The President's FY 2006 Budget also proposes to reduce 
funding for the Emergency Management Performance Grant program by $10 
million--or nearly 6 percent--relative to the current year level. A 
March 2002 survey by the National Emergency Management Association 
found that an additional 5,212 local emergency management positions are 
needed, with 3,960, or 76 percent, of those positions being fulltime 
directors needed to manage the programs. For this reason, I support 
funding for the Emergency Management Performance Grant to a level no 
lower than the enacted FY 2005 level of $180 million.
     The President's FY 2006 Budget proposes to consolidate FY 
2005 sector-specific grants for port security, rail and transit 
security, trucking security, and intercity bus security into one $600 
million Targeted Infrastructure Protection grant program for next 
fiscal year. I have two concerns with the Administration's proposal: 
First, this grant program would force many critical infrastructure 
sectors to compete against one another for scarce resources, increasing 
the likelihood that these sectors will receive less funding than last 
year. On a related note, requesting the new Targeted Infrastructure 
Protection program as part of DHS' Urban Area Security Initiative 
raises the concern that funding for critical infrastructure 
improvements will not be channeled to non-urban area environments. 
Second, the Administration's $600 million request is woefully 
inadequate, especially given that port and rail systems have billions 
of dollars in funding needs. For example, to date, ports will receive 
$715 million in security grant funding, yet this amount is $410 million 
short of initial estimated needs and $4.7 billion short of the Coast 
Guard's $5.4 billion overall estimate of what owners and operators of 
port facilities believe will be needed to make themselves secure 
against a terrorist attack. Similarly, outstanding public rail and 
public transit needs total nearly $3 billion. I support grant programs 
that take advantage of the sector-specific expertise that exists, or is 
being developed, within the Department. Additionally, if the targeted 
infrastructure program is enacted as requested, I believe that 
additional resources for port and rail security totaling $1.6 billion 
above the President's request for FY 2006 will be required.
     The FY 2006 President's Budget--similar to last year's 
proposal--includes no funding for the Metropolitan Medical Response 
System (MMRS). The primary focus of the MMRS, which was conceived after 
the 1995 terrorist release of sarin nerve gas in a Tokyo subway, is to 
develop or enhance existing emergency preparedness systems to 
effectively respond to a public health crisis, particularly an event 
involving a weapon of mass destruction (including a so-called ``dirty 
bomb'' which disperses harmful radiation). Through MMRS-sponsored 
preparation and coordination, local law enforcement, fire, hazardous 
material, emergency medical service, hospital, public health, and other 
first responder personnel plan will be more effective in responding in 
the first 48 hours to a public health crisis. Currently 125 municipal 
authorities in 43 states benefit from the program. I am not convinced 
that, consistent with the President's Budget, the goals of the MMRS 
program will be better supported by other, less specific, terrorism 
grant programs, and believes that the program should be funded at a 
level no less than the current year amount of $30 million.

                        DEPARTMENTAL OPERATIONS

    The FY 2006 President's Budget requests $665 for Department 
Management and Operations, representing a $140 million--or 27 percent 
increase--above the FY 2005 enacted level. The requested amount 
includes nearly $50 million to support the establishment of a DHS 
nationwide regional structure; $26 million for continued development of 
the Department's headquarters in Washington, D.C., and $53 million for 
DHS' human resource system initiative, dubbed ``MAX HR,'' which will 
implement the Department's new personnel system that is slated to begin 
implementation later this year. It should be noted that DHS' concept of 
a future regional structure is not yet mature, nor has it been formally 
approved by DHS leadership, thus calling into question whether funds 
will be needed as requested in the President's budget. Regarding DHS' 
new personnel system, I remain concerned that it will erode the 
collective bargaining and employee appeal rights that have long 
protected government employees against unfair or arbitrary management 
practices, and replace the well-established civil service compensation 
program with a new, untested ``pay for performance'' system. I will 
continue to give close attention to this issue, and believes that the 
$53 million in requested funds would be better allocated to rectify 
specific homeland security gaps.

                    OFFICE OF THE INSPECTOR GENERAL

    The FY 2006 President's Budget requests $83 million for the Office 
of the Inspector General (OIG), representing barely a 1-percent 
increase above the FY 2005 enacted level (less than the rate of 
inflation). Requested resources will be used to support a staff of 540 
employees, most of who will be engaged in audits, inspections, and 
investigations of various Departmental programs and activities. Given 
the vital importance of the Inspector General's office in probing and 
identifying programmatic inefficiencies and general waste, fraud, and 
abuse in a Department that encompasses over 180,000 employees for the 
benefit of Congress and DHS' leadership, I am concerned that additional 
resources may be needed above the level requested by the President to 
fully support the OIG's work.

                   BORDER AND TRANSPORTATION SECURITY

Office of the Under Secretary for Border and Transportation Security; 
        United States Visitor and Immigrant Status Indicator Technology 
        (US-VISIT)
    The President requests $390 million for the US-VISIT program for 
next fiscal year, an increase of approximately $50 million above the 
current year level. I continue to have concerns about the overall 
development and long-term vision of the US-VISIT program. Additionally, 
I remain concerned about the continued reliance of the US-VISIT system 
on rapidly aging Immigration and Naturalization Service (INS) legacy 
systems. I want to emphasize the need for continued oversight of the 
program, especially in such areas as the total future cost of the 
system, contractor performance, the effectiveness of US-VISIT as a 
counterterrorism tool, and the program's impact on the free flow of 
commerce at our nation's borders.

                              NEXUS/SENTRI

    The FY 2006 Budget requests $21 million for the NEXUS and SENTRI 
(Secure Electronic Network for Travelers Rapid Network) programs. Both 
NEXUS and SENTRI are ``pre-enrollment'' frequent traveler screening 
programs designed to expedite border crossings for those individuals 
identified as posing a low risk of terrorism. I am concerned that the 
$21 million allocated for NEXUS and SENTRI may be insufficient to 
adequately fund enrollment centers in major population centers away 
from the border and to provide necessary maintenance for the technology 
used for the programs. Additionally, higher levels of funding may be 
needed above the President's request to promote greater participation 
in both programs, which would create the advantage of allowing border 
inspectors to devote more time to screen travelers judged to be ``high 
risk.'' For this reason, I will continue to exercise close oversight 
over the performance of, and resource levels for, the NEXUS and SENTRI 
programs.

            OFFICE OF SCREENING COORDINATION AND OPERATIONS

    The Department's FY 2006 proposal seeks to establish an Office of 
Screening Coordination and Operations (SCO) to coordinate, consolidate, 
and streamline various screening programs to facilitate both security 
and travel. I look forward to assessing precisely how the SCO will 
operate, DHS' rationale regarding which programs will be included as 
part of the new office, and how those programs will be managed.
    As part of this effort, the Department of Homeland Security 
proposes to shift the US-VISIT program into this new office, along with 
several other Transportation Security Administration (TSA) or Customs 
and Border Protection (CBP) efforts. The Department seeks to exercise 
its existing authority to collect fees next fiscal year totaling $321 
million to fully recover the costs of the Secure Flight, Transportation 
Worker Identification Credential, Hazardous Material Drivers' License 
Endorsement, and the Alien Flight School Check programs. The new SCO 
office, or other appropriate entity in DHS, will likely need additional 
amounts made available for implementation of the new law enforcement 
officer travel credential, as mandated by the Intelligence Reform and 
Terrorism Prevention Act of 2004. Additionally, as part of the request 
for the new SCO office, the FY 2006 President's budget seeks $81 
million for the Secure Flight program. The Department of Homeland 
Security Appropriations Act for 2005 (Public Law 108-334 Sec.  522) 
prohibits TSA from deploying or implementing the Secure Flight program 
until the system is certified to meet a number of requirements as set 
forth by the Government Accountability Office (GAO). The GAO has not 
yet issued a report on Secure Flight, but has commented to Minority 
staff of the Homeland Security Committee that notable obstacles remain 
before the program can proceed. Given GAO's report, I question whether 
Secure Flight will be sufficiently developed by next fiscal year to 
require all of the resources requested for it within the President's FY 
2006 budget.

                  CUSTOMS AND BORDER PROTECTION (CBP)

Construction
    The President's FY 2006 Budget requests $93.4 million to maintain 
and construct CBP facilities nationwide. The President's budget makes 
clear that the entire construction budget is for the Border Patrol and 
not for our nation's ports-of-entry. While I support the infrastructure 
needs of a rapidly growing Border Patrol, we are concerned that the 
request will not meet the Border Patrol's current needs nor will it 
meet the needs of the workforce authorized in the Intelligence Reform 
and Terrorism Prevention Act of 2004. Additionally, providing border 
security without inhibiting trade requires a substantial investment in 
border infrastructure. This is especially true at our land ports of 
entry. While the General Services Administration is responsible for 
construction at our nation's ports of entry, CBP involvement is 
critical as will be the new Office of Screening Coordination and 
Operations. Layouts of inspection plazas, space limitations, limited 
number of inspection booths and lanes all affect the flow of traffic. 
Clogged borders with large traffic backups put pressure on inspectors 
to cut corners, thus reducing overall levels of security. The need for 
additional infrastructure investments is especially necessary given the 
implementation of US-VISIT and various pre-enrollment programs to 
separate high from low risk travelers. In a June, 2000 report, the 
former U.S. Customs Service estimated that an additional $784 million 
was needed to improve infrastructure and technology at our nation's 
ports of entry. Given that this estimate was made before the attacks of 
9/11, it did not take into account all of the current security-related 
costs that are now needed. Additionally, it did not include the costs 
of infrastructure needed to process travelers and goods leaving, as 
opposed to entering, the country. I believe that at least at additional 
$1 billion is urgently needed above the level requested by the 
President for border construction needs.

CBP Personnel
    The President's FY 2006 Budget requests $4.7 billion for CBP 
salaries and expenses, an increase of $197 million above the current 
year level to fund, in part, CBP personnel. Such personnel are critical 
in our national effort to prevent terrorists from gaining entry to the 
United States or using transportation and commercial supply chain 
systems to help carry out a terrorist attack. I am concerned, however, 
that several specific resource levels included in the FY 2006 Budget 
will be insufficient:
     Border Patrol: The Intelligence Reform and Terrorism 
Prevention Act of 2004 authorized 2,000 additional Border Patrol 
personnel annually for deployment along the U.S. northern and southern 
border from FY 2006-2010. The President's FY 2006 Budget provides 
funding for only 210--or 1,790 Border Patrol agents short of 
Congressional intent. I understand that the 210 new agents will replace 
those from the southern border who have been relocated to the northern 
border. Resource levels included in the President's FY 2006 Budget will 
also not result in the necessary Border Patrol personnel required to 
reach levels authorized in the 2001 PATRIOT Act and the 2002 Enhanced 
Border Security and Visa Entry Reform Act. Currently, DHS is 728 Border 
Patrol agents short of the mandates in the latter two bills. If the 9/
11 bill authorization levels are taken into consideration, the 
President's budget should fund 2,728 Border Patrol agents for FY 2006, 
which would result in over 13,500 agents defending our nation's 
borders. I believe that, at a minimum, an additional $87 million is 
necessary above the President's request to satisfy the Border Patrol 
level for next fiscal year included in the 9/11 reform bill. If all 
congressional mandates are to be honored, an additional $135 million 
would be needed above the President's request.
     C-TPAT/CSI: The President's request includes an additional 
$8 million to pay for supply chain security validations of companies 
who participate in the Customs Trade Partnership Against Terrorism (C-
TPAT) program. I am concerned that the Administration's request may not 
fix the personnel shortages associated with C-TPAT. C-TPAT membership 
has nearly doubled over the last year while the level of supply chain 
specialist has remained the same. This means that, without additional 
personnel, security validations will take years to complete. 
Simultaneously, lower than optimal personnel levels will allow 
companies to receive the benefit of reduced security inspections 
without ensuring they meet their security responsibilities. The FY 2006 
Budget also includes funding for an additional 14 positions in support 
of DHS' Container Security Initiative (CSI). While such an increase is 
a positive development, and mindful of past resource increases, I am 
concerned that it may not be sufficient to ensure effective 
implementation of the CSI program. The amount of new CSI inspectors, 
and their deployment schedule at overseas foreign ports, will need to 
be monitored closely to ensure that, in light of the program's goals, 
robust examination of cargo at foreign ports occurs before it travels 
to the United States. I will work to ensure sufficient resources are 
devoted to both programs.

Non-Intrusive Inspection Technology
    The President's FY 2006 Budget requests $125 million for the 
development, purchase, and installation of radiation portal monitors at 
our nation's major border crossings. Such portals are a type of non-
intrusive inspection (NII) technology that can be used to detect the 
presence of radiological materials that could comprise a weapon of mass 
destruction. The $125 million would complete the installation of portal 
monitors on the southern border and 10 percent of air cargo facilities 
at international airports. Requested funds are in addition to the $279 
million previously provided by Congress to install portals at our 22 
largest sea ports, major northern border crossings, and international 
mail facilities. However, even if FY 2006 requested funds for NII 
technology are provided, I understand that CBP will still require an 
additional $92 million above the President's request (for a total of 
$496 million) to ensure that--consistent with its own plan--portal 
monitors are installed at air cargo facilities, rail border crossings, 
and smaller ports of entry. Additionally, no funds are requested in the 
FY 2006 for handheld isotope identifiers which identify the type of 
radiation present in a container, or additional VACIS machines which 
use x-rays to provide an image of the contents of a shipping container. 
I believe it is unacceptable for NII technology to be lacking at our 
ports of entry and other critical infrastructure sites over 3 years 
since September 11, and strongly supports additional resources of at 
least $92 million above the FY 2006 request to correct this deficiency.

Immigration and Customs Enforcement
    The President's FY 2006 Budget requests $4.4 billion for 
Immigration and Customs Enforcement (ICE), representing a $519 million, 
or 13 percent, increase above the FY 2005 amount. However, $94 
million--or nearly 20 percent--of the increase is dedicated to existing 
programs which are being shifted to ICE from other agencies. The 
continuing financial management problems at ICE, along with the ongoing 
baseline review of its budget, make it difficult to know with any 
precision whether the requested amount for next fiscal year will be 
adequate to support ICE's myriad missions. I remain concerned that 
ICE's financial problems will not be fully resolved until FY 2007 at 
the earliest, adversely effecting operations in the meantime. I will 
continue to monitor ICE's financial health closely to ensure it has the 
resources needed to perform its vital work.

ICE Inspectors
    The Intelligence Reform and Terrorism Prevention Act of 2004 
authorized 800 additional ICE investigators annually from FY 2006-2010 
to investigate immigration violations. The President's FY 2006 Budget 
provides funding for only 152 new investigators--or 648 investigators 
short of Congressional intent. I estimate that an additional $61 
million above the President's request would be needed to satisfy the FY 
2006 personnel level included in the Intelligence Reform and Terrorism 
Prevention Act of 2004.

Detention and Removal Operations (DRO)
    For next fiscal year, the President's budget includes approximately 
$1.7 billion for Detention and Removal Operations (DRO), including $90 
million for additional bed space to incarcerate removable aliens. 
According to the Department of Homeland Security, the requested $90 
million translates to 1,920 new beds--6,080 beds short of the amount 
included in the Intelligence Reform and Terrorism Prevention Act of 
2004. I am concerned that DRO may not be able to accommodate its 
current bed space needs; if additional funds are not provided in FY 
2005 to correct this shortfall, much, if not all, of the proposed FY 
2006 increase could be consumed by higher costs resulting in no new bed 
space. If DRO receives sufficient additional funds in FY 2005 to meet 
its current needs, then bringing the President's request up to the 
levels authorized in the Intelligence Reform and Terrorism Prevention 
Act of 2004 would require an additional $285 million above the level 
requested by the President.

Federal Air Marshals
    The President's FY 2006 Budget includes $689 million for the 
Federal Air Marshal Service (FAMS) within the Bureau of Immigration and 
Customs Enforcement, an increase of $25.9 million over the FY 2005 
enacted level. I support increased resources for FAMS, but believe that 
an additional $39.1 million is necessary for the Air Marshal Service to 
retain and hire sufficient personnel to fully reach authorized levels 
and ensure appropriate flight coverage.

                 TRANSPORTATION SECURITY ADMINISTRATION

    The President's FY 2006 Budget includes $5.6 billion for the 
Transportation Security Administration (TSA), representing a net 
increase of $156 million over the current year level. The Department 
requests that the majority of TSA's FY 2006 budget--$ 4.1 billion, or 
nearly 75 percent--will be offset through the collection of passenger 
security and air carrier fees. Nearly 85 percent of TSA's request 
directly involves personnel and equipment costs for airport screening 
of passengers and baggage, with an additional 14 percent supporting 
aviation needs. Less than 1 percent of TSA's FY 2006 request is for 
surface transportation security efforts.

Passenger Fee Increase
    Of significant note in the President's FY 2006 Budget request is a 
proposal to increase the aviation security fee placed on passenger 
tickets by $3.00, to a maximum of $8.00. The Administration estimates 
that this increase will provide TSA with an additional $1.6 billion in 
revenue, for a total of $3.8 billion. Additionally, $350 million is 
proposed in the budget to be paid to TSA by air carriers, which would 
bring total fee-funded revenue to $4.1 billion--or 91 percent of the 
cost of providing aviation security screening. I am concerned that an 
increase in the fee levied on air tickets will have significant 
detrimental effects on the aviation industry, potentially resulting in 
the end of operations for multiple air carriers. More fundamentally, I 
believe that the cost of providing for aviation security in the post 9/
11 environment should be financed primarily by the Federal Government, 
as opposed to passing this cost on to consumers in the form of an 
additional ``tax'' on airline tickets. I do not believe the President's 
Budget proposal is acceptable, and maintain that additional Federal 
funds, most likely in the form of discretionary appropriations, should 
be devoted to TSA in lieu of the proposed passenger security fee 
increase.

Aviation Screeners
    I am concerned that the current legislative mandate to limit TSA 
screeners to no more than 45,000 may be having a detrimental effect on 
aviation security, given the resulting staffing imbalances and 
shortfalls that exist at some of our nation's airports. I expect that 
TSA will soon complete its study of the number of screeners that are 
needed to fully implement security regulations at every airport, 
consistent with the Intelligence Reform and Terrorism Prevention Act of 
2004 and the Congress should provide the appropriate level of resources 
needed to support the number of screeners determined necessary.

Private Aviation Screening
    The President's FY 2006 Budget request continues funding for the 
five airports involved in the Private Screening Program (PP5) but does 
not include segregated funds for additional airports opting out of TSA 
screening under the Screening Partnership Program (SPP). I understand 
that TSA intends to fund screening costs for any SPP airports out of 
funds requested for TSA screener airports, and approves of this 
approach until more information is available on the number of SPP 
airports.

Explosives Detection System (EDS)/Explosives Trace Detection (ETD) 
        Installation
    The President's FY 2006 budget requests $367 million in 
discretionary appropriations, to be complemented by $250 million form 
the Aviation Security Capital Fund, for a total of $617 million for 
EDS/ETD purchase, installation, and maintenance at airports nationwide. 
This total is $33 million less than both the full amount made available 
to TSA for the current year, and the fully authorized amount for EDS 
installation as a result of the Intelligence Reform and Terrorism 
Prevention Act of 2004. Of the total amount, $241 million will be 
devoted to reimburse nine airports through eight Letters of Intent 
(LOI) for EDS/ETD equipment at a 75 percent reimbursement level for 
large airports. It should be noted that airports may require up to $4 
billion to install in-line EDS technology to protect the traveling 
public, and that additional resources above the level requested by the 
President are urgently needed--in part to save money in the long run. 
Regarding the nine airports that are currently covered by LOIs, the 
Government Accountability Office has noted that, ``According to TSA's 
analysis, in-line EDS systems would reduce by 78 percent the number of 
TSA baggage screeners and supervisors required to screen checked 
baggage at these nine airports, from 6,645 to 1,477.''\5\ For these 
reasons, I recommend funding for EDS installation to a level no lower 
than the fully authorized amount of $650 million.

Air Cargo Security
    The President requests $40 million for air cargo security, 
representing no change from the current year level and $160 million 
less than the fully authorized amount in the Intelligence Reform and 
Terrorism Prevention Act of 2004. I feel that such funding levels need 
to be revisited, given persistent threats to aviation security. I 
believe that TSA should take steps to ensure that 100 percent of air 
cargo is inspected and that security verifications for all companies 
participating in the ``known shipper'' program are completed. Given 
that the proposed FY 2005 budget does not provide sufficient resources 
for either of these goals, I strongly recommend funding for air cargo 
security efforts at a level no lower than the fully authorized amount 
of $200 million.

                       UNITED STATES COAST GUARD

    The President's FY 2005 Budget requests $966 million for the 
Integrated Deepwater program, a $242 million increase over the current 
year level. The Deepwater program is designed to replace the Coast 
Guard's antiquated fleet of cutters and aircraft. Many of these assets 
are reaching the end of their service life and, as a result, suffer 
major mechanical casualties. These casualties have hampered the Coast 
Guard's ability to perform its vital homeland security and law 
enforcement missions. The FY 2006 request will modestly accelerate 
completion of the program from approximately 22 to 20 years. However, I 
am concerned that completing the Deepwater program in 20 years is too 
long to wait in light of the Coast Guard's significant homeland 
security missions. I believe that the Deepwater program should be 
accelerated to be completed in 10 years, and that an additional $926 
million to the Coast Guard's budget above the level of the President's 
request to achieve this objective. While this represents a large 
increase, such an acceleration would not only outfit the Coast Guard 
with a modern fleet of cutters and aircraft, but, as I understand it, 
would also results in $4 billion in savings over the life of the 
program.

                         SCIENCE AND TECHNOLOGY

    The President's FY 2006 Budget requests $1.37 billion for the 
Science and Technology Directorate of DHS. I am pleased that the 
request reflects a consolidation throughout DHS of research and 
development activities within the Directorate and expects that this 
reprogramming will yield cost efficiencies and technology leveraging in 
the coming years.

               MAN-PORTABLE AIR DEFENSE (MANPAD) SYSTEMS

    The Minority notes the increase in the President's FY 2006 Budget 
request for the counter-MANPADs program to $110 million, an increase of 
$49 million. The Minority recognizes that the program is entering more 
costly development and testing stages, and--consistent with the 
program's current mandate to protect the American public against MANPAD 
systems--strongly urges the Department to provide to Congress an 
operational feasibility study for counter-MANPADs technology.

            AVIATION SECURITY-RELATED RESEARCH & DEVELOPMENT

    The Minority notes that the Intelligence Reform and Terrorism 
Prevention Act of 2004 authorizes $470 million for specific aviation 
security-related research and development (R&D) programs, to include: 
$100 million for air cargo research and development (R&D) work, $250 
million for aviation portal monitors for the detection of biological, 
radiological, chemical, and explosive materials, $100 million for R&D 
efforts to support improved explosive detection systems, and $20 
million to support the development of advanced biometric technology 
applications for aviation security. Unfortunately, however, the 
President's FY 2006 Budget only includes $52 million within DHS' 
Science and Technology Directorate to fund these critical efforts--$418 
short of amounts included in the 9/11 bill. Consistent with 
congressional intent, I recommend an additional $418 million to fund 
aviation security-related R&D efforts.

          BIOLOGICAL COUNTERMEASURES AND AGRICULTURAL DEFENSE

    The FY 2006 budget for the Department includes $362 million for 
research, development, testing, and evaluation of several biological 
countermeasures, including: support for threat awareness and risk 
assessment of biothreats ($46 million); detection systems for 
aerosolized bioagents ($109 million); automated sample collection 
technologies ($82 million); and development of animal vaccines and 
next-generation diagnostics for foreign animal diseases ($87 million). 
The President's FY 2006 budget for the Department also includes $23 
million to establish a new National Bio and Agrodefense Facility to 
strengthen detection and response capabilities to the intentional 
introduction of high consequence biological threats, such those 
targeted against animal livestock or the nation's food supply. Total 
funding for design and construction of the new Facility is estimated at 
$451 million for FY 2006-2010. While I applaud the Administration's 
recognition of the importance of detecting and preventing a bioterror 
attack, it notes that the total amount of funding requested for 
biological countermeasures is $35.4 million--or nearly 9 percent--below 
the FY 2005 enacted level. I will continue to exercise close oversight 
of the activities designed to boost capabilities to detect and respond 
to an attack using biological pathogens, including those pathogens used 
to attack crops or livestock, and recommends funding to a level no 
lower than the FY 2005 amount of $375 million.

           INFORMATION ANALYSIS AND INFRASTRUCTURE PROTECTION

    The FY 2006 President's Budget requests $873 million for the 
Department's Information Analysis and Infrastructure Protection (IAIP) 
Directorate, representing a $20.5 million, or 2 percent, decrease 
relative to the current year level. Funds are requested for IAIP 
Management and Administration, and Assessments and Evaluation.

                        ASSESSMENT & EVALUATIONS

    The FY 2006 President's Budget requests $669 million for the 
Assessment and Evaluations account, representing a $92 million--or 12 
percent--decrease relative to the current year level. The overall 
reduction is due, in part, to the transfer of $50 million for Buffer 
Zone Protection Plans as part of the Administration's Targeted 
Infrastructure Protection grant program within the Office of State and 
Local Government Coordination, and $41.5 million to the DHS S&T 
Directorate for critical infrastructure emerging technology pilot 
projects. I note that an additional $6 million is requested for the 
Department's cyber security activities above the current year level of 
$67 million, which will aid in greater computer security preparedness 
and response to cyber attacks and incidents. Additionally, I am pleased 
with the $11 million requested for IAIP's National Biosurveillance 
Integration System, designed to improve the Federal Government's 
capability to rapidly identify and characterize a potential 
bioterrorist attack through the integration of information from other 
Federal agencies, such as the Department of Agriculture and the Centers 
for Disease Control. Overall, however, I will continue to exercise 
close scrutiny over the resource levels of the assessment and 
evaluation efforts of IAIP given its critical functions, in part, to 
complete a comprehensive National Critical Infrastructure Plan, 
consistent with Homeland Security Presidential Directive 7, and the 
creation of an associated national asset database.

                     MANAGEMENT AND ADMINISTRATION

    The President's FY 2006 Budget requests $204 million for the 
Management and Administration account of the Information Analysis and 
Infrastructure Protection (IAIP) Directorate, representing a $72 
million, or 55 percent, increase over the FY 2005 level. Increases 
include $38 million for facilities enhancements to allow the IAIP 
workforce to function in a secure work environment (this is in addition 
to $26 million requested for enhancements to DHS' Homeland Security 
Operations Center); $19 million for the Homeland Security Data Network, 
and $11 million to hire 146 new information analysis, infrastructure 
vulnerability analysis, and cyber security operations. I want to 
emphasize the need for continued oversight in this important area of 
the DHS budget.

                                ENDNOTES

    1. Council on Foreign Relations, Report of an Independent Task 
Force Sponsored by the Council on Foreign Relations, Emergency 
Responders: Drastically Underfunded, Dangerously Unprepared (New York: 
Council on Foreign Relations, June 2003), 2.
    2. Public Safety Wireless Network, LMR Replacement Cost Study 
Report (Washington: Public Safety Wireless Network, June 1998), 5.
    3. Council on Foreign Relations, Report of an Independent Task 
Force Sponsored by the Council on Foreign Relations, America Still 
Unprepared, America Still in Danger (New York: Council on Foreign 
Relations, 2002), 14.
    4. Council on Foreign Relations, Report of an Independent Task 
Force Sponsored by the Council on Foreign Relations, Emergency 
Responders: Drastically Underfunded, Dangerously Unprepared (New York: 
Council on Foreign Relations, June 2003), 33.
    5. Government Accountability Office, ``Transportation Security: 
Systematic Planning Needed to Optimize Resources,'' GAO-05-357T, 
Tuesday, February 15, 2005, 9.

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

    Mr. Chairman, thank you for the opportunity to submit my testimony 
to the House Budget Committee regarding the President's proposed FY 
2006 budget.
    Mr. Chairman, our country continues to face challenges in the 
industry and manufacturing fields. Jobs are being lost overseas and 
many of our skilled worker will be retiring in the coming years leaving 
a critical shortage of qualified domestic applicants who possess the 
skills to operate in a multifaceted, technologically integrated 
environment.
    Illinois educators and businesses are concerned with the 
President's FY 06 budget for education, and the proposed cuts to Career 
and Technical Education (CTE) funded under the Carl Perkins Act. As the 
Committee is well aware, this essential program has been zeroed out. 
The approximately $1.3 billion program supports career and technical 
education for high school and community college programs that lead to 
employment in high tech and high demand occupations such as health 
care, computer-related, manufacturing and business. Nationally, only 23 
percent of careers require a BA/BS or above according to United States 
Department of Labor (USDOL) data. Students in CTE programs are the 
``pipeline'' for business, industry and labor's needed workers. The CTE 
Federal budget leverages state dollars by its matching requirements, so 
that Illinois will lose not only the Federal CTE funds, but the 
corollary state funds as well. Federal education budget funds for 
Career and Technical Education should be increased or at the very 
minimum retained at current levels.
    Research shows that Career and Technical Education (CTE) 
complements other Federal education legislation, particularly the No 
Child Left Behind Act goals for high school graduation and increased 
academic achievement. In Illinois, 95 percent of CTE concentrators 
graduate. Additionally, CTE reduces dropouts, promotes higher 
attendance rates, and a recent Chicago Public School System study (Nov. 
2004) shows that attendance rates, graduation rates and academic 
achievement in Chicago Public Schools increased in direct proportion to 
the number of CTE courses taken. National studies show 80 percent of 
CTE students complete the same number and type of science and math 
credits as their peers who take the academic program only. In math-
enhanced CTE programs, students score as well or better in geometry and 
algebra 2; 60 percent of these go on to college (half of these in pre-
baccalaureate technical programs).
    Career and technical education represents a necessary and 
successful avenue for students to be prepared for the working world and 
find meaningful employment. In Illinois, CTE program data shows that 60 
percent of Illinois students took at least one CTE course and that 95 
percent of students who complete two or more CTE courses graduate. 
Finally, 52 percent of CTE students enroll in college after high 
school. It should also be noted that 38 percent of community college 
enrollments are CTE students.
    Eliminating career and technical education funding will gravely 
harm the ability of the United States to remain competitive in the 
global market and will seriously hinder the success of students unable 
to attend a traditional 4-year college or university.
    I urge the Committee and the Congress to fully fund CTE programs 
and continue our commitment to all forms of education.

Prepared Statement of Hon. Frank R. Wolf, a Representative in Congress 
                       From the State of Virginia

    Mr. Chairman, thank you for the opportunity to submit a statement 
as the House Budget Committee meets to consider the House Budget 
Resolution for fiscal year 2006.
    I urge your support for pay parity between military and civilian 
employees. There is no reason for either Congress of the Administration 
to support adjusting military and civilian pay by different amounts. It 
is only equitable that both military and civilian employees receive the 
same pay increase this year recommended at 3.1 percent in the 
President's budget.
    As a former Federal employee, I am keenly aware of the invaluable 
contributions Federal employees make to our country. As we make 
decisions on the budget resolution, I believe we must ensure that our 
Federal workforce is treated with fairness and respect.
    The Pentagon stated in the proposed regulations for the new 
National Security Personnel System that ``NSPS is essential to the 
department's efforts to create an environment in which the total force, 
uniformed personnel and civilians, think and operates as one cohesive 
unit.'' What kind of message does it send to those civilians if they 
receive disparate pay increases from their military colleagues?
    A uniform pay increase is necessary to recruit and retain 
professional employees at a time when many Federal employees are 
eligible for retirement and new personnel systems are being 
implemented. The Federal Government is the nation's largest employer. 
We need to attract and retain the best and brightest for Federal 
service. What kind of message does it send to the Federal workforce 
about the jobs they do when we say fairness isn't a part of their pay 
plan?
    Since 9/11 it has become ever more vital to have a thriving civil 
service. Now more than ever in our nation's history we must take action 
that reflects the contributions both our civilian and military 
employees are making--in the war on terrorism and as well as the daily 
operations of the Federal Government in providing the services upon 
which every American relies.
     Federal employees are on the front lines of the war 
against terror.
     The first American to die in Afghanistan was a CIA agent 
from my district.
     Federal employees died in the terrorist attacks of 
September 11.
     Federal employees are in Iraq helping the Iraqi people to 
build a free nation.
     Throughout the world, America's civil servants are serving 
our government and our people, often in dangerous locations.
    How can we tell them we will not give them a fair and equitable pay 
raise that recognizes their hard work, dedication, and sacrifice?
    Closer to home, Federal employees are performing duties that 
deserve recognition with a pay raise equal to that provided for the 
military.
    What do we tell the Federal employees who are cancer researchers at 
NIH? My parents died of cancer. We all know of individuals and families 
struck by cancer and other illnesses.
    Don't we want to be able to recruit and keep researchers at places 
like NIH to improve health care and save lives? Pay parity is essential 
to allow places like NIH to be able to bring on board renown experts to 
find cures and treatment for diseases which touch everyone.
    What do we tell Federal employees who are FBI agents? When a child 
is kidnaped, FBI agents are there to help find the missing child and 
bring the kidnappers to justice.
    What do we tell the Federal employees who work to answer questions 
about Social Security benefits for our nation's seniors?
    What do we tell border patrol agents, DEA agents, Federal prison 
guards, U.S. embassy staff, nurses at veterans hospitals, space center 
engineers, and the list goes on?
    We are asking Federal employees to take on more and more 
responsibility every day. They are on the ground in the war on 
terrorism overseas and at home.
    Immigration officials are working to keep those who wish us harm 
out of our country. FBI agents are investigating terrorists' cells, and 
TSA agents are screening passengers and baggage at airports. They are 
all playing a vital role in keeping us safe and deserve to be treated 
with respect and fairness.
    Providing a pay raise for Federal employees that is equal to a pay 
raise for military employees does not increase the budget. Agencies 
manage pay increases through their regular budgets.
    Congress has traditionally provided pay parity for America's 
military and civilian Federal employees. We have a long tradition in 
the Congress of recognizing the valuable contributions of our Federal 
employees in both the military service and in the civil service by 
providing fair and equitable pay adjustments. This is not the time to 
shirk our duty to the civil service.

    Mr. Portman. Welcome, Mr. Petri.
    I would like to turn to Mr. Spratt to see if he has any 
opening comments for this afternoon.
    Mr. Spratt. Mr. Chairman, we look forward to the testimony 
of all of our colleagues. And I might simply say the 
temperature in the room should not be interpreted to mean we 
are giving you a chilly reception.
    Mr. Petri. You are cutting the heating bill a little?
    Mr. Portman. Mr. Petri will give us some good input. To our 
colleague, the floor is yours for 10 minutes.

  STATEMENT OF THE HON. THOMAS E. PETRI, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF WISCONSIN

    Mr. Petri. Thank you very much. And I am testifying on 
behalf of the Transportation and Infrastructure Committee, and 
I know I speak for my chairman, Don Young. Thank you for 
extending him, me and the committee this courtesy.
    Enactment of H.R. 3, the Transportation Equity Act (TEA): A 
Legacy For Users, continues to be our committee's highest 
legislative priority for the upcoming year. Recently the 
committee unanimously approved its Views and Estimates for the 
2006 budget, including a recommendation that highway safety, 
motor carrier safety and transportation programs be funded at 
$46.6 billion for 2006. This is slightly higher than the 
administration's proposed funding level for 2006. But the 
committee's 6-year reauthorization proposal recently introduced 
as H.R. 3 is consistent with the administration's 6-year 
proposed funding level of $283.9 billion. The bill that is 
coming up next week we hope will be in line with the budget 
submission from the administration.
    Although the administration's proposal is not sufficient to 
meet highway and transit investment needs as estimated by its 
own Department of Transportation, our committee considers the 
$283.9 billion level to be an adequate point at which to resume 
deliberations on the surface transportation reauthorization 
bill. So we have adopted this funding level for purposes of 
House passage of H.R. 3 and request that the budget resolution 
assume at least the H.R. 3 funding levels.
    In addition, in order to preserve maximum flexibility in 
conference, we ask that a contingency procedure for surface 
transportation again be included in the budget resolution to 
allow spending to be increased to the extent such spending is 
offset by new receipts to the Highway Trust Fund. We remain 
committed to ensuring that the Highway Trust Fund revenues are 
adequate to meet investment needs and are made fully available 
for their intended purposes. And toward that end, one of the 
Transportation Committee's highest priorities is the 
continuation of the firewalls and guaranteed funding levels 
that were established in TEA 21, including the transit general 
fund guarantee. We appreciate your continued cooperation on 
these key components of the reauthorization effort.
    In addition to the surface transportation issues I have 
already discussed, I would like to highlight the committee's 
recommendations regarding aviation funding. This year the 
number of air travelers is expected to return to and surpass 
the record high levels that were experienced prior to 9/11. In 
2000, we saw one in every four commercial flights delayed, 
canceled or diverted. Without improvements in the aviation 
system capacity, airline delays will quickly return to the 
levels experienced in 2000.
    Under the President's budget, aviation capital programs 
would receive $5.45 billion, $1.2 billion less than the $6.65 
billion levels guaranteed by the Vision 100--Century of 
Aviation Reauthorization Act. This proposed reduction is 
extremely shortsighted and will only serve to accelerate the 
impending crisis of congestion and delays in our Nation's 
aviation system.
    To ensure that our aviation system remains safe, reliable, 
and efficient, we recommend that aviation capital programs be 
funded at least at the $6.65 billion level guaranteed by Vision 
100. The $1.2 billion shortfall between the President's budget 
and the Vision 100 guaranteed level must be corrected in the 
budget year 2006 Transportation-Treasury-HUD appropriations 
bill, or the bill will be subject to the point of order that 
protects the Vision 100 authorization level. Therefore, for 
both substantive and procedural reasons, it is important that 
the budget resolution assume full funding of the aviation 
capital programs.
    For more comprehensive information on the committee's 
recommendations, I refer you to the Views and Estimates adopted 
by the committee on February 16, 2005. These Views and 
Estimates demonstrate that we are significantly underfunding 
many of our transportation and infrastructure investments from 
surface transportation, aviation, to ports, inland waterways, 
clean water infrastructure, and public buildings. These needs 
exceed the revenues available.
    Underinvestment in our Nation's transportation 
infrastructure needs is penny wise and pound foolish. Economic 
growth depends on a transportation system that moves people and 
goods efficiently. By allowing congestion to grow more and more 
each year, we are putting our economy, global competitiveness 
and our quality of life at risk.
    While the costs may seem high, the costs of not meeting our 
Nation's transportation needs is greater still. So I urge your 
support for the Transportation and Infrastructure Committee's 
recommendations as you develop the 2006 budget resolution and 
ask unanimous consent that the full statement be included in 
the record of your proceedings.
    [The prepared statement of Thomas E. Petri follows:]

    Prepared Statement of Hon. Thomas E. Petri, a Representative in 
                  Congress From the State of Wisconsin

    Thank you Chairman Nussle and Ranking Member Spratt for allowing me 
to testify before you on behalf of the Transportation and 
Infrastructure Committee.
    Enactment of H.R. 3, the ``transportation equity act: a legacy for 
users,'' continues to be the committee's highest legislative priority 
for the upcoming year.
    Chairman Young and I appreciate your assistance during last year's 
surface transportation reauthorization process, and look forward to 
continuing to work cooperatively with you as this process moves forward 
again this year.
    Recently, the Transportation and Infrastructure Committee 
unanimously approved its views and estimates for the 2006 budget, 
including a recommendation that highway, highway safety, motor carrier 
safety and transit programs be funded at $46.6 billion in 2006.
    While this is slightly higher than the administration's proposed 
funding level for 2006, the committee's 6-year reauthorization 
proposal--recently introduced as H.R. 3--is consistent with the 
administration's 6-year proposed funding level of $283.9 billion.
    Although the administration's proposal is not sufficient to meet 
highway and transit investment needs as estimated by the department of 
transportation, the committee considers the $283.9 billion level to be 
an adequate point at which to resume deliberations on the surface 
transportation reauthorization bill. Therefore, we have adopted this 
funding level for purposes of house passage of H.R. 3, and request that 
the budget resolution assume at least the H.R. 3 funding levels. In 
addition, in order to preserve maximum flexibility in conference, we 
ask that a contingency procedure for surface transportation again be 
included in the budget resolution to allow spending to be increased to 
the extent such spending is offset by new receipts to the highway trust 
fund.
    We remain committed to ensuring that highway trust fund revenues 
are both adequate to meet highway and transit investment needs, and 
made fully available for their intended purposes. Toward that end, one 
of the transportation committee's highest priorities is the 
continuation of the firewalls and guaranteed funding levels that were 
established in TEA 21, including the transit general fund guarantee. We 
appreciate your continued cooperation on these key components of the 
reauthorization effort.
    In addition to the surface transportation issues I have already 
discussed, I would like to highlight the committee's recommendation 
regarding aviation funding needs.
    This year, the number of air travelers is expected to return to and 
surpass the record-high levels that were experienced in 2000, when one 
in every four commercial flights was delayed, cancelled, or diverted. 
Without improvements in aviation system capacity, airline delays will 
quickly return to the levels experienced in 2000.
    Under the president's budget, aviation capital programs would 
receive $5.45 billion, $1.2 billion or 18 percent less than the $6.65 
billion level guaranteed by the vision 100--century of aviation 
reauthorization act.
    This proposed reduction is extremely shortsighted and will only 
serve to accelerate the impending crisis of congestion and delays in 
our nation's aviation system. To ensure that our aviation system 
remains safe, reliable, efficient, and able to accommodate the 
increased number of passengers anticipated in the near future, the 
committee recommends that aviation capital programs be funded at least 
at the $6.65 billion level guaranteed by vision 100.
    The aviation funding guarantees are enforced through points of 
order, most notably the ``capital priority'' point of order. This point 
of order was intended to ensure 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 $1.2 billion shortfall between the President's budget and the 
vision 100 guaranteed level must be corrected in the FY 2006 
Transportation-Treasury-HUD appropriations bill or the entire bill will 
be subject to this point of order in both the House and the Senate. 
Therefore, for both substantive and procedural reasons, it is important 
that the budget resolution assume full funding of the aviation capital 
programs.
    I would also like to draw your attention to several other 
transportation-related proposals in the President's budget that we 
believe are either politically unsustainable or unwise. If these 
proposals are assumed in the budget resolution, they will create a 
major shortfall in the Appropriations Committee's 302(a) allocation.
    For example, a $1.9 billion shortfall will be created if the budget 
resolution assumes enactment of the administration's proposed increase 
in the aviation security fee. For reasons detailed in the views and 
estimates we submitted to you last week, we believe this fee increase 
places an unfair burden on air travelers. In addition, we believe it 
has little chance of enactment at this time, as U.S. Airlines enter 
their fifth consecutive year of multi-billion dollar losses.
    Just as unrealistic is the administration's proposal to zero out 
Amtrak. Although Amtrak is a perennial favorite of budget cutters, its 
funding has been consistently restored during the appropriations 
process. This proposal has little chance of enactment. If the budget 
resolution assumes liquidation of Amtrak, but Amtrak funds are 
subsequently restored during the appropriations process, other 
important programs will have to be cut significantly in order to make 
up the difference.
    In addition, the President's budget proposes to cut funding for the 
clean water state revolving fund and the army corps of engineers. While 
these proposals would produce smaller funding shortfalls, they are 
still of significant concern to the transportation and infrastructure 
committee.
    For more comprehensive information on the committee's 
recommendations, I refer you to the views and estimates adopted by the 
committee on February 16, 2005. These views and estimates demonstrate 
that 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.
    Under-investment in our nation's transportation and infrastructure 
needs is penny-wise and pound-foolish. Economic growth depends on a 
transportation system that moves people and goods efficiently. By 
allowing congestion to grow more and more each year, we are putting our 
economy, global competitiveness, and quality of life at risk.
    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. I urge your support for the Transportation and 
Infrastructure Committee's recommendations as you develop the 2006 
budget resolution.

    Mr. Portman. I thank our colleague from the Transportation 
Committee, and I appreciate your testimony today and commend 
you for the fact that you are patient and persistent in coming 
back again with a highway bill that we will be able to take up 
shortly in the House.
    You indicated that the number will likely be the $283.9 
billion that the President had indicated was acceptable. Is 
that still your understanding, first of all, that that would be 
your number, and, second, that the administration would be 
amenable to that number?
    Mr. Petri. Yes.
    Mr. Portman. We appreciate the input on the aviation 
capital programs. Are you going to make changes in the trust 
fund in the process of this transportation bill?
    Mr. Petri. No.
    Mr. Portman. Again, thank you for testifying today before 
us and giving us your input. We look forward to having your 
full statement in the record.
    Mr. Spratt, any questions?
    Mr. Spratt. Mr. Petri, I don't have the information at my 
disposal. It is my recollection that the President requested a 
fairly substantial increase in fees to be applied to the 
Transportation Security Administration,
    Mr. Petri. I believe that is right. That is obviously in 
another committee's jurisdiction.
    Mr. Spratt. OK. Homeland Security?
    Mr. Petri. Yes.
    Mr. Spratt. Do you have any opinion, since aviation does 
fall within your purview, do you have the opinion of what the 
impact of those fees might be upon the commercial aviation 
industry?
    Mr. Petri. We know there are bankruptcies there. There are 
significant tension issues. They have experienced significant 
increases in ticket fees and other charges in the past few 
years to fund at least security problems. So the impact cannot 
be good.
    Mr. Spratt. Thank you very much.
    Mr. Portman. Mr. Conaway.
    Mr. Conaway. No questions.
    Mr. Portman. Thank you, Chairman Petri. We appreciate your 
testimony.
    And our next witness is Mr. Gibbons. Are you prepared?
    Mr. Gibbons. I am indeed.
    Mr. Portman. Move in the middle if you like. I know you had 
initially thought you might be joined by Mr. Bishop and Ms. 
McMorris. I assume they are not going to be joining you at the 
outset?
    Mr. Gibbons. Mr. Otter is here as well.
    Mr. Portman. Do you want to join us at the table, Mr. 
Otter?
    And, Mr. Gibbons, we appreciate your testimony, and you 
have 10 minutes.

STATEMENT OF THE HON. JIM GIBBONS, A REPRESENTATIVE IN CONGRESS 
                    FROM THE STATE OF NEVADA

    Mr. Gibbons. Thank you, Mr. Chairman, and I will make my 
comments fit within the time allotted there and would ask that 
my full statement be admitted into the record.
    Mr. Portman. Without objection.
    Mr. Gibbons. Mr. Chairman, I first want to thank you and 
the members of this committee for inviting us to testify today 
about issues that directly affect many Western States, but, 
most importantly, my home State of Nevada. And I understand the 
challenges that you face in crafting the 2006 budget 
resolution, and I am grateful that you have given us an 
opportunity to be involved in that process.
    First and foremost, let me speak on a matter of direct 
importance to the State of Nevada. The President's budget 
proposal to redirect revenue from Southern Nevada Public Lands 
Management Act to the Federal Treasury is the issue at hand 
here. I stand united with the entire Nevada delegation in 
opposition to this proposal.
    Revenues from the land sales in Nevada should stay in 
Nevada, just as the Southern Nevada Public Lands Management Act 
(SNPLMA) mandates and Congress intended when the act was 
passed. The funding Nevada receives under the Southern Nevada 
Public Lands Management Act is critically needed to support 
Nevada's general education fund, conservation efforts, habitat 
protection, and Lake Tahoe restoration. This revenue helps 
address the challenges facing Nevada due to the development 
that SNPLMA, the acronym we use, has allowed, such as the many 
new schools that must be built and the protection of sensitive 
lands near those new communities. This funding is even more 
critical when you consider that over 91 percent of the State of 
Nevada is owned and managed by the Federal Government and, 
therefore, removed from any property tax rolls.
    Additionally, Nevada faces Federal tax share burdens which 
are unfairly high. For every dollar in Nevada taxes that goes 
to Washington, DC, Nevada receives only 70 cents back to our 
communities. The administration's proposal to divert the 
revenue from SNPLMA to the Federal Treasury means Nevada would 
be sending more money to Washington, DC. And getting even less 
back. This de facto tax adds insult to injury by robbing Peter 
to pay Paul with money generated by Nevadans in Nevada for 
Nevada. Therefore, I respectfully request that the Southern 
Nevada Public Lands Management Act funds remain in Nevada where 
they belong.
    I must also express my strong opposition to the President's 
proposed funding levels for the Yucca Mountain nuclear waste 
repository. I would be remiss not to address that issue. And I 
realize that the United States needs to find a solution to the 
nuclear waste problem, and I am committed to that goal; 
however, Yucca Mountain is not the answer.
    Every week that goes by, and with every dollar spent in an 
attempt to make Yucca Mountain feasible, additional flaws that 
would render the project unsuitable for licensing are exposed. 
Scientific, public safety, health, and environmental concerns 
surrounding the proposed waste repository are well documented. 
The future of nuclear power should not rely on a hole in the 
ground in the Nevada desert. Rather it should rely on sound 
science and new, innovative technologies. For the good of our 
entire Nation, the Budget Committee must reject the unnecessary 
and wasteful $651 million budgeted for Yucca Mountain, and 
under no circumstances should the funding for the project be 
taken off budget or removed from the tight fiscal control of 
Congress.
    On a different topic, as Westerners, we have a very unique 
relationship with the Federal Government. In Nevada, the 
Federal Government owns about 65 million acres of land, which, 
as I mentioned, equates to over 91 percent of the State. 
Contrast that with the Chairman's home State of Iowa where 
close to 300,000 acres are owned by the Federal Government, 
equa less than 1 percent of Iowa's total land mass.
    More often than not in the West, the Federal Government 
isn't just our neighbor, it is the entire neighborhood. With 
such a large Federal presence comes significant challenges, 
especially in our rural communities. The Payment in Lieu of 
Taxes Program (PILT) helps to compensate for the inability of 
our rural communities to generate tax revenues for schools and 
local infrastructure because of Federal land ownership. Since 
Nevada cannot raise revenue from over 91 percent of our State, 
PILT funding is vital, yet the program has never been 
adequately funded.
    The President's proposal to decrease PILT funding by $26 
million will only exacerbate the current funding discrepancy, 
and the burden to our rural communities grows even greater. I 
find this disheartening and would encourage you to include full 
funding of PILT in your fiscal 2006 budget report.
    Another discouraging aspect of the proposed budget is $154 
million earmark for land acquisition. In an era where we have 
to dedicate more resources to battling the war on terror, it is 
irresponsible, I believe, for the Federal Government to spend 
more money on further land acquisition. Land management 
agencies do not have enough money to manage the land they 
currently have. Additional land acquisition places a greater 
burden on the Federal agencies charged with management of these 
lands as well as the communities that lose that tax base. Land 
management agencies should focus on getting their Federal house 
in order prior to expanding their reach. If, as a Congress, we 
can get Federal land acquisition under control and fully fund 
Payment in Lieu of Taxes, we will make sincere progress in 
preventing a decrease in the quality of life in our rural 
communities.
    Mr. Chairman, I hope during the next few weeks you can 
examine these important issues that negatively affect many 
people in the Western United States. And I want to thank you 
again for this opportunity to share my views, and I would yield 
back the balance of my time.
    Mr. Portman. Thank you, Chairman Gibbons, and we appreciate 
your bringing these issues to our attention.
    [The prepared statement of Jim Gibbons follows:]

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

    Mr. Chairman, I would like to first thank you and the members of 
this committee for inviting me to testify today about issues that 
directly impact my home state of Nevada. I understand the challenges 
that you face in crafting the 2006 Budget resolution, and I am grateful 
that you have given us the opportunity to be involved in that process.
    First and foremost, let me speak on a matter of direct importance 
to the state of Nevada. The President's Budget proposed to redirect 
revenue from the Southern Nevada Public Lands Management Act (SNPLMA) 
to the Federal treasury. I stand united with the entire Nevada 
delegation in opposition to this proposal.
    Revenues from land sales in Nevada should stay in Nevada, just as 
SNPLMA mandates and as Congress intended. The funding Nevada receives 
under SNPLMA is critically needed to support Nevada's general education 
fund, conservation efforts, habitat protection, and Lake Tahoe 
restoration. This revenue helps to address the challenges facing Nevada 
due to the development SNPLMA has allowed-such as the many new schools 
that must be built and the protection of sensitive lands near new 
communities. This funding is even more critical when you consider that 
over 91 percent of the state of Nevada is owned by the Federal 
Government and thereby removed from any property tax rolls.
    Additionally, Nevada's Federal tax share burden is unfairly high. 
For every dollar in Nevada taxes that goes to Washington, DC, only 70 
cents goes back to our communities. The administration's proposal to 
divert revenue from SNPLMA to the Federal treasury means Nevada would 
be sending more money to Washington, DC and getting even less back. 
This defacto tax adds insult to injury by robbing Peter to pay Paul 
with money generated by Nevadans, in Nevada, for Nevada. Therefore, I 
respectfully request that SNPLMA funds remain in Nevada where they 
belong.
    I must also express my strong opposition to the President's 
proposed funding levels for the Yucca Mountain nuclear waste repository 
site. I realize that the United States needs to find a solution to the 
nuclear waste problem * * * and I am committed to that goal. However, 
Yucca Mountain is not the answer.
    With every week that goes by and with every dollar spent in an 
attempt to make Yucca mountain feasible, additional flaws that should 
render the project unsuitable for licensing are exposed. The 
scientific, public safety, health, and environmental concerns 
surrounding the proposed waste repository are well-documented. The 
future of nuclear power should not rely on a hole in the ground in the 
Nevada desert; rather it should rely on sound science and new, 
innovative technologies. For the good of our entire nation, the Budget 
Committee must reject the unnecessary and wasteful $651 million 
budgeted for Yucca Mountain. And under no circumstances should the 
funding for the Yucca Mountain Project be taken off-budget or removed 
from the tight fiscal control of Congress.
    On a different topic, as westerners, we have a very unique 
relationship with the Federal Government. In Nevada, the Federal 
Government owns about 65 million acres of land, which as I mentioned 
earlier, equates to over 91 percent of the state. Contrast that with 
the Chairman's home state of Iowa, where close to 300,000 acres are 
owned by the Federal Government--equaling less than 1 percent of Iowa's 
total land mass.
    More often than not, in the west, the Federal Government isn't just 
our neighbor, it's the entire neighborhood. With such a large Federal 
presence comes significant challenges, especially in our rural 
communities. The PILT (Payment in Lieu of Taxes) program helps to 
compensate for the inability of our rural communities to generate tax 
revenue for schools and local infrastructure because of Federal land 
ownership. Since Nevada cannot raise revenue from over 91 percent of 
our state, PILT funding is vital * * * yet, the program has never been 
adequately funded.
    The President's proposal to decrease PILT funding by $26 million 
will only exacerbate the current funding discrepancy and burden our 
rural communities even more. I find this disheartening and would 
encourage you to include full funding of PILT in your FY'06 budget 
report.
    Another discouraging aspect of the proposed Budget is the $154 
million earmark for land acquisitions. In an era where we have to 
dedicate more resources to battling the War on Terror, it is 
irresponsible for the Federal Government to spend more money on further 
land acquisition. Land management agencies do not have enough money to 
manage the land they currently have. Additional land acquisition places 
a greater burden on the Federal agencies charged with management of 
these lands as well as the communities that lose that tax base. Land 
management agencies should focus on getting the Federal house in order, 
prior to expanding their reach. If as a Congress we can get Federal 
land acquisition under control and fully fund PILT, we will make 
sincere progress in preserving the quality of life in our rural 
communities.
    Mr. Chairman, I hope that during the next few weeks that you 
carefully examine these important issues that negatively impact many 
western states. Again, thank you for this opportunity to share my 
views.

    Mr. Portman. You mentioned that Iowa had only 300,000 
acres. Ohio is probably similar.
    Mr. Gibbons. It should be, I guess.
    Mr. Portman. But probably a similar percentage, and these 
are not issues many of us who are not in Western States deal 
with everyday.
    We appreciate the input on the Southern Nevada Public Lands 
Management Act, but also on Yucca Mountain and the PILT issue, 
which is one that most districts probably deal with in one way 
or another, and then the issue of future land acquisition.
    I would like to request at this point before we turn it 
over to Mr. Spratt that Mr. Otter and Mr. Cannon have a chance 
to make comments within the time frame. You were going to share 
these 10 minutes. We have 3 minutes and 17 seconds remaining. 
You and Mr. Otter have 10 minutes separately. So if you would 
like to--Mr. Gibbons indicated you with were him on this 
testimony, but do you have different issues?
    Mr. Otter. No. I will use those 3 minutes that he didn't 
and plus my own 10.
    Mr. Portman. Why don't we do this. Let us turn it over to 
Mr. Spratt and Mr. Conaway and see if they have questions for 
Mr. Gibbons to allow him to leave, and then we will turn next 
to Mr. Cannon and Mr. Otter, assuming this is on the same 
general topic. And then we are going to go to Ms. Berkley and 
Mr. LoBiondo.
    Mr. Spratt, any questions?
    Mr. Spratt. Mr. Gibbons, just two questions. First of all, 
I listened carefully, but do you have anything to say about the 
change in pricing by the Power Marketing Administration? Does 
that affect Nevada?
    Mr. Gibbons. I did not change that, but I will be happy to 
look into that to see if there is an impact on the people of 
the State of the Nevada, especially the rural communities that 
are affected. But power marketing was not part of my comment.
    Mr. Spratt. Secondly, what would you support in the way of 
funding for Yucca Mountain?
    Mr. Gibbons. Zero.
    Mr. Spratt. That is a succinct answer. Thank you, sir.
    Mr. Portman. Mr. Conaway.
    Mr. Conaway. Mr. Gibbons, in Texas we have very little 
Federal lands, but we have school lands that support the 
educational process. You mentioned that the money from the land 
sales supports education in Nevada. Can you give me a sense of 
the percentage of that money?
    Mr. Gibbons. Out of the Southern Nevada Public Lands 
Management Act, 5 percent goes to the Permanent Education Trust 
Fund in the State of Nevada; 10 percent goes for the Southern 
Nevada Water Authority; and the balance, 85 percent, is given 
to the Department of Interior budget to do with as they speak. 
And we are talking about $1.6 billion from the sale of land in 
the most recent years.
    Mr. Conaway. This is the State department of interior or 
U.S.?
    Mr. Gibbons. U.S.
    Mr. Conaway. I don't have any other questions.
    Mr. Portman. Mr. McHenry.
    Mr. McHenry. No.
    Mr. Portman. Do you all have any comments you would like to 
make? You have 1 minute and 14 seconds remaining.

   STATEMENT OF THE HON. CATHY MCMORRIS, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF WASHINGTON

    Miss McMorris. Thank you, Mr. Chairman.
    I am Cathy McMorris from Washington State and really 
appreciate the time to share with you one concern. But first of 
all, I am very supportive of the effort to cut the deficit in 
half, and I appreciate we are going to have to be making some 
very difficult decisions, but like everyone else who is here, I 
have one issue that is especially concerning to Washington 
State and the Pacific Northwest, and it is related to what 
would amount to be significant rate increases for the 
Bonneville Power Administration (BPA), and this is on top of 
the fact that we had an energy crisis in early 2001.
    We have lost a lot of jobs related to that impact. It 
amounted to a 36 percent increase in retail electric rates, 
increases during that time period, 1999 to 2002. And this would 
basically mean that we would be facing similar rate increases 
moving forward. During that time period, we lost 72,000 jobs. 
We saw unemployment go up from 5 to 7 percent. We lost 10 
aluminum smelters, and there are only 3 more that are partially 
operating today. And I am very concerned that if we faced more 
electric rate increases, that we would lose those aluminum 
smelters. Without a doubt, it would have significant impacts on 
our economy, and I also believe it would have significant 
impacts on our tax revenues.
    Another piece of this proposal is counting Bonneville's 
third-party debt cap. The administration in its proposal is 
raising the debt cap by $200 million, and there is a lot of 
uncertainty as to what the impact of that would be, and the 
fact that it would also impact BPA's ability to expand the 
transmission system, mitigate for fish and wildlife, and 
acquire cost-effective conservation and renewable resources.
    I recognize that we have some difficult decisions. I 
believe this part of the proposal would actually cost jobs and 
stifle economic growth, and I ask for your consideration in 
removing this part from the budget. Thank you.
    [The information referred to follows:]

Prepared Statement of Hon. Cathy McMorris, a Representative in Congress 
                      From the State of Washington

    Thank you for the opportunity to come before you.
    I am here today to talk about the Administration's proposal to 
increase power rates in the Pacific Northwest.
    The Pacific Northwest was hard hit by the Western electricity 
crisis of 2001, the economic recession and the technology slump.
    I would like to take a moment to give some examples of what this 
increase will mean to the region should it be implemented.
    The increase in retail electricity rates in the region between 1999 
and 2002 was 36 percent--the same order of magnitude as the expected 
impacts of the market-pricing proposal.
    The region has been dramatically affected by the rising cost of 
energy. For example:
    Between 2000 and 2003, the region lost 72,000 jobs.
    Unemployment rates increased from 5 percent to more than 7 percent. 
In both 2002 and 2003, Oregon and Washington had the highest 
unemployment rates in the nation with the exception of Alaska.
    The region's ten aluminum smelters shut down. Only three aluminum 
plants are partially operating today. Price increases caused by the 
Administration's proposal would certainly push even those plants over 
the edge, and a regional industry that recently provided half of the 
U.S. aluminum production and one-tenth of the world production would be 
gone.
    Here is a summary of the effects of the increased Bonneville market 
rates:

                  CHANGE IN REGIONAL ELECTRICITY COSTS

   $1.4 billion increase in cost of power from Bonneville
   $300 million increase in cost of power to residential and 
        small farm IOU customers
   $1.7 billion total increase (spread over 3 years)

                       EFFECT ON REGIONAL ECONOMY

   $1.3 billion dollar decrease in personal income
   13,000 decrease in regional jobs
   Additional effects on aluminum and other energy intensive 
        industry
   Decreased income and jobs in other regions

                         EFFECT ON TAX REVENUES

   $217 million dollar decrease in Federal personal income tax 
        revenues
   Additional loss in Federal revenues corporate profits taxes
   $59 million dollar decrease in state personal tax revenues
   Additional loss in state revenues from corporate taxes

    Another important component of the Administration's proposal is 
counting Bonneville's third party debt toward the cap on its borrowing 
authority. BPA's borrowing authority is raised by $200 million in the 
proposal, but the effects of the redefinition of debt are unclear. If 
BPA's ability to borrow is severely constrained, it will affect its 
ability to carry out much needed maintenance and expansion of the 
transmission system as well as fulfill its statutory responsibilities 
to mitigate for fish and wildlife impacts and acquire cost effective 
conservation and renewable resources.
    I hope my testimony today demonstrates the negative effect this 
will have on the Pacific Northwest. I urge you to consider these 
examples. This proposal will cost jobs, cost consumers and stifle 
economic growth. Our region's economy was built on inexpensive hydro 
power from our dams and rivers. It is unfair to increase our region's 
power rates. We need to preserve the natural resources that sustain the 
economies of the Pacific Northwest.
    Again, I thank the Chairman.

    Mr. Portman. Thank you for your testimony. Mr. Spratt.
    Mr. Spratt. I have none.
    Mr. Portman. The Power Marketing Association issue is one 
which will be looked at in the individual committees of 
jurisdiction, and we appreciate your input today.
    Mr. Conaway.
    Mr. Conaway. With respect to the power problems, California 
chose to not build capacity to generate. Can you shed us 
Washington State's attitude toward additional power generation 
capacity for electricity during that time frame? Are you buying 
power from other places?
    Miss McMorris. We have--the biggest challenges that are 
facing Washington State relates to transmission and getting the 
power after it is generated. We have had challenges in 
Washington State in actually generating new power, too.
    At the State level we have been trying to work through some 
of the permitting issues, especially those that have caused us 
some difficulty, but the biggest challenge is relating to 
transmission issues, and this proposal would make it even more 
difficult because BPA oversees the power transmission system.
    Mr. Conaway. There is some sense of recognition that 
additional generating capacity within the State would help?
    Miss McMorris. Absolutely. And I would remind you that 
Washington State has many hydroelectric dams. They are--it has 
been the source of very low power rates in the past, and we 
have worked very hard to protect those dams and make sure we 
are generating electricity and adding to the system.
    Mr. Portman. Thank you, Ms. McMorris.
    Gentlemen, ladies, I am going to make a revision in our 
timing here, and I won't make Mr. Otter and Mr. Cannon very 
happy, but I am informed that Mr. LoBiondo was the next Member 
in line by the staff. He has a plane to catch. And then Ms. 
Berkley was next.
    I was told by Mr. Gibbons that you all were together, so I 
mistakenly thought you were going to testify with him. If you 
two gentlemen would not mind being patient, we will let these 
other Members--so if it is with the indulgence of the 
committee, I would like to go in order of attendance here, and 
that is Mr. LoBiondo, then Ms. Berkley, Mr. Cannon and Mr. 
Otter together, and then Mr. Bishop. I know, Mr. Bishop, you 
were to be part of the earlier group. If you would like to 
testify at the end of the line, we would welcome your 
testimony. But we will go to Mr. LoBiondo for 10 minutes.

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

    Mr. LoBiondo. Mr. Chairman, thanks very much for your 
consideration. I deeply appreciate it. I appreciate the 
opportunity to testify today on the 2006 budget. I certainly 
support the effort to reduce the deficit and move back to a 
balanced budget; however, I think we must do so in a very 
responsible way that fairly balances our priorities and 
provides for improved homeland and economic security for our 
country.
    As the committee is aware, the President has requested an 8 
percent increase in the overall Coast Guard budget. I chair the 
Coast Guard and Maritime Subcommittee, and I just came from a 
hearing where we were reviewing the Service's budget request, 
and I can tell you that every penny of this modest increase is 
desperately needed. The Service continues to be tasked with 
doing more and more homeland security and homeland security 
responsibilities while struggling to maintain what are 
considered very traditional missions that have great 
significance to our Nation, and as their operation tempo 
continues to increase, and because of past increases, their 
aging assets are rapidly failing. Our Dolphin helicopter 
engines are literally failing in flight, and an alarming 
percentage of the cutter fleet are suffering from broken 
propulsion systems and breached hulls, a very serious condition 
which not only has resulted in fiscal year 2004 of 742 patrol 
days that were lost because of these asset failures, but, maybe 
more importantly, they are putting the lives of our Coast Guard 
men and women at serious risk.
    Fortunately, the Deepwater program is working to replace 
the Service's aging fleet of ships and aircraft with more 
flexible assets able to meet the multimission challenges of 
today. Unfortunately, funding for the program has been 
insufficient to keep up with the original 20-year procurement 
schedule. We have slipped significantly, and Deepwater needs to 
be accelerated. Doing so would ensure that the Coast Guard is 
able to respond to terrorist threats and to maintain a high 
level of readiness to fulfill its other vital missions. And as 
a recently released congressional report found, acceleration 
will result in approximately $4 billion in overall savings to 
the taxpayer. It is a win-win situation.
    The Coast Guard has provided my subcommittee with $920 
million in unfunded fiscal year 2006 priorities. Deepwater 
accounts for $700 million of that. I respectfully request the 
committee make every effort to at least--to accommodate the 
administration's request for the Coast Guard, but urge the 
committee to do more for the sake of our homeland security 
efforts.
    In addition to homeland security and other national 
priorities is improving economic opportunity. A program now 
under way is helping to accomplish this goal in my district and 
across the country. As you know, empowerment zone initiatives 
provide Federal assistance to support the comprehensive 
revitalization of designated communities across the Nation.
    In my district in Cumberland County, NJ, empowerment zone 
is a collaborative revitalization effort among the communities 
of Bridgeton, Millville, Vineland, and Port Norris. Cumberland 
has committed nearly 100 percent of the $25 million that has 
been made available by Housing and Urban Development so far. 
Over 360 jobs have been created to date, with an additional 
1,400 that we are just on the edge of being able to lock in on 
over the next 12 to 18 months if the Federal funding source 
continues. Over 166 housing units have been renovated and 
rehabilitated, and there has been construction for areas in EZ 
neighborhoods. A $4 million loan pool has been made available 
to be reinvested back into targeted communities. And one of the 
most telling features of this program and the positive 
partnership it is is that these projects are leveraged by a 
total of about $340 million in private, public and tax-exempt 
bond funding. Put plainly, this Cumberland EZ zone has 
leveraged nearly $12 in private investment for every $1 in 
public funding, yielding great results. I think this is a 
return that the Federal Government would love to see in a 
number of different areas.
    The administration proposes to consolidate empowerment zone 
programs in 17 other economic development programs into the 
Strengthening America's Communities Initiative. While Congress 
has not seen the details of this proposal, I am very concerned 
that the initiative may not be effective as the empowerment 
zone program, and the success we have met in Cumberland County 
and other areas will be lost, and we will slide back. So until 
Congress has an opportunity to better review and consider the 
administration's proposal, I urge the committee to continue to 
accommodate full funding for empowerment zone.
    Economic security is also dependent on providing our youth 
with the skills they will need to be successful as they move 
into the workforce. That is why I am very concerned the budget 
proposes to eliminate Federal funding for vocational education. 
The Perkins program is the only federally funded program for 
students who pursue vocational and technical education at the 
secondary and community college level. These institutions 
strive to prepare students for employment in the higher-paying 
skilled jobs of the future. The elimination of this funding 
would cost New Jersey nearly $30 million in direct career and 
technical assistance. Without these funds, vocational and 
technical schools in my State would not be able to effectively 
continue the professional development of their teaching core 
and support staff. And in my part of the State, which is a 
third of the State geographically, it is the rural part of the 
State, we lag behind a lot of other indicators in north Jersey, 
and because of infrastructure concerns and a lot of other 
components, we have an unemployment rate that is nearly double 
the rest of the State. We don't have the high-tech jobs that 
come into my part of the district, so vocational education 
takes on an added responsibility for kids who wouldn't have an 
opportunity otherwise.
    I was very pleased to see the administration's budget 
include a request to increase the military death benefit from 
$12,000 to $100,000, but I would like to see this program 
expanded. Limiting the payout to only those killed on active 
duty is arbitrary and wrong. The proposal should cover all of 
our brave servicemembers who have made the ultimate sacrifice 
to defend our freedom, be it on the battlefield or in training. 
In my district we have lost five heroes in this war on 
terrorism, and there is never enough money to honor the 
sacrifice of these brave men and women and of their families.
    I recognize we have significant budget restraints this 
year, but I strongly believe we must find the necessary 
resources to secure America's homeland and our economic future. 
I thank you for this opportunity to present my views.
    [The prepared statement of Frank A. LoBiondo follows:]

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

    Mr. Chairman, thank you for the opportunity to testify on my 
priorities for the Fiscal Year 2006 Budget Resolution. I support the 
effort to reduce the deficit and move back to a balanced budget. 
However, we must do so in a responsible way that fairly balances our 
priorities and provides for improved homeland and economic security for 
our country.
    As the Committee is well aware, the President requested an 8 
percent increase in the overall Coast Guard Budget. I just came from 
chairing a Coast Guard and Maritime Transportation Subcommittee hearing 
on the service's budget request and I can tell you that every penny of 
this modest increase is desperately needed. The service continues to be 
tasked with more and more homeland security responsibilities, while 
struggling to maintain their commitment to their traditional missions. 
And as their operations tempo increases, their aging assets are rapidly 
failing. Dolphin helicopter engines are literally failing in flight and 
an alarming percentage of the cutter fleet is suffering from broken 
propulsion systems and breached hulls. In fiscal year 2004, 742 patrol 
days were lost because of asset failures.
    Fortunately, the Deepwater program is working to replace the 
service's aging fleet of ships and aircraft with more flexible assets 
able to meet the multimission challenges of today. Unfortunately, 
funding for the program has been insufficient to keep it to its 
original 20 year procurement schedule. Deepwater needs to be 
accelerated. Doing so would ensure the Coast Guard is able to respond 
to terrorist threats and maintain a high level of readiness to fulfill 
its other vital missions. And as a recently released Congressionally 
mandated report found, acceleration will result in approximately $4 
billion in overall savings to the taxpayer.
    The Coast Guard has provided my subcommittee with $920 million in 
unfunded fiscal year 2006 priorities. Deepwater accounts for $700 
million of that. I respectfully request the Committee make every effort 
to at the very least accommodate the Administration's request for the 
Coast Guard, but I urge the Committee to do more.
    In addition to homeland security, another national priority is 
improving economic opportunity. A program now underway is helping to 
accomplish this goal in my district and across the country. As you 
know, the Empowerment Zone initiative provides 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 and 
retain businesses.
    In my District, the Cumberland County Empowerment Zone is a 
collaborative revitalization effort among the communities of Bridgeton, 
Millville, Vineland and Port Norris. Cumberland has committed nearly 
100 percent of the $25 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. 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.
    The administration proposes to consolidate the Empowerment Zone 
program and 17 other economic development programs into the 
Strengthening Americas Communities Initiative. While Congress has not 
yet seen the details of the proposal, I am concerned the initiative may 
not be as effective as the Empowerment Zone program and the success we 
have met with in Cumberland County could be lost. Until Congress has an 
opportunity to better review and consider the Administration's 
proposal, I urge the committee to continue to accommodate full funding 
for the Empowerment Zone program.
    Economic security is also dependent of providing our youth with the 
skills they will need to be successful as they move into the workforce. 
That is why I am very concerned the budget proposes to eliminate 
Federal funding for vocational education. The Perkins program is the 
only federally funded program for students who pursue vocational and 
technical education at the secondary and community college level. These 
institutions strive to prepare students for employment in the higher 
paying skilled jobs of the future. The elimination of this funding 
would cost New Jersey nearly $28 million in direct career and technical 
assistance. Without these funds, vocational and technical schools in my 
state would not be able to replace equipment needed to keep up with 
technology and workplace changes. They would not be able to implement 
programs to meet the challenges of this century, nor would they be able 
to effectively continue the professional development of their teaching 
corps and support staff. All of this translates into reduced 
opportunities for students as they move into the workforce. I urge the 
Committee to support funding for this program.
    The Administration's budget proposes to slow the growth of Medicaid 
costs by $60 billion over the next 10 years. While I understand the 
need, especially now, to look carefully at all programs to ensure that 
they are being run cost effectively, I fear that cuts of this magnitude 
could adversely effect needed health care services for some of our most 
vulnerable citizens. We must remember that nearly 52 million children, 
poor, disabled and elderly individuals rely on Medicaid for their 
healthcare needs. Medicaid should be closely examined and policies 
developed to reform the program so it can be sustained over the long 
run.
    I was very pleased to see the Administration's budget includes a 
request to increase the military death benefit from $12,000 to 
$100,000, but I would like to see the proposal expanded. Limiting the 
payout to only those killed on active duty is arbitrary and wrong. The 
proposal should cover all of our brave servicemembers who made the 
ultimate sacrifice to defend our freedom, be it on the battlefield or 
in training. New Jersey's Second District has lost five of it's sons in 
Operation Enduring Freedom and Operation Iraqi Freedom. No amount of 
money would is ever enough to honor the sacrifice of these and the rest 
of our servicemembers , but this proposal is a step in the right 
direction. I urge the Committee to accommodate an expanded proposal in 
the budget resolution.
    I want to take a moment to stress the important work the Army Corps 
does to protect our coastal communities. As you know, the Army Corps 
works with state and local coastal communities to replenish eroded 
beaches and dunes to protect the residents and business owners from 
hurricane and storm damage. Building these projects has a true economic 
benefit for the Federal Government, as 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 60 
percent below the FY05 enacted levels and placed a series of new and 
arbitrary restrictions on funding for these projects. I strongly urge 
the Committee to reject the administration's budget request for the 
Army Corps shore protection program.
    Finally, I respectfully request that as you prepare a new budget 
resolution, you not include an assumption of revenues from drilling in 
the Arctic National Wildlife Refuge. Revenue projections from drilling 
in the refuge are entirely speculative. Oil companies are currently 
focusing their investments on producing more oil from already developed 
fields in Alaska and in exploring areas to the west of these fields in 
the National Petroleum Reserve. As a result, it would be inappropriate 
to assume these companies would bid on refuge leases. We should not 
base our budget projects on such assumptions.
    While I recognize that we have significant budget restraints this 
year, I strongly believe we must find the necessary resources to secure 
America's homeland and our economic future. I look forward to working 
with you to develop a budget that reflects these goals.

    Mr. Portman. Thank you, Mr. LoBiondo. We appreciate your 
testimony, and with regard to all these issues, as you know, 
the Budget Committee is eager to hear your input. Ultimately 
these issues need to be resolved in your committee, at the 
Appropriations Committee level.
    And on the Coast Guard, I will ask you one question. The 
President's budget has about a 3 percent increase for homeland 
security. I don't know how much of that the Coast Guard would 
benefit from. You indicated earlier it would be good to hold 
the President's number. Are you pleased with the President's 
policies and numbers and the budget on Coast Guard?
    Mr. LoBiondo. I am very pleased with the President's 
policies and numbers considering what some other areas are 
suffering from, but the part I am trying to emphasize, while 
people are saying, why are you worried, you have an 8 percent 
increase there, we have to look at how their missions have been 
increased.
    Homeland security and maritime antiterrorism with port 
security, we have only scratched the surface. The Coast Guard 
is tasked to undertake making all of our ports safe. And the 
maritime economy contributes about $750 billion to the gross 
domestic product (GDP). If we had a terrorist incident at one 
of our ports, it is likely to shut down all of our ports. The 
consequences would be dramatic. So therefore, while Coast Guard 
has an increase that we are pleased with, this is an absolute 
minimum we can consider based on the fact we have expanded what 
we are expecting them to do.
    Mr. Portman. We appreciate your testimony on the enterprise 
zones, vocational education, and finally the expansion of the 
death benefit, and we look forward to working with you as this 
budget process unfolds.
    Mr. Spratt.
    Mr. Spratt. I listened to your testimony and read it more 
completely here, and I would encourage you to take a close look 
at the Democratic resolution. I think you will find a lot of 
accommodation of these points of view in the Democratic 
resolution, probably more than in the Republican resolution. So 
give us a fair shot. Empowerment zones, Coast Guard, vocational 
education, I think we will have a lot of those places covered.
    Thank you for testifying.
    Mr. Portman. Mr. Conaway.
    Mr. Conaway. No.
    Mr. Portman. With that, we will turn to Ms. Berkley, and 
thank you for your patience. You have 10 minutes. If you don't 
use it all, we will not be disappointed.

  STATEMENT OF THE HON. SHELLEY BERKLEY, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF NEVADA

    Ms. Berkley. I would like to thank you, Chairman Portman, 
and, of course, Ranking Member Spratt, for allowing me to share 
my concerns regarding the administration's budget. There are 
three issues that have a direct and negative impact on the 
State of Nevada, and I would like to share those three issues 
with you.
    I would like to address a provision in the President's 
budget that the people of southern Nevada overwhelmingly 
oppose. The President has proposed taking 70 percent of the 
funds from the Southern Nevada Public Lands Management Act 
account to offset the deficit. This would deny Nevada at least 
$700 million a year which would be used for conservation, 
recreation, water, and education programs. I can assure you, 
Mr. Chairman, the Nevada delegation stands united against this 
proposal and will fight against this plan at every turn.
    As Mr. Gibbons testified, almost 90 percent of the land in 
Nevada is federally owned. The Southern Nevada Public Lands 
Management Act is an innovative act that authorizes the 
proceeds from land sales in Nevada to be used to build parks 
and trails, acquire environmentally sensitive land, maintaining 
the Clark County multispecies habitat conservation plan, and 
improve the clarity of Lake Tahoe. Funds are also allocated for 
water infrastructure, always a problem in the Nevada desert, 
and education programs in the State of Nevada. The law has been 
highly successful, and Nevada residents and millions of our 
visitors have benefited from it.
    The President should not be penalizing Nevada or seeking to 
gut this program. Rather he should be applauding Senators 
Ensign and Reid and former Senator Bryan for their ingenuity 
and honor the intent of the law. Interior Secretary Norton said 
during her many visits to the State of Nevada over the last 
several months that this is an extremely innovative program 
that should be used as an example for the rest of the Nation. 
This proposal is going to take Nevada's money, which is used 
for outstanding and important projects that would go unfunded, 
and it would go into the general fund where it would disappear, 
and nobody would benefit from this.
    Second, I would like to address the President's proposal to 
fund the proposed nuclear waste dump site at Yucca Mountain. 
Multiple lawsuits have revealed that the proposed Yucca 
Mountain repository will not protect the health and safety of 
Americans. The Environmental Protection Agency blatantly 
disregarded the findings of the National Academy of Sciences 
that radiation levels will reach their peak levels--radiation 
levels will reach their peak in 300,000 years, and instead the 
EPA set up a 10,000-year radiation standard; the gap between 
the science and the EPA standard, a mere 290,000 years.
    The findings have established that the storage cannisters 
that are proposed for Yucca Mountain will corrode. The study 
did not say they may corrode; it said they will corrode and 
release radioactive wastes into our groundwater, and there is 
an enormous terrorist threat and risk created by this project 
if waste is shipped across the Nation.
    Despite the findings, the administration continues to push 
recklessly ahead with the Yucca Mountain project. The 
administration has proposed reclassifying contributions to the 
Nuclear Waste Trust Fund as offsetting collections. Not only 
does this budget gimmick funnel money to a project plagued with 
problems, it also bypasses budgetary rules that have been put 
in place to maintain the integrity of our appropriations 
process. With rapidly growing deficits, Congress must ensure 
that every dime of taxpayer money is spent responsibly. Given 
the overwhelming needs in our Nation and the limited resources 
at our disposal, it makes no sense to give special treatment to 
the Yucca Mountain project at the expense of millions of 
Americans' and our Nation's many pressing needs.
    The President's budget also includes a provision that we 
are deeply troubled by and that directly affects the gaming 
industry. This provision requires gaming establishments to 
intercept winnings from customers who owe child support. Now, 
while I strongly support law enforcement's efforts to collect 
payments from individuals who have failed to fulfill their 
parental obligation, I oppose this provision. Under the 
proposal, a customer whose winnings exceed the threshold for 
filling out an Internal Revenue Service W2-G form would be 
subject to the Federal records check in the Child Support 
Federal Parent Locator Service. If the individual is listed in 
the system, the gaming establishment would be required to 
garnish the winnings.
    This administration's proposal not only is very bad policy, 
it creates unreasonable demands on the gaming industry and the 
individual businesses, their employees, and sets alarming 
precedents. It forces gaming establishments to pry into 
sensitive personal information, creating obvious and serious 
invasions of privacy concerns. Gaming establishments would 
assume the investigatory and enforcement duties currently 
entrusted to law enforcement and government agencies, and the 
gaming establishments could be ultimately liable if any 
employee mistakes or misuses the information.
    Finally, it establishes a precedent of requiring private 
businesses to directly apply the law to an individual. Should 
banks check the court records of customers making deposits and 
withdrawals? Must the car dealer invoke the same requirements 
against their customers? The answer is clearly no.
    The administration's proposal will open the door to 
additional costly and unreasonable mandates on our business 
community, and by singling out the gaming industry I think is a 
huge mistake that starts us down a very slippery slope that we 
don't wish to go down. While the goal of this provision is 
laudable, the provision is imprudent and could lead to a myriad 
of unintended consequences. I urge the committee to reject this 
proposal. And I thank you for the opportunity that I have been 
given to testify before the committee.
    [The prepared statement of Shelley Berkley follows:]

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

    I would like to thank Chairman Nussle and Ranking Member Spratt for 
allowing me to share my concerns regarding the Administration's Budget.
    First, I would like to address a provision in the President's 
budget that the people of southern Nevada overwhelmingly oppose. The 
President has proposed taking seventy percent of the funds from the 
Southern Nevada Public Lands Management Act account to offset the 
deficit. This would deny Nevada at least $700 million a year, which 
would be used for conservation, recreation, water and education 
programs. I can assure you, Mr. Chairman, the Nevada delegation stands 
united against this proposal and will fight against this plan at every 
turn.
    More than eighty percent of the land in Nevada is federally-owned. 
The Southern Nevada Public Lands Management Act was an innovative law 
that authorized the proceeds from land sales in Nevada to be used to 
build parks and trails, acquire environmentally sensitive land, 
maintain the Clark County Multi-Species Habitat Conservation Plan and 
improve the clarity of Lake Tahoe. Funds are also allocated for water 
infrastructure and education programs in the State of Nevada.
    The law has been highly successful, and Nevada residents and 
millions of visitors have benefited. The President should not penalize 
Nevada or seek to gut the program. Rather, he should applaud Senators 
Ensign, Reid and former Senator Bryan for their ingenuity, and honor 
the intent of the law.
    Second, I would like to address the President's proposal to fund 
the proposed nuclear waste dump at Yucca Mountain. Multiple lawsuits 
have revealed the proposed Yucca Mountain repository will not protect 
the health and safety of Americans. The Environmental Protection Agency 
blatantly disregarded the findings of the National Academy of Sciences 
that radiation levels will reach their peak in 300,000 years, and 
instead set a 10,000-year radiation standard. The gap between the 
science and EPA's standard? A mere 290,000 years!
    More findings have established that the storage canisters at Yucca 
Mountain will corrode and release radioactive waste, and there are 
enormous terrorist risks created by this project if waste is shipped 
across the nation.
    Despite these findings, the Administration continues to push 
recklessly ahead with the Yucca Mountain Project. The Administration 
has proposed reclassifying contributions to the Nuclear Waste Trust 
Fund as offsetting collections.
    Not only does this budget gimmick recklessly funnel money into a 
project plagued with problems, it also bypasses budgetary rules that 
have been put in place to maintain the integrity of our appropriations 
process.
    With rapidly growing deficits, Congress must ensure that every dime 
of taxpayer money is spent responsibly. Given the overwhelming needs in 
our nation and the limited resources at our disposal, it makes 
absolutely no sense to give special treatment to the Yucca Mountain 
project at the expense of millions of Americans and our nation's many 
pressing needs.
    The President's budget also includes a provision that directly 
affects the gaming industry. This provision requires gaming 
establishments to intercept winnings from customers who owe child 
support.
    While I strongly support law enforcement's efforts to collect 
payments from individuals who have failed to fulfill their parental 
obligations, I oppose this provision.
    Under the proposal, a customer whose winnings exceed the threshold 
for filling out an Internal Revenue Service W2-G form would be subject 
to a Federal records check in the Child Support Federal Parent Locator 
Service. If the individual is listed in the system, the gaming 
establishment would be required to garnish the winnings.
    This Administration's proposal is ill-conceived, creates 
unreasonable demands on gaming businesses and their employees, and sets 
alarming precedents.
    It forces gaming establishments to pry into sensitive information, 
creating serious invasion of privacy concerns. Gaming establishments 
would assume the investigatory and enforcement duties currently 
entrusted to law enforcement and government agencies, and the 
establishments could be liable for any employee mistakes or misuse of 
information.
    Finally, it establishes the precedent of requiring a private 
business to directly apply the law to an individual. 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 the Administration's proposal will open the 
door to additional costly and unreasonable mandates on our business 
communities.
    While the goal of the provision is laudable, the provision is 
imprudent and could lead to a myriad of unintended consequences, and I 
urge the Committee to reject this proposal.
    Thank you for the opportunity to testify before the Committee.

    Mr. Portman. Thank you, Ms. Berkley, and thank you for 
giving us a lot of information in a short period of time. We 
did hear earlier about the Southern Nevada Public Lands 
Management Act, $700 million a year.
    Ms. Berkley. You will be hearing it again.
    Mr. Portman. It sounds like I may be. And it is an issue 
that many of us in non-Western States would not be appreciating 
as you have explained it, so we appreciate that.
    Yucca Mountain, we appreciate your input on that; and 
finally this additional burden on the gaming industry. Thank 
you so much for your testimony.
    Mr. Spratt.
    Mr. Spratt. No questions.
    Mr. Portman. Mr. Conaway.
    Mr. Conaway. No.
    Mr. Moore. No questions.
    Mr. Portman. Thank you, Ms. Berkley.
    To the patient gentleman from Utah and his colleague from 
Idaho, I want to thank you for sticking with us and start the 
clock.
    Mr. Cannon. Could we make an adjustment? Mr. Flake has time 
after us, and he has an airplane to catch. Could we put the 
time together and let him start, and we will let other people 
who need to go go more quickly, and stay within the parameters 
of your time.
    Mr. Portman. With the indulgence of the committee. Without 
objection, we will do that. I want to commend you for your 
generosity. Mr. Bishop, is that acceptable to you?
    Mr. Bishop of Utah. Anything you say will be acceptable.
    Mr. Portman. Your testimony will be received. With that, 
Mr. Flake, welcome to the committee. The gentleman from 
Arizona, we look forward to your testimony.

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

    Mr. Flake. I thank my patient colleagues. I will be brief.
    I came before the committee last year to ask the same thing 
I am going to ask this year, and the committee, I believe, did 
the right thing in putting language in that reflected our 
concerns. Our concern is every year the President has in his 
budget additional funding for land acquisition, hundreds of 
millions of dollars. When we use that, we create more Federal 
land, which puts our cities and counties at a disadvantage in 
terms of being able to fund schools and needed resources and 
services.
    We have a program called Payment in Lieu of Taxes that is 
authorized at over $300 million and only funded at $200 
million, actually a decrease from last year. What we are 
advocating is taking land acquisition funding and applying it 
to Payment in Lieu of Taxes. The committee did this last year, 
reflected in language passed by the Budget Committee, and we 
would urge you to do the same thing this year. When you get 
more Federal land, it puts us in a deeper hole in terms of 
Payment in Lieu of Taxes, and so we are really in a bind.
    I noted just a few weeks ago, the administration had seen 
the problem that we have here in the District of Columbia with 
the Federal Government owning some so much excess land, and it 
committed to sell off some of that land to get the District 
government in a better financial position. We have that problem 
in spades in the West: Arizona, with over half of its land 
Federal; Nevada is that way, and Utah is even worse. It is 
difficult for rural counties to make do.
    And so we would ask again that we simply do the same thing 
we did last year: Make further reductions in land acquisition, 
apply that to PILT, and you would have additional money for 
deficit reduction. We are not asking for additional resources 
or money here; we are asking for less, far less, in Federal 
land acquisition, a little more toward PILT, and apply the rest 
to deficit reduction. I yield back.
    [The prepared statement of Jeff Flake follows:]

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

    Thank you for the chance to speak to you today on behalf of the 
Congressional Western Caucus, where I serve as Vice-Chairman.
    The Budget Committee has a number of tough choices to make in the 
coming weeks. While I want to ensure that Western states have their 
concerns addressed by this Committee, as a fiscal conservative, I am 
not asking for something for nothing. Instead, I think we need to 
reallocate current appropriations in a way that better serves 
taxpayers.
    Last year I talked to you about the need to fully fund the Payment-
in-Lieu-of-Taxes program (PILT) by reducing Federal land acquisition 
funds. As you know, PILT funding goes to counties with high percentages 
of Federal land.
    Because counties cannot draw tax revenue from these Federal lands, 
PILT funds provide the funding for schools, roads, and public safety 
programs that normally would be paid for through local tax revenues.
    Unfortunately, I am here to talk to you again this year about the 
same funding issue. PILT is currently authorized at $340 million, yet 
the President's budget only allocates $200 million for FY '06, a 
reduction of $26.8 million from the current budget.
    The Western Caucus firmly believes that this gap under funds the 
government's obligation to compensate these communities for the land 
held by the Federal Government.
    At the same time, the President's budget continues to fund the 
purchase of additional Federal lands despite its inability to 
effectively manage the Federal lands that it currently administers. In 
this year's budget, $154 million is provided for new Federal land 
acquisition.
    Last year, the Committee agreed that this inconsistency needed to 
be resolved. In its discussion of PILT in its budget resolution, the 
Committee said that the Federal budget could fully fund PILT, and that 
further reductions should be made in Federal land acquisition spending. 
I would ask that the Committee reaffirm its commitment to this 
principle by including this report language again in its budget 
resolution.
    I continue to believe that we should fund PILT by reducing the 
amount of money appropriated to the purchase of new Federal lands. If 
we follow this Committee's own recommendations, we should significantly 
reduce this funding level. By committing these savings to PILT, we 
could fully fund the program and have money left over for deficit 
reduction.
    Another source of funds better spent on PILT are EPA discretionary 
grants. The EPA has been widely and consistently criticized by the GAO, 
OMB, and others for the way it spends more than $300 million every 
year.
    Often the funds from EPA simply free up other money that groups 
receiving the grants then spend to try and defeat political candidates. 
Subsidizing such political activity is not a wise use of tax dollars.
    In summary, we in the Western Caucus are not asking for something 
for nothing. We are advocating that this Committee take a hard look at 
the money we spend, and allocate it more effectively to meet the 
important needs of our communities rather than increase the already 
inflated holdings of the Federal Government.
    Again, I thank the Chairman.

    Mr. Portman. Mr. Otter or Mr. Cannon.
    Mr. Cannon. May we share time among ourselves? Is that 
acceptable?
    Mr. Portman. Mr. Flake, thank you for your testimony.
    Start the clock, Mr. Otter or Mr. Cannon.
    Mr. Cannon. Can we have the chart up here, both charts?
    I think what Mr. Flake has said we are going to try and 
reiterate. The picture here is worth 10 million words. You 
recall that the States can't tax land that is owned by the 
Federal Government, and that is why you have a Payment in Lieu 
of Taxes.
    So to set the discussion, let me read you a quote from 
Ronald Reagan. I have a map, I wish everyone can see it. It is 
a map of the United States. And land owned by the government is 
in red, and the rest of the map is white. West of the 
Mississippi River, your first glance of the map, you think the 
whole thing is red, the government owns so much property. I 
don't know any other place than the Soviet Union where the 
government owns more land than ours does. And with that 
context, let me turn the time over to Butch, and we will go 
through several statements.

STATEMENT OF THE HON. C.L. ``BUTCH'' OTTER, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF IDAHO

    Mr. Otter. Thank you very much, Mr. Chairman, and thank 
you, Mr. Cannon.
    Mr. Chairman, at the risk of repeating what has already 
been said, I would like to point out in the initial map that 
you saw, that was not a Presidential election map. That was, in 
fact, Federal ownership. And if you look at Idaho, Nevada, 
Utah, New Mexico, quite a bit of California, you will see that 
the tax base, which is white, is what supports our schools, it 
supports our first responders. If there is a crime in that red 
area, which is government land, police officers and sheriffs 
from the white area have to go into the red area at the cost to 
the tax base of the white area.
    I think Mr. Flake said it best. We are getting $200 million 
of Payment in Lieu of Taxes funds. Congress authorized $350 
million. So we are getting $150 million less than was 
authorized. We have never since that authorization received the 
full funding of PILT. Obviously this was done for the purpose 
of being able to defray the costs of the Federal lands within 
the States.
    Having said that, let me move on to a couple of other 
concerns that I have. And I just would mention, too, before I 
leave this whole lands issue, while we are being offered $26 
million in the Interior budget for Payment in Lieu of Taxes, 
the Federal Government agencies that can own land, the BLM, the 
Forest Service, the Bureau of Reclamation and National Parks, 
are getting $90 million to make that map even more red than it 
is right now. And the redder that map is, the less we have as a 
tax base.
    I am very concerned about the administration's proposal to, 
we have heard before, the Power Marketing Administration's 
rates by 20 percent each year. What that means to the Pacific 
Northwest is an increase in our power rates of about $480 
million a year until we reach market price, which will then be 
a total increase of $2.5 billion.
    I would like to remind you that the economies of 
Washington, Oregon, and Idaho, the Pacific Northwest as a 
whole, rely heavily on value-added industries, that are driven 
by the power we produce under our hydro projects.
    Another area of concern for me is the administration's 
proposal in protecting the American borders. During my time in 
Congress, we have talked a lot about enhancing the national 
security; however, our inability to control our borders leaves 
our counties vulnerable to attack and promotes a blatant 
disregard for our laws.
    Over and over again we have heard how national security 
requires communication, cooperation amongst all levels of law 
enforcement right down to the county sheriff. I find it 
particularly disturbing that the administration has completely 
eliminated funding for the State Criminal Alien Assistance 
Program. That is where we go and pick up an illegal alien and 
put them in our jail with our police officers, who feed them 
and take them until we are ready to turn them over to the INS 
for shipment or to the Federal Government for shipment back to 
the country from whence they came, or try them for the crime 
that they committed. All of those costs and the money that we 
used to get from the Federal Government have been eliminated 
from the President's budget.
    Mr. Chairman, just one more mention that I want to make, 
and that is throughout the budget, I am alarmed at seeing where 
we are actually increasing administrative budgets while at the 
same time decreasing on the ground where we see the most good 
being done by the expenditure of the dollars. For instance, a 
constituent recently brought to my attention that the Small 
Business Administration's administrative budget is being 
increased in the President's budget by 20 percent this year, 
while proposing grant funding for the actual on-the-ground 
programs that are being cut, and that is really where we do the 
best job for our economy and the future businesses that we have 
in our economy. At the same time that we are cutting many 
domestic programs that are important, we are increasing our 
participation and our contributions to the betterment of 
foreign countries.
    Mr. Chairman, with that, I yield back the balance of my 
time of my time.
    [The prepared statement of C.L. ``Butch'' Otter follows:]

 Prepared Statement of Hon. C. L. ``Butch'' Otter, a Representative in 
                    Congress From the State of Idaho

    Mr. Chairman, thank you for the opportunity to testify today. Let 
me begin by stating my strong support for the principles of budget 
discipline and fiscal responsibility. I represent a state where 
balancing the budget is a constitutional requirement, and we understand 
prioritizing needs and paying as we go. I applaud the President's 
efforts to rein in spending and his realization that what we spend here 
is not the government's money--it belongs to the individuals we serve.
    With that said, I wish to express serious concerns with certain of 
the President's budget priorities, specifically as they pertain to 
meeting the legitimate obligations and commitments of government.
    Mr. Chairman, I won't mince words. I am sorely disappointed with 
the Administration's budget request for Payment in Lieu of Taxes, or 
PILT. The authorized level for PILT funding is approximately $350 
million, yet the Fiscal Year 06 request is for only $200 million. That 
is $26.8 million less than was paid in Fiscal Year 05. In fact, the 
$200 million represents the funding level from 2001.
    Clearly, that does not rise to the level of commitment that my 
constituents in Idaho or anyone in the West expect or deserve. We 
should be increasing PILT, moving closer to fulfilling our obligation 
to make local governments whole. Instead, we are moving in the wrong 
direction.
    Almost two-thirds of my state's land mass is controlled by the 
Federal Government. Counties with high percentages of public lands have 
little tax base to support such essential functions as police and fire 
protection and the education of our children. It is simply unfair to 
ask rural citizens whose livelihoods and lifestyles so often suffer as 
the result of decisions by public land managers to fund the search-and-
rescue, waste disposal, and court costs for those who come to play on 
those public lands. Congress realized this inequity and created PILT. 
It is time Congress remembers the commitment it made to rural 
communities and fully funds PILT.
    I further suggest that the Federal Government seek to reduce its 
financial impact on local communities by reducing land acquisitions. It 
simply does not make sense for the Federal Government to continue 
acquiring land when it cannot--or WILL not--take care of what it 
already owns. If it really is in the best interest of the general 
public for more land to be added to the Federal domain, then I believe 
a similar amount of land should be removed from Federal management and 
returned to local tax rolls.
    I also am very concerned with the Administration's proposal to 
increase Power Marketing Administration (PMA) rates by 20 percent each 
year until reaching ``market rates.'' Although the rate increases are 
described as ``gradual,'' the impact would be immediate and 
devastating. To put a dollar figure to it, this proposal would cost the 
Northwest $480 million next year and $2.5 billion over 3 years.
    Such a drain on the region's resources will have a devastating 
impact on job creation and economic development, and indeed on 
businesses and communities large and small. The net result will be 
robbing Peter to pay Paul--increasing the short-term revenue for the 
Power Marketing Administration at the expense of the long-term economic 
health and revenue-generating potential of municipalities, industries 
and individuals throughout the Northwest.
    Another area of concern for me in the Administration's budget 
proposal is protection of America's borders. During my time in Congress 
we have talked a lot about enhancing national security. However, our 
inability to control our borders leaves our country vulnerable to 
attack and promotes blatant disregard for our laws. Over and over again 
we have heard how national security requires communication and 
cooperation among all levels of law enforcement, right down to the 
county sheriff. I find it particularly disturbing, then, that the 
Administration again has completely eliminated funding for the State 
Criminal Alien Assistance Program, or SCAAP.
    Each year law enforcement agencies at the state and local level 
incarcerate illegal aliens who have violated federal, state or local 
laws. They do so at their own expense, often relying on local property 
tax receipts to cover those costs. Through SCAPP they can be reimbursed 
for these imposed expenses. Providing adequate funding for the program 
helps ensure effective local law enforcement and fosters that ``team 
spirit'' that we so desperately need to succeed in protecting our 
national security. And yet, this successful program has been left 
unnoticed in the Administration's budget over the past few years.
    What bothers me so much, Mr. Chairman, is that while such critical 
programs fall by the wayside in the name of fiscal responsibility, the 
Administration continues to irresponsibly increase funding for foreign 
aid. It is as though the right hand does not know what the left hand is 
doing. For example, a constituent recently brought it to my attention 
that the SBA's administrative budget has increased by 20 percent this 
year while proposed grant funding for actual on-the-ground programs--
the ones that benefit our economy and the American people--is being 
reduced. The budget proposal is rife with similar examples.
    As it pertains to foreign aid, I am particularly concerned that we 
continue offering financial assistance to countries with policies at 
odds with America's national interests. While I support the 
Administration's efforts in the Middle East, I am convinced that we 
undermine our success by doling out foreign aid indiscriminately to 
countries that actively work against us. How can we expect foreign 
governments to act responsibly in the broader world community if our 
own policy fails to hold them accountable even to us? The 
administration is dramatically increasing funding for some foreign 
assistance programs without evaluating their effectiveness or linking 
those payments to behavior consistent with America's goals.
    Thank you again, Mr. Chairman, for the opportunity to address these 
critical issues of our government's responsibility to the people we 
serve.

    Mr. Cannon. I think Mr. Bishop would like to speak to the 
effect of Payment of Lieu of Taxes and the failure to get 
funding on our schools.

STATEMENT OF THE HON. ROB BISHOP, A REPRESENTATIVE IN CONGRESS 
                     FROM THE STATE OF UTAH

    Mr. Bishop of Utah. Mr. Chairman, I assume you have the 
handout that we presented, I would hope, because we have 
pictures in there. The testimony will be riveting for you as 
you read that.
    When Utah became a State back in 1896, the enabling act 
said the land, the red stuff, 67 percent of my State, would be 
deeded to the Federal Government until such time as the Federal 
Government shall, not if or might, but shall, dispose of the 
lands, and the schools were supposed to get 5 percent of the 
proceeds of that. It is historically typical of enabling acts 
during that particular period of time. This concept we have 
today that simply deals with the idea of recreational land-
owned funds to all of us is a fairly modern change in the 
historical purpose for which that land was there.
    If you could look at the pictures, and I am hoping you have 
these. We brought them here.
    Mr. Portman. Here they are.
    Mr. Bishop of Utah. There are more pictures.
    Let me have you turn to the first one, and I am going to go 
through these quickly. Shows the percent change in projected 
enrollment, which simply means those of us west of the Rocky 
Mountains have all the kids. You guys don't. That presents the 
problem. You can see the same thing if you look at the map of 
the land there.
    Go to the third one, with is pupil-per-teacher ratio, and 
you find out those in the West have larger classes than those 
of you in the East.
    Percent change in expenditures per pupil. Those area where 
education is growing slowest happens to be in the West. If you 
want the bar graph right after it, our education funding is at 
28 percent. Those east of the Rockies is growing at 57 percent.
    There happens to be a common denominator in all of these 
things. Go to the one that says Annual Property Taxes Lost to 
Public Education. If that red property were able to be taxed, 
my State would have $160 million more for the education budget 
each year. I have two kids in high school. The Federal 
Government is hurting my kids.
    As you can see by all of these, the common denominator is 
the West, where there is massive amount of Federal lands, do 
not have as much money for education as the rest of the Nation 
does, even though as you keep looking through these, you will 
find out we have a higher tax burden and a higher commitment to 
education. It is--the bottom line deals with the amount of land 
that happens to be there.
    We also have the problem, and I am glad the individual is 
not here, but one of the constituents of a committee member 
came to my State for recreation purposes on this public land. 
Now, anyone in Utah knows that you don't go into the black box 
area. He decided to go tubing in that area. Emery County had to 
retrieve the body of one of your constituents, and it spent our 
entire emergency funds for that one individual.
    There are expenses incurred by Western States because of 
Federal land that supposedly belongs to all of us. The PILT 
issue goes right to the heart of this. If you look at the very 
last picture, it shows you what we have been paying in PILT. 
PILT is not welfare for the West. It is rent that is due by the 
Federal Government so we can maintain services that every other 
State has.
    Actually there is one cute one you have to see. If you go 
partway in the middle, it is called Land Ownership. If you 
block out what you all own, you will see that the West is 
almost totally blocked out, and you can compare it to what the 
Federal Government owns in your particular States.
    What we are asking for is the same thing. There needs to be 
full funding of PILT. Our children are being harmed and our 
citizens are being overtaxed because the Federal Government 
will not allow us to develop our land. If you want to give us 
the land back, we might work something out, but until that 
time, there is rent that is due with PILT.
    Secondly, as Representative Flake said, there is $154 
million in additional funding for land acquisition. There is 
too much. There has already been 5 million acres identified by 
the BLM that needs to be eliminated, be vacated. And also there 
is EPA funding--that last page of my testimony that needs to be 
eliminated from the budget, looking at disposal lands that are 
excess.
    With that, Mr. Chairman, as the third Ranking Member, let 
me say I am realizing I am the last as well, let me save 
whatever time I have to Representative Cannon. I am done.
    [The prepared statement of Rob Bishop follows:]

  Prepared Statement of Hon. Rob Bishop, a Representative in Congress 
                         From the State of Utah

    Mr. Chairman, thank you for providing time to individual members to 
testify on behalf of their priority issues before your committee. As a 
member of the Congressional Western Caucus, I appreciate your past 
interest in issues impacting the West. I am motivated to testify today 
due to several inadequacies in the Administration's FY06 budget.
    For decades, the American West has borne the burden of the Federal 
Government's vast land holdings, resulting in less money available for 
education, law enforcement, healthcare, emergency services, etc. As 
I've looked through the Administration's FY06 budget, unfortunately I 
do not see this burden on the West lessening--I see it increasing.
    Payment in Lieu of Taxes or PILT was created to help offset the 
tremendous cost to the counties from Federal ownership of lands. Sadly 
the Administration has reduced by $26 million this year's PILT 
allocation, referring to it as a non-priority in the budget--I am 
offended.
    The Federal Government owns over 65 percent of the land in my home 
state of Utah. This disparity in ownership is the contributing factor 
to Utah and the West's poor showing in annual expenditures on public 
education when compared with the Eastern United States. Utah and most 
Western states have tax rates that are equal to or greater than most 
Eastern states. Additionally, Utah spends over 41 percent of its annual 
budget on public education. However when it comes to per pupil 
expenditures, we are close to the bottom. So what gives? Frankly, this 
is attributable to the Federal Government ripping off the West each 
year by under-funding PILT while still increasing its public lands 
portfolio. This is demonstrated well in this year's budget as the 
Federal Government's insatiable appetite to acquire more land is well 
funded at $154 million.
    Mr. Chairman, the Administration's budget priorities, when it comes 
to public lands in the west, are perverse. I would argue their budget 
priorities actually harm the children in my state by shortchanging 
public education. By increasing Federal ownership of lands, they're 
reducing the amount of taxable land and increasing the burdens on our 
rural counties. I make no apologies when I say that, in effect, the 
Federal Government has become an absentee slumlord--zealously and 
unnecessarily holding onto ownership of public lands while squeezing 
off financial assistance to nearly broke Western counties. Western 
counties are increasingly finding themselves in the difficult situation 
of determining which critical services to fund and still fulfill the 
various Federal mandates placed upon them.
    Some points to be made regarding PILT:
    a. The proposed 2006 Budget only funds PILT at $200 million, a $26 
million decrease from last year and more than $140 million short of the 
fully authorized level.
    b. The proposed FY 2006 budget ironically provides more than $154 
million for new Federal land acquisition, which would create an 
additional funding burden for the PILT program.
    c. Over the past 10 years, the PILT program has always fallen short 
of the authorized level averaging $155 million, while over the same 
time period Federal land acquisitions funding has averaged more than 
$347 million.
    The Federal Government owns more than 670 million acres, almost 
one-third of the land in the United States
    As recently as April of 2004 the General Services Administration 
identified more than 5 million acres of Federal lands as ``vacant'' 
with no Federal purpose.
    As we consider the disparity in PILT funding and land acquisition 
funding let us remember President Bush has talked of creating an 
``Ownership Society.'' However, we live in a country where the Federal 
Government is the largest possessor of wealth and property rather than 
empowering our people with these gifts.
    Absent a change in Administration policy, I encourage the following 
to restore equity to rural western counties:
     Fully fund PILT.
     Cut Federal funds for land acquisition and transfer them 
to PILT. The Federal Government should not be in the land acquisition 
business.
     Eliminate EPA discretionary grants. These are 
controversial grants which should no longer be awarded.
    Mr. Chairman, I am passionate about this issue. Again, I appreciate 
the opportunity to testify before your committee. As you draw up the 
parameters for the FY06 budget, I sincerely appreciate your favorable 
consideration of the remarks and statements made by me and my 
colleagues from the Congressional Western Caucus. With your help, we 
can reign in the unnecessary spending on further land acquisition, 
questionable Federal grants, and restore equity to the West. With that, 
I yield back the balance of my time.

    STATEMENT OF THE HON. CHRIS CANNON, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF UTAH

    Mr. Cannon. We will go ahead if you like, and I will be 
quick. Just a couple of points on PILT. You can tell there is 
some intensity here. The intensity is we are taxing our people 
all over the West and spending less on education than anybody 
else in the country. And the reason for that--and if you look 
to the charts, you will see the compelling case. And the reason 
for that is because of public lands. We have the Soviet-style 
red block in the Western United States. People want to move to 
rural parts of America. And so when I moved in my house 18 
years ago, we had about 3,000 people in my little town and lots 
of open spaces. Today there is no more open space after 15 
years, and the town is about 15,000 people.
    We have a problem or an opportunity in America where people 
want to move to less urban areas. They want to have the 
opportunities that high tech and broadband give them, and they 
can do that today, and we need to make that attractive to them. 
You can't do that when the tax burden is such that your schools 
in these rural areas are underfunded and they have great 
difficulty.
    The fact is most people think, and I have heard many of our 
Northeastern friends say, these public lands belong to all 
Americans, and the answer is that is right. Pay the fee.
    I just have to say that this is a vitally important issue. 
There are other places for this money to come from, including 
the land acquisition, which I think is about $154 million. We 
don't need more land if we are not going to pay for it. And 
secondly, you have the EPA discretionary grants that total 
about $400 million.
    If I might now shift gears to another issue, there is an 
organization called the Administrative Conference of the United 
States. It was the only program that was phased out in 1996, I 
think ignorantly so. We had in my committee, the Committee on 
Commercial and Administrative Law, a hearing at which both 
Justice Scalia and Justice Breyer attended. Both of them were 
remarkably supportive. I think this is the only time we got two 
Justices this century in the House in a hearing. They pointed 
out that this committee or this Conference has saved massive 
amounts of money. In one case, in one issue with the Social 
Security system, they saved $85 million.
    This is a group that has been reauthorized last year to be 
a group of judges, private lawyers, and government regulatory 
lawyers who get together, people of high esteem like Justice 
Scalia and Justice Breyer--I think Justice Scalia was the 
Executive Director for a while--and they look at the system and 
say, how can we make the system work better?
    We are looking for $3.1 million to fund that. Let me 
suggest that I don't think that we can spend that kind of money 
better anywhere on earth. We need to be dealing with science 
and how science is used in regulation.
    We need to deal with the litigation that happens over 
permits. This group came up with the negotiated regulation 
process. We need them to come up with a negotiated permitting 
process so that we get people's views while we are looking at 
cutting timber, and not after the permit has been issued and 
tying it up in litigation for years.
    If we want to have healthy forest initiates, it is a 
problem over the whole country. So we are hoping for that 
addition to PILT, which I cannot overstate the intensity of 
emotion on this issue for all the western Members. I chair the 
Western Caucus. That is a very large number of western 
Congressmen, and we are deeply concerned about that.
    And in addition to that, all Americans in the Western 
Caucus in particular would like to see the Administrative 
Conference refunded. Now, it has been reauthorized. It needs to 
be funded so that we can get the benefit of the wisdom that 
those people give, by the way, for free. That $3.1 million is 
the cost of administering it. These are wonderful attorneys who 
contribute their time to that.
    And with that, I yield.
    [The prepared statement of Chris Cannon follows:]

 Prepared Statement of Hon. Chris Cannon, a Representative in Congress 
                         From the State of Utah

    It is a pleasure to testify today before Chairman Nussle and the 
House Budget Committee. I am testifying today to ask your support in 
funding the recently enacted ``Federal Regulatory Improvement Act of 
2004'' at the authorized level of $3.1 million in the FY'06 House 
Budget Resolution as well as issue support for the full funding of 
Payment In Lieu of Taxes (PILT).
    The Federal Regulatory Improvement Act, (Public Law 108-401) 
reauthorizes the Administrative Conference of the United States (ACUS). 
ACUS was originally established in 1964 as the government's advisor on 
administrative procedures, but was de-funded in 1996. Last year, the 
House Judiciary Committee held hearings on whether ACUS needed to be 
reauthorized. At two separate hearings, the Committee garnered 
unanimous support from those testifying as well as the Members of the 
Committee that the reconstituting of ACUS would inject efficiency and 
fairness into the regulatory process. With the investment of $3.1 
million ACUS would save, in some estimates, billions of dollars by 
streamlining the regulatory agencies and their decisions.
    Over the course of its 28-year existence, the Conference issued 
more than 200 recommendations--some of which were government-wide and 
others that were agency-specific. It issued a series of recommendations 
eliminating a variety of technical impediments to the judicial review 
of agency action and encouraging less costly consensual alternatives to 
litigation. The fruits of these efforts include the enactment of the 
Administrative Dispute Resolution Act in 1990, which established a 
framework for the use of ADR.
    In addition to this legislation, ACUS served as the key 
implementing agency for the Negotiated Rulemaking Act, the Equal Access 
to Justice Act, the Congressional Accountability Act, and the 
Magnusson-Moss Warranty-Federal Trade Commission Improvement Act. The 
Conference also made recommendations regarding implementation of the 
Congressional Accountability Act. Further, ACUS served as a resource 
for Members of Congress, Congressional Committees and the Executive 
Branch.
    With respect to specific agencies, the Conference, for example, 
during the 1970's undertook an exhaustive study of the procedures of a 
single agency--the Internal Revenue Service--which resulted in 72 
proposals concerning the confidentiality of taxpayer information, IRS 
settlement procedures, and the handling of citizen complaints, among 
other matters. The IRS ultimately adopted 58 of these recommendations.
    According to the Congressional Research Service, there are growing 
patterns of evasion among agencies with respect to notice and comment 
requirements. An increasing number of regulations are being 
successfully challenged in the courts. An informal study by CRS 
indicates that 51 percent of these rules were struck down by the 
courts. Needless litigation hurts everyone--it slows the rulemaking 
process, encourages agencies to try to circumvent public comment 
requirements, and costs taxpayers millions of dollars.
    Another serious area of concern is the need to have a coherent 
approach among the agencies with respect to emerging issues and 
technologies. These areas include issues dealing with privacy, national 
security, public participation, the internet, and the Freedom of 
Information Act. There are also concerns about the need to have peer 
review and to have regulations based on sound science. Our people and 
business communities depend upon Federal agencies to promote scientific 
research and to develop science-based policies that protect the 
nation's health and welfare. Integral to the Federal regulatory process 
is the need to assess the safety, public health, and environmental 
impact of proposed regulations. Regulations lacking sound scientific 
support can present serious safety and health consequences as well as 
cause private industry to incur unnecessary and burdensome expenses to 
comply with such regulations.
    Restoring the Conference would provide a cost-effective, yet highly 
valuable solution to these problems. It is my hope that the Budget 
Committee will support this request and move the government toward a 
more efficient regulatory system.
    Another issue of importance to me is sustaining a vibrant western 
economy. This is a key priority for the Congressional Western Caucus of 
which I am the Chair.
    I commend the President for providing funding for the Healthy 
Forests Initiative and Cooperative Conservation Programs.
    However, I am deeply concerned about the Payment-in-Lieu-of-Taxes 
program, or PILT, which provides payments to local counties that are 
unable to draw tax revenue from Federal lands in their jurisdictions. 
PILT payments help to fund essential services such as environmental 
compliance, law enforcement, health care, education, firefighting, and 
search and rescue operations.
    Twelve western states have more than 25 percent of their land owned 
by the Federal Government and four states are more than 60 percent 
federally owned. This creates a huge strain on Western economies 
because they do not have the same opportunity to earn tax revenues as 
other states do.
    The PILT program is intended to make up for that shortfall in tax 
revenues however, over the past several years it has been grossly under 
funded. Although the PILT program has been authorized at $340 million, 
the President's budget only calls for $200 million in FY 2006. This is 
a decrease of $27 million from last year's appropriated level and more 
than 40 percent less than what is authorized.
    Ironically, the President's budget provides more than $154 million 
for new Federal land acquisition, which would create an additional 
funding burden for the PILT program. If we can't make payments on the 
land we already own, why are we proposing to acquire more land? It 
seems to me, that the budget proposal submitted to Congress got this 
one wrong.
    Making up the shortfall in the PILT program can and must be 
accomplished. I maintain that cutting Federal land acquisition funds as 
well as EPA discretionary grants could easily fund the difference.
    Every year the EPA makes more than $400 million in grants to 
various non-profit and educational partners. However, over the last 
decade, EPA's grants program has been best known for mismanagement.
    One illustrative example is the fact that under EPA's management, 
in FY 2004 more than $337 million in grants went to non-profits, some 
to environmental organizations that spent more than $18 million in 
political activities during the 2004 election cycle. Even worse, last 
year, the EPA's Inspector General noted that one group's grant funding 
allocated for work on projects under the Clean Air Act was spent by the 
group's lobbying organization--in direct violation of the law.
    Given the current economic climate and the considerable amount of 
taxpayer dollars appropriated every year for the Environmental 
Protection Agency and the Departments of Agriculture and Interior, we 
must use utmost care to ensure that hardworking American dollars are 
wisely spent.
    This request for PILT is consistent with language in last year's 
budget resolution where the Committee stated that the budget could 
accommodate full funding of the PILT program and that further 
reductions in Federal land acquisition should be made.
    Again, I'd like to thank Chairman Nussle and the Committee for this 
opportunity to testify.

    Mr. Portman [presiding]. Why don't we break here for 
questions for the group that just testified, and then we will 
start with Mr. Porter, who has separate time.
    First of all, gentlemen, we appreciate your testimony. And, 
Mr. Cannon, you have explained the PILT issue well. You have 
been a real leader on this over the years. Basically, Mr. Flake 
and Mr. Otter's suggestions as well as yours, Mr. Cannon, on 
constructively coming up with an offset, which is basically 
consistent with your philosophy that we should not be putting 
more pressure on the schools, taking out of the acquisitions to 
fund the PILT adequately.
    I know that Mr. Bishop is a former schoolteacher. I did not 
know that he also specialized in analysis and probability and 
statistics, but great charts. I mean this is a very impressive 
presentation of the issue in a stark visual way.
    The question I would have for you all with regard to the 
Payment in Lieu of Taxes program is, if indeed it was funded to 
the extent of its authorization, would that solve the problem 
that you have laid out in your presentation?
    Mr. Cannon. Let me just answer. There is never going to be 
enough money for these rural areas, because they are deprived 
of virtually everything by Federal ownership and Federal 
regulations. If you look at that chart, you will see that the 
Federal Government has committed in law many, many streams of 
funds to these people. PILT is only one of these streams of 
funds.
    The full funding level of PILT is appropriated at this 
point in time. But clearly more money has to come to pay the 
costs imposed on those counties in the West. And frankly we 
would just love to see them sold and get the percentage of 
money that would come to the States when those lands are sold 
or otherwise diminished in size, diminished in dominance, so if 
they get sold the States get to tax them in addition to getting 
a percentage of the sales.
    So the issue is complicated. There are several streams of 
funds that are directed. PILT, in our perception, is the first 
thing that we need to do, and we just absolutely need to do 
that one as a fix to the matter so that our counties can count 
on the revenue stream in the future, then if they have more 
money coming or more private land that is available to tax that 
that is good and well.
    Mr. Bishop of Utah. Mr. Chairman, if I could also add, as 
far as the education component, if indeed the enabling acts 
were honored and the amount of money from a disposal were given 
to the States and/or they also had an ongoing revenue stream 
from the amount of money that would be on the lowest of the tax 
levels, you would see the disparity that is obvious between the 
West and the East disappear.
    Obviously there is never enough money to do everything you 
want to do, but it would bring equity between those who are 
non-Federal land States and those who are Federal land States 
in the area of education if those two actions were taking 
place.
    Mr. Portman. Thank you, Mr. Cannon. I would like to turn to 
Mr. Cueller for questions.
    Mr. Cueller. I don't have any questions, but I do 
appreciate it. I understand, I used to do with budget for the 
State of Texas when I came to public education. I understand 
the difficulties if you do not have that particular resource. 
So I understand your argument. I agree with the arguments on 
that. Thank you.
    Mr. Portman. Mr. Conaway.
    Mr. Conaway. No.
    Mr. Portman. Gentlemen, thank you very much for your 
testimony. We will now, in the order of which people came to 
the hearing today, we will go to Mr. Porter. Mr. Porter, it 
sounds like some of the issues you were planning to raise have 
already been raised. You did have separate time on our 
schedule. So you are entitled to it, and we look forward to 
your testimony.

   STATEMENT OF THE HON. JON C. PORTER, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF NEVADA

    Mr. Porter. Thank you, Mr. Chairman. I will concur with my 
colleagues from the West, and I will save the committee's time 
at this point on some of these issues. But I do agree with and 
appreciate their presentation.
    I support the President and this Congress looking for ways 
to eliminate waste, fraud, and abuse. I think we can spend 
hours talking about areas where Federal dollars are being 
wasted, but we can save that for another time.
    However, I do disagree with one of the proposals by the 
White House that has to do with the funds that are being 
received from the sale of public lands in Southern Nevada. My 
colleagues, Mr. Gibbons and Mrs. Berkley, touched upon it 
earlier.
    According to the proposal, there may be a 70-percent 
reduction in the funds under the Southern Nevada Public Lands 
Management Act that will remain in Nevada. These are lands that 
are sold in Nevada. These funds were brought together in a 
collaborative effort by the Senate, both Democrats and 
Republicans in the House of Representatives, and all of the 
funds that are being appropriated and invested in our community 
are approved by the Secretary of the Interior and signed off 
based upon Federal standards and Federal laws.
    And there is very little land left. This program has 
certainly been an asset for the State of Nevada, and the value 
of this land has increased substantially. That value has 
increased because of the investments that we have made, as a 
community and as a State, to improve our quality of life in 
Nevada.
    The funds for these projects are substantial--global--and 
they impact every State in the Union. The funds from the sale 
of public lands in Nevada are going to protecting Lake Tahoe, 
which is a treasure for the country; Lake Mead, one of the 
largest national recreation areas in the country; Red Rock 
Canyon; Sloan Canyon; to make sure that we do things like 
protect Indian artifacts and Indian history, and to the 
implementation of the Endangered Species Act.
    Yes, the funds are helping our community, but also helping 
the country as a whole. Although we are a State of about 2.2 
million people, we had about 40 million tourists last year, and 
visitors explore into our community from all over the country 
and world. Adding to that the fact, properties that are being 
sold--in some cases up to 2,000 acres at a time--and are 
creating communities the size of 70,000 or 80,000 new people a 
year.
    Think about that, Mr. Chairman, new communities of 70,000 
to 80,000 new people a year.
    With this growth comes major demands not only on our 
infrastructure, but also on our public facilities that are 
certainly a part of the Federal program. The fact that we are 
using Federal dollars from the land sales is actually saving 
the country money, because instead of us having to come to the 
House and to the Senate to ask for funds for some of our 
programs, for our natural historic resources that are federally 
controlled, we are using dollars that are generated in Nevada 
from the sale of lands in Nevada.
    Mr. Chairman, I would ask that we find, and I know that our 
delegation will be happy to find areas of waste, areas of abuse 
where additional dollars may be available help this budget. 
However, this is an area that we are being penalized for being 
frugal.
    We have spent our money wisely through the process that was 
established through regulation and through enactment of this 
House and the Senate, and I know that we also have additional 
programs that are budgeted based on these funds for future 
allocations. I would like to submit additional information, if 
you do not mind, Mr. Chairman, after I conclude my presentation 
so I can keep it brief.
    Mr. Portman. Without objection.
    Mr. Porter. I would also like to state that I remain 
adamantly opposed to Yucca Mountain. We want to make sure, as 
my colleagues have mentioned, that Congress retains control 
over the budgetary process in the oversight of Yucca Mountain. 
I know the question earlier was asked what we really wanted to 
do with Yucca. We would like to close it down, but we also want 
to make sure that Congress remains in constant oversight of the 
project.
    So, Mr. Chairman, that is a brief overview. I will be 
submitting this information. But I think that this is a program 
that is a model for the country and a model for Washington on 
how funds are spent wisely to make sure that public facilities, 
Federal facilities are taken care of, and maintained and 
properties are protected in Nevada.
    With that I say thank you, Mr. Chairman.
    [The prepared statement of Jon C. Porter follows:]

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

    Mr. Chairman, I would like to take a few minutes to speak today 
about issues of great concern to my constituents and me in Southern 
Nevada.
    First, I would like to state that I am fully supportive of this 
Committee and President Bush in their efforts to reduce the Federal 
deficit. I am in lock-step with all of you in making sure that our 
taxpayers' dollars are used efficiently, and I am committed to helping 
you all in this effort.
    However, in pursuing this ideal, I believe that within the 2005 
Budget was a grave error, which is why I am here speaking to the Budget 
Committee today.
    In 1998, Senator Richard Bryan and Congressman John Ensign crafted 
a bipartisan and bicameral bill known as the Southern Nevada Public 
Lands Management Act (SNPLMA). When SNPLMA was signed into law, its 
intent was to allow for the disposal of public lands in Clark County, 
Nevada, and to provide for the acquisition of environmentally sensitive 
lands within the state. The money raised from these land sales is 
divided between the State of Nevada's General Education Fund (5 
percent), the Southern Nevada Water Authority (10 percent), and the 
remaining 85 percent is dedicated to a Federal account for 
environmental projects, such as development of parks and trails, 
conservation initiatives, land acquisition, and a multi-species habitat 
conservation plan in Clark County, Nevada.
    Before going into how SNPLMA has benefited Southern Nevada, I want 
to take a moment to explain how the funding mechanism under SNPLMA 
works. Every year since being passed into law, local, state and the 
Federal agencies work together to determine which projects, sales, and 
acquisitions will occur. Once approved by all stakeholders, this list 
of projects is sent to the Secretary of Interior for approval. All 
funds generated from these projects and sales then go into a special 
fund to be used for Federal purposes within Nevada, as specified within 
the law.
    The goal of SNPLMA is to protect and preserve Southern Nevada for 
future generations. Since being signed into law, SNPLMA has been 
amazingly beneficial in meeting Federal obligations in Clark County. 
Funds generated from SNPLMA have helped pay for capital improvements at 
Lake Mead National Recreation Area, Red Rock Canyon National 
Conservation Area, Spring Mountain National Recreation Area, Lake 
Tahoe, and other lands administered by the Department of Interior. 
These funds have paid for the development of much-needed parks and 
trails in this quickly-growing community, and SNPLMA funds have helped 
in building and maintaining visitor facilities in some of the most 
visited national parks and conservation areas in the nation. Further, 
some of these funds have already been committed for long-term use, such 
as $300 million going to Lake Tahoe over 10 years in order to help 
preserve and protect Lake Tahoe for future generations.
    In the President's budget proposal exists a provision that could 
divert seventy percent of the funds generated under SNPLMA. As a Member 
of Congress who represents many of the people and lands that have 
benefited from SNPLMA, I am firmly opposed to this provision, because I 
believe that since these funds were generated in Southern Nevada, they 
should stay in Southern Nevada for federally beneficial projects. 
Although no one in the 106th Congress could have imagined how 
successful this program has been, Clark County has been able to use 
these much-needed funds to improve and conserve our lands for both 
locals and tourists alike. It was the Southern Nevada community that 
helped to increase the economic value of these lands, and I believe 
that Southern Nevadans should be able to help make sure that their 
children's children can enjoy areas like Red Rock Canyon, the Spring 
Mountains, Lake Mead, and Lake Tahoe someday. In other words, these 
funds are self-generated, as opposed to being derived from taxpayers' 
dollars, and do not add to the Federal deficit.
    As a Congressman who represents a state with approximately ninety 
percent Federal land, I am here to say that SNPLMA, through the sale of 
Federal lands where revenue is dedicated to the Federal projects in 
this area, helps to ``free up'' Federal dollars for other areas, such 
as the Florida Everglades, Yosemite and Yellowstone National Parks, and 
our Grand Canyon. This law also allows Southern Nevada to use SNPLMA, 
as opposed to Federal, dollars to protect endangered or threatened 
species. We simply do not need to rely as strongly on other Federal 
funding sources to support all of the Federal lands we have in Southern 
Nevada. This bill is smart for both Nevadans, and every single person 
who uses our Federal parks and lands and enjoys its native species, as 
it helps to ensure that our Federal lands and species throughout the 
United States are protected.
    It would be different if this bill was coming at the expense of the 
American taxpayer. However, SNPLMA is fiscally responsible, and 
environmentally friendly. Although I am in favor of reducing our 
Federal deficit, I believe that these cuts should come at the expense 
of wasteful programs, as opposed to SNPLMA.
    Mr. Chairman, the entire delegation is united on this effort. I 
respectfully ask you to consider the benefits of SNPLMA, and the 
negative impacts this budget proposal will have, as we determine where 
our Federal dollars will go next year.
    Another section in the President's Budget that I am concerned with 
is the so called ``deadbeat dads'' issue. This idea was first raised by 
the Clinton administration in 1994 and again in 2000. The Bush 
administration proposal would capture gaming winnings of non-custodial 
parents who have not paid their child support. Each time an 
individual's winnings triggered completion of an IRS W2G form, 
employees of gaming establishments, including casinos, horse and dog 
tracks, and locations where the lottery, jai alai and keno are played, 
would be required to check a Federal database to determine if the 
customer was delinquent in owing child support.
    This ``deadbeat dads'' proposal has a commendable goal but uses 
dubious tactics. First and foremost, no one condemns any effort to 
avoid child support payments more than I do. But mandating the gaming 
industry to garnish winnings from those listed in a government database 
raises serious privacy questions. Additionally, the creation of what 
would amount to a new Federal bureaucracy to process this information 
would only seem to compound the potential for mistakes and misuse of 
sensitive information. Instead we should provide the individual states 
and localities with the resources they need to locate and penalize 
those who are delinquent on their child support payments.
    Mr. Chairman, I would like to thank the Committee for the time and 
opportunity to allow me to speak on these issues that are so near and 
dear to my constituents and me. I am happy to answer any questions.

    Mr. Portman. Thank you, Mr. Porter. We appreciate your 
leadership on the Yucca Mountain issues over the years, and 
also your leadership now on looking at these public lands 
issues, including the Southern Nevada Public Lands Management 
Act. Thank you for your testimony today. Mr. Cuellar.
    Mr. Cuellar. No questions.
    Mr. Conaway. Mr. Porter, help me understand Yucca Mountain. 
I am new to this process. What is Yucca Mountain other than 
dirt?
    Mr. Porter. Mr. Chairman, I am not sure where we should 
begin here. Yucca Mountain, in a nutshell, is an area of 
disposal proposed for Nevada for all high-level nuclear waste. 
This waste is set to travel through your communities, and our 
communities, to a site about 100 miles north of Las Vegas where 
thousand and thousands of tons of high level nuclear waste to 
be stored at a facility that the State of Nevada is adamantly 
opposed to. But, unfortunately, there are a number of other 
States that would like to send their waste into our community, 
and we have been fighting, will continue to fight this. From a 
States' rights perspective, we are adamantly opposed, but also 
for safety reasons. It is an untested, unproven science; 
facilities that are being built have yet to be tested. So it is 
a major, major concern for us and has been for years, and we 
are adamantly opposed and will continue to be.
    Mr. Conaway. It is underground storage?
    Mr. Porter. Yes.
    Mr. Conaway. There is a similar one in Carlsbad.
    Mr. Porter. We would like to send the rest of the waste to 
Carlsbad. It is a different level of waste. These are spent 
nuclear rods from power generation, but also military grade 
nuclear waste. But we would love to send the balance of this 
waste into Carlsbad, and I would work with you on this.
    Mr. Conaway. We have a low level one planned in Texas. I 
also understand that folks in Andrews see it as an economic 
development issue. They see the other side of the coin, that 
there is an opportunity here to grow jobs in Andrews, Texas, 
using safe science, using science as best we know to dispose of 
this stuff. But this is low level, an entirely different realm 
of risks than what you are talking about.
    Mr. Porter. Thank you for your question. This is a science 
that is untested. Nevada is being used as that testing ground 
for storage, and we are concerned for our children, and for our 
families, with its transportation and burial. Thank you for 
asking.
    Mr. Portman. And again, Mr. Porter, your full statement 
will be made part of the record. We have one final question 
from Mr. Cuellar.
    Mr. Cuellar. Mr. Porter, just a question on your testimony. 
I just want to get your thoughts on the deadbeat dads. I think 
you are saying we agree with the goal, it is just the way you 
want or--I think you disagree with the system or the way it is 
supposed to be collected. That is the privacy issue.
    Are you saying that this is pretty much a State issue 
instead of Federal issue, because I think we agree that we 
ought to do something about the deadbeat dads that we have out 
there. I just want to see if you can elaborate a little bit 
more on the procedure you want to follow.
    Mr. Porter. Thank you. It is in my backup testimony. I 
appreciate your bringing it up. I think deadbeat dads should be 
busted and we should use every available means to make sure 
that they take care of their children and their families. It is 
unacceptable that we have deadbeat parents whom are not taking 
care of their responsibilities. Our concern is that the private 
sector in this instance would be asked to be the law 
enforcement agency.
    I think that we should help and encourage local governments 
who are the experts at law enforcement, and do everything we 
can to encourage and to help them in the collection, whether it 
be technology driven through the court system. But when you get 
into the private sector, asking the private sector, again, 
whether it is a car dealership or a resort in Nevada or a 
resort in Ohio or Texas, it crosses into a whole other realm, 
where we think that we should help law enforcement as a 
Congress, we should help local government, but the private 
sector getting into collection and into law enforcement I don't 
think is an appropriate means. And then there is the privacy 
issue. But I think, more importantly, it is the issue that we 
should help local government do what they do best.
    Mr. Portman. Thank you. Mr. Simmons, we look forward to 
your testimony. You have 10 minutes.

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

    Mr. Simmons. Thank you, Mr. Chairman, and I thank Mr. 
Cuellar and Mr. Conaway for their attention and their interest 
in participating in these hearings, and I commend them on their 
endurance.
    I come before you this afternoon as the new chairman of the 
Subcommittee on Intelligence, Information Sharing and Terrorism 
Risk Assessment of the new Homeland Security Committee, now an 
``A'' level permanent committee of the House of 
Representatives.
    I would ask unanimous consent that my full testimony be 
inserted into the record as read, and then I would like to 
summarize it.
    We all remember, Mr. Chairman, the events of 9/11, 
especially those of us who were here in this Capitol on that 
day, and we remember the terrible intelligence failures that 
resulted in the loss of over 3,000 innocent lives.
    The 9/11 Commission report detailed these failures in great 
detail, and then called upon all of us to, ``create something 
positive, an America that is safer, stronger and wiser.'' I 
believe the creation of the Department of Homeland Security and 
a permanent committee of Congress to oversee that department is 
part of the effort to create something positive.
    I also believe that intelligence reform is part of that 
effort, and the subcommittee which I chair will try to oversee 
the creation of an intelligence capability in the Department of 
Homeland Security that makes us ``safer, stronger and wiser.''
    We all have a common goal. We want our homeland and our 
loved ones to be safe, but we also know that we can spend every 
dollar in the budget, we can search every traveler, we can 
inspect every shipping container and still fail to prevent 
another attack.
    The Chinese built the Great Wall at great expense, but it 
failed to keep the Mongol hordes out of China. In the 1930s the 
French built the Maginot Line at great expense to exclude the 
Germans, but it also failed. So we have to be wise in our 
choices.
    And good intelligence gathering and good intelligence 
sharing helps us to be wise. Before 9/11, we did not have the 
capacity to connect the dots because our sharing and our 
analysis and our reaction was inadequate. Since then we have 
made a lot of progress toward integrating our intelligence 
activities, sharing information, and focusing on the terrorist 
threat. And that threat is very real. It was real 3 years ago. 
It is real now.
    Just last week the media reported on an intercepted 
communication between Osama bin Laden and Abu Musab al-Zarqawi, 
reiterating the desire of al-Qaeda to target the U.S. homeland, 
and that report coincided with Homeland Security Deputy 
Secretary Loy's testimony, ``al-Qaeda has considered using the 
southwestern border to infiltrate the United States.'' I note 
that two of our Members at the dais are from Texas, and that 
infiltration is a real risk and a real danger to you and to 
your people.
    Good intelligence gives us the eyes and ears to see and 
hear those who would do us harm, and at the same time good 
intelligence allows us to preserve and protect the civil 
liberties of our people.
    Now, moving quickly to the budget requests for the 
Information Analysis and Infrastructure Protection for fiscal 
year 2006, $873 million has been requested by the President. 
This represents a decrease of $20 million below the fiscal year 
2005 levels, but a substantial number of the activities within 
Information Analysis have increased. We simply have transfers 
of some activities and consolidation for savings.
    But my point is this: It is essential that the Congress 
support the Department and support the administration in its 
request and not make any cuts so that information analysis can 
continue to expand its important work in this vital area.
    We have requested and we support a request for an increase 
of $12 million in the homeland security operations center. This 
is the heart and soul of what we are trying to do in homeland 
security. We have $5.5 million for information sharing and 
collaboration. An additional $20 million for 173 full-time 
equivalent employees is also requested.
    Do you realize that they are not fully staffed? Do you 
realize that our information analysis capabilities in the 
Department of Homeland Security are lacking literally hundreds 
of personnel and that when we identify people to hire it takes 
upwards of a year and maybe longer to clear them?
    This is a huge problem, and this is something that we have 
to focus on very carefully. A lot of the offices downtown are 
empty, and this is inadequate to the task that we have before 
us.
    We have also tried to spend the money smarter. The 
Information Analysis budget transfers $53 million in buffer 
zone protection plans to another agency to create a targeted 
infrastructure protection grants program which will result in a 
savings, and there are additional savings that we have been 
able to achieve through consolidation.
    My bottom line is, Mr. Chairman, and the message of this 
testimony is that we have a new Homeland Security Committee, 
with new subcommittees, which include the Subcommittee on 
Intelligence. We are overseeing a new agency of government that 
has been created to deal with the new security challenges of 
terrorism in the American homeland. We think we are making 
progress in this regard. We think the moneys that have been 
requested are adequate, but we also know that we do not have 
all of the answers at this point in time. As our oversight 
activities continue throughout this spring and summer we have 
to be flexible, we have to be creative. We have to be diligent, 
because we may have to change course a little bit here and 
there to meet the task, and we hope that this committee will 
give us the resources that we need to perform this important 
mission.
    I thank you for your attention. I would be happy to answer 
any questions.
    [The prepared statement of Robert Simmons follows:]

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

    Chairman Nussle, Ranking Member Spratt, I thank you for allowing me 
to testify on the President's Fiscal Year 2006 Budget Submission to 
Congress.
    As Chairman of the Homeland Security Committee's Subcommittee on 
Intelligence, Information Sharing and Terrorism Risk Assessment, I will 
focus on the Department of Homeland Security's intelligence and 
information sharing capabilities.
    We all remember the tragic events of September 11th when terrible 
failures of our U.S. intelligence community resulted in the loss of 
over 3,000 innocent lives. The 9/11 Commission outlined those failures 
in great detail, and then called upon all of us to use that tragedy to 
``create something positive--an America that is safer, stronger and 
wiser.''
    The creation of a new Department of Homeland Security, and a 
permanent committee of Congress to oversee it, is part of that effort 
to ``create something positive.'' Intelligence reform is also part of 
that effort, and the new Subcommittee which I chair will try to oversee 
the creation of an intelligence capability in the Department of 
Homeland Security that makes us ``safer, stronger and wiser.''
    We all want our homeland and our loved ones to be safe. We also 
know that we can spend every dollar, search every traveler, inspect 
every shipping container and still fail to prevent another terrorist 
attack here at home.
    The Chinese built the Great Wall of China at extraordinary expense 
to keep out the Mongol hoards, and it failed. In the 1930's, the French 
built the Maginot Line to exclude the Germans, and it failed. So we 
have to be ``wise'' in our choices. Good intelligence gathering and 
good intelligence sharing helps us to be wise.
    Prior to 9/11, information was not being effectively shared, 
analyzed and acted upon. Because of this we were unable to ``connect 
the dots'' to prevent 9/11. Since then, we have made great progress 
toward integrating our intelligence activities, sharing information and 
focusing on the terrorist threat. It is vital that our activities and 
capabilities in this area continue to improve. The cost of failure is 
too high to consider.
    The threat is real. Just last week the media reported on an 
intercepted communication between Osama bin Laden and Abu Musab al-
Zarqawi reiterating the desire of al Qaeda to target the U.S. homeland. 
This report coincides with the testimony of Homeland Security Deputy 
Secretary, Admiral James Loy, that ``al Qaeda has considered using the 
southwestern border to infiltrate the United States.'' And we know that 
our enemies' ambitions do not stop there.
    Good intelligence gives us ``the eyes and ears'' to see and hear 
those who would do us harm. At the same time, good intelligence allows 
us to preserve and protect the civil liberties of our people.
    This being said, the President's Budget Request for the Information 
Analysis and Infrastructure Protection in FY06 totals just over $873 
million, a net decrease of $20.5 million below FY05 enacted levels. 
While this includes substantial increases for certain activities within 
the IAIP budget, it also involves the transfer of over $100 million out 
of the IAIP Directorate due to Department-wide consolidation efforts. 
In the coming weeks the Subcommittee will closely examine additional 
changes for IAIP because of the importance of its mission. The 
Subcommittee will pay particular attention to the intelligence and 
information-sharing functions of IAIP as well as the Open-Source 
Intelligence capabilities of the Department.
    While we anticipate some changes to the IAIP budget, we believe 
that these changes can be accomplished within the top-line DHS budget, 
so we are not asking for an overall DHS increase at this time. But it 
is essential that Congress support the Department in this area and not 
make further cuts so IAIP can continue and expand its important work in 
information analysis.
    The DHS Information Analysis and Infrastructure Protection 
Directorate (IAIP) has a unique role in the Federal Government. Not 
only does it serve as the ``eyes and ears'' of the department, focusing 
specifically on the threats and vulnerabilities of the U.S. homeland, 
but it also establishes vital partnerships with state, local, tribal 
and private sector authorities. To accomplish this task, the 
President's budget requests:
     A $12.9 million increase for the Homeland Security 
Operations Center (HSOC), one of the major successes of the Department 
to date. Enhancing this capability will strengthen information sharing 
and coordination with Federal, state, local, and tribal partners as 
well as with the private sector.
     $5.5 million for the Information Sharing and Collaboration 
program, which will help link together and coordinate information-
sharing between IAIP, DHS operational elements and their state and 
local partners.
     An increase of $20.5 million to support an additional 73 
Full Time Equivalent (FTE) in IAIP. These new hires will directly 
support the DHS statutory role of analyzing information and sharing 
information, issuing warnings and sharing assessments with Federal, 
state, local and private sector officials. It is vital that IAIP make 
hiring additional personnel a priority.
     A $19.4 million increase for the construction of the 
Homeland Secure Data Network (HSDN), a secure, classified network for 
information sharing and collaboration.
    In addition to these increases, the DHS budget also strives to 
spend smarter. For instance:
     The IAIP budget transfers $53 million in Buffer Zone 
Protection Plans to the Office of State and Local Government 
Coordination and Preparedness (OSLGCP) to create a Targeted 
Infrastructure Protection (TIP) Grants program. This will result in a 
$3 million savings as a result of the consolidation in OSLGCP.
     The IAIP budget also includes a $41.5 million decrease, 
transferring the Emerging Pilot and Technology Application Pilots to 
the Science and Technology Directorate as part of a broader DHS 
consolidation of Science and Technology funding.
    These are important first steps to save money through 
consolidation. Over the course of this year, we can and will do more.
    In closing, Mr. Chairman, it is important to reiterate that the 
Intelligence Subcommittee of the Homeland Security Committee is engaged 
in a new oversight role involving a new agency of government created to 
deal with the new security challenges of terrorism in the American 
homeland. We believe we are making progress in this vital mission. But 
we also know that these new challenges will require that we be creative 
and flexible in order to preserve and protect a free America that is 
``safer, stronger and wiser.''
    Thank you. I am happy to respond to your questions.

    Mr. Portman. Thank you, Mr. Simmons, for your testimony, 
and congratulations on your new chairmanship. Given your 
background in intelligence, you are the right person for the 
task and, as we can tell by your testimony today, you have a 
good grasp of some of the challenges.
    I would ask you as a general matter whether you are pleased 
with the President's budget as to Homeland Security generally? 
He has an increase in funding, as you know, and within that 
makes priorities.
    Obviously one of the priorities that you would like to see 
is not as high on the priority list as it was in the 2005 
budget, but can you give us a sense of what the overall budget 
looks like from your perspective?
    Mr. Simmons. I will leave it to Chairman Cox to make a 
definitive statement. I have discussed this issue with him. We 
believe that the gross numbers are adequate. As long as there 
is an opportunity to move dollars around within those gross 
numbers, we can be successful. The administration has been very 
progressive in allowing increases in this budget. I think the 
Defense budget is the only other one that has experienced those 
increases.
    So, again, we are not looking to spend a lot of money. That 
is why I mentioned the Great Wall of China and the Maginot 
Line. We are not looking to put a guard on every bridge. We are 
trying to be smarter about this. But to be smarter, you have to 
have good intelligence, and you will notice that the 
intelligence budget in the DHS budget is only about 3 percent 
of the total. About 3 percent of the total.
    So it is my expectation that there may be some movement 
within the gross budget to move some of those figures around as 
we try to get our arms around the problem, as we try to get 
people hired, as we try to get some of the components of these 
22 agencies to work together better, even to sit together in 
the same buildings, which at this point they do not, as we try 
to conform some of the personnel systems, and this also is part 
of the problem.
    So the quick answer is, we think the gross numbers are 
adequate. We would not like to see those reduced, but there may 
be some movement within those gross numbers to meet the 
requirements that we face.
    Mr. Portman. Thank you. As you know, we will as a Congress 
have the ability to reallocate even within a number that we 
agree to, which is an aggregate number. I know you will be very 
involved in that process.
    Mr. Cuellar. Thank you, Mr. Chairman. Mr. Chairman, again, 
congratulations on being a new chairman. I think it is--being 
from Laredo,Texas, right on the border, I understand those 
threats. I understand why it is so important to be wise or use 
the smart ways, because you cannot put an agent in every block 
or every bridge across. So it is very, very important that we 
do this.
    But I want to just talk about one, your last paragraph, 
which is very important to me. That is, you are talking about 
your subcommittee is going to be doing a new type of oversight, 
and I think one of the things we need to do here in Congress is 
have the legislative body provide that oversight on how the 
agencies are working, whether they are spending the money 
correctly, whether we ought to shift some of those dollars 
around, have that flexibility, whether they are creating rules 
or regulations that are too burdensome or not working. And that 
is a role that we ought to play as Congressmen.
    And my question to you is, what is your definition as the 
new chairman of Congressional oversight, especially when you 
talk about a new agency that just got created? I can understand 
how difficult it is, but what is your definition of legislative 
oversight?
    Mr. Simmons. A good question. I would first of all say that 
I had an experience as a staff director of the Senate 
Intelligence Committee a number of years ago in the 
establishing and the managing of Congressional oversight of the 
intelligence community. It was particularly challenging because 
the activities of the intelligence community were secret.
    We have a somewhat similar task today. Certain activities 
of the Department of Homeland Security must of necessity remain 
secret so they can remain effective, and at the same time we 
have an obligation that the people we represent in that 
oversight process, and the people are represented by us, by the 
Members of the Congress.
    We have budget authority; in other words, we make budget 
decisions. That is what you are doing here today, and in the 
next few weeks, is what we do in our capacity as members of an 
authorization committee. But we also have a responsibility to 
get out in the field, to actually see who is working where and 
what they are doing, to see how effective they are, to see if 
these buildings are empty or if they are full, to see if people 
are talking, and if their communications systems are working, 
to see if they are connecting from a Federal level down to a 
county level, because the task of homeland security no longer 
involves just the Federal Government, it involves State 
governments, it involves county and municipal governments, it 
involves vertical and horizontal communication in a timely 
fashion.
    And I have already made plans for some of these trips. I 
was in Mexico a week ago focusing on the cross border issues. 
And in particular, lack of work, lack of jobs, population 
pressures in Mexico are creating illegal methods of bringing 
people into this country illegally, and those same networks are 
available to the terrorists.
    If somebody is willing to pay a ``coyote'' $10,000 to get 
him into this country or maybe $20,000 or $30,000, they will 
bring a terrorist into this country. So we have to look at 
those networks and try to examine what the best way is to deal 
with them.
    It involves a partnership with the executive branch. But it 
also involves a focus on our civil liberties. In doing all of 
these things, we do not want to violate the liberties of our 
citizens in the name of terrorism or homeland security. So it 
is a balancing act as well.
    It is a difficult challenge, but I think it is something 
that we must do.
    Mr. Cuellar. I thank you. It is refreshing to see that type 
of definitional approach when it comes to legislative 
oversight, because I really think, Mr. Chairman, that we need 
to reassert that Congressional oversight at all levels, not 
only in the budget but in the committees because, keep in mind 
that we come and go, but some of institutional persons, the 
agencies sometimes have a longer life than we do. And I think 
it is very, very important that we provide that legislative 
oversight. Thank you.
    I know you know the border when you start using words like 
coyote. Those are the terms and lingo that is used down there.
    And the last thing, just to conclude on this, on the border 
where I live in Laredo, there have been about 26 Americans that 
have gone across and are missing, and we are starting to see 
some of those killings on this side of the border. And I am 
sure that Homeland Security, it will be your committee, or one 
of your committees will start looking at that, because it is a 
big problem. And I am worried about that overflow, because you 
got the MS-13 and some of those violent gangs are coming over 
the border, and we are starting to see them. I think just 
yesterday three men were shot in the head right on the U.S.-
Mexico border. I am talking about on this side. So you are 
starting to see that violence coming over, and Homeland 
Security certainly needs to play a role in that.
    Mr. Simmons. It may be that part of our oversight visit to 
the borders may involve you and your district.
    Mr. Portman. Thank you. Mr. Conaway.
    Mr. Conaway. Thank you, Mr. Simmons, appreciate your 
service and the background you bring to the tasks. Given the 
risks that should an event happen, you know, God forbid, the 
amount of criticism of all of us for having not spent immense 
amounts more on trying to protect ourselves, there will be no 
limit to that criticism.
    So hearing you say that the top line budget as we 
understand the risks, as we understand the plans for protecting 
ourselves, that DHS should be able to function within that--and 
I do agree that if we wait until the terrorists get to the Rio 
Grande then we are sunk. And the role of intelligence gathering 
worldwide and us then going after the bad guys where they are 
hatching those plans, it is far better than waiting until they 
wade the Rio Grande River and come into this country illegally.
    With all of that said, you mentioned two things. One, 
hundreds of jobs going unfilled, as well as the lengthy time it 
takes for us to vet or clear from a security standpoint those 
jobs. Could you speak to the length of time it takes? Is that 
inordinate to protect ourselves and make sure that we do not 
hire--and then also, having chaired a State regulatory agency 
for 7\1/2\ years, I know the bureaucrats, when they have empty 
slots they find someplace else to spend the money that was 
allocated for those salaries. And it is spent on one-time 
purchases during the timeframe that the slots are empty. That 
is one thing, but if they spend that money on ongoing programs 
and then come back to us and say, well, now I have got these 
empty slots that were empty, I have not filled them, I need 
more money to pay those folks, can you speak to us about how--
your sense of that happening with these empty slots?
    Mr. Simmons. First of all, you have a very solid grasp of 
bureaucratic politics. So I thank you for those insights. I 
think they are quite correct. The fact is that we have a new 
agency and a new mission, and something that Americans have 
really not had to worry about for a long period of time. The 
War of 1812 is the last time that we had enemy activity, here 
in Washington, DC. So for approximately 180 years, the two 
great oceans provided us with most of the security we needed. 
Now we have to look inward, and this is a new challenge and a 
new task. Cobbling together 22 organizations with different 
sets of rules and regulations is not easy.
    Standing up a new intelligence capability means you have to 
get people, and the preexisting intelligence organizations of 
course have their own people, many of whom are happy with where 
they are. You can get some from other agencies, but you can't 
fill all of your slots that way. Assuming you are hiring people 
that are not cleared, the clearance process is taking upwards 
to a year, which is not unusual, but we need to set priorities 
to accelerate that. We do not want the clearance process to be 
degraded. We simply want it to be facilitated or speeded up.
    And I think that can be done. I have had some experience 
with that over the last several years dealing with industrial 
clearances for shipbuilders in my district. I think we can work 
with OPM and with others to create those priorities. These are 
some of the things that I have learned over the last 2 weeks as 
the chairman, and these are some of the issues that I intend to 
focus on. If you need additional answers to your questions, we 
would be happy to submit them for the record.
    Mr. Conaway. I appreciate your comment on the heads up on 
understanding the bureaucratic--at the end of the year spend 
all of the budget so you do not have to defend not having spent 
that on your committee is on point.
    Mr. Simmons. I an am very familiar with the issue. I am not 
aware that that has taken place.
    I am not making any accusations, but I have got a staff 
member behind me who is taking notes on that. So we will 
provide that for you.
    Mr. Conaway. Thank you.
    Mr. Portman. Thank you. Mr. Shaw, you are recognized for 10 
minutes. Welcome to the committee.

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

    Mr. Shaw. Thank you, Mr. Chairman, and I shall not take the 
full 10 minutes. I appreciate all of you on a get-away day that 
are with us. So glad to be before you and the members of the 
committee that are here.
    I am here to talk about a subject that is near and dear to 
my heart. That is the subject of cancer and finding a cure for 
cancer. I am a lung cancer survivor. I might add here that 
there is not many of us. Lung cancer is the leading cancer 
killer among men and women. Lung cancer kills more people 
annually than breast cancer, prostate and colorectal cancer 
combined.
    More than 50 percent of those newly diagnosed with lung 
cancer are former smokers or have never smoked before. I may 
say here that I haven't smoked for about 30 or 35 years, and 
when they took out and removed the upper left lobe of my lung 
the doctor said he could tell I was once a smoker. I think this 
goes to show that the damage that you do perhaps as a young 
person can certainly come back to haunt you in your adult life.
    Overall, one in three women will be affected by cancer in 
their lifetime and one in every two men. So you can look to 
your left and to your right and you can find that somebody next 
to you is going to have cancer if it is not you yourself.
    The National Cancer Institute estimates that over 570,000 
Americans will die from cancer this year. This equals 1,500 
Americans per day, or over 1 per minute. We must work together 
to turn these statistics around.
    I formed, after my lung cancer, the 2015 Caucus with our 
colleague Colin Peterson from Minnesota. Both Colin and I had 
cancer operations during the same period of time over 2 years 
ago. This 2015 Coalition, they are Members of Congress who 
either are cancer survivors or have a close relative who 
battled cancer.
    As you may know, the National Institutes of Health has 
established the goal of treating cancer as a manageable disease 
by 2015. I think we can do better than that. I think we can 
actually find a cure for cancer by 2015.
    Congressman Peterson and I have written the President 
asking for his strong leadership in finding a cure by 2015. I 
am submitting a copy of the letter that I would appreciate and 
ask that it be made a part of the record.
    Cancer research scientists are poised to make great 
breakthroughs in discovering a cure for cancer. Now is the time 
for the United States to be fully committed to this roadmap of 
discovery.
    As you know, the President proposed $28.8 billion in 
funding for NIH for fiscal year 2006. Of this, he has proposed 
$4.8 billion in funding for the National Cancer Institute. 
While I appreciate the President's continued commitment to the 
NIH and NCI, I think now is the time to step up our Federal 
resources.
    As we develop the fiscal year 2006 budget resolution, I 
hope you will give special consideration to NIH, to their 
budget, and to NCI and join with me in finding a cure for 
cancer by 2015.
    Mr. Chairman, I can tell you there is no more frightening 
words that you can hear than you have cancer. I will never 
forget it. The doctor came out and he wouldn't even have eye 
contact. It was like a jury coming back with a guilty verdict. 
It is a frightening thing. But it is something that we can 
cure.
    My early diagnosis, and I might say that because of the 
doctor insisting that I go have the necessary tests, is the 
only reason I am here today. And we can solve this for all 
Americans. It is time that we make this commitment, such as 
Kennedy did with making the commitment to flying a man to the 
Moon and bringing him home safely. We can find a cure for 
cancer by 2015. We need to get started on that process and get 
started now.
    I thank you and I yield back.
    [The prepared statement of E. Clay Shaw follows:]

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

    Chairman Nussle, Ranking Member Spratt and Members of the Budget 
Committee, thank you for this opportunity to express my thoughts about 
something very near and dear to my heart--finding a cure for cancer.
    I am a lung cancer survivor. Lung cancer is the leading cancer 
killer among men and women. Lung cancer kills more people annually than 
breast, prostate and colorectal cancer combined. More than 50 percent 
of those newly diagnosed with lung cancer are former smokers or have 
never smoked before.
    Overall, one in every three women will be affected by cancer in 
their lifetime and one in every two men will be affected by cancer in 
their lifetime. The National Cancer Institutes estimates that over 
570,000 Americans will die from cancer this year--this equates to 1,500 
Americans per day or more than one per minute.
    We must work together to turn these statistics around.
    I formed the 2015 Caucus, with our colleague Collin Peterson (D-
MN), as a forum for members who are either cancer survivors or have a 
close relative who battled cancer. As you may know, the National 
Institutes of Health has established the goal of treating cancer as a 
manageable disease by 2015. I believe we can go one step further and 
find a cure for cancer by 2015.
    Congressman Peterson and I have written the President, asking for 
his strong leadership in finding a cure by 2015. I am submitting a copy 
of this letter for the record. Cancer research scientists are poised to 
make a great breakthrough in discovering a cure for cancer. Now is the 
time for the United States to be fully commitment to this road map of 
discovery.
    As you know, the President proposed $28.8 billion in funding for 
the NIH for fiscal year 2006. Of this, he has proposed $4.8 billion in 
funding for the National Cancer Institute. While I appreciate the 
President's continued commitment to the NIH and NCI, I think now is the 
time to step up our Federal resources.
    As you develop the fiscal year 2006 budget resolution, I hope you 
will give special consideration to NIH budget and join with me in 
finding a cure for cancer by 2015. Thank you for your time.

    Mr. Portman. Thank you, Mr. Shaw, for your personal 
commitment to this issue. I remember vividly when that cancer 
was discovered, and I remember you valiantly going through this 
with Emily, and as is the case with ever Member present here 
and anybody here in the audience, all of us have had a brush 
with it through our families one way or the other, having lost 
my mother and mother-in-law and having other family members 
suffer through cancer, but as survivors I certainly understand 
your commitment to this and we appreciate your specific 
suggestion.
    With that, Mr. Cuellar.
    Mr. Cuellar. No questions, except it is important to have 
somebody like you to talk about it. I think one of your last 
statements here, it is not even high ranking officials like you 
are immune. I think that is one of statements that you had. So 
I appreciate your courage. I know it is very difficult. I have 
known a lot of folks. This is one battle that we have to win, 
Mr. Shaw. Thank you.
    Mr. Shaw. If I could comment, Rob, on what you had to say 
regarding family members. Emily lost her mother and her father 
and her sister with cancer. We were watching her very closely. 
And it came to me, which I have no known cancer in my family. 
So nobody is immune. It is something we all need to watch very, 
very carefully and have our checkups and do these things.
    But I think it is incumbent upon us as Members of Congress 
to do what we can to seek out, properly fund and find a cure 
for this disease.
    Mr. Conaway. No questions, Mr. Shaw, other than to just 
comment that my first wife battled Leukemia for 4 years, but 
lost.
    Mr. Portman. Thank you for your testimony.
    We now are pleased to have with us Mr. Evans. Lane, thank 
you for being here. And you are joined, I understand, by Mr. 
Michaud as well as Ms. Herseth. I appreciate your being here. 
And welcome to the committee and to Congress.
    Mr. Evans, you have 10 minutes to divide as you wish. Then 
we will have an opportunity to ask you some questions as follow 
up. Welcome to the committee and look forward to your 
testimony.

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

    Mr. Evans. Thank you, Mr. Chairman. The administration's 
fiscal year 2006 budget resolution for the Department of 
Veterans Affairs (VA) proposes flat-line funding that will 
severely weaken the system. It fails to adequately fund 
veterans health care and seeks to put the burden on veterans 
themselves to make up the shortfall.
    The administration's budget would force the VA to deny care 
to thousands of additional veterans, cut programs for nurses 
within the system, abandon even more veterans who need VA 
nursing home care, and gut the successful programs of State 
nursing homes.
    This is all at the time that we are in war, at the height 
of war. This is unconscionable.
    For 2006, the administration has requested only one-half of 
1 percent more than Congress appropriated for the VA in fiscal 
year 2005. This will force the Department of Veterans Affairs 
to sustain and even broaden the practice of rationing care to 
veterans. What sort of message does it send to our returning 
troops, to those who might be considering military service, and 
you cannot get help when you need it--when you come back home?
    Under the administration plan, without corrections, the VA 
programs would receive only a 0.4 percent increase over the 
funds appropriated for fiscal year 2005. This ignores the VA's 
own testimony that it needs 14 percent annually to maintain a 
current level of service. The bottom line is that this 
administration's proposal is at least $3 billion short in the 
health care funding just to keep the VA ship afloat. The way we 
keep it afloat is not by forcing one veteran to fight against 
the other, or by cutting critically needed professionals, 
needed by all veterans, working together to solve those 
problems.
    I and my Democratic colleagues on the Veterans' Affairs 
Committee would submit for your consideration the views that 
represent, I believe, a realistic VA budget, based on our 
veterans views.
    Thank you, Mr. Chairman, and I yield to the gentleman from 
Maine at this point.
    [The prepared statement of Lane Evans follows:]

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

    Mr. Chairman and Ranking Member Spratt, the Administration's fiscal 
year 2006 budget submission for the Department of Veterans Affairs 
proposes flat-line funding that will severely weaken the system. It 
fails to adequately fund veterans' health care and seeks to put the 
burden on veterans themselves to make up the shortfall. The 
Administration's budget would force VA to deny care to thousands of 
additional veterans, cut thousands of nurses from the system, abandon 
even more veterans who need VA nursing home care, and gut the 
successful state nursing home program.
    At any time, this would be wrong. At the height of a war, it is 
unconscionable.
    For fiscal year 2006, the Administration has requested only one-
half of 1-percent more than Congress appropriated for the VA in fiscal 
year 2005. This will force the Department of Veterans Affairs to 
sustain and even broaden a practice of rationing care to veterans. What 
sort of message is that to send to returning troops, to those who might 
be considering military service, and to all who have already honorably 
served?
    Under the Administration plan, without collections, VA medical 
programs would receive only a 0.4 percent increase over the funds 
appropriated for fiscal year 2005. This ignores VA's own testimony that 
it needs 14 percent annually to maintain a current level of health 
services.
    The Administration's budget calls for a staff reduction of 2 
percent in VA's medical care business line. That amounts to the removal 
of more than 3,000 health care employees, mostly nurses, at a time when 
there is, in fact, a nursing shortage in VA.
    The bottom line is that the Administration's proposal is at least 
$3 billion short in health care funding just to keep the VA ship 
afloat. And the way to keep it afloat is not by forcing one veteran to 
pay for another veteran's care or by cutting critically needed health 
care professionals.
    I and my Democratic colleagues on the Veterans' Affairs Committee 
have submitted for your consideration views & estimates that represent 
a realistic VA budget based on veterans' needs. Unlike the 
Administration's budget proposal, it takes into account the impact of 
thousands of returning troops from Iraq and Afghanistan who will need 
health care, including mental health services and other types of 
transition assistance.
    For the third straight year, the President's budget recommends a 
$250 annual enrollment fee for medical care for Priority 7 and Priority 
8 veterans, and more than doubles the amount they pay for prescription 
drugs. These are veterans whose conditions are not service-connected 
and who have incomes above VA means-tested levels. According to the 
Administration's own figures, this will result in driving 213,000 
additional veterans out of the system.
    But what is most appalling is the position of some that these 
veterans, Priority 7s and 8s, are not deserving of VA care because they 
are--and this is quite misleading--``higher income'' and might 
therefore have other health care options. This group of veterans, in 
fact, includes combat-decorated veterans and others who served 
honorably and whose annual incomes exceed $25,000 (single) to $36,000 
(four or more dependents). A significant number of them lack health 
insurance (in 2001, 6.4 percent, but likely more as the number of 
uninsured Americans continues to grow), and some are not eligible for 
Medicare.
    In the private sector these veterans are not going to receive the 
veteran-sensitive, specialized treatment that VA can provide. Without 
VA, some will fall through the health care cracks altogether. Moreover, 
many in the veterans' affairs community have serious concerns that the 
VA health care system may not remain a viable independent system 
without these veterans as patients, so all veterans may be adversely 
affected by such policies. The Administration's push to oust deserving 
veterans from the system also endangers VA's other missions of 
educating the Nation's health care professionals, conducting research 
and serving as back-up to the Department of Defense in the event of 
war.
    As troops return home from Operation Iraqi Freedom and Operation 
Enduring Freedom, VA will eventually become responsible for many of 
their health care needs, particularly for those with injuries that may 
last a lifetime. Many of these servicemembers will require ongoing 
rehabilitative care for their injuries--both mental and physical. As of 
December 2004, VA had treated 32,684 of the 210,000 veterans from these 
deployments. We agree with the Independent Budget on the necessity of a 
significant infusion of funds to ensure that veterans are able to 
receive the best sustaining care available for their problems.
    Recent studies have shown that a significant number of returning 
troops (up to 17 percent or more) are demonstrating a need for post-
deployment mental health intervention. Troops' mental health issues 
range from acute and transitory anxiety and readjustment disorders to 
more chronic and severe problems, even psychoses. We believe VA must 
stand ready to provide immediate relief to servicemembers who return 
requiring its services. Experts indicate that immediate intervention 
may be the surest remedy to preventing some long-term and chronic 
disorders.
    The President's budget also cuts $9 million from VA's renowned 
medical and prosthetic research program, whose achievements have 
benefited veterans and non-veterans alike. As advocates are quick to 
point out, without appropriated research dollars, these programs fail 
to draw competitively based funding from private and other government 
sources. With continued cuts to its appropriated funding levels, the 
system continues to be challenged to fund merit-reviewed projects that 
could greatly benefit veterans and other Americans.
    Mr. Chairman, we can and must do better for our veterans. We ask 
you to give serious consideration to the views & estimates put forward 
by those who join me on this panel today, and our other Democratic 
colleagues on the Veterans' Affairs Committee.
    Thank you.

    Mr. Michaud. Thank you, Mr. Chairman. I have a couple of my 
colleagues who actually have flight problems. I can yield to 
them first. So without objection I yield to my colleagues.

  STATEMENT OF THE HON. SHELLEY BERKLEY, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF NEVADA

    Ms. Berkley. Thank you again for giving me the opportunity 
to speak with you on an issue that is very important to me. I 
am here today to express my disappointment that the 
administration's budget does not, in my opinion, adequately 
address the needs of those veterans who have served our Nation, 
as well as current service members who will soon become 
veterans.
    As many people are aware, I represent the district that has 
the fastest growing veterans population in the United States. I 
have almost 200,000 in the southern Nevada area. I work very 
closely with them. I am very well aware of their problems, and 
I would like to share those problems with you and how this 
budget does not help where it is needed the most.
    First, the President's budget fails to recognize that more 
than 30,000 veterans have remanded claims which have been 
pending for years, and in some cases more than a decade. In 
Nevada and across the country, veterans who appealed decisions 
as long ago as 1994 still have not received a final decision on 
their claims.
    I strongly urge the Budget Committee to use the temporary 
funding provided in the administration's budget to address the 
remanded claims problem. And Nevada has the fourth highest 
remand rate in the Nation. These veterans have been waiting 
years to have their claims addressed.
    In fiscal year 2004, veterans filed almost 200,000 more 
disability rating claims than in fiscal year 2000. However, the 
VA rating staff has not increased proportionately. As a result 
the pending caseload of these claims has significantly 
increased since President Bush took office. Permanent funding 
is necessary for 113 additional employees so veterans can 
receive accurate and timely decisions on their claims.
    Second, additional funding must be authorized for the Board 
of Veterans Appeals to prevent even longer delays in processing 
appeals. In my home State of Nevada, the number of pending 
appeals currently exceeds 1,200, which is up from 750 in the 
year 2001. It is unconscionable that veterans who are appealing 
decisions for benefits based on their service-connected 
disabilities are required to wait years for a decision from 
their own government.
    Third, the President's budget is inadequate to continue the 
investment in improving the Nation's memorials and cemeteries 
that honor our veterans. I request additional funding to assure 
progress on the national shrine commitment so those who have 
paid the ultimate price can be laid to rest in dignified, well-
maintained surroundings, and I can tell you without fear of 
contradiction when I was first running for office 7 years ago 
and met with the veterans organizations in my community this 
was the one thing they pointed out to me more than any other.
    In addition, I would like to urge the committee to provide 
funding in the administration's fiscal year 2006 budget to 
construct a full-scale medical complex in Las Vegas. After 
going through an exhaustive CARES study, holding hearings 
across the United States, the administration has added $199 
million for a full service VA medical complex in southern 
Nevada.
    We have, as I mentioned, the fastest growing veterans 
population in the country. We have no hospital, no outpatient 
clinic, no long-term care facility. The veterans in southern 
Nevada are relying on a string of temporary clinics scattered 
across the valley. There are times during the summer when it is 
115 degrees. I have 80-year-old veterans standing in the heat 
waiting for a shuttle to pick them up to take them to 1 of 10 
locations. So if they have to go and see a doctor for high 
blood pressure, they go to one facility. Then they have to get 
back on the bus, on the shuttle, go to another building in 
order to get a different service, and then they have to go 
somewhere else to get their prescription medication taken care 
of.
    Almost 1,500 of southern Nevada veterans are sent to 
neighboring States hundreds of miles away because the services 
cannot be provided locally since we do not have a full service 
VA hospital for our veterans. They usually go to southern 
California. The problem with that is they tend to be older, 
they tend to--obviously, if they need the care, they are not in 
good physical shape, they have medical problems, and they are 
away from their families. This is an extremely stressful time, 
and we need to bring these facilities to southern Nevada where 
the veterans are located. The burden that these veterans and 
their families have because of the lack of facilities in Las 
Vegas is mind boggling and very sad to observe.
    The proposed hospital outpatient clinic and long-term care 
facility, of which we have none, in Las Vegas will 
significantly improve health care access for the almost 200,000 
veterans in my community. That I would say is our number one 
priority, and since it has already been approved in the budget 
I ask you to look lovingly at that, and my veterans will thank 
you very much for that, as we should be thanking them.
    I appreciate your time and sincerely hope that we can work 
together to ensure the highest quality of care and service for 
our Nation's veterans. There is not a group of Americans that 
deserves our care more than they do. Thank you very much.
    [The prepared statement of Shelley Berkley follows:]

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

    Thank you, Mr. Chairman. I am here today to express my 
disappointment that the Administration's budget does not adequately 
address the needs of those veterans who have served our country, as 
well as the current servicemembers who will soon become veterans.
    I agree with the positions expressed in the Views and Estimates of 
the Democratic Members of the Committee on Veterans' Affairs and today, 
I would like to focus on areas where funding for the VA is desperately 
needed.
    First, the President's budget fails to recognize that more than 
30,000 veterans have remanded claims, which have been pending for years 
and in some cases more than a decade. Almost 75% of those who appealed 
VA regional office decisions in FY 2004 had those decisions remanded or 
reversed by the Board of Appeals. In Nevada, and across the country, 
veterans who appealed decisions as long ago as 1994 still have not 
received a final decision on their claim. I strongly urge the Budget 
Committee to use the temporary funding provided in the Administration's 
budget to address the remanded claims problem.
    In FY 2004, veterans filed almost 200,000 more disability rating 
claims than in FY 2000. The number of veterans filing these claims for 
the first time has also increased by 83,000. However, VA rating staff 
has not increased proportionately. As a result, the pending caseload of 
these claims has increased from 278,334 when President Bush took office 
to 340,020 as of February 19, 2005. I cannot stress enough that 
permanent funding is necessary for the 113 additional employees so 
veterans can receive accurate and timely decisions on their claims.
    Second, I agree with the majority that additional funding must be 
authorized for the Board of Veterans Appeals to prevent even longer 
delays in processing appeals. Veterans who are appealing decisions to 
the Board of Veterans Appeals can expect to see a dramatic increase in 
time to resolve their appeals. Since President Bush took office in 
2001, the number of pending appeals has increased from 87,291 to 
152,948 as of February 19, 2004. My home state of Nevada is no 
exception, with the number of pending appeals currently exceeding 1,200 
from 750 in 2001. This cannot continue.
    Third, the President's budget is inadequate to continue the 
investment in improving the nation's memorials and cemeteries that 
honor our veterans. I request additional funding to assure progress on 
the national shrine commitment so those who have paid the ultimate 
price can be laid to rest in dignified, well-maintained surroundings.
    In addition, I urge the Committee to provide the funding in the 
Administration's FY 2006 Budget to construct the full-scale medical 
complex in Las Vegas. Southern Nevada has one of the fastest-growing 
veterans' populations in the country and there is no hospital, 
outpatient clinic, or long-term care facility in sight.
    The veterans in Southern Nevada are relying on a string of 
temporary clinics scattered across the Valley and my veterans are 
forced to shuffle between the clinics for their various health care 
needs. Hundreds of Southern Nevada veterans are sent to neighboring 
states, hundreds of miles away from their homes, because the services 
cannot be provided locally. This is an unfair burden on the veterans 
and their families. The proposed hospital, outpatient clinic, and long-
term care facility in Las Vegas will significantly improve health care 
access for the 160,000 veterans in my community.
    I appreciate your time and sincerely hope that we will work 
together to ensure the highest quality of care and service for our 
nation's veterans.

                                             U.S. Congress,
                                 Washington, DC, February 28, 2005.
Hon. Jim Nussle,
Chairman, Committee on the Budget, House of Representatives, 
        Washington, DC.

Hon. John Spratt, Jr.,
Ranking Member, Committee on the Budget, House of Representatives, 
        Washington, DC.
    Dear Chairman Nussle and Ranking Member Spratt: We are writing to 
express our concern regarding a provision in the administration's FY 
2006 budget for the Department of Health and Human Services that would 
require gaming establishments to serve as Federal collection agents for 
overdue child support payments. While we adamantly support the efforts 
of state law enforcement agents to recover child support from parents 
who do not fulfill their parental obligations, this provision is 
imprudent and could lead to a myriad of unintended consequences.
    Under the proposal, an individual whose legal winnings exceed the 
threshold for filling out an Internal Revenue Service W2-G form would 
be subject to a Federal records check. A civilian commercial casino 
employee would be tasked with searching for the name of the winning 
patron in the Child Support Federal Parent Locator Service to determine 
whether the winner is delinquent in his or her child support payments. 
Gaming establishments that fail to execute this function as mandated by 
the Federal Government would be subject to strict penalties.
    Most commercial casinos operate 24 hours a day, 7 days a week. 
State law requires casinos to payout winnings when they are due and 
without delay. Therefore, to implement this proposal, thousands of 
gaming employees would need immediate access to accurate information at 
all times. These civilian workers,with no law enforcement background, 
would have access to sensitive, confidential information. Not only does 
this raise serious invasion of privacy concerns, casinos also could be 
liable for any employee misuse or mistakes.
    Requiring a private business to directly apply the law to an 
individual would set a dangerous precedent, as well. It could open the 
door to requiring other cash handling industries 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 
private sector should not be expected to bear the burden of costly and 
unreasonable mandates, such as the one proposed by the administration.
    In conclusion, the intended goal of this provision is laudable, but 
it is the role of law enforcement to police decisions made in our court 
systems. This provision singles out the gaming industry, creating 
unreasonable demands on the employees of gaming establishments. We ask 
you to reject this proposal and not include this or similar language in 
the FY2006 Budget Resolution.
    Thank you for your consideration.
            Sincerely,
                                           Shelley Berkley,
                                                Member of Congress.

                                            Jon. C. Porter,
                                                Member of Congress.

                                            Frank LoBiondo,
                                                Member of Congress.

                                               Jim Gibbons,
                                                Member of Congress.

                                           Bennie Thompson,
                                                Member of Congress.

                                        Carolyn Kilpatrick,
                                                Member of Congress.

 STATEMENT OF THE HON. STEPHANIE HERSETH, A REPRESENTATIVE IN 
            CONGRESS FROM THE STATE OF SOUTH DAKOTA

    Ms. Herseth. Thank you, Mr. Chairman, Mr. Conaway, and 
thank you to my colleagues, Ranking Member Evans and Mr. 
Michaud, for yielding time. Thank you for giving me the 
opportunity to speak to you today.
    As the ranking member of the Economic Opportunity 
Subcommittee, I am here to share my concerns regarding the 
President's fiscal year 2006 budget request and its impact on 
VA programs that are intended to provide service members, 
veterans and military families economic security and 
advancement.
    Today, perhaps more than any time in our recent history, 
transition assistance, vocational rehabilitation and education 
programs for veterans are in need of adequate and timely 
funding. In my State of South Dakota, more than 2,500 National 
Guard soldiers have served in support of Operations Noble 
Eagle, Enduring Freedom and Iraqi Freedom. These returning 
soldiers, along with service members from across the country, 
deserve the best available service we can provide.
    Unfortunately, the administration' budget does not reflect 
the need nor adequately provide funding for many of the 
valuable education, vocational rehabilitation and transition 
services promised to our Nation's veterans.
    I want to take this opportunity to highlight two areas of 
particular concern for me and many of my colleagues on the 
committee. First, the President's fiscal year 2006 budget 
request would eliminate 14 full-time employee equivalents 
FTEEs, in the VA's Education Service. We agree with the 
majority on this budget issue in rejecting the administration's 
funding level and recommend an increase in resources of $1.1 
million to restore the projected FTEE cuts in VA's Education 
Service.
    Education claims are expected to increase due to more 
veterans seeking to take advantage of Montgomery G.I. Bill 
education benefits, as well as a new National Guard and Reserve 
education program enacted last year as part of the National 
Defense Authorization Act of 2005. Moreover, a number of senior 
VA Education Service employees are eligible to retire in the 
near future. Additional resources are needed to address the 
expected increases in education claims and to hire new 
employees.
    The second area I would like to highlight is that the 
President's fiscal year 2006 budget request provides no funding 
for additional FTEE designated to provide direct vocational 
rehabilitation and employment counseling services. Rather, the 
President's budget simply reflects a redistribution of 
management support personnel. Veterans applying for vocational 
rehabilitation and employment services increased dramatically 
over the last decade, roughly 75 percent increase. Demand for 
this service will certainly and surely continue due to the many 
injuries suffered by our troops serving in Iraq and 
Afghanistan.
    Former Secretary Anthony Principi established a task force 
to review the vocational rehabilitation employment program, 
VR&E, from top to bottom. The VR&E task force issued a 
comprehensive report in May of last year. The report contained 
102 recommendations to improve the VR&E program and reform it 
to be responsive to 21st century needs of service connected 
disabled veterans.
    The task force recommended increasing full-time staff 
positions in the VR&E program by approximately 200 FTEE, 
including 27 FTEE in headquarters, 112 in the regional offices 
to deliver direct services, 56 in the regional services for 
contracting and purchasing, and 8 quality assurance staff.
    Consistent with the VR&E task force report, we recommend an 
increase of $5 million to provide for 57 additional FTEE, one 
full-time staff position in each regional office.
    Again, I want to thank you for providing me the opportunity 
to speak today and encourage you to reconsider the President's 
budget request and provide adequate funding for veterans 
education, vocational rehabilitation, and transition programs. 
Thank you and I yield back.
    [The prepared statement of Stephanie Herseth follows:]

   Prepared Statement of Hon. Stephanie Herseth, a Representative in 
                Congress From the State of South Dakota

    Thank you for giving me the opportunity to speak today. As the 
Ranking Member on the Economic Opportunity Subcommittee, I am here to 
share my concerns regarding the President's Fiscal Year 2006 budget 
request and its impact on VA programs that are intended to provide 
servicemembers, veterans, and military families economic security and 
advancement.
    Today, perhaps more than any time in recent history, transition 
assistance, vocational rehabilitation, and education programs for 
veterans are in need of adequate and timely funding. In my state of 
South Dakota more than 2500 National Guard soldiers have served in 
support of operations Noble Eagle, Enduring Freedom, and Iraqi Freedom. 
These returning soldiers, along with servicemembers from across the 
country, deserve the best available service we can provide. 
Unfortunately, the Administration's budget does not reflect the need 
nor adequately provide funding for many of the valuable education, 
vocational rehabilitation, and transition services promised to our 
nation's veterans.
    I want to take this opportunity to highlight two areas of concern 
that I have. First, the President's FY06' budget request would 
eliminate 14 Full Time Employee Equivalents (FTEE) in the VA's 
Education Service. We agree with the majority on this budget issue and 
reject the Administration's funding level and recommend an increase in 
resources of $1.1 million to restore the projected FTEE cuts in VA's 
Education Service. Education claims are expected to increase due to 
more veterans seeking to take advantage of Montgomery G.I. Bill 
education benefits, as well as the new Guard and Reserve education 
program enacted last year as part of the National Defense Authorization 
Act of 2005. Moreover, a number of senior VA Education Service 
employees are eligible to retire in the near future. Additional 
resources are needed to address the expected increases in education 
claims and hire new employees.
    The second area I would like to highlight is that the President's 
FY06' budget request provides no funding for additional FTEE designated 
to provide direct vocational rehabilitation and employment counseling 
services. Rather, the President's budget simply reflects a 
redistribution of ``management support'' personnel. Veterans applying 
for vocational rehabilitation and employment services increased 
dramatically over the last decade--roughly 75 percent increase. Demand 
for this service will surely continue due to the many injuries suffered 
by our troops serving in Iraq and Afghanistan. Former Secretary Anthony 
J. Principi, established a task force to review the vocational 
rehabilitation and employment program (VR&E) from ``top-to-bottom.'' 
The VR&E Task Force issued a comprehensive report in May of 2004. The 
report contained 102 recommendations to improve the VR&E program and 
reform it to be responsive to 21st Century needs of service-connected 
disabled veterans. The Task Force recommended increasing full-time 
staff positions in the VR&E program by approximately 200 FTEE; 
including 27 FTEE in headquarters; 112 in the regional offices to 
deliver direct services; 56 in the regional offices for contracting and 
purchasing; and 8 quality assurance staff. Consistent with the VR&E 
Task Force Report, we recommend an increase of $5 million to provide 
for 57 additional FTEE--one full time staff position in each regional 
office.
    Again, I want to thank you for providing me with the opportunity to 
speak today, and encourage you to reconsider the President's budget 
request and provide adequate funding for veterans education, vocational 
rehabilitation, and transition programs.

    Mr. Evans. I would like to yield to the Congressman from 
Maine for the remainder of our time.

 STATEMENT OF THE HON. MICHAEL H. MICHAUD, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF MAINE

    Mr. Michaud. Thank you very much, Ranking Member Evans.
    Mr. Chairman, I was asked by a member of the Veterans' 
Committee, Mr. Strickland, if he could submit prepared remarks 
for the record.
    Mr. Portman. Without objection.
    [The prepared statement of Ted Strickland follows:]

Prepared Statement of Hon. Ted Strickland, a Representative in Congress 
                         From the State of Ohio

    Thank you for hearing the oversight perspective regarding VA's 
unfounded claims of $4.34 billion in management efficiency-based 
savings and the proposed addition of new fees and co-pays on veterans 
seeking health care.
    I would like to begin by thanking HVAC Chairman Buyer for boldly 
stating in his views and estimates that VA has ``overestimated'' 
management efficiency savings. We fully agree. What we disagree on is 
the amount of net savings, if any.
    In the budget submissions for fiscal years 2005 and 2006, VA uses 
only 79 words each year to account for claimed savings of about $1.2 
billion and 1.8 billion, respectively. All too often, their stated 
basis has never transpired, never been proven or has encountered 
serious management problems. Other unstated management problems may 
also offset claimed savings.
    I have brought with me two IG reports to illustrate our point. This 
is by no means a comprehensive list of VA management deficiencies.
    The first is an Inspector General review of the CoreFLS system--
$249 million in government obligations for an automated management 
system that was never deployed because ``VA Management of the CoreFLS 
Project did not Protect the Interests of the Government'' and ``Senior 
Leadership did not Respond Adequately to SPD [supply, processing, and 
distribution] Warnings and did not Ensure Adequate Preparation for 
CoreFLS Testing.'' This does not sound like management efficiency. It 
did not sound like an efficiency to the Carnegie Mellon Independent 
Technical Assessment Team contracted to review the CoreFLS failure and 
which noted numerous technical and management related problems.
    More recently, on February 16, 2005 the IG published a report 
titled, ``Evaluation of VHA Sole-Source Contracts with Medical Schools 
and Other Affiliated Institutions'' which indicates a myriad of 
problems with general contracting, contract pricing, and conflicts of 
interest.
    One need only to go the VA IG website or review reports of the 
Government Accountability Office for a more complete picture, a picture 
that indicates a host of management problems at VA over the last 4 
years--many are associated with a cost to the government--and the 
taxpayer--because of VA management deficiencies. Nowhere in the budget 
submissions do we see a substantiated accounting of either the net 
losses or the net savings at VA. The two must be considered in balance. 
The result must be proved before we allow ``just anybody's guess'' to 
impact veterans' health care. For this reason, we must restore the 
offsets to veterans' health care based on VA's claims of management 
efficiencies until those efficiencies are proven and a net savings can 
be determined.
    Perhaps one indicator that the claimed magnitude of VA management 
efficiencies is--as Mr. Buyer states, ``overestimated'', relates to 
VA's strident interest in the last 4 years to impose fees and co-pays 
on veterans.
    VA recommendations for new fees and increased co-pays seem to pop 
up in rough approximation to the unfounded efficiency claims. Why? If 
all claims of management efficiency were real, would the fees and co-
pays be necessary?
    VA has built a house of cards on efficiency claims that are without 
substance, now they seek to correct for their management shortcomings 
by levying fees and co-pays on our veterans. This is wrong. We will not 
support it.
    The newly proposed $250 enrollment fee is often compared by our new 
Chairman to TriCare for Life. Differences abound. Veterans usually do 
not have a choice of provider/physician at VA, family members are not 
usually eligible, and there is no fee for TriCare for Life.
    Of course there is a threshold for the new VA fees and increased 
co-pays--in my District, someone making $26,000/yr is considered too 
wealthy for the exemption.
    Following VA's budget savings ``exaggeration'' with an injustice in 
order to cover management deficiencies and balance the ledger is no way 
to treat veterans in this time of war. We will accept an offset to 
health care based on factual, provable net savings based on management 
efficiencies. We will not accept burdening those who have served with 
the cost associated with past management failures at VA.
    I urge the Budget Committee to restore all claimed management 
efficiency savings for FY 2003-FY2006 until net savings are proven.

    Mr. Michaud. Thanks for the opportunity to appear before 
your committee this afternoon. I agree with the remarks of 
Ranking Member Evans regarding the inadequacy of the 
administration's budget proposal. There is no doubt that there 
is a growing strain on the VA. We will not truly overcome this 
challenge with the policies that will decrease demand or ration 
care because the demands represent the needs of real veterans 
needing care.
    Along with my colleagues here today, and along with the 
veterans of this country, I believe we should reject the 
proposed enrollment fees and increased copayments and provide 
the necessary resources to meet the demands on VA. I would like 
to draw your attention to the effects of the administration's 
budget as it affected the long-term care option for our 
veterans. The administration proposes to limit eligibility for 
nursing home care to all of its venues and to the mostly 
severely connected veterans.
    That would be devastating. We do not believe that the VA 
should abandon its long-term care responsibility in any of its 
nursing care venues, particularly at a time when veterans' 
demands for such services is increasing and is at its peak.
    Congress seemed to share these concerns when it passed 
Public Law 106-117, which required VA to maintain its in-house 
nursing home capacity at the level of the fiscal year 1998, but 
VA programs have continued to erode since that time. Rather 
than take action to address this erosion, VA continues to 
propose to do away with the requirement and find ways to reduce 
its institutional long-term care capacity.
    For example, the President's budget would revise the 
eligibility requirement for the State veterans homes so that 
the vast majority of veterans who reside in State veterans 
homes would suddenly be ruled ineligible for per diem benefits. 
The National Association of State Veterans Homes estimated that 
in many States this change will eliminate VA per diem for at 
least 80 percent of State home residents.
    The impact would not only be felt by those who would no 
longer qualify under this proposal, in fact this change would 
jeopardize the future of State home systems all together. The 
proposal will cost the State of Maine Veterans Homes $4.7 
million per year. By excluding so many veterans it would have a 
similar impact on the Iowa State Home, in Marshalltown and two 
homes in South Carolina, and the State Veterans Homes all 
across the country. I understand that 75 percent or more of the 
State homes could go bankrupt under this plan. Indeed, it is 
unclear what all of the impacts of such a plan would be, other 
than to drastically decrease the current workload in funding 
availability to State homes, thereby threatening the overall 
ability to the existence of these homes.
    To that end, the minority members of the committee are 
recommending funding to restore the 1998 baseline of services 
in VA nursing homes, and to enhance State home capability. Mr. 
Chairman, I would ask that the proposals within the 
administration budget, the proposals that would jeopardize the 
care of thousands of aging veterans, be rejected, and that we 
do not abandon our commitment to the long-term care of our 
Nation's veterans.
    Thank you very much, Mr. Chairman.
    [The prepared statement of Michael H. Michaud follows:]

  Prepared Statement of Hon. Michael H. Michaud, a Representative in 
                 Congress From the State of California

    Mr. Chairman, thank you for the opportunity to appear before your 
committee.
    I would like to associate myself with the statement made by Ranking 
Member Evans regarding the inadequacy of the Administration's budget 
proposal. We should not force those who have sacrificed so much for our 
country to sacrifice again. There is no doubt that there is a growing 
strain on the VA. We will not truly overcome this challenge with 
policies that decrease demand or ration care--because that demand 
represents the needs of real veterans needing real care. Along with my 
colleagues here today, and along with the veterans of this country, I 
believe we should reject the proposed enrollment fee and increased 
copayments, and provide the necessary resources to meet the demand on 
the VA.
    I would now like to draw your attention to the devastating effects 
the Administration's budget would have on long-term care options for 
our veterans. The Administration proposes to limit eligibility for 
nursing home care in all of its venues--VA--community--and state--to 
only the most highly service-connected veterans and those with short-
term needs. We do not believe that the VA should abandon its long-term 
care responsibilities in any of its nursing care venues, particularly 
at a time when veterans' demand for such services--the demand of the 
``greatest generation''--is at its peak.
    Congress seemed to share this concern when it passed Public Law 
106-117, which requires VA to maintain its in-house nursing home 
capacity at the level that existed in fiscal year 1998. But VA's 
programs have continued to erode since that time. Rather than take 
actions to redress this erosion, VA continues to propose to do away 
with the requirement and find ways to reduce its institutional long-
term care capacity.
    For example, the President's budget would revise the eligibility 
requirements for the State Veterans Homes so that the vast majority of 
veterans who reside in State Veterans Homes would suddenly be ruled 
ineligible for per diem benefits. The National Association of State 
Veterans Homes estimates that in many states, this change will 
eliminate VA per diems for at least 80 percent of State Home residents.
    The impact would not only be felt by those who would no longer 
qualify under this proposal. In fact, this change would jeopardize the 
future of the State Homes system altogether. This proposal would cost 
the Maine State Veterans Homes $4.7 million per year. By excluding so 
many veterans, it would have a similar impact on the Iowa State Home in 
Marshalltown, the two homes in South Carolina, and State Veterans Homes 
across the country. I understand that 75 percent or more of the state 
homes could go bankrupt under the plan. Indeed, it is unclear what all 
of the impacts of such a plan would be, other than to drastically 
decrease the current workload and funding available to state homes, 
thereby threatening their overall ability to exist.
    In contrast to the President's budget and VA's recent history, the 
Federal Advisory Committee on the Future of VA Long-Term Care 
recommended that VA should:
     Maintain its bed capacity
     Increase capacity in the state homes
     And double or triple capacity in its non-institutional 
long-term care settings.
    To that end, the minority Members of the Committee are recommending 
funding to restore the 1998 baseline of services in VA nursing homes 
and to enhance state home capacity. Mr. Chairman, I ask that the 
proposals within the Administration's budget--proposals that would 
jeopardize the care of thousands of aging veterans--be rejected and 
that we do not abandon our commitment to the long term care of our 
nation's veterans.
    Thank you Mr. Chairman.

    Mr. Portman. Thank you, Mr. Michaud, we appreciate your 
testimony. And Mr. Evans, thank you for your testimony.
    I just want to correct the record, if I could. Ms. Herseth 
said that she would urge this committee to reconsider the 
President's request, and there was kind of an implicit 
assumption in some of the testimony that this committee would 
be deciding on what the veterans programs will be. That is not 
the case.
    This committee does establish the broad blueprint for our 
budget. In the case of the veterans programs, of course, these 
are both mandatory and discretionary, and we come up with two 
numbers. One is on the discretionary side, which will be an 
overall number. Within that the Congress, through its committee 
process, the Appropriations Committee, which Mr. Evans works 
with, would choose how to spend that money, both in terms of 
its overall allocation to veterans or not, and then within the 
veterans program, and the other case there is a broad number 
for mandatory spending, and the same would apply. So Congress 
controls the purse strings and we will have the ability to look 
at all of those programs.
    Second, I know you all know this, over the last 5 years 
veterans health care has been increased by 42 percent. We do 
have an increase, not adequate, for Mr. Evans' opinion and the 
other Members who testified, but again that is something to 
keep in mind. This is a tough year because we do have needs 
that throughout our various communities are tough to meet.
    VA, Mr. Evans, you said would like a 14 percent increase in 
health care. That is a pretty steep increase to just do year 
after year after year, and the question is, are there ways in 
which we can reform the system to make it work better and not 
have these double digit increases. The veterans in my community 
are not happy with the care that they receive for the most 
part. Some are and some aren't, but certainly our veterans 
system is far from perfect.
    But Congress as they look at this will look at the numbers, 
but also at the substance and some of the reforms, ideas that 
have been proposed to improve the health care and make it work 
better for our veterans. Mr. Conaway.
    Mr. Conaway. Thank you for your testimony. I appreciate it.
    One is a comment anecdotally. A veteran from our community 
from Odessa had a wrist injury, held over from Vietnam, and 
needed to be taken care of. He was required to go to 
Albuquerque, New Mexico for assessment and come home. He was 
required to go back to Albuquerque for the surgery and go home 
and then go back to Albuquerque--and this is an 8-hour trip--
for post-op care. There is no shortage of doctors in Odessa, 
Texas who could have provided that service and he could have 
stayed there. The commitments for veterans health care is 
there. We are going to meet that.
    What I would encourage the committee to look at is the idea 
that, you know, the system was set up in 1950, late 40s, to 
address the millions of World War II veterans at a time when 
our medical system was much, much different than it is today, 
and maybe there is a better way we can meet the needs of all 
veterans that would be easier on them and cheaper.
    I had another veteran, a Vietnam vet suffering from post-
traumatic stress syndrome, tell me at a town hall meeting last 
Friday in Odessa, that he was transported from Odessa to 
Temple, another 8-hour drive in an ambulance, for $2,300. And 
when they got him ready for discharge, they gave him a $35 
voucher for a bus ride home that got him halfway. A system that 
works like that way is just nonsense.
    I think we can keep these promises. And I have a father who 
is a veteran of Korea and World War II and goes to a veterans 
hospital for treatment of diabetes. And we want to keep those 
promises to him. But I think we can do it better and cheaper. 
It makes it easier on the veterans.
    I am also a veteran. I am a beneficiary of the GI bill. So 
I have some skin in the game as well.
    One other thing, and I just appreciate you listening to 
this. One of the other witnesses mentioned a caseload at VA for 
determining disabilities and the appeals. Again, harkening back 
to the 7 years I spent on a regulatory agency board in Texas, 
we tracked opened cases from start to finish. And every year we 
went from a legislative oversight board, with our little chart 
in hand, that said here is somebody that we opened and somebody 
we closed. Here is what we have pending, the average length of 
time it took us to fix that. I would hope that the VA tracks 
that and the committee is holding their feet to the fire. She 
said years on determinations. That is awful, I mean, for the 
lack of a phrase, that your committee doesn't hold their feet 
to the fire to get the work done.
    Thank you for your service. This is a tough environment. We 
have veterans we are creating every day with problems. I am 
going to go to Bethesda on Monday to visit with injured troops, 
to look them in the eye and tell them thank you. We have to 
keep promises, but we also can't break the bank as the Vice 
Chairman said. We have had significant increases in VA funding 
and we have to continue to work together to make sure we keep 
those promises. Thank you for your testimony.
    Mr. Evans. I believe we can work together to see what we 
can do. For all of us who have rural counties in their 
district, it is a tremendous problem for veterans to get a 
ride, much less a reimbursement for the gas to get to VA 
medical centers. So it is something I would like to work on.
    And, you know, all these problems we bring up about the VA 
is the reason veterans are doing so well. But by and large, we 
are going to see an increase in the need for funding veterans 
of the Persian Gulf wars, and there is an indication that the 
current level of services should be extended. Most people think 
we are slowing down the defense spending and slowing down 
veterans spending and that we don't need them anymore. This one 
time we need funding increases in both.
    So thank you very much, and I appreciate you and the 
Chairman's assistance.
    Mr. Portman [presiding]. Thank you, Mr. Evans. Appreciate 
you coming before us today and your longtime concern for our 
veterans.
    And, Mr. Michaud, thank you for your testimony.
    Mr. Portman. Ms. Bordallo, thank you for your patience. I 
see you over there and we appreciate you being here. We look 
forward to your testimony. Any statement you have may be made 
part of the record and you are welcome to testify up to 10 
minutes.

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

    Ms. Bordallo. Thank, you Mr. Chairman, and members of the 
House Budget Committee. I thank you very much for the 
opportunity to testify today. There are several priorities for 
Guam that I feel merit consideration for inclusion in the 
Fiscal Year 2006 Budget Resolution. I respectfully request your 
assistance with ensuring that the budget provide sufficient 
overhead to cover the costs of these important programs and 
initiatives.
    There are four specific items, Mr. Chairman, that I would 
like to discuss today very briefly.
    The first item I wish to discuss involves the forgiving of 
debts owed by the Government of Guam to the Department of 
Agriculture's Rural Utility Service loan program. In enacting 
Public Law 108-188, the reauthorization of the Compact of Free 
Association between the United States, the Republic of the 
Marshall Islands (RMI), and the Federated States of Micronesia 
(FSM), Congress and the administration recognized the adverse 
financial impact shouldered by the Government of Guam of 
providing unreimbursed services to the citizens of these Freely 
Associated States. Under the Compact of Free Association, 
citizens of the RMI and the FSM may travel to the United States 
and utilize any social services without having to pay taxes to 
U.S. jurisdictions. And because of the geographic proximity, 
many of the FAS migrants choose Guam as their destination.
    In addition to increasing direct Federal assistance to Guam 
and other U.S. jurisdictions in the Pacific region, the Compact 
Reauthorization included provisions of a bill that I introduced 
as the Compact-Impact Debt Reconciliation Act. This act granted 
the administration authority to reimburse Guam for past 
unreimbursed costs associated with the FAS migrants by 
forgiving debts owed by the Government of Guam to the Federal 
Government. Unfortunately, the administration has declined to 
exercise its authority to provide such debt relief in fiscal 
year 2005, citing the need for a congressional appropriation. 
So I am requesting that Congress appropriate debt relief for 
$105 million in outstanding RUS loans and respectfully request 
that the Budget Committee provide sufficient head room to cover 
this appropriation.
    The second item, Mr. Chairman, I wish to discuss concerns 
coordinating the payment of the Earned Income Credit in Guam 
and the Virgin Islands. As you are aware, the tax codes of Guam 
and the Virgin Islands mirror that of the Internal Revenue 
Code, and we must provide our citizens with the same tax credit 
as individuals receive in the 50 States and the District of 
Columbia. However, the payment of refundable tax credits such 
as the EIC constitutes an unfunded Federal mandate. The 
refundable portion of this tax credit, which is the amount that 
exceeds an individual taxpayer's total tax liability, is meant 
to offset the impact of FICA taxes on low-income individuals. 
While citizens of Guam and the Virgin Islands pay their FICA 
taxes to the U.S. Treasury, the territorial treasuries are 
tasked with covering the costs of the refundable portion of 
this credit out of our local revenues.
    Congresswoman Christensen of the Virgin Islands and I have, 
over the years, proposed various solutions to this issue. On 
different occasions, Senate Finance Chairman Grassley and House 
Ways and Means Committee Chairman Thomas have engaged in 
colloquies expressing their willingness to work with us to 
resolve this matter, and we are hopeful for a consensus on a 
resolution this year. The Joint Committee on Taxation scored my 
most recent proposed legislation solution at $39 million for 
fiscal year 2006. I respectfully request that the Budget 
Committee include this figure in the 2006 budget resolution.
    As my third item for discussion, I respectfully request 
that the Budget Committee provide $8 million in head room for 
additional Medicaid appropriations to Guam and the small 
territories. Last year, I introduced a floor amendment to the 
Departments of Labor, Health and Human Services, and Education 
Appropriations Act for Fiscal Year 2005 that would have 
increased Medicaid funding to Guam and the small territories 
above current section 1108 funding limitations. Section 1108 of 
the Social Security Act limits the amount of funding that the 
territories may receive in Federal Medicaid matching grants. I 
agreed to withdraw my amendment at the request of House Energy 
and Commerce Chairman Barton upon learning of his interest to 
work with me to address this matter through the program's 
authorizing committee. I am pleased with the Chairman's 
understanding of the adverse impact of section 1108 on the 
territories and his willingness to help us identify additional 
resources.
    Last year, the House Government Reform Subcommittee on 
Human Rights and Wellness held a hearing which highlighted 
continuing health disparities in the territories, coupled with 
disproportionately high rates of unemployment and low rates of 
economic growth. Health care financing in the territories has 
reached, Mr. Chairman, a state of crisis. In this week's 
meeting of the Interagency Group on Insular Areas a couple of 
days ago, which was chaired by the Secretary of the Interior, 
Governors and Delegates of the small territories each 
highlighted the extent of this crisis. With both the 
administration and congressional leadership aware of the need 
to provide additional Federal funding for health services in 
the territories, I respectfully request that the Budget 
Committee include $8 million to cover the cost of my proposed 
increase in section 1108 limitation levels to help address this 
issue.
    Lastly, Mr. Chairman, I wish to raise the issue of Guam war 
claims. It has been over 60 years since Guam was liberated from 
the Imperial Japanese forces by the U.S. Armed Forces in World 
War II. During 3 years of brutal occupation, the citizens of 
Guam endured internment, personal injury, forced labor, rape, 
and numerous other violations of human rights. Hundreds of 
Chamorros, the indigenous people of Guam, were killed. Although 
Congress passed the Guam Meritorious Claims Act of 1945 to 
provide immediate relief to the people of Guam, the goal of the 
act was not realized, due to the complete chaos of postwar Guam 
and the inaccurate dissemination of information.
    The Guam War Claims Review Commission was established under 
Public Law 107-333 to determine whether there was parity in the 
treatment of residents of Guam in the war claims process when 
compared to other war claims programs afforded to other 
similarly situated Americans. After an extensive review, the 
War Review Commission found a lack of parity and recommended 
additional compensation for eligible individuals. Legislation 
to implement these recommendations will be introduced shortly 
and I am hopeful for swift congressional consideration. The 
Review Commission estimates, at minimum, a total of $126 
million to be necessary to pay these claims. I respectfully 
request that the Fiscal Year 2006 Budget Resolution account for 
these costs.
    Mr. Chairman, this would be the last group of U.S. citizens 
that have not been recognized or compensated for war claims, 
and we are looking at 60 years ago.
    Mr. Chairman, I hope that members of the committee will be 
on the lookout for fair treatment of the U.S. territories. And, 
again, I thank you for this opportunity to present the 
priorities of the citizens of Guam with respect to the Fiscal 
Year 2006 Budget Resolution. Thank you.
    [The prepared statement of Madeleine Bordallo follows:]

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

    Chairman Nussle, Ranking Member Spratt, and members of the House 
Budget Committee, thank you for the opportunity to testify today. There 
are several priorities for Guam that I feel merit consideration for 
inclusion in the Fiscal Year 2006 Budget Resolution. I respectfully 
request your assistance with ensuring that the Fiscal Year 2006 Budget 
provides sufficient overhead to cover the costs of these important 
programs and initiatives. There are four specific items that I would 
like to discuss today, and I look forward to working with you to ensure 
their inclusion in the Budget Resolution. Included among these requests 
are funding for Guam debt-relief, the Earned Income Credit in Guam and 
the Virgin Islands, Medicaid reimbursement to the governments of Guam 
and the small territories, and Guam War Claims.

                            GUAM DEBT RELIEF

    The first item I wish to discuss involves the forgiving of debts 
owed by the Government of Guam to the Department of Agriculture's Rural 
Utilities Service (RUS) loan program. In enacting Public Law 108-188, 
the Reauthorization of the Compact of Free Association between the 
United States and the Republic of the Marshall Islands (RMI) and the 
Federated States of Micronesia (FSM), Congress and the Administration 
recognized the adverse financial impact shouldered by the Government of 
Guam of providing unreimbursed services to citizens of these Freely 
Associated States (FAS). Under the Compact of Free Association, 
citizens of the RMI and FSM may travel to the United States and utilize 
any social services without having to pay taxes to U.S. jurisdictions. 
Because of geographic proximity, the preponderance of FAS migrants 
chose Guam as their destination.
    In addition to increasing direct Federal assistance to Guam and 
other U.S. jurisdictions in the Pacific Region, the Compact 
Reauthorization included provisions of a bill I introduced as the 
Compact-Impact Debt Reconciliation Act. This Act granted the 
Administration authority to reimburse Guam for past unreimbursed costs 
associated with FAS migrants by forgiving debts owed by the Government 
of Guam to the Federal Government. Unfortunately, the Administration 
has declined to exercise its authority to provide such debt relief in 
Fiscal Year 2005, citing the need for a Congressional appropriation. I 
am requesting that Congress appropriate debt relief for $105 million in 
outstanding RUS loans, and I respectfully request that the Budget 
Committee provide sufficient head room to cover this appropriation.

                          EARNED INCOME CREDIT

    The second item I wish to discuss concerns coordinating the payment 
of the Earned Income Credit (EIC) in Guam and the Virgin Islands. As 
you are aware, the tax codes of Guam and the Virgin Islands mirror that 
of the Internal Revenue Code, and we must provide our citizens with the 
same tax credits as individuals receive in the 50 States and the 
District of Columbia. However, the payment of ``refundable'' tax 
credits such as the EIC constitutes an unfunded Federal mandate. The 
``refundable'' portion of this tax credit, which is the amount that 
exceeds an individual taxpayer's total tax liability, is meant to 
offset the impact of FICA taxes on low-income individuals. While 
citizens of Guam and Virgin Islands pay their FICA taxes to the U.S. 
Treasury, the territorial treasuries are tasked with covering the cost 
of the ``refundable'' portion of this credit out of local revenues.
    Congresswoman Christensen and I have, over the years, proposed 
various solutions to this issue. On different occasions Senate Finance 
Chairman Grassley and House Ways and Means Committee Chairman Thomas 
have engaged in colloquies expressing their willingness to work with us 
to resolve this matter, and we are hopeful for a consensus on a 
resolution this year. The Joint Committee on Taxation scored my most 
recent proposed legislative solution at $39 million for Fiscal Year 
2006. I respectfully request that the Budget Committee include this 
figure in the Fiscal Year 2006 Budget Resolution.

                                MEDICAID

    As my third item for discussion, I respectfully request that the 
Budget Committee provide $8 million in head room for additional 
Medicaid appropriations to Guam and the small territories. Last year, I 
introduced a floor amendment to the Departments of Labor, Health and 
Human Services, and Education Appropriations Act for Fiscal Year 2005 
that would have increased Medicaid funding to Guam and the small 
territories above current Section 1108 funding limitations. Section 
1108 of the Social Security Act limits the amount of funding that the 
territories may receive in Federal Medicaid matching grants. I agreed 
to withdraw my amendment at the request of House Energy and Commerce 
Chairman Barton upon learning of his interest to work with me to 
address this matter through the program's authorizing committee. I am 
pleased with the Chairman's understanding of the adverse impact of 
Section 1108 on the territories and his willingness to help us identify 
additional resources.
    Last year, the House Government Reform Subcommittee on Human Rights 
and Wellness held a hearing which highlighted continuing health 
disparities in the territories. Coupled with disproportionately high 
rates of unemployment and low rates of economic growth, health care 
financing in the territories has reached a state of crisis. In this 
week's meeting of the Interagency Group on Insular Areas, which is 
chaired by the Secretary of the Interior, Governors and Delegates of 
the small territories each highlighted the extent of this crisis. With 
both the Administration and Congressional leadership aware of the need 
to provide additional Federal funding for health services in the 
territories, I respectfully request that the Budget Committee include 
$8 million to cover the cost of my proposed increase in Section 1108 
limitation levels to help address this issue.

                            GUAM WAR CLAIMS

    Lastly, I wish to raise the issue of Guam war claims. It has been 
over 60 years since Guam was liberated from Imperial Japanese forces by 
U.S. Armed Forces in World War II. During 3 years of brutal occupation, 
the citizens of Guam endured internment, personal injury, forced labor 
and numerous other violations of human rights. Hundreds of Chamorros, 
the indigenous people of Guam, were killed. Although Congress passed 
the Guam Meritorious Claims Act of 1945 to provide immediate relief to 
the people of Guam, the goal of the Act was not realized due to the 
chaos of post-war Guam and the inaccurate dissemination of information.
    The Guam War Claims Review Commission was established under Public 
Law 107-333 to determine whether there was parity in the treatment of 
residents of Guam in the war claims process when compared to other war 
claims programs afforded to other similarly situated Americans. After 
an extensive review, the Review Commission found a lack of parity and 
recommended additional compensation for eligible individuals. 
Legislation to implement these recommendations will be introduced 
shortly, and I am hopeful for swift Congressional consideration. The 
Review Commission estimates, at minimum, a total of $126 million will 
be necessary to pay these claims. I respectfully request that the 
Fiscal Year 2006 Budget Resolution account for these costs.
    Thank you for the opportunity to present the priorities of the 
citizens of Guam with respect to the Fiscal Year 2006 Budget 
Resolution. I look forward to working with members of the Committee to 
ensure inclusion of these items in the Budget, and I look forward to 
answering any questions you may have regarding these requests.

    Mr. Portman. Thank you, Ms. Bordallo. We will think no less 
of you for the fact you only took 8 minutes. Thank you. 
Appreciate your testimony on the debt relief issues, earned 
income tax credit and the Medicaid issues, as well as the Guam 
war claims. Good education for us those of us on the committee 
who don't deal with those issues day to day.
    Mr. Conaway.
    Mr. Conaway. I just had one question--historical, of 
background--the compact that was signed that creates this 
problem that you have got with the unreimbursed----
    Ms. Bordallo. The debt relief.
    Mr. Conaway. When did that start?
    Ms. Bordallo. In the 108th.
    Mr. Conaway. Four years ago. No other questions.
    Mr. Portman. We are now pleased to have before the 
committee Ms. Wilson from New Mexico. Ms. Wilson, you have 10 
minutes for your testimony. And any written statement you have 
will be made part of the record.

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

    Mrs. Wilson. Thank you Mr. Chairman. I appreciate your 
putting my full statement in the record. What I would like to 
do is summarize. I appreciate your patience for staying so long 
on go-home day.
    What I want to talk to the committee about is Medicaid. In 
the President's budget there is about $60 million in reductions 
in Medicaid spending over 10 years and new initiatives 
amounting to about $16.5 billion, for a net reduction of $43.6 
billion. A lot of the proposals for the reductions are what are 
called ``program integrity.'' and I believe some, if not all, 
of those proposals have merit, and they would make for 
significant needed improvements in the Medicaid program. But I 
believe that these ideas need to be evaluated as part of a 
comprehensive effort to reform the Medicaid program and bring 
it into line with 21st century medicine.
    When you look at these ideas, even though they are 
aggressive in many ways, they may not go far enough to reform 
the program. Medicaid is set up to pay claims. It is not set up 
to improve anyone's health. And real Medicaid reform goes far 
beyond what has been proposed in the fiscal year 06 budget. But 
there are some States who have used the matching Federal 
structure of Medicaid to inappropriately draw down Federal 
funds to pay for nonhealth expenses. The most obvious of these 
is something called the intergovernmental transfer, where money 
is moved into accounts to draw down Federal match, and then the 
State or local money is moved back to another completely 
nonhealth-related purpose.
    There are legitimate and illegitimate intergovernmental 
transfers. We need to make sure that we don't dry up the 
ability of a county hospital's funds to be used as local match 
for Medicaid when we try to end some of the more creative 
financing schemes that State governments have participated in.
    The administration estimates that they will save $10.9 
billion in 10 years by restricting these intergovernmental 
transfers. We have to accept and understand that that cost will 
be shifted to the States and will result in reduced benefits or 
reduced payments to health care providers and will have a 
significant impact on low-income Americans.
    There is another initiative in the budget on Medicaid that 
deals with administrative costs, a proposed cap on the current 
50 percent Federal match for administrative costs. Most of the 
administrative costs that States use for Medicaid are used for 
computer systems and to fight fraud, track quality, and collect 
and disseminate data.
    The Medicaid program has not done very well on fraud 
recoveries compared to Medicare. And one of the reasons for 
that is the way the program is set up and the way the 
reimbursements are done. I am concerned that if we reduce 
further the Federal match for Medicaid administrative costs, we 
are going to see even fewer recoveries and less attention to 
fraud, waste and abuse in Medicaid, which is all investigated 
by the States. So we have to be very careful about the 
unintended consequences of some of these so-called 
administrative cost constraints. While the initiatives in the 
President's budget may have merit, I don't think they 
constitute Medicaid reform.
    I chaired a task force in the 108th Congress on Medicaid, 
and we looked at the entire program and we identified several 
areas where Medicaid should be improved or modernized to bring 
it up to date. It is increasingly clear to me that we need a 
national strategy on long-term care. Thirty percent of the 
costs of health care under Medicaid goes to seniors, and 
seniors are only 16 percent of the people who are enrolled in 
Medicaid; 7 out of 10 nursing home beds in this country are 
paid for by Medicaid. And this is going to triple over the next 
10 years, from about $50 billion in costs to $140 billion in 
costs. We have a looming challenge on the horizon as baby 
boomers retire, live longer, and more people are drawing down 
Medicaid.
    There are some proposals in the budget to strengthen 
existing asset transfer rules, and I think that will probably 
help. But I think more fundamental reforms and initiatives are 
going to be needed to get private funding into the system and 
relieve the burden on Medicaid.
    We have 56 different systems for determining eligibility 
for long-term care, and it is very difficult to do things like 
reverse mortgages. We have some States that have partnerships 
for long-term care insurance, but not enough of them. And all 
of us know that there is a subspecialty of the bar that 
specializes in qualifying mom and dad for Medicaid while you 
protect your inheritance. We can't afford for middle- and 
upper-income Americans to give away their assets so Medicaid 
can pay for their nursing home care.
    Medicaid is administered by the States with a joint State-
Federal funding mechanism that I think would make Rube Goldberg 
proud. In fact, some days, I think it is only held together by 
bailing wire and duct tape.
    There are 47 different eligibility pathways for Medicaid in 
the State of New Mexico. In most States, it is comparable. 
Medicaid pays claims, but it doesn't pay to improve anybody's 
health. In fact, we have had testimony in the Energy and 
Commerce Committee and asked State Medicaid directors what do 
you track to see whether you are improving the health status of 
low-income individuals in your State. And they look at you like 
you are from Mars.
    Medicaid wasn't set up to improve anybody's health. We will 
pay a hospital $28,000 to amputate the legs of a diabetic. That 
is authorized under Medicaid. But you need a waiver from the 
Federal program to teach a diabetic how to monitor their own 
blood sugar.
    This is a program that is in need of comprehensive reform. 
It is a one-size-fits-all program. And we are now in a world of 
health care that demands choices. I think that implementing 
piecemeal changes, as we are really doing, and we do every year 
in Medicaid, doesn't really allow us to do the reform that is 
needed. And setting an arbitrary budget number lets budget 
drive policy instead of the other way around. We have to get 
our arms around this program for the long term.
    About 10 days ago, I introduced legislation to create a 
bipartisan commission on Medicaid to make recommendations for 
improvements that would strengthen and modernize the program. 
It already has the support of 97 of our colleagues in the House 
and 22 in the Senate. There are 32 groups that have endorsed 
the legislation, including the American Hospital Association, 
the OB-GYNs, the National Association of Counties, and a whole 
lot of others.
    Even more than Medicare, Medicaid is an extremely 
complicated program and we need a real concerted effort to 
light the way toward substantial reform. Mr. Chairman, there 
are 2,500 approved waivers to the Medicaid program. Any Federal 
program that is given 2,500 exceptions to the rules needs to 
take a hard look at changing the rules.
    I would ask the Budget Committee to include funds in the 
budget resolution for a bipartisan commission on Medicaid. We 
are going to have to do some things in reconciliation this 
year. You all have talked about it, and so have others. But we 
need to stop doing this year by year and let policy drive the 
budget and not the budget drive policy.
    I thank you for your consideration of this request and I 
would be happy to answer any questions.
    [The prepared statement of Heather Wilson follows:]

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

    Thank you, Mr. Chairman, for allowing me to submit testimony on the 
Fiscal Year 2006 Budget Resolution.
    Mr. Chairman, I have some concerns about this budget in the area of 
Medicaid. President Bush has submitted a budget proposal that would 
reduce Federal Medicaid spending by $60.1 billion over 10 years. The 
budget also proposes new initiatives that would increase Federal 
Medicaid spending by $16.5 billion over 10 years, for a net reduction 
of $43.6 billion.
    To achieve these savings, the budget proposes specific initiatives 
that the Administration calls ``program integrity.'' I believe some of 
these proposals have merit and would make needed improvements to the 
Medicaid program. But these proposals must be evaluated as part of 
comprehensive reform and its overall impact on the Medicaid program. If 
there are savings associated with implementing these proposals, the 
savings should be reinvested in the Medicaid program to enhance 
programs that will improve the health of those who depend on Medicaid. 
I believe implementing these initiatives on their own may endanger the 
ability of the program to provide access to services for the more than 
50 million low-income children, pregnant women, elderly, and disabled 
covered by Medicaid, including more than 420,000 people in New Mexico.
    At the same time, this collection of ideas for change contained in 
the budget may not go far enough to reform the program. Medicaid is set 
up to pay claims, not to improve anyone's health. Real Medicaid reform 
goes far beyond the proposals in this budget.
    Some states have used the Federal matching structure of Medicaid to 
inappropriately draw down Federal funds to pay for non-health expenses. 
This is often done through complicated financing mechanisms that 
require taxing or transferring dollars from counties, public providers, 
or in some cases beneficiaries and then returning the funds to the 
borrower. This allows states to avoid putting up their share while 
still drawing Federal dollars. These techniques, however, are sometimes 
used legitimately within the guidelines established in the Medicaid 
statute and are a vital tool states use to fund health care for low-
income Medicaid patients. While fraudulent mechanisms that allow states 
to use Federal Medicaid dollars inappropriately should be ended, a 
distinction should be mode between legitimate and illegitimate 
intergovernmental transfers. If a county hospital funds care for low-
income people eligible for Medicaid, a state should be able to use that 
local contribution as part of its ``match,'' for example. While the 
Administration estimates savings of $10.9 billion over 10 years by 
restricting intergovernmental transfers, this cost will be shifted to 
the states. States will not simply absorb this cost, but will take 
actions to reduce eligibility, reduce benefits, or reduce payments to 
health care providers. These decisions have consequences for those who 
depend' on Medicaid.
    Under another initiative, the Federal Government would cap the 
funding states could receive for administrative costs. States use the 
50 percent Federal administrative match to invest in computer systems 
that identify and fight fraud, track quality, and collect and 
disseminate data. Reducing the ability of states to prevent Medicaid 
fraud and abuse and conduct outreach to eligible beneficiaries would 
appear to be antithetical to the goals outlined in the President's 
budget and may be ill-advised without further explanation and review.
    While some of the initiatives in the President's budget may have 
merit, they do not constitute Medicaid reform. I chaired a Medicaid 
Task Force in the Energy and Commerce Committee during the 108th 
Congress that comprehensively studied the challenges facing Medicaid. 
We identified several areas where Medicaid should be improved and/or 
modernized to bring the program in line with 21st Century medicine. It 
is increasingly clear to me that we need a national strategy for long-
term care. While only, 16 percent of the people enrolled in Medicaid 
are seniors, they account for 30 percent of the cost. Much of that cost 
is spent on long-term care. Medicaid pays for more than seven out of 
ten nursing home beds in this country. We are living longer and the 
baby boom generation will put burdens on the system that Medicaid is 
not designed to carry. Federal Medicaid spending for long-term care is 
projected to nearly triple over the next 10 years, from $50 billion to 
$140 billion. The growth in long-term care spending alone will take 
away from Medicaid's ability to continue to provide health care 
services to children, such as early periodic screening and development 
tests. While enforcing and strengthening existing asset transfer rules 
will help, more fundamental reforms and incentives will be needed to 
get more private funding into the system and relieve the burden on 
Medicaid.
    A national strategy on long-term care will make it easier for 
seniors to get reverse mortgages, promote long-term care insurance, and 
make sure high quality care is available for low-income seniors by 
expecting people who can afford to pay for themselves to do so.
    There is a subgroup of the bar that specializes in qualifying Mom 
and Dad for Medicaid while you protect your inheritance. We cannot 
afford for middle- and upperincome Americans to give away their assets 
so that Medicaid can pay for their care.
    Medicaid is administered by the states with joint federal-state 
financing mechanisms that would make Rube Goldberg proud. Many 
eligibility pathways are tied to the old Aid to Families with Dependent 
Children welfare program, which was replaced with the Temporary 
Assistance to Needy Families Program nearly a decade ago. In New 
Mexico, there are 47 different eligibility pathways for Medicaid. 
Medicaid reimbursement to providers often lags significantly behind 
Medicare and private insurers, leading to access problems for Medicaid 
beneficiaries. Medicaid pays claims, but it doesn't pay to improve 
anyone's health. States need a waiver from the Federal Government to 
implement programs that teach people who to manage chronic disease, and 
waivers can take more than 2 years to be approved. With very few 
exceptions, Medicaid is an inflexible, one-size-fits-all program in a 
world that demands choices.
    We need real Medicaid reform that addresses these challenges. 
Implementing piecemeal changes that allow us to meet an arbitrary 
budget number is not real reform. In fact, addressing these issues now 
through the budget process may inhibit our effort at making more 
needed, fundamental reforms in the near future. I do not believe the 
budget process should drive Medicaid reform or impede our ability to 
improve it. Policy should drive the budget, not the other way around.
    I have introduced legislation to create a Bipartisan Commission on 
Medicaid to make recommendations for improvements that would strengthen 
and modernize the program. The legislation outlines specific areas the 
Commission would examine and directs the Commission to issue a report 
to Congress, the President, and the public within 18 months. This 
legislation, introduced less than 2 weeks ago, already has the support 
of 97 of our colleagues in the House and 22 Senators. Thirty-two groups 
have endorsed the legislation because they realize that any changes to 
the Medicaid program have consequences for the populations served and 
for the providers who administer the Medicaid program. (See addendum). 
Even more than Medicare, Medicaid is a very complicated program. We 
need a concerted effort to light the way to real reform. The commission 
would provide the right forum to carefully deliberate needed policy 
changes to ensure the long-term financial stability of the program 
while maintaining Medicaid as a safety net program for low-income 
children, pregnant women, elderly and disabled Americans.
    Mr. Chairman, there are 2,500 approved waivers for the Federal 
Medicaid program. In fact, the only reason this program is working at 
all is because of these waivers. Any Federal program that has given 
2,500 exceptions is overdue for fundamental reform to change the rules 
and the program.
    I respectfully request that the Budget Committee include $1.5 
million in the FY 2006 Budget Resolution for the Bipartisan Commission 
on Medicaid. Including funding for the Commission in the FY 2006 Budget 
Resolution will ensure that the work of the Commission begins quickly 
after its enactment so that Medicaid modernization efforts will not be 
delayed.
    Thank you, Mr. Chairman, for your consideration of this request and 
I appreciate the opportunity to submit this testimony to your 
committee.

    Mr. Conaway [presiding]. Thank you for that testimony. I 
think most of us share the common concern that the looming 
issue with Medicaid and Medicare and how we continue to fund 
that and meet those needs is one that is going to dwarf the 
current efforts to retool Social Security. And you are serving 
on the right committee, obviously, that is going to be the one 
to look at the overall numbers.
    I don't have any other questions other than to say good 
luck with the efforts. And you are going to be on the leading 
edge of what we have to face in the near future.
    Mr. Portman. First I ought to thank you for your 
willingness to take on this task and your passion for it. This 
is a critical issue and I am going to go out on a big limb here 
and tell you we would be happy to cosponsor your legislation.
    I see one of my staff members looking up and saying, wait a 
minute. You haven't asked us yet. In this case, I know it is 
the right thing to do. I would like to be on the legislation. I 
think short of a commission, it is difficult to see how we can 
get at some of these underlying problems. And we have done this 
with Internal Revenue Service and with Medicare, which was 
somewhat successful. And I think this is an example of our 
inability as Members of Congress year to year to make the 
fundamental reforms that are needed to provide health care that 
is appropriate to our poor citizens, rather than go through the 
bureaucratic process of simply delivering a payment.
    I am particularly interested in the issue of seniors. And I 
know in my own State, there is an increasing reliance on 
Medicaid. This is an effect the States feel as well, because in 
Ohio the States pick up 40 percent of that. And I think that is 
probably a leading issue that might get us to the point of 
setting up a commission once we do that.
    As you indicate there are so many other issues we need to 
look at.
    I have one simple question for you and this is premature 
and has to do with reform. Do you feel that there is an 
inherent conflict in the way in which the program is set up 
because of the match that neither the Federal Government nor 
the State government has an alignment of the responsibility for 
the full payment of the program and thus the accountability 
that would go with that?
    Mrs. Wilson. I think there are fundamental problems with 
the way we finance this program and it is not only in the 
mechanisms between the States and the Feds, but it forces every 
State official that is going after the marginal penny on the 
dollar for Federal match. They are not thinking about the 
patients.
    In my previous life I was the Cabinet secretary for 
children's programs in New Mexico. Here is an illustration, 
just a story, but I think it tells something. Shortly before I 
became the Cabinet secretary, we had a lot of kids in group 
homes. If you are a teenager in foster care, you are not going 
to have a family of your own until you have one yourself. Most 
of us can't even stand our own teenagers, let alone one that is 
abused and neglected. We figured out that, you know, if we 
could get these group homes eligible as residential treatment 
centers under Medicaid, we could draw down $0.75 on the dollar 
in Federal match. Most of these kids have diagnoses, 
medicalized them, added in behavioral health specialists and 
psychiatrists and everything else. The costs went up, but for 
the State, it was only $0.25 on the dollar. The general fund 
cost to the State went down. We qualified all of these group 
homes as residential treatment centers, gave every one of these 
kids a label as mentally ill. You know the one thing they 
didn't get? They didn't get parents.
    What would you have done with that money to support a 
foster family and give them the training and the support they 
needed to take a troubled kid? We were doing the wrong thing 
for the kid, and every one of those kids, because we were 
following the Federal match.
    And there are a thousand decisions like that that are made 
every day in every State in this Nation and that is why we need 
to change this program.
    Mr. Portman. Good example. And I thank you for your ongoing 
efforts and appreciate you being here today.
    Mr. Conaway. Ms. Wilson, you mentioned waste, fraud and 
abuse within the system. It is my understanding that States are 
supposed to have units that--are they doing their job? Does 
that need to be restructured as well?
    Mrs. Wilson. I think it does. Even if you go to a 90 
percent match, States are very reluctant to invest in computer 
systems and information investigatory systems that go after 
Medicaid fraud. And one of the reasons is that they don't get 
much from the recovery until it is all over and then they only 
get very little. And so the motivation isn't there as it is 
under Medicare. So we don't have anywhere near the recoveries 
for fraud and waste under Medicaid that we do under Medicare.
    Mr. Conaway. We have been joined by Mr. Cooper.
    Mr. Cooper. Nothing.
    Mr. Conaway. Mrs. Wilson, thank you very much for your 
passion on this issue. Like I said, you have been the center of 
the storm on an issue that is going to face this Congress and 
this Nation over the next several years.
    Mr. Conaway. Mr. Miller is next on the list. Ten minutes. 
Thank you for being here today.

STATEMENT OF THE HON. BRAD MILLER, A REPRESENTATIVE IN CONGRESS 
                FROM THE STATE OF NORTH CAROLINA

    Mr. Miller of North Carolina. Thank you Mr. Chairman. Thank 
you for this opportunity to address the priorities that I think 
should be reflected in this year's budget to assure our Nation 
a prosperous future.
    My State faces a difficult economic transition. The 
industries that North Carolinians have relied upon for their 
livelihood--textiles, tobacco, furniture--have suffered one 
layoff after another. Most of the plants that have closed will 
never reopen. North Carolina has lost more than 190,000 
manufacturing jobs in the last 4 years. And the textile 
industry is bracing for more bad news shortly.
    Mr. Chairman, those statistics on job loss are not just 
economic statistics to me. I can close my eyes and see the 
faces of workers who have lost their jobs and don't know how 
they are going to support themselves or their families.
    North Carolina's experience is hardly unique. The Nation 
has suffered a net loss of 2.8 million manufacturing jobs in 
the last 4 years. Those are jobs with decent wages and 
benefits, jobs a family can build a future around. The current 
administration now predicts our economy will slow for the next 
generation and beyond to a growth rate of about half of what 
our parents and grandparents experienced. And my generation in 
particular needs to scale back our expectations of what life 
will be like after we retire from the workforce.
    Mr. Chairman, I refuse to accept that, though we have to do 
better than the President's proposed budget. We can and should 
be the most innovative and productive economy in the world. Our 
great strength is the American people, the American worker, the 
American entrepreneur and the American scientist. The proposed 
budget cheats them all of the help they need and deserve.
    First, our standard of living depends upon having the most 
skilled workforce in the world. Chairman Alan Greenspan, in his 
testimony last week to the Financial Services Committee, 
stressed the need for both full education and on-the-job 
training. But the proposed budget cuts $1.3 billion from 
technical and vocational education programs, including all 
funding for national and State grants, tech prep education 
grants, and tech prep demonstration projects. The budget cuts 
adult education, including adult literacy programs, by $370 
million.
    Mr. Chairman, to give you one example, Rockingham County in 
my district has the highest percentage of the workforce in 
manufacturing in the State. Forty-five percent of the adult 
population of Rockingham County does not have a high school 
diploma or GED. Folks went straight from high school to the 
mill, like their parents did before them. It didn't matter if 
they didn't have a high school diploma. Now they are middle 
aged, my age, they have to find new work, and they have to go 
back and get a GED to do it. Cutting $370 million from adult 
literacy programs betrays those workers of what they need.
    The budget eliminates funding for education and technology 
programs, including the Education and Technology State Grants. 
In North Carolina, the budget would mean $21 million less for 
vocational education in the public schools and $12 million less 
for job training programs for our community colleges.
    Second, our economic future depends on our economy 
remaining the world's most agile economy. The entrepreneurial 
talent of Americans is astounding. Small businesses spot 
economic niches, even new industries, remarkably quickly and 
have made our economy the most vibrant economy in the world. We 
count on small businesses to grow our economy. Half our gross 
domestic product is generated by small business. Even more 
important, small businesses create 75 percent of new jobs. But 
even in the face of our current economic challenges, the 
proposed budget would cut funding for small business programs 
by 62 percent.
    The $6.1 billion in cuts to programs that provide technical 
assistance, incentives or capital to small business amounts to 
only one-quarter of 1 percent of the overall 2006 budget. Those 
cuts do very little to help the deficit and they stifle the 
ability of new entrepreneurs to start and grow their own 
businesses. Many of the programs cut have a proven track 
record. Many of them make more money on return investment than 
they cost. For example, the proposed budget once again would 
raise fees for 7(a) loan program participants, making the 
program less accessible and more costly. The microloan program 
run through the Small Business Administration would be 
eliminated. Programs that help small businesses access 
technology, such as Community Technology Centers and Technology 
Opportunities Program, receive no funding. Despite a record 
deficit and trade deficit, the President's budget was proposed 
cutting all funding for the U.S. Export Assistance Center which 
helps small businesses sell their products in the global 
marketplace. The budget would cut by 56.5 percent the funding 
for the Manufacturing Extension Partnership (MEP) which helps 
small businesses, primarily small manufacturers, adopt advanced 
manufacturing technologies and business practices. In 2002 
alone, North Carolina's MEP helped North Carolina companies 
save $85.6 million, a critical competitive advantage in a 
ruthless world economy.
    Third, our future prosperity depends on remaining the most 
innovative economy in the world. Our research universities are 
the envy of the world, and our Nation has led the world in 
developing new products and new production technologies from 
research. But the proposed budget for research again fails to 
even keep pace with the rate of inflation.
    The Advanced Technology Program (ATP) is the only source of 
``patient capital'' for many innovative small companies and has 
helped many businesses cross the valley of death from an idea 
in the lab to product in the marketplace, a difficult and 
expensive journey. The proposed budget eliminates all funding 
for the ATP.
    Mr. Chairman, I hope this committee will look at the 
economic challenges our economy and Nation faces and not accept 
meekly that our Nation's economy will not lead the world in the 
future as it has in the past. We can continue to lead the 
world, but not with the priorities of this budget. Thank you 
Mr. Chairman.
    [The prepared statement of Brad Miller follows:]

 Prepared Statement of Hon. Brad Miller, a Representative in Congress 
                    From the State of North Carolina

    Mr. Chairman, thank you for this opportunity to address the 
priorities that I think should be reflected in this year's budget to 
assure our nation a prosperous future.
    My state faces a difficult economic transition. The industries that 
North Carolinians have relied upon for their livelihood--textiles, 
tobacco, furniture--have suffered one layoff after another. Most of the 
plants that have closed will never reopen. North Carolina has lost more 
than 190,000 manufacturing jobs in the last 4 years, and the textile 
industry, in particular, is bracing for more bad news shortly.
    North Carolina's experience is hardly unique. The nation has 
suffered a net loss of 2.8 million manufacturing jobs in the last 4 
years. Those are jobs with decent wages and benefits, jobs a family can 
build a future around.
    The current administration now predicts that our economy will slow 
for the next generation and beyond to a growth rate of about half what 
our parents and grandparents experienced, and that my generation, in 
particular, needs to scale back our expectations of what life will be 
like after we retire from the workforce.
    Mr. Chairman, I refuse to accept that. But we have to do better 
than the President's proposed budget.
    We can and should be the most innovative and productive economy in 
the world. Our great strength is the American people--the American 
worker, the American entrepreneur, the American scientist. The proposed 
budget cheats them all of the help they need and deserve.
    First, our standard of living depends on having the most skilled 
workforce in the world. Chairman Alan Greenspan, in his testimony to 
the Financial Services Committee last week, stressed the need for both 
formal education and on-the-job training.
    But the proposed budget cuts $1.3 billion from technical and 
vocational education programs, including all funding for national and 
state grants, tech-prep education grants and tech-prep demonstration 
programs.
    The budget cuts adult education, including adult literacy programs, 
by $370 million.
    The budget eliminates funding for education and technology 
programs, including the Education Technology State Grants.
    In North Carolina, the budget would mean $21 million less for 
vocation education in the public schools and $12 million less for job 
training programs through our community colleges.
    Second, our economic future depends on our economy remaining the 
world's most agile economy.
    The entrepreneurial talent of Americans is astounding. Small 
businesses spot economic niches, even new industries, remarkably 
quickly, and have made our economy the most vibrant economy in the 
world. We count on small businesses to grow our economy. Half of the 
American economy, our gross domestic product, is generated by small 
businesses. Even more important, small businesses create 75 percent of 
new jobs.
    But even in the face of our current economic challenges, the Bush 
budget proposal would cut funding for small business programs by 62 
percent. The $6.1 billion in cuts to programs that provide technical 
assistance, incentives, or capital to small businesses, amounts to only 
one quarter of 1 percent of the overall 2006 budget. These cuts do 
little to help the deficit, and they stifle the ability of new 
entrepreneurs to start and grow their own business.
    Many of the programs cut have a proven track record. Many of them 
make more money in returned investment than they cost.
    For example:
     The purposed budget once again would raise fees for 7(a) 
loan program participants, making the program less accessible and more 
costly.
     The Microloan program run through the Small Business 
Administration would be eliminated.
     Programs that help small businesses access technology such 
as Community Technology Centers (CTC) and the Technology Opportunities 
Program (TOP) receive no funding.
     Despite a record trade deficit, the President's budget 
purposes cuts all funding for U.S. Export Assistance Centers, which 
help small businesses sell their products in the global marketplace.
     The budget would cut by 56.5 percent the funding for the 
Manufacturing Extension Partnership, which helps small businesses, 
primarily small manufacturers, adopt advanced manufacturing 
technologies and business practices. In 2002 alone, North Carolina's 
MEP helped North Carolina companies save $85.6 million, a critical 
competitive advantage in a ruthless world economy.
    Third, our future prosperity depends on our remaining the most 
innovative economy in the world. Our research universities are the envy 
of the world, and our nation has led the world in developing new 
products and new production technologies from research. But the 
proposed budget for research again fails even to keep pace with the 
rate of inflation.
    The Advanced Technology Program is the only source of ``patient 
capital'' for many innovative small companies, and has helped many 
businesses cross the ``valley of death'' from idea in the lab to 
product in the marketplace, a long and expensive journey. The proposed 
budget eliminates funding for the ATP.
    Mr. Chairman, I hope this committee will look at the economic 
challenges our nation faces, and not accept meekly that our nation's 
economy will not lead the world in the future as it has in the past. We 
can continue to lead the world, but not with the priorities of this 
budget.

    Mr. Conaway. I appreciate those comments. Mr. Cooper, any 
questions?
    Mr. Cooper. I just would like to thank my friend from North 
Carolina because I think he has gone the extra mile to not only 
represent his constituents but protect his constituents, 
because these budget cuts can and will be devastating to his 
constituents and people like that around the country.
    I think North Carolina is a great example of a State that 
has done all it could locally to have an excellent education 
system, but they need a little Federal help. And to abandon 
vocational education, it is almost unthinkable. You wonder who 
on Earth suggested this to the President, and hopefully cuts 
will not remain in the final budget product. But North Carolina 
is going through a very difficult transition, perhaps the most 
difficult transition of any State, due to losses of tobacco, 
textiles, and general manufacturing. My heart goes out to the 
gentleman, but at least your constituents are well represented.
    Mr. Miller of North Carolina. Thank you, Mr. Cooper. And 
you know well how important our community college system is. 
Mr. Cooper, like me, graduated from the University of North 
Carolina, Chapel Hill. And although he is from Tennessee, I 
think he knows my State pretty well and understands that we 
were the leader in community colleges. And they are a 
remarkable asset to our State. Something like one North 
Carolina adult in six attends or is enrolled in a community 
college course in any given year. That is a remarkable 
statistic. Our State is remarkably dependent upon them.
    I gave a statistic of 45 percent of the adult population in 
Rockingham County not having a high school diploma or GED. But 
for most of North Carolina's rural counties, the number is in 
the high 30s, and the community colleges are where folks go to 
get a GED. They go to workplaces where the employer will help 
out by letting their employees take courses at their workplace. 
They are a prize.
    And cutting funding for adult education and cutting funding 
vocational education really cheats the people of my State and 
workers of my State of the help they need to create an economic 
future for themselves as we face--North Carolina faces a very 
difficult economic transition.
    Mr. Conaway. We have some difficult choices ahead as the 
authorizing committees and the appropriations committees deal 
with the details and assess each one of the President's 
recommendations. So thank you for your testimony today. Thank 
you, sir. Appreciate you being here.
    Mr. Conaway. We will turn to Ms. Capito.

STATEMENT OF THE HON. SHELLEY MOORE CAPITO, A REPRESENTATIVE IN 
            CONGRESS FROM THE STATE OF WEST VIRGINIA

    Mrs. Capito. Thank you, Mr. Chairman and Mr. Cooper. Thank 
you for the opportunity to testify before the committee. I 
appreciate the opportunity to address items in the budget that 
I feel are important to West Virginians.
    I want to applaud the efforts of the President and the 
Budget Committee as it moves through the effort to control 
Federal spending. I think it is important to the Nation's long-
term financial health that we try to accomplish the President's 
goal of cutting the deficit in half by fiscal year 2009.
    I would like to address some areas of concern that I have 
with the President's budget proposal. The budget proposes a New 
Communities Initiative which combines 18 economic development 
programs into a single program under the Department of 
Commerce. The President's budget proposes $3.71 billion for the 
new program, a significant decrease from the $5.31 billion the 
18 programs combined received in last year's appropriation 
cycle. I support efforts to become more efficient in the 
Federal Economic Development programs, but I am concerned. I am 
concerned, however, the funding cuts will do substantial harm 
to economic development activities in areas like my rural 
district that greatly needs these resources.
    I was interested to hear the discussion of North Carolina, 
who is in transition. If anybody knows the State of West 
Virginia well, we want to get to the point where we can 
transition. We have had always difficult economic problems.
    Of grave concern to me is the shift of the Community 
Development Block Grant (CDBG) program, which itself received 
more than $4 billion last year from the Department of Housing 
and Urban Development to the Department of Commerce. Community 
development block grants provide the resources for economic 
activities across West Virginia. Cities like Charleston and 
Martinsburg in my district could see significant reductions of 
economic development aid if we accept the reconfiguration of 
the CDBG program. These cities have experienced cuts last year 
in the CDBG money and further cuts could hinder the city's 
ability to provide important services and bring jobs to the 
communities. Rural areas such as West Virginia would be harmed 
by the CDBG reductions. CDBG money provides funding to West 
Virginia's Small Cities Grant program that sends development 
aid to communities across the State. I know that smaller sums 
of money to States like mine can do enormous and make enormous 
progress. So any cut is felt in a very significant way.
    Planning funds from the programs provide resources to 
regional councils such as the Region VII Development Council 
that helps match Federal, State, and local dollars with private 
investment to bring jobs to Randolph, Upshur, Lewis, and 
Braxton counties in my district. Some of these counties have 
unemployment in the 13, 14 percent range. Funds for these 
planning activities come not just from the CDBG program but 
also from the Economic Development Administration, another 
program consolidated under the Communities Initiative. Rural 
enterprise communities like the Upper Kanawha Valley Enterprise 
Community would also be at risk for funding reductions under 
this proposal.
    I ask the committee as you consider the President's 
Communities Initiative to ensure that adequate money is 
provided to continue to support funding at last year's level 
for development activities in cities and regional planning 
organizations.
    I am also concerned, as my colleague from North Carolina, 
with the proposed changes in high school education funding and 
the vocational technical. The President's budget proposes $1.24 
billion High School Intervention Initiative that consolidates 
the funding for Perkins Vocational Education, the TRIO Upward 
Bound, and TRIO Talent Search programs. These programs combined 
received $1.925 billion last year. These programs are crucial 
to the success of at-risk students and for those careers of 
those who do not attend college. In West Virginia, we have one 
of the lower college-going rates. These programs are essential 
to not only the training but to the future of these young men 
and women as they seek their futures. States should be held 
accountable for student achievement certainly, but we must 
ensure that school districts are given the resources to 
succeed.
    We owe a debt of gratitude to all the men and women who 
have served in our Armed Forces. It is important we provide 
those resources to care for our veterans, from the aging 
members of the World War II generation to those who are 
returning injured from the war against terror. While I am proud 
that the budget for veterans health is 47 percent higher than 
it was in 2001, this year's budget proposal increases funding 
for veterans by less than one-half of 1 percent. I urge the 
committee to provide sufficient resources to provide the 
highest-quality health care for our veterans.
    I want to commend the President for including $283.9 
billion for the reauthorization of SAFETEA through 2009 in the 
budget proposal. This funding level will provide the funds 
necessary for crucial construction projects across this Nation. 
Making U.S. Route 35 in my district a four-lane highway in 
Putnam and Mason County is a crucial project that will benefit 
from this reauthorization.
    Medicaid and SCHIP programs are critical programs that 
provide basic health care to low-income children and families. 
Medicaid--and we have discussed this, Mrs. Wilson--Medicaid is 
in a looming financial crisis for both the Federal and State 
governments. It is important that as we work to reduce our 
Federal deficits, we work with States to ensure that Medicaid 
programs are adequately funded and that the burden of the 
program is not shifted to the States.
    I commend the administration for proposing Cover the Kids 
Initiative that will provide $1 billion in grants to promote 
SCHIP and ensure that parents whose children could benefit know 
about this program. I ask that the committee provide the 
resources for this new program.
    I also want to say that the President's Community Health 
Centers Initiative has done wonders for the State of West 
Virginia in delivery and accessing quality of rural health 
care. These centers, like the Minnie Hamilton Health Center in 
Calhoun County in West Virginia, reduce the costs of health 
care by cutting down unnecessary emergency room visits while 
providing important preventive care. The proposed budget 
recommends $2 billion for Community Health Centers, and I ask 
that the committee fully fund the President's request.
    In closing, thank you for the opportunity to appear before 
the committee today for issues that I believe are important to 
West Virginia. I look forward to working with the committee as 
this budget resolution moves through our House.
    [The prepared statement of Shelley Moore Capito follows:]

 Prepared Statement of Hon. Shelley Moore Capito, a Representative in 
                Congress From the State of West Virginia

    Mr. Chairman, Mr. Ranking Member, and Members of the Budget 
Committee,
    Thank you for the opportunity to testify before the committee. I 
appreciate the opportunity to address items in the budget that are 
important to West Virginians.
    First, I applaud the efforts of the President and the Budget 
Committee to control Federal spending. It is important to the nation's 
long term financial health that we accomplish the President's goal of 
cutting the deficit in half by Fiscal Year 2009. I am pleased that this 
goal will be accomplished while extending the tax cuts we passed in 
2001 and 2003 that have brought over 2 million jobs to our nation in 
the past year.

                COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG)

    I would like to address some areas of concern that I have with the 
President's budget proposal. The budget proposes a new Communities' 
initiative which combines 18 Economic Development programs into a 
single program under the Department of Commerce. The President's budget 
proposes $3.71 billion for the new program, a significant decrease from 
$5.31 billion the 18 programs combined received in last year's 
appropriations cycle.
    I support efforts to bring more efficiency to Federal economic 
development programs. I am concerned; however, the funding cuts will do 
substantial harm to economic development activities in areas like my 
rural district that greatly need these resources.
    Of greatest concern is the shift of the Community Development Block 
Grant program, which itself received more than $4 billion last year, 
from the Department of Housing and Urban Development to the Department 
of Commerce. Community Development Block Grants provide the resources 
for economic activity across West Virginia.
    Cities like Charleston and Martinsburg in my district could see 
significant reductions in economic development aid if we accept the 
reconfiguration of the CDBG program. These cities already experienced 
cuts in CDBG money last year, and further cuts could hinder the cities' 
ability to provide important services and bring jobs to the community.
    Rural areas would also be harmed by CDBG reductions. CDBG money 
provides funding to West Virginia's Small Cities Grant Program that 
sends development aid to communities across the state. Planning funds 
from the program provide resources to regional councils, such as the 
Region VII Development Council that helps match federal, state, and 
local dollars with private investment to bring jobs to Randolph, 
Upshur, Lewis, and Braxton counties in my district. Funds for these 
planning activities come not just from the CDBG program, but also from 
the Economic Development Administration, another program consolidated 
under the communities' initiative. Rural Enterprise Communities, like 
the Upper Kanawha Valley Enterprise Community would also be at risk for 
funding reductions under the proposal.
    I ask the committee as you consider the President's Communities 
Initiative to ensure that adequate money is provided to continue to 
support funding at last year's level for development activities in 
cities and regional planning organizations.

                          VOCATIONAL EDUCATION

    I am also concerned with proposed changes in high school education 
funding. The President's budget proposes a $1.24 billion high school 
intervention initiative that consolidates the funding for Perkins 
Vocational Education, TRIO Upward Bound, and TRIO Talent Search 
programs. These programs combined received $1.925 billion last year. 
These programs are crucial to the success of at-risk students and the 
careers of those who do not attend college. States should be held 
accountable for student achievement, but we must ensure that school 
districts are given the resources to succeed.

                                VETERANS

    We owe a debt of gratitude to all the men and women who have served 
in our Armed Forces. It is important that we provide the resources to 
care for our veterans--from the aging members of the World War Two 
generation to those who are returning injured from the War against 
Terror.
    While I am proud that the budget for veteran's health care is 47 
percent higher today than it was in 2001, this year's budget proposal 
increases funding for veterans medical programs by less than half of 1 
percent. I urge the committee to provide sufficient resources to 
provide the highest quality healthcare for our veterans.

                             TRANSPORTATION

    I want to commend the President for including $283.9 billion for 
the reauthorization of SAFETEA through 2009 in the budget proposal. 
This funding level will provide the funds necessary for crucial 
construction projects across the nation. Making US Route 35 a four lane 
highway in Putnam and Mason counties in my district is a crucial 
project that will benefit from this reauthorization level. I urge the 
committee to include at least the $283.9 billion proposed by the 
President in the final budget resolution.

                                MEDICAID

    Medicaid and SCHIP are critical programs that provide basic health 
care to low income children and families. Medicaid is also a looming 
financial crisis for both the Federal Government and for state 
governments. It is important that as we work to reduce our Federal 
deficit, we work with states to ensure that Medicaid programs are 
adequately funded and that the burden of the program is not shifted to 
the states.
    I commend the administration for proposing the Cover the Kids 
initiative that will provide up to $1 billion in grants to promote S-
CHIP and ensure that parents whose children could benefit from S-CHIP 
know about the program. I ask that the committee provide resources for 
this important new program.
    I also commend the President on his Community Health Centers 
Initiative that would open rural health centers in every low income 
county that can support one. These centers, like the Minnie Hamilton 
Health Center in Calhoun County, West Virginia, reduce the cost of 
health care by cutting down on unnecessary emergency room visits, while 
providing important preventative care. The proposed budget recommends 
$2 billion for community health centers and I ask that the committee 
fully fund the President's request.

                                CLOSING

    Again, thank you for the opportunity to appear before the committee 
today to present issues important to the people of West Virginia. I 
look forward to continuing to work with the committee on a budget 
resolution that reflects our national priorities.

    Mr. Conaway. Mr. Cooper, do you have any questions?
    Mr. Cooper. Just briefly, I would like to ask the 
gentlelady from West Virginia, it is my understanding we could 
save a lot of money in the CDBG program if we means-tested it. 
In other words, if wealthy communities were no longer eligible 
for benefits. And my guess is that means test would still 
enable communities in West Virginia to receive the funds.
    Mrs. Capito. Certainly in the State of West Virginia, we 
welcome all means testing because, unfortunately, our means are 
not in certain pockets. We do have some areas of growth. But 
generally speaking, we are in the low-income areas. We are a 
member of the Appalachian Regional Commission. All 55 counties 
belong to that. Of that, over half of those counties were 
considered economically distressed.
    And I believe you bring up an excellent point. If we target 
our resources to those who are more economically distressed for 
whatever reason, historically or because of a loss of 
manufacturing jobs in certain industries, it will create a 
rising tide for all of our communities, and certainly those 
that haven't been able to enjoy any of the economic growth that 
has cascaded across the Nation in the last couple of decades.
    Mr. Cooper. I would just encourage you to influence your 
friends who serve on the committee, because it is usually a 
party-line vote, and I don't know what they are going to do 
with CDBG grants. But if you could persuade just two or three 
of your fellow Republicans, we may be able to save a good bit 
of this program. But it is going to take Republicans breaking 
rank on this committee in order to do. I have only served 3 
years on the committee and I never seen that happen. Good luck 
in your efforts to persuade them to think independently on this 
important issue.
    Mr. Conaway. Thank you for your testimony. And I appreciate 
that.
    During the Presidents Day break, I had the opportunity to 
visit a technical school and had it pointed out they used their 
Perkins grant money to buy equipment that was training people 
for $40,000- to $50,000-a-year jobs. So that was helpful to 
understand how the money is used in a real way. Thank you for 
your comments today.
    Mr. Conaway. The Chair now recognizes Mr. Robin Hayes for 
10 minutes.

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

    Mr. Hayes. Thank you, Chairman Conaway, and Ranking Member 
Cooper. I would ask your permission and unanimous consent to 
submit the complete statement for the record and highlight the 
issues that I am sure you have heard before, if that would be 
OK with the committee.
    Mr. Conaway. Without objection.
    Mr. Hayes. Thank you for the opportunity to testify today. 
The Eighth District of North Carolina is vitally important to 
me and others of us who serve. Obviously we are concerned with 
veterans programs. They are the heroes of the present and past 
battles. We want to make sure we sustain and increase the 
services that we provide for veterans, and the President's 
budget needs a little help there. We got a 2.7 percent increase 
in discretionary funds. And we want to make sure we increase 
veterans health care funding and other services and not have 
anything other than that.
    Everything in your power I would ask that you do to 
adequately fund our Nation's veterans. Quality, affordable, 
accessible health care service, are a critical priority.
    The next item, Mr. Chairman, is impact aid. Impact aid for 
our military communities such as Cumberland County and 
surrounding counties at Fort Bragg is important to education 
and local school systems in order to replace revenues that are 
lost because of the very large, very important, much 
appreciated military presence there. The President's budget 
puts impact aid at level funding, which unfortunately in this 
climate, because of the way that the program is structured. The 
cost-of-living adjustment is triggered by the impact aid 
formula, and school districts will receive less money. So I 
would respectfully request a 3 percent increase in the impact 
aid funding.
    Another vitally important issue here to our constituents, 
hopefully we would take money that has been proposed for 
funding foreign aid and other operations that could not--we 
need to do things at home before we spend that money abroad. So 
I would ask the committee to do what they can in that regard.
    The community college presence, our technical colleges, 
those schools that provide retraining for jobs that we lost in 
manufacturing and other areas are so vitally important. Perkins 
funding. I would ask the committee do everything they can to 
take care of Perkins programs and increase the ability for 
people to be retrained and reenter the workforce. Economic 
development and workforce education are so important in mine 
and other districts.
    Other important issues, the agriculture budget; cannot 
stress enough how much our producer communities depend on a 
strong agricultural economy. Based on present programming, 
there has been a $16 billion savings compared to the March 2002 
cost estimate. Farmers need to plan just like other businesses. 
I would like to keep those programs intact because they are 
working in an environment where internationally we are subject 
to so many foreign subsidies and artificial tariff barriers. We 
need to be sure our farmers can be competitive. A 
disproportionate burden of debt reduction at the present seems 
to be falling on the shoulders of our farmers.
    Conservation initiatives, vitally important. They are doing 
a great job in addressing the environmental issues in a 
commonsense and in a very results-oriented way.
    Community block grants, as Ms. Capito mentioned are 
important to my rural district. I hope you will be able to find 
a way to deal with that.
    Mr. Chairman, thank you for the opportunity to testify 
before your committee. I appreciate your consideration. 
Everyone wants to cut the budget. There is no disagreement 
there. It is just when you get into where the cuts come is 
there some discussion. I appreciate your time and attention and 
would be glad to answer any questions.
    [The prepared statement of Robin 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 of allowing me to 
testify before the Committee today. There are several topics I would 
like to highlight: funding for Veteran's health care, Impact Aid, 
Department of Agriculture programs, and Community Development Block 
Grants.
    Mr. Chairman, our veterans are the heroes who helped define our 
American heritage. They are living evidence that freedom is never free. 
As we continue to sustain operations in support of the Global War on 
Terrorism, it is imperative we send a strong signal to these active 
duty forces that our nation will indeed care for them when they return 
home.
    As you know, the President's FY 2006 budget proposal totals $70.8 
billion-$37.4 billion for mandatory programs and $33.4 in discretionary 
programs. This represents a 2.7 percent increase in discretionary funds 
over the enacted level of 2005. From 2001 to 2005, veterans health care 
funding has increased 47 percent. As you and your committee begin 
assembling the budget resolution for Fiscal Year 2006, I ask that you 
do everything in your power to adequately fund programs for our 
nation's veterans.
    Providing quality, affordable, and accessible health care services 
to our nations' veterans must be a priority. In my district in North 
Carolina, we have been working on establishing a Community Based 
Outpatient Clinic and must have the funds to do so. We must adequately 
care for our nation's heroes. 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 2006, there are 
a 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 
foreign operations. Sending hard-earned American taxpayer dollars 
overseas to fund programs in other countries and international 
organizations should not be a top priority when we must meet so 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. This program began in 1950 when the Federal Government 
acknowledged that it has a responsibility to reimburse local public 
school districts for local tax revenue 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. 
Impact Aid literally funds the school system. It takes the place of 
local tax revenue that otherwise would flow to the school system if 
Uncle Sam wasn't the primary presence in the County.
    This year the President's Budget proposal funds Impact Aid. In 
tight budget times, this doesn't sound so bad. However, federally 
impacted school systems know that level funding actually means a loss. 
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.
    The House Impact Aid Coalition was formed in 1995 to promote and 
improve the Impact Aid Program. Our coalition has grown from just 
twelve Members of Congress in 1995, to its current membership of 129. 
As a Coalition Co-Chair, I join my colleagues to support our goal to 
increase funding for the Impact Aid Program to $1.281 billion, a 3 
percent increase over last year's conference report funding level. At 
this level, school systems would be able to maintain their vital 
programs and Congress would affirm its commitment to the program.
    Further helping strengthen our Nation's education system, many of 
my constituents, college students and Community College Presidents, 
have contacted me with their concerns regarding Perkins funding. The 
Carl D. Perkins Vocational and Technical Education Act funding is vital 
to my district, and to the entire North Carolina Community College 
System. As Congress looks for ways to improve the Perkins program, I 
urge this Committee to recognize that we must not compromise the 
success of those that look to Community Colleges for workforce 
training. We want our young people and those seeking retraining to be 
prepared for the 21st Century workforce. By eliminating Perkins funding 
altogether, I fear we would working against our own goal of helping 
those institutions that are so vital to the economic development and 
workforce education of my district.
    Mr. Chairman, I also want to let you know that I have heard many 
concerns from farmers in my district regarding the President's budget 
proposal. My district is very rural and composed of many small to large 
farms through out the region. I cannot stress to you enough how many 
producers and communities depend upon a strong agricultural economy.
    It is important to consider what U.S. farm policy has already 
contributed to deficit reduction. U.S. farm policy for commodities has 
already achieved $16 billion in savings compared to the March 2002 CBO 
cost estimate. Meanwhile, mandatory funding for conservation, rural 
development, trade promotion, research, renewable energy, and forestry 
initiatives have all sustained cuts in the last 2 years totaling more 
than $2 billion. The recently proposed cuts to U.S. farm policy, when 
added to the mandatory savings already achieved, bring to rest a 
disproportionate burden of deficit reduction on the shoulders of our 
nation's producers and rural communities.
    As you know, producers have made long-term business plans based 
upon the programs currently available in the Farm Bill. Taking away or 
altering these programs brings uncertainty to the farming assistance.
    U.S. farm policy is also about our producers being competitive 
globally when many countries all over the world already have much 
higher price support systems than the U.S. Foreign subsidies and 
tariffs are 5 and 6 times higher than our own. It is important that we 
do not inadvertently make our farmers less competitive and hurt our 
much-needed agricultural exports.
    I would also like to stress my support for funding our agriculture 
conservation initiatives. I've seen first hand how incentive based 
conservation initiatives, such as EQIP and CRP, have been a major 
success in rehabilitating wildlife and wildlife habitat and improving 
air and water quality. I am hopeful that you will continue to support 
farming programs that have a high rate of success and that are 
extremely important to 8th District farmers.
    Finally, Mr. Chairman I would like to address the proposed cuts in 
funding to the Community Development Block Grant Program (CDBG's). The 
CDBG program provides local municipalities the opportunity to create 
jobs, build and improve much needed infrastructure, provide safe and 
affordable housing and leverage considerable private sector investment 
in communities.
    In my district, which has been hit particularly hard by the loss of 
textile and manufacturing businesses, the CDBG program has provided 
over $13 million in assistance to help keep these towns on their feet.
    CDBGs allow our local governments the flexibility to design 
programs that are most effective to meet their specific needs. I urge 
that the Committee make every effort to keep this important Program 
funded at or above Fiscal Year 2005's level.
    Mr. Chairman, thank you for the opportunity to testify before your 
Committee about these important programs. I appreciate your 
consideration and look forward to working with you on the Fiscal Year 
2006 budget.

    Mr. Conaway. Thank you, Mr. Hayes. Mr. Cooper.
    Mr. Cooper. No.
    Mr. Conaway. Several witnesses have talked about the impact 
that reducing Community Development Block Grant moneys has. Is 
there a way that we can quantify that? Any time you cut moneys, 
everybody says that has a bad effect on programs. But it might 
be helpful if there is some way we can say, given these grants, 
you know, to fix things--in my community it is used for curbs 
and gutters and sewers and infrastructure and those kinds of 
things that, once it is done it is done. And if we didn't have 
that money next year, we wouldn't do what we did this past 
year. Is there some way we can look ahead and see what impact 
these actual cuts will have instead of just saying that it is 
going to have a bad impact?
    Mr. Hayes. Absolutely. Those actions are underway. And at 
the same time, folks back home, I say to them, best thing we 
can do is cut your taxes. Don't send the money to Washington, 
because by the time we take our portion out of it and what you 
get back is not as good as if you kept it here. There are some 
funds that are going to be increased in other areas that would 
hopefully take some of that impact away and again give a 
positive impact.
    I think the idea of putting it in commerce is to use it for 
economic development, infrastructure, and things like that that 
is going to grow the economy and create more jobs, which is so 
important.
    Mr. Conaway. Thank you, sir. Appreciate your comments 
today.
    The gentlewoman, Ms. Waters. You are recognized.

   STATEMENT OF THE HON. MAXINE WATERS, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Ms. Waters. Thank you very much, Mr. Chairman. The 
President's proposed funding year budget 2006 will create a 
tremendous hardship on our Nation's low-income families, senior 
citizens, disabled persons, veterans, those seeking to improve 
their lives through education and job training.
    As the ranking member of the Housing Subcommittee of the 
Financial Services Committee, I am here to urge the committee 
to reject the disastrous budget cuts and program transfers in 
the U.S. Department of Housing and Urban Development (HUD) 
budget that the administration has proposed. If the President's 
budget were enacted, HUD would suffer a whopping 12 percent 
budget cut, the largest of any Cabinet department.
    As I said to HUD Secretary Jackson when he appeared before 
the Financial Services Committee yesterday, I am very 
disappointed by the huge budgets cuts and the massive program 
transfers away from HUD that the administration has proposed in 
its fiscal year 2006 budget. The HUD budget accelerates a 4-
year effort by the administration to dismantle critical HUD 
programs, to make deep funding cuts in these programs and, 
regretfully, to target these cuts to our most vulnerable low-
income families, seniors and disabled persons.
    The proposed elimination of the Community Development Block 
Grant and the 50 percent cut in the Disabled Housing funding 
are just two of the most noteworthy examples. We have an 
affordable housing crisis in much of this country. Just 2 weeks 
ago, the Los Angeles Times reported that police had to disperse 
a crowd of about 3,000 people vying for 150 low-income housing 
applications in Hollywood, CA. When some people rushed the 
line, a riot ensued.
    You could find a similar scene in many, many communities. 
As the National Low Income Housing Coalition regularly reports, 
there is not a single metropolitan area where an extremely low-
income family can be assured of finding a modest two-bedroom 
rental home that is affordable. There are literally millions of 
people who are homeless.
    Mr. Chairman, it is stunning to me at a time when the 
administration seeks $82 billion in a supplemental 
appropriation for Iraq, Secretary Jackson told us that HUD has 
to prioritize by cutting affordable housing programs because 
the Department's proposed budget will not permit these programs 
to be funded.
    The President's proposed budget would eviscerate CDGB to 
States and localities, thereby resulting in a loss of 
affordable housing investments of $1.16 billion; cut the 
disabled housing budget by 50 percent; continue an assault on 
the rental housing assistance safety net programs, that is 
Section 8 and public housing; eliminate future funding for the 
HOPE VI program; rescind $143 million in funding for 2005 HOPE 
VI funding that was only appropriated a few months ago; and cut 
funding for housing programs for Native Americans by 16 
percent. Funding for critically needed capital repair of 
housing units is cut another $252 million, and operating 
assistance is cut by $17 million.
    The overall fiscal year 2006 budget housing request is 9 
percent below last year's level, and 30 percent below the level 
when the administration took office after adjusting for 
inflation. Home block grants and the Housing for People with 
AIDS program, the HOPWA program, also cut. Even funding for 
housing counseling and for fair housing enforcement would be 
cut from the current funding levels.
    All these programs play a vital role in providing safe, 
decent, affordable housing for low-income families, and I am 
hopeful that we can join together from both sides of the aisle 
to keep from cutting these programs.
    I want to really put my attention at CDBG, the costs. CDBG 
is that block grant funding program that goes to the cities and 
the States to be disseminated among some small towns, that is a 
last-stand effort by the Federal Government to really give some 
assistance to the cities with critical problems that their 
budgets just won't meet.
    I was pleased to hear you mention that in your area, the 
cities and towns use this money for infrastructure. I, too, 
have five cities in my district, and they are small cities. 
Without CDBG they would not be able to support the needed 
repairs to the infrastructure that are so desperately needed 
all over the country. So it is not simply a matter of money 
that is going to follow 101(c)3 nonprofit organizations that 
are working with at-risk youth and with seniors and with other 
very, very needed areas in our cities, it is about support for 
these towns and cities that they could not get anyplace else. 
No, Mr. Chairman, they just don't have the budgets.
    This CDBG budget proposes to slashcommunity development by 
$1.9 billion, a cut of 35 percent from the $5.6 billion level 
at which these programs were funded in fiscal year 2005.
    The President is also proposing a major reorganization of 
community development programs under which nearly all of the 
programs that comprise a community development fund, including 
the Community Development Block Grant, would be moved out to 
the Department of Commerce. Now, I don't know what this is all 
about. When we talked with Secretary Jackson about this, they 
talked about taking 18 programs and transferring them over to 
Department of Commerce. I understand what the Department of 
Commerce does, and I support economic development in a very, 
very strong way, and there may be some programs like Section 
108 Loan Guarantee Program that is maybe better situated, even 
though, you know, this particular program is supported by the 
CDBG funds that would be over in HUD. But these are moneys that 
are used for the larger project developments in cities, like 
the development of old towns and big industries that will 
create a lot of jobs.
    So maybe there is some way that something like that could 
be worked out, but to have these other programs, what do you 
do? Do you release all of the people in HUD and bring in new 
people who have long years of experience? I mean, release the 
people in Commerce, bring in people from HUD, you transfer 
personnel, you train new personnel, you set up new departments? 
I don't know how this is done. If you are saying that the 
people who are there now were responsible for the Department of 
Commerce programs will then somehow magically all of a sudden 
know what to do with CDBG, I don't think so. So I don't 
understand why that is being done.
    Among the programs slated not to be funded under the 
President's proposals are Brownfields, Empowerment Zones/
Enterprise Communities, and the Rural Housing and Economic 
Development Program. Well, for those people who think that it 
is important to have economic development in the cities so that 
we won't continue forever to have to fund 501(c)(3)s because we 
don't have the kind of businesses and programs that can 
generate its own funding, it is a mistake to go into their 
empowerment zones that were set up for economic development and 
employment and all of a sudden get rid of them. We haven't 
finished the work yet. The same thing with, well, Empowerment 
Zones/Enterprise and economic development.
    I won't bore you with the rest of this testimony. I know 
you have been here for a long time, and you have still got 
Members to go. I have submitted 50 copies as required by the 
committee. I am very, very hopeful that we will all, Democrats 
and Republicans alike, see the value in CDBG and HUD and not 
allow it to be slashed in the way that is being proposed.
    Thank you.
    [The prepared statement of Maxine Waters follows:]

Prepared Statement of Hon. Maxine Waters, a Representative in Congress 
                      From the State of California

    Chairman Nussle, Ranking Member Spratt, Members of the Committee, 
thank you for the opportunity to testify before you today.
    Mr. Chairman, the President's proposed FY 2006 budget will create a 
tremendous hardship on our nation's low-income families, senior 
citizens, disabled persons, veterans, those seeking to improve their 
lives through education and job training, and many other groups.
    As the Ranking Member of the Housing Subcommittee of the Financial 
Services Committee, I am here to urge this Committee to reject the 
disastrous budget cuts and program transfers in the HUD budget that the 
Administration has proposed. If the President's Budget were enacted, 
HUD would suffer a 12 percent budget cut, the largest of any Cabinet 
Department.

                               HUD BUDGET

    Mr. Chairman, as I told HUD Secretary Jackson when he appeared 
before the Financial Services Committee yesterday, I am very 
disappointed by the huge budget cuts and the massive program transfers 
away from HUD that the Administration has proposed in its FY 2006 
Budget. The FY 2006 HUD budget accelerates a 4-year effort by the Bush 
Administration to dismantle critical HUD programs, to make deep funding 
cuts in these programs, and regretfully, to target these cuts to our 
most vulnerable low-income families, seniors, and disabled persons. The 
proposed elimination of the Community Development Block Grant Program, 
and the 50 percent cut in disabled housing funding are just two of the 
most noteworthy examples.
    Mr. Chairman, we have an affordable housing crisis in much of this 
country. Just 2 weeks ago, the Los Angeles Times reported that police 
had to disperse a crowd of about 3,000 people vying for 150 low-income 
housing applications in Hollywood, California, when some people rushed 
the line and a riot ensued. You could find a similar scene in many, 
many communities.
    As the National Low Income Housing Coalition regularly reports, 
there is not a single metropolitan area where an extremely low-income 
family can be assured of finding a modest two bedroom rental home that 
is affordable. Moreover, there are literally millions of people who are 
homeless.
    Mr. Chairman, it is stunning to me, at a time when the 
Administration seeks almost $82 billion dollars in Supplemental 
Appropriations, principally for the War in Iraq, Secretary Jackson 
would tell us that HUD has to ``prioritize'', by cutting affordable 
housing programs, because the Department's proposed budget will not 
permit these programs to be funded.
    The President's proposed budget would eviscerate CDBG flexible 
block grants to states and localities thereby resulting in a loss of 
affordable housing investments of $1.16 billion dollars; cut the 
disabled housing budget by 50 percent; continue an assault on the 
rental housing assistance safety net programs (Section 8 and public 
housing); eliminate future funding for the HOPE VI program; rescind 
$143 million dollars in FY 2005 HOPE VI funding that was only 
appropriated a few months ago; and cut funding for housing programs for 
Native Americans by 16 percent.
    Funding for critically needed capital repair of public housing 
units is cut another $252 million, and operating assistance is cut by 
$17 million. The overall FY 2006 public housing request is 9 percent 
below last year's level, and 30 percent below the level when the 
Administration took office, after adjusting for inflation. HOME block 
cuts and the Housing for People with AIDS program (HOPWA) also are cut. 
Even funding for housing counseling and for fair housing enforcement 
would be cut from their current funding levels! All these programs play 
a vital role in providing safe, decent, affordable housing for low-
income families. We must not cut these programs.
    The HUD budget will cut 50 percent of the funding for the Section 
811 program for disabled housing. It is inexcusable for this program to 
be cut, let alone singled out for a cut of this magnitude. The 
Administration budget also proposes to turn Section 811 into a rental 
assistance program only, ending the longstanding Federal role in 
funding the cost of construction of new affordable housing for the 
disabled.

                                  CDBG

    Now let me turn to CDBG. The Bush FY 2006 budget proposes to slash 
community development funding by $1.9 billion dollars, a cut of 35 
percent from the $5.6 billion dollar level at which these programs were 
funded in FY 2005. The President also is proposing a major 
reorganization of community development programs under which nearly all 
of the programs that comprised the Community Development Fund, 
including the Community Development Block Grant program (CDBG) would be 
moved out of the Department of Housing and Urban Development (HUD) and 
into the Commerce Department.
    Among the programs slated not to be funded under the President's 
proposal are Brownfields, Empowerment Zones/Enterprise Communities, and 
the Rural Housing and Economic Development Program. The 
Administration's proposal also eliminates Section 108 CDBG loans which 
have successfully been used by localities to leverage private sector 
capital for critical community development projects, and, thus, would 
throw into jeopardy the funding stream, the collateral, for Section 108 
CDBG loan guarantees already outstanding.
    These cuts would have a devastating impact on housing, neighborhood 
improvements, and social services for the elderly, the disabled, 
families with children, and the homeless. You can't shoehorn $5.6 
billion dollars in community development programs into a $3.71 billion 
dollar economic development program without many people being hurt.
    Mr. Chairman, as all of us know, CDBG funds are among the most 
flexible Federal funds available to cities, states, and community-based 
organizations. Funds can be used for a wide array of activities, 
including housing rehabilitation (loans and grants to homeowners, 
landlords, nonprofits, and developers), new housing construction, 
downpayment assistance and other help for first-time homebuyers, lead-
based paint detection and removal, the purchase of land and buildings, 
the construction or rehabilitation of ``public facilities'' such as 
shelters for people experiencing homelessness or victims of domestic 
violence, making buildings accessible to the elderly and disabled, 
``public services'' such as job training, transportation, health care, 
and child care (public services are capped at 15 percent of a 
jurisdiction's CDBG funds), capacity building for non-profits, 
rehabilitating commercial or industrial buildings, and loans or grants 
to businesses.
    The proposed CDBG cuts, if enacted, would have a devastating impact 
on housing, neighborhood improvements, and social services for the 
elderly, the disabled, families with children, and the homeless. The 
proposed transfer of community development programs, while requiring 
legislative action, is extremely ill-advised. The proposal also would 
reorient CDBG away from its traditional HUD focus of affordable housing 
and community development, to a Commerce Department whose focus is on 
economic development, and which caters to business interests.
    All of these community development programs play an important role 
in helping local governments improve their neighborhoods. If the 
proposed cuts were to be enacted, they would severely damage these 
communities' efforts to improve safety in their neighborhoods, create 
jobs, provide affordable housing and social services for their 
residents, and create a huge funding hole that States and localities 
cannot possibly fill.
    Mr. Chairman, I am also very troubled by the effects that the cuts 
to CDBG will have on affordable housing. Last year, $1.16 billion in 
CDBG funds were used for housing, resulting in 112,000 homeowners 
receiving funds for housing rehabilitation, 11,000 families receiving 
assistance to become 1st-time homeowners, and 19,000 rental housing 
units being rehabilitated. The proposed elimination of CDBG would 
result in a $1.16 billion cut in affordable housing funding.
    Finally, it appears that the Administration believes that community 
development funding should only be available in communities with 
poverty rates that exceed the average poverty rate. A proposal to limit 
funding to only the most distressed communities would effectively 
abandon efforts to help the millions of low-income persons living in 
middle income and economically diverse communities. Instead of carrying 
out the existing Federal policy objective of de-concentrating low-
income families, the proposal would further concentrate them in the 
poorest communities, and potentially further stratify society along 
economic and racial lines. CDBG funds should continue to be available 
to serve poor people wherever they happen to reside.

                               CONCLUSION

    Mr. Chairman, the President's misguided budget proposals do not 
meet the needs of the American people. I urge you to reject the 
President's proposals and substantially improve funding for affordable 
housing and community development as you write the FY 2006 budget 
resolution.

    Mr. Conaway. Thank you, Ms. Waters.
    Mr. Cooper, any questions or comments?
    Mr. Cooper. I would just like to thank the gentlelady. You 
do a terrific job not only representing your constituents, but 
also your voice for the voiceless all across this great country 
of ours.
    I know I have heard a tremendous amount of concern over the 
HUD cuts in my district. They can be devastating to folks. The 
CDBG cuts are bad. There are lots of things that we need to 
look at in this budget and correct, because there are some 
terrible mistakes made in the President's budget. I thank the 
gentlelady.
    Ms. Waters. You are certainly welcome.
    Mr. Conaway. Ms. Waters, thank you very much for coming 
today. I appreciate your testimony.
    Not to be argumentative, but I am a CPA, and I don't 
automatically subscribe to budget increases in programs to 
being our best interests. Conversely, I don't automatically 
subscribe to the idea that budget cuts or reduced funding in 
certain areas is bad.
    You said every single program that you mentioned today was 
getting cuts. You have very dire predictions as to what would 
happen if those happen. We have tough choices to make. We have 
limited resources to spread across an almost seemingly 
unlimited need across this great country, and look forward to 
working with you as we try to somehow try to reconcile between 
those two. So thank you for coming this afternoon.
    Ms. Waters. You are welcome, Mr. Chairman. Let me just say 
as I close and I leave, one of the good things about CDBG is 
the community is involved in the entire planning process as 
mandated by Federal law. Not only do they have to put the 
notices out so that the community comes together to go over and 
review what the city is doing, they, too, have the opportunity 
to suggest to the city where the money is best spent, and the 
process is one of the best ones that I have ever seen for 
planning. I am hopeful that we will take that into 
consideration as we look at this.
    Mr. Conaway. Thank you. I have got experience with my local 
United Way over a long time and have seen the good that this 
program does work and the good process that it has to go 
through, the annual scrubbing and competition, in effect.
    Ms. Waters. Yes.
    Mr. Conaway. So that we do have the money spent on the most 
important needs within the community.
    Thank you very much for your testimony this afternoon.
    Ms. Waters. Thank you.
    Mr. Conaway. Mr. Holt from New Jersey. You are recognized 
for 10 minutes.

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

    Mr. Holt. Mr. Conaway, Mr. Cooper, thank you very much. I 
appreciate the opportunity to be here today. I would certainly 
concur in the remarks of Ms. Waters, Ms. Capito, Mr. Hayes, all 
important points. No doubt all day today you have heard about 
what we can do to meet the needs of the people of the United 
States, whether we are talking about food on the table or 
housing.
    Let me tell you, if we are economically going to be able to 
meet those needs, we must invest in innovation. It is the 
engine that drives our economy. Science and technology 
leadership must not be taken for granted. Excellence in science 
and technology requires sustained, appropriately funded 
research in a broad range of fields. This is not a luxury. It 
is not welfare for people in lab coats. It is our future well-
being. It is the quality of life of Americans, maybe not this 
year's research for next year's food on the table or next 
year's housing, but in a very real way it is our future.
    The President has proposed that the overall U.S. research 
and development budget increase by about 0.6 percent in fiscal 
year 2006 to $132.3 billion. Looked at one way, you would say 
the Federal investment in research and development has been 
increasing, but it is a little bit deceptive.
    If we put aside the development part of the research and 
development budget, and this is primarily for defense and 
homeland security development projects, important as they are--
but if we put that aside, the Federal science and technology 
budget, which would be the real research part, the proposed 
spending would be about $60 billion, down by 1.5 percent from 
2005 spending.
    Now, if the U.S. standing in science and technology were 
secure, we might be able to tolerate this, but our leadership 
in science and technology is not secure. If we were concerned 
about jobs going overseas or just meeting our needs here at 
home, we must be the innovation leaders in the world. As it is, 
other countries are spending significantly in science and 
technology, in research and development. More and more of the 
best patents are foreign, more and more of the best scientific 
papers are written in other countries, more and more graduate 
students are choosing to stay in their own countries or go to 
other places other than United States universities for a first-
rate education.
    Now, these unprecedented advances in worldwide science and 
engineering are great news for the world and for humankind at 
large. Scientists and engineers around the world no doubt will 
be making important discoveries in innovation. But this is not 
great news for the United States as a country. The United 
States is at best treading water.
    We can't do that forever. We are living off much of the 
innovation that came from the 1960s and 1970s. We are overdue 
for a real significant investment in research and development. 
As a percentage of GDP, the funding for physical science 
research has been in a 30-year decline.
    Now, Mr. Conaway, Ms. Schwartz, as I would, or any other 
Member of Congress, you would like to be introduced to the next 
Rotary Club meeting as a future-oriented Member of Congress. It 
can't be just words. If we don't actually make this investment 
in science and technology and research and development, we 
cannot call ourselves future-oriented.
    Let me focus on the National Science Foundation (NSF). The 
NSF isn't the only part of the Federal R&D effort that requires 
more support, but it is key to our infrastructure. We have in 
recent years doubled the funding for the National Institutes of 
Health (NIH). We have made large increases in the last few 
years, as I made reference to, in development in the Department 
of Defense (DOD).
    The NIH and the DOD research and development will not be 
able to use these funds well if we don't make a concurrent 
investment in the National Science Foundation. It is from the 
National Science Foundation that the scientists are trained. It 
is from the National Science Foundation that the 
instrumentation and methodology is developed so that we can 
actually get good results from our huge investments that we 
have, I think, wisely made at NIH and in DOD.
    In 2002, the President signed into law the NSF 
Authorization Act that authorized a doubling in the budget of 
the NSF by fiscal year 2007. We are not keeping at even one-
quarter of that rate. In other words, NSF is not on a doubling 
path. If we don't put it back on a doubling path, we will be 
squandering the many billions of dollars that we are putting 
into NIH, DOD, and elsewhere.
    This is just one example of the attention that I believe 
this committee needs to devote to research and development. 
There are other things. Let me just make brief mention of the 
Hubble Space Telescope.
    The Hubble Space Telescope is one of the most productive 
scientific instruments in the world's history. Its best work is 
perhaps yet to come. It is expanding our understanding of the 
universe and where we are in the universe. Prematurely ending 
its mission would be, well, a shame and a disgrace.
    Another example I would point to is fusion energy research, 
supported by the Department of Energy, Office of Science. The 
administration proposes that we make severe cuts to the U.S.-
based research so that we can fund the International 
Thermonuclear Experimental Reactor (ITER). This could be based 
in Europe or Japan.
    Now, I think supporting ITER is a good idea, but supporting 
ITER must be in addition to, not instead of, a U.S.-based 
program. If we don't invest in the United States, the United 
States will not have the capacity to use the results in the 
international reactor or to contribute significantly to the 
international reactor or, what really counts, to be able to 
develop fusion energy as a marketable energy source in years to 
come.
    A good science budget is within our reach. In the scheme of 
things, we are talking about seed corn, which is a small 
fraction of our harvest. A good budget for science can be 
achieved. I recognize that there are immediate needs, social 
needs, human needs, but the science is our future.
    I hope I have made the case, I have tried to make it as 
strongly as I can, that not to make a significant investment--
for example, not to put NSF on the funding doubling path that 
we in Congress authorized just a few years ago--would be to put 
the future and perhaps ourselves in jeopardy. Thank you.
    [The prepared statement of Rush Holt follows:]

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

    Mr. Chairman, thank you for the opportunity to testify today on 
President Bush's Fiscal Year 2006 budget submission to Congress. I want 
to use this opportunity to address Federal support for science.
    Innovation is the engine that drives our economy. The United 
States' leadership in science and technology is the basis of our global 
economic and political leadership.
    Our science and technology leadership must not be taken for 
granted. Excellence in science and technology requires well conceived, 
sustained, and appropriately funded research in a broad range of 
fields. We need to advance our understanding of the structure of the 
universe, of the laws governing matter and energy, of the properties of 
materials, and of the building blocks of life. We need to develop new 
and better ways to serve human needs with new materials, processes, 
devices, and systems. To achieve this we need a very well conceived and 
adequately funded budget for research.
    President Bush has proposed that the overall U.S. Research and 
Development budget increase by only 0.56 percent in FY 2006, to $132.3 
billion. I am pleased that in recent years, including this year, the 
Federal investment in R&D has been increasing. But this increase is 
largely due to significant increases for weapons research and 
development, for the creation of new homeland security R&D programs, 
and for the now-complete campaign to double the National Institutes of 
Health (NIH) budget. If we put aside the ``development'' part of the 
R&D budget, which is primarily for defense and homeland security 
development projects and which has grown to more than half of the R&D 
budget, and look at the remaining part, called the ``Federal S&T 
budget'', the proposed spending would be $60.8 billion, down 1.4 
percent from FY2005 spending.
    If the U.S. standing in science and technology were secure, a 1.4 
percent cut in this time of tight budgets might be appropriate. If U.S. 
science were in a secure position, we could rest on our laurels, make 
some economies, and cut back a bit on science in order to make it a 
tiny bit easier to cover the huge deficits that have been built up by 
the current Bush administration.
    But our leadership in science and technology is not secure. The 
United States is still the world leader in science and technology, but 
other countries are catching up. Other countries are significantly 
increasing their spending on science and technology, and they are 
getting results. More and more of the best patents are foreign. More 
and more of the best scientific papers are written in other countries. 
More and more of the world's best graduate students are choosing to 
stay in their own countries for graduate school rather than coming to 
the great universities of the United States, because their universities 
increasingly provide a first-rate education.
    These unprecedented advances in worldwide science and engineering 
capacity are great news for the world. Scientists and engineers in 
other countries will undoubtedly make important discoveries and 
innovations, and they will build new industries that will benefit us 
all.
    While other countries have been surging ahead, the United States 
has been treading water. Federal funding of basic research in 
engineering and the physical sciences has experienced little to no 
growth over the last thirty years. As a percentage of GDP, funding for 
physical science research has been in a thirty year decline.
    The United States absolutely cannot afford to lose its lead in 
science. We have to innovate faster and better than anyone else, or we 
will eventually be second-rate. In every generation since World War II, 
there have been dire warnings that the United States is loosing its 
economic and technological edge. Somehow we have always managed to 
regain our leadership position. But if you look back, you can see that 
each time, we have regained our edge because of research and innovation 
that has received substantial Federal support.
    Probably every Member of Congress would like to be introduced at 
their next Rotary meeting as a future-oriented Member of Congress. 
Science, technology, and education are the future of America.
    Today I want to focus my recommendations on the budget for the 
National Science Foundation (NSF). NSF is not the only part of the 
Federal R&D effort that requires more support. But NSF is key to our 
scientific infrastructure. If NSF is not strongly supported, U.S. basic 
research is in trouble.
    In 2002, President Bush signed into law the NSF Authorization Act 
(P.L. 107-368). This authorized a doubling of the budget for the NSF by 
FY 2007, to $9.8 billion, through annual 15 percent increases. In fact, 
it has taken 4 years for NSF to receive an overall increase of 15 
percent, from $4.8 billion in FY 2002 to the President's proposed $5.6 
billion in FY 2006. We need to get back on track toward an NSF budget 
of $10 billion. We can achieve this for NSF through annual 15 percent 
increases over the next 4 years. For FY 2006, the NSF appropriation 
should be $6.3 billion, a 15 percent increase over FY 2005.
    There are other ways that the budget needs to be revised to support 
science. An important example is the Hubble Space Telescope. Hubble is 
one of the world's most productive scientific instruments. It has 
expanded our understanding of the life and death of stars. It has shown 
us the accelerating expansion of the universe and the existence of 
black holes. It is the most successful science project in NASA history. 
The President proposes to cancel servicing of the Hubble Space 
Telescope, prematurely ending its mission. We need to restore this 
funding.
    Another example is fusion energy science, supported by the DOE 
Office of Science. The Administration proposes that we make severe cuts 
in U.S.-based research, so that we can fund the International 
Thermonuclear Experimental Reactor (ITER) fusion project, which will be 
based in Europe or Japan. We should definitely support and participate 
in ITER. But to benefit the United States, supporting ITER must be in 
addition to, not instead of, having a U.S.-based program. Otherwise the 
United States will not have the capacity to develop fusion energy; 
technology leadership will go to Europe and Japan.
    This year marks the 100th anniversary of Einstein's first 
revolutionary papers. Einstein's science transformed our understanding 
of the physical world, from the sub-atomic structure of matter and 
energy to the dynamics of the universe. The discoveries of Einstein and 
many other scientists in the twentieth century have led to innovations 
that have powered the U.S. economy. Now, in the twenty-first century, 
we need to support basic science, to ensure that America has a strong 
scientific foundation for the future.
    Scientists are creative, disciplined, and work hard. As Members of 
Congress, we too need to be creative and disciplined, to provide the 
support necessary to enable U.S. scientists to make new and as yet 
unimagined discoveries. A good budget for science is within our reach. 
Yes, the United States has immediate needs that must be accommodated in 
the overall budget. But science is our future, and it must be 
appropriately supported.

    Mr. Conaway. Mr. Holt, thank you for those comments.
    Ms. Schwartz, do you have any comments for the gentleman 
from New Jersey?
    Ms. Schwartz. Thank you, Mr. Chairman.
    Thank you, Mr. Holt. I just want to appreciate, certainly, 
your own expertise as a scientist, that you would bring this to 
our attention, and I think that you point out really very 
correctly that we had already made a commitment, that Congress 
had made a commitment--not me, I wasn't here at the time--but 
that the Congress had made that commitment in 2002. It seems we 
are reneging on that commitment.
    You point out that these are--it is a difficult budget, 
there isn't--there are choices to be made. There is certainly 
the issue of priorities that have to be made.
    My question to you really is to what degree do you think 
this is isolated to an area? I mean, you are from New Jersey. 
Obviously, you mentioned Mr. Einstein and some of the rich 
scientific community in New Jersey. Being from the southeastern 
part of Pennsylvania, I have been very involved in promoting 
biotechnology as one of the advances that we ought to make our 
investment in. But I understand as well we have to step back a 
bit and really look at basic science and scientific research 
that really leads people to consider it.
    I wonder if you could speak at all about any particular 
parts of the National Science Foundation funding that would be 
dramatically hurt, that might hurt in particular either 
geographic areas or scientific communities or populations you 
think we are going to cut out. Will they cut funding for young 
people and some of the National Science Foundation scholarships 
that are provided and other things in particular?
    Mr. Holt. Yes, Ms. Schwartz, thanks for the question. It 
does appear that education might suffer disproportionately in 
these budget cuts. But the point I want to make is this is not 
isolated to any geographic area or to a subject area. It is the 
source of our productivity and economic vitality in every State 
in this country, really, in every town and village. Our 
previous investment in science and technology over the decades 
is why we are the global, economic, political and, I would say, 
military leader. It makes possible our discussing CDBG and all 
of the HUD programs and all of the other things we are talking 
about here. We would not have a $12 trillion economy had it not 
been for the investments in transistors, lasers, medical 
technology, which came from basic research.
    The National Science Foundation looks at new materials and 
processes and devices and systems. It looks at information 
technology and computer sciences, which are not applicable to 
just one area, but all areas. We went through, over a 6-year 
period, a doubling of the National Institutes of Health, up to 
several tens of billions of dollars now, and I think that was 
wise. There is a lot of good research coming out of that, but 
we can't sustain that research unless we are producing the 
scientists, the methodology, the instrumentation, that is used 
for this NIH research, and much of that comes from the NSF. 
That is why the decision was made to put NSF on a doubling 
path.
    Doubling NSF, by the way, would still make it only a small 
fraction of the budget of NIH. We are not talking about, you 
know, massive spending. Yes, it is billions of dollars, but it 
is relatively small in the scheme of things.
    Ms. Schwartz. OK. Just one last question, or almost a maybe 
comment, is that it is both the really hard, serious dollars 
that we need to do this research. But do you think it is also a 
message that we don't care about science at a time when we, as 
you point out, need to be really clear to our young people that 
science matters, and also to our global competitors, if you 
will, that science matters, that we will be making that 
investment in science, because I think otherwise, as you point 
out, they are already getting ahead--and while I am not sure 
the sort of space race that we were engaged in many, many years 
ago, but did compel a lot of young people to think about 
science as a career, that I am not sure we are doing it, if we 
are actually cutting science funding as you point out, a 
National Science Foundation funding.
    Do you think it is not just the hard dollars on the actual 
science that gets done, but the message as well?
    Mr. Holt. Well, Representative Schwartz, as you know, this 
is a topic for a lengthy discussion at another time. But a 
failing of our education system is that we have told 80 percent 
of Americans that science is for scientists. Consequently, most 
people think that spending at the National Science Foundation 
is for scientists. No, it is for every man, woman and child in 
America. Science is for all of us, not just the scientists.
    Ms. Schwartz. OK. Thank you very much, Mr. Holt.
    Mr. Conaway. Mr. Holt, thank you. I think it might help put 
some additional meat on the bones for your arguments if you 
would include in your presentation as an example the number of 
engineers being produced by China today versus in America. I 
know that is just one segment of the scientific community, but 
it is a factor of, I think--I could be corrected on this, but I 
think it is like eight times the number of engineers being 
produced in China each year than in America, so that it has 
dramatic ability not just on our dollars, but on our ability to 
compete in the world.
    So thank you for your testimony today. I appreciate that.
    Mr. Holt. Thank you, Mr. Conaway.
    Mr. Conaway. It is now my high pleasure to welcome my 
neighboring Congressman from Lubbock, Texas, Mr. Randy 
Neugebauer. Mr. Neugebauer, 10 minutes.

  STATEMENT OF THE HON. RANDY NEUGEBAUER, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF TEXAS

    Mr. Neugebauer. Thank you, Mr. Conaway and Ms. Schwartz, 
for conducting these hearings.
    Mr. Conaway. I was hoping you would say Mr. Chairman. I 
would really like to hear that.
    Mr. Neugebauer. Thank you, Mr. Chairman. In fact, I ask 
unanimous consent to revise my remarks and make my written 
remarks part of the record.
    Mr. Conaway. Without objection, sir.
    Mr. Neugebauer. Thank you, sir. I know you have heard a lot 
of testimony, and the hour is drawing close to the evening, but 
I wanted to make a few points.
    I just finished about 13 or 14 town hall meetings all 
throughout my district, and I think there is a consensus of the 
people in the 19th District of Texas that $2.57 trillion is 
enough to spend for our budget. In fact, they agree with me 
when I say that Congress doesn't have an income problem, it has 
a spending problem, and it is incumbent upon us, as Members of 
Congress, to tackle this problem to begin to reduce these 
deficits so that we do not leave our children and our 
grandchildren with this huge debt.
    As we look forward to our budget, I think one of the things 
that I want to encourage you is that I think that the President 
sent over a good target, $2.57 trillion. But you know if we can 
do better than $2.57 trillion, then I think the taxpayers get 
an extra dividend. So as we put this budget together, I don't 
want us to work toward one mark, but work toward a budget that 
is fiscally responsible and that spends American taxpayers' 
money wisely.
    If you recall, the President during his State of the Union 
message said, you know, if we can't spend the American 
taxpayers' money wisely, we shouldn't spend it at all. And I 
think we all agree that that is exactly what we should be 
doing.
    One of the things that I think is important about this 
budget process is that we make this budget document flexible, 
so that our authorizing committees and our appropriation 
committees can go and do the work that they have been 
challenged to do. Let them go through the budget and look for 
ways that we can save, look for programs to eliminate. The 
President sent over a list of about 150 programs that he 
believed that we could consolidate or eliminate. You know, I 
call that a good start. So I think we should not just limit our 
look to those 150 programs that the President sent over, but 
certainly look at other programs.
    We tend to focus, when we go through this budgetary 
process--and last year we did reduce nondefense, nonhomeland 
security discretionary spending, but that is such a small 
portion of the budget that I think we have to look through the 
entire budget document. And I think we have to look at 
mandatory spending.
    Mr. Chairman, I am going to quote you, as I heard you say 
earlier in the week last week, that if you are going to go duck 
hunting, that you have got to go where the ducks are. As I 
think we go through this budget, I think that all mandatory 
spending should be up for a look and not just some parts of 
mandatory spending and the discretionary spending, because we 
do know that the fastest-growing part of the budget where we 
have seen the most increases is, in fact, in the mandatory side 
of the budget.
    As it is--we look at these programs, particularly we look 
in the agricultural program, I know in the President's budget, 
he pointed out that he wanted to look at taking some of the 
cuts from the farm programs.
    As you know, when you look at the total USDA budget, that 
over 50 percent of that budget is mandatory spending on not 
really farm-related expenditures, being nutritional programs. I 
think if we are going to give a scrub to the USDA budget, the 
agricultural budget, that we need to look through the entire 
mandatory spending part of that.
    One of the things that concerns me is that coming from the 
small business world, I have watched government over the years 
in making policies 1 year and changing the policy the next. 
When you are out and making investments and taking risks and 
borrowing money, that makes it very difficult for our small 
business people. It makes it very difficult for farmers and 
ranchers across America.
    And so we, in 2002, we passed a farm bill. What we said to 
the producers and--in America, you know, here is a multiyear 
policy for farm programs in this country over the next 5 or 6 
years. You know what those farmers and ranchers did? They went 
out and they leased land. They went to their banker. They 
showed him a 5- or 6-year business plan where they were going 
to buy new machinery and equipment to be able to farm more 
effectively and efficiently.
    Quite honestly, what makes American producers to be able to 
compete in this economy on an unlevel playing field when it 
comes to trade is the fact that our farmers and ranchers have 
developed a great deal of efficiency through technology and 
productivity. The productivity has really come from getting 
larger. So the family farm in my district that used to be a 
half section or a section is now a family farm that is farming 
4,000 or 5,000 acres of land, and it is through that efficiency 
that they have been able to compete in a global economy where 
they are competing with not really other producers in other 
countries, but literally competing against those countries, 
because those countries are subsidizing their producers at 
larger rates than our current farm policy.
    You know what else is good about the farm program is we did 
a multiyear program, but we also put together a farm program 
that is working. It was designed to be a safety net. In fact, 
in the first 3 years, it really only cost us what we had 
projected for 2 years, some $17 billion less than what we had 
projected for those farm programs to cost.
    So it is just not good policy to change the rules in the 
middle of the stream. I think particularly for agriculture 
right now it is important, because there are a lot of things 
that are going on that we are doing on multiple fronts for our 
producers in our country.
    We are at the table right now with the WTO. What we have 
said in that framework is we have asked those other countries 
to put their subsidies and their tariffs on the table, and we 
have agreed to do the same thing. I think it would be premature 
for us to start taking some of our negotiating chips off of the 
table from a policy standpoint until we have concluded those 
negotiations.
    Just today we got a ruling where Brazil won a ruling 
against the United States, saying that the current farm policy 
in America violates the WTO. All of us know that we are in 
compliance with the WTO ruling, but, again, that is just 
another one of those issues that we are going to have to 
negotiate, and we are on the tail end of this farm--current 
farm bill and on the beginning of a new farm bill. I think that 
is the appropriate time for us to begin to address some of the 
issues that are brought up about how we are going to provide a 
safety net for producers in the future.
    I feel very confident, and as I talked through with 
producer groups all throughout my district, the agricultural 
committee wants to be a player, they want to be a partner in 
reducing this Federal deficit, but we have to do it in a smart 
and wise way, a way that is a win/win for America. We have to 
do it in a way that is fair to agriculture and fair to other 
areas of our budget.
    So I hope, Mr. Chairman, as we go through this budget 
process, I am ready to roll up my sleeves and help bring this 
number in, hopefully less than $2.57 trillion. I think that 
would be a real plus. I think it is a doable thing, but I hope 
as we do that, that we will make sure that we do it in a way 
that we are making good policy for America while at the same 
time trying to bring home a dividend of less spending for the 
American people.
    Thank you, and thanks for your time.
    [The prepared statement of Randy Neugebauer follows:]

   Prepared Statement of Hon. Randy Neugebauer, a Representative in 
                    Congress From the State of Texas

    Chairman Nussle and members of the House Budget Committee, thank 
you for the opportunity to present my views on the 2006 Budget 
Resolution.
    I think many of us agree that a Federal budget of more than $2.5 
trillion dollars provides enough resources for the government. As I 
tell my constituents, we don't have an income problem here in 
Washington; we have a spending problem. As you put together this year's 
resolution, I ask that you keep our budget total at or below the total 
recommended by President Bush.
    Even with the recent economic growth and growth in revenues, we 
continue to spend more than we take in. I commend the Committee's 
effort last year to slow the increase in non-defense discretionary 
spending, which we ultimately managed to keep to 1.4 percent. Holding 
down or decreasing discretionary spending, however, is not going to be 
enough to reduce the deficit when this spending is less than 20 percent 
of the budget.
    When meeting with constituents last week in my district, I used the 
analogy that if you are going duck hunting, you go where the ducks are. 
Well, if we are going to reduce the deficit, we have to go where the 
spending is.
    We are at war, so funding for defense and security must remain a 
priority. However, there are certainly non-defense discretionary 
programs that can be reduced, consolidated or eliminated, and we must 
address mandatory spending in order to continue down the path toward 
deficit elimination. When the rate of growth in mandatory programs far 
exceeds the rate of growth in the economy, these programs simply are 
not sustainable.
    I encourage the Budget Committee to set reconciliation targets for 
mandatory spending, and I also ask that you give the authorizing 
committees full discretion to determine how we meet those targets. We 
know this won't be an easy process, but it is our responsibility to 
address the unsustainable spending growth in order to maintain 
important programs and services for the future.
    One area I want to address in a bit more detail with you is 
agriculture. Mr. Chairman, my constituents and I appreciated your 
remarks last month during a C-SPAN interview. I agree with you that we 
need to look at all the mandatory spending within USDA, not just farm 
programs, which comprise just one-half percent of the Federal budget.
    The 19th district of Texas is heavily dependent on its agricultural 
economy. Farmers, lenders and input providers have made investment 
decisions based on a multi-year farm policy, which will be reauthorized 
within the next 2 years. The 2002 Farm Bill has proven to be a very 
effective safety net for our producers, providing support in times of 
lower prices, and reducing support when it is not needed.
    During the first 3 years of this policy, farm programs have cost 
$14 billion less than the Congressional Budget Office predicted when 
the legislation passed. Even though spending will increase somewhat 
this year due to lower prices, total spending over the life of this 
Farm Bill is still projected to be less than was predicted. Changing 
the rules of the game now, and then again in 2 years, is not sound 
policy.
    Budget decisions we make in agriculture today will not only affect 
the 2007 Farm Bill, but they will also affect our negotiating position 
in the World Trade Organization. If we take all of our chips off the 
table now, we will not have anything left to negotiate with as our 
trade representatives continue efforts to open new markets and reduce 
other barriers to U.S. products.
    During meetings with constituents throughout my district last week, 
farmers understood the importance of balancing the budget, and they are 
willing to do their part to reduce the deficit. However, they do not 
support agriculture bearing a disproportionate share of the burden. 
Neither do I, Mr. Chairman.
    As you write the House budget resolution, I ask that you fairly 
distribute reconciliation instructions across areas of mandatory 
spending, basing them on shares of the budget and contributions already 
made to budget savings. I also ask that the budget does not restrict 
flexibility of the authorizing committees in writing reconciliation 
legislation.
    Our constituents are looking to us to make responsible decisions 
about the use of their hard-earned tax dollars. They are counting on us 
to set the right priorities and follow thorough on past commitments. 
Thank you for your work on the first step in our budget and spending 
process. Mr. Chairman, I appreciate your efforts to ensure that our 
most important needs are met and that deficit reduction is shared 
proportionally.

    Mr. Conaway. Thank you, Mr. Neugebauer. I appreciate those 
comments.
    The thing you did point out is the wisdom of this process 
in that the Budget Committee simply sets, to use Chairman 
Nussle's phrase, the fence around it, around this, the number 
of dollars that we are going to spend, and the folks who know 
that--the most about various programs you authorize, the 
committees and the appropriation committees, will be charged 
then with doing the heavy lifting of deciding how much that 
money is spent and where. So I think there is great wisdom in 
that.
    Ms. Schwartz, do you have comments?
    Ms. Schwartz. Thank you. Maybe just to ask you if you had 
any additional suggestions for us, as we sit on the Budget 
Committee, and while it is just parameters, you make a pretty 
strong point that $2.5 trillion is plenty of money, that we 
should look for additional programs to cut, additional spending 
to cut.
    Of course, this particular budget anticipates a certain 
amount of deficit, adding a certain amount to the deficit of 
$427 billion. You didn't mention that, whether you actually 
have some concerns about that in addition, or whether you would 
set that as a parameter to--and if you have any specific 
suggestions about where we could cut another $400, $500 billion 
from the budget, where you would cut in that spending, what 
programs you would target, whether you would want that all to 
come out of the health spending; you suggest the mandatory 
program. So I assume you are talking about cutting some of the 
health programs that are available to seniors or health 
benefits available to--where would you cut?
    Mr. Neugebauer. That is a very good point.
    Ms. Schwartz. What would your suggestion be in terms of 
additional hot spending cuts that you would want to make; what 
other programs in addition to your support for cutting the 150 
programs already? Inherent in your statement is to cut that, 
but I assume you don't think we should be adding to the deficit 
either. Many of us don't think we should be adding to the 
deficit. But where would you cut?
    Mr. Neugebauer. Well, thank you for that question.
    First of all, I think the overall goal as to what would I 
like to see the deficit be, I would like to see the deficit be 
zero. I would like to see a surplus. But the way we are going 
to eventually get there is for us to slow the rate of growth in 
government down to the same rate of the growth in our economy.
    Our economy is not growing at the same rate of government 
spending, so you are never going to be able to fix the deficit 
problem until you get the rate of growth in government spending 
in line with the rate of growth in our economy.
    What we have already seen is we have stimulated the economy 
last year, and as you recall, we thought that the deficit was 
going to be actually about $100 billion more than what it 
actually was, and how did we do that? Well, we started growing 
the economy at a very rapid rate, and I think the last figures 
that came out just last week is we are growing our economy 
right now at 3.8 percent. Unfortunately, the rate of growth in 
the government has been in the 4 percent and nearly 5 percent 
area.
    Ms. Schwartz. So you don't have any hope that we might be 
able to grow the economy. You feel like it is pretty strong.
    Mr. Neugebauer. I think even Chairman Greenspan when he 
comes up to the Hill would tell you that this is pretty strong 
growth. So we were able to do that by leaving more taxpayers' 
money in their hands. So when I said we don't have an income 
problem, we have a spending problem, that is what I mean. I 
don't think we need to do anything on the income side.
    As it comes to programs, one of the first areas I think we 
need to look at is tighten up the waste, fraud and abuse. For 
example, one of the examples in the USDA budget is food stamps. 
We know that USDA is now bragging that their waste, fraud and 
abuse is now less than 10 percent, but I think at one time it 
was 10, 11, or 12 percent.
    Unfortunately in that budget, that is in real money so to 
the extent possible, I think we have to look at it in the areas 
of tightening up some of these programs.
    We also have people that have been on these programs for a 
number of years. The question is are their ways to be able to 
transition these people into a work environment and get off of 
some of these programs?
    So I think as we go through all of the budgets, I think we 
have to tighten up the strengths and say, you know, make sure 
that we have deserving people on these programs, evaluate how 
we are administering these programs, if there are ways to say 
to those agencies, look, you know, an 8 percent or 9 percent 
fraud rate in your budget is unacceptable. You are going to 
have to get that number down by this amount, and the way we are 
going to help you get there is we are going to cut your program 
by about half of that fraud rate or three-fourths of that fraud 
rate and really get serious about that.
    I think the only way we are going to get there is to put 
some fairly measured constraints in this budget process on 
these agencies to make sure that if we are going to send those 
dollars out, that we are sending them out to the people that 
need them and serve them and not to folks that are just 
maneuvering through the system.
    Ms. Schwartz. Thank you.
    Mr. Neugebauer. Thank you.
    Mr. Lungren [presiding]. Thank you. Thank you very much, 
Congressman Neugebauer. We appreciate it very much.
    Mr. Neugebauer. Thank you.
    Mr. Lungren. Next up is Congressman Christopher Shays, but 
before----
    Mr. Shays. Well----
    Ms. Watson. I am waiting on someone.
    Mr. Lungren. Before you do, if I could put one thing in the 
record, I would ask unanimous consent that all Members of 
Congress be allowed 7 days to submit statements for the record. 
Without objection, so ordered.
    Congressman Shays.

 STATEMENT OF THE HON. CHRISTOPHER SHAYS, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CONNECTICUT

    Mr. Shays. Thank you, Mr. Chairman. I would like my full 
statement to be submitted in the record, and would want to say 
as a member of the Budget Committee for 12 years, I have deep 
respect for the work that you and your Ranking Member and 
others need to do to help get our country's financial house in 
order, and I am grateful that I don't play the same role that I 
used to. I am happy not to be on the committee. It is a tough 
job, and happy to be working on other issues, but eager to help 
you.
    I do want to say that I do agree with the previous speaker 
that ultimately the key is slowing the growth of spending so 
that the budget grows close to the natural growth of revenue. 
So if we are seeing a 4 percent growth in our economy, it is 
one thing to see spending growth that way, but when you see 
spending grow higher than that, it is not surprising that you 
end up with deficits.
    I want to speak to the fact that in this process of your 
debating what to do, I think you have to look at both 
discretionary and mandatory cuts, but I am particularly amazed, 
frankly, that the administration has sought to consolidate a 
number of grants into a block grant, particularly the CDBG 
grant in HUD and the HHS Community Services Block Grant. In the 
HUD, in the CDBG grant, it is $4.1 billion, and the Community 
Service Block Grant used by our CAP agency is about $631 
million.
    Republicans established these programs, and the logic was 
they would be there to allow for local communities to design 
programs, not in one big cookie cutter designed by the Federal 
Government, but designed by them. And our argument was give 
them the capability to determine their needs in their local 
community using a block grant program.
    Regretfully my own party gives block grants a bad name, 
because what we then do is we take 16 grants and put them into 
one grant. We take $5.6 billion--or some said it is not $5.6 
billion, it is $5.3 billion, whatever--and we combine it into a 
program with $3.7 billion, and then we say, OK, now you have 
the discretion. It just seems to me the way we are using block 
grants is to disguise cuts and then say to someone else they 
have to make these cuts.
    So I just really hope that in the process of your debating 
this issue that you don't take the programs that seem to me to 
be so advantageous to particularly the urban areas and just 
slash and not look at the whole host of areas throughout the 
Federal budget, including our health care plans and so on that 
we are--discussed earlier.
    We are going to see growth in Medicare and Medicaid. The 
question is should they be growing at the rate they are 
growing. I will tell you when we were on the Budget Committee 
in the late 1990s, we balanced the budget even sooner than the 
President thought, but we balanced it by allowing for a 1 
percent growth in entitlements. Then every year after that, our 
budgets were growing off of a lower base, and we balanced the 
budget doing that. It would be an amazing advantage if we 
returned to that concept.
    I also want to say this evening that whatever you do as a 
Budget Committee, if you don't have budget enforcement as a 
part of it, you simply aren't going to achieve what you need 
to. Whatever you decide to have as your budget, you have got to 
ultimately agree that it is going to be enforced. Without the 
enforcement capability, we never would have balanced the budget 
in the 1990s.
    So I want you to look at the entire budget, mandatory as 
well as discretionary spending; argue that you should look at 
the mandatory and say to all recipients, you know, we are going 
to have 1 year where we are not going to have growth, and then 
say to them from then on, let it grow at the natural rate 
again. But particularly of all the things to cut, I am 
surprised that we would look at Community Development Block 
Grants as one of the things to cut.
    So I thank you for that opportunity to address you, and I 
notice the full Ranking Member here, and I don't know why he is 
such a glutton for punishment that he would come back at 6.
    Thank you, Mr. Chairman.
    [The prepared statement of Christopher Shays follows:]

   Prepared Statement of Hon. Christopher Shays, a Representative in 
                 Congress From the State of Connecticut

    I appreciate the opportunity to testify before you today. As a 
member of the Budget Committee for 12 years, I have deep respect for 
the difficult work the Committee does.
    The need for affordable and quality housing in Connecticut's Fourth 
Congressional district cannot be overstated, and I am here to speak 
with you about proposed cuts to some of our most effective block grant 
programs. Specifically, Mr. Chairman, I request the Committee not 
include in the Budget Resolution the proposal to cut funding for the 
Community Development Block Grant (CDBG) and Community Services Block 
Grant (CSBG) programs and to transfer them to the Department of 
Commerce.
    I fully support the Administration's goal of halving the deficit by 
2009, but am deeply concerned some cuts to domestic spending will be to 
the detriment of our urban areas. It is critical we not give our cities 
the short end of the stick.
    The President's Budget includes a proposal to consolidate 18 
programs, including CDBG and CSBG, into a new program to be operated by 
the Department of Commerce. Proposed funding for this consolidated 
program would be 35 percent lower than the combined FY 2005 
appropriated level for these 18 programs. The pro rata reduction for 
CDBG alone would be $1.42 billion.
    This funding reduction would have a significant negative impact on 
the ability of states and localities to address local housing and 
community development needs. Housing would be particularly hard hit. 
Last year, $1.16 billion of CDBG funds were used for housing, resulting 
in 112,000 homeowners receiving assistance to rehabilitate their homes, 
11,000 families becoming first-time homebuyers, and 19,000 rental 
housing units being rehabilitated.
    I am also concerned that adoption of this proposal could eliminate 
funding for communities in Connecticut's Fourth Congressional district 
and around the state. Although the proposal does not include a detailed 
funding formula for the new program, it states that it ``targets 
resources only to communities that need assistance, based on poverty 
and job loss,'' further noting that only ``38 percent of CDBG funds 
currently go to States and communities with poverty rates that are 
lower than the national average.'' A dramatic narrowing of funding 
eligibility would jeopardize the ability of countless moderate and 
higher-income communities, like those I represent, to create jobs and 
affordable housing opportunities for lower income working families. The 
jobs are an important part of the region's economic engine.
    The CDBG program is based on the concept that local communities and 
states can best determine priority community development needs and then 
develop strategies and programs to address those needs. I couldn't 
agree more. The proposed changes to CDBG would jeopardize the 
flexibility and local control that are the hallmark of the program.
    CDBG is a program that works, and I support fully funding it. I am 
a member of the Financial Services Committee, which I expect will hold 
hearings on the Administration's proposal as committee of jurisdiction. 
I hope the budget resolution will not tie the hands of Financial 
Services and other authorizing committees in considering the future of 
this critical program.

    Mr. Lungren. Thank you, Mr. Shays.
    I think he came back because you and Congresswoman Watson 
were here, and he was looking for the magic pills that we could 
swallow so that we can get this deficit down.
    I don't want to keep you too long, but just one quick 
question. You said that we need to enforce the budget, whatever 
we decide, specifically----
    Mr. Shays. I believe in pay-go, and I believe that, 
candidly, that pay-go should apply to the spending side and the 
revenue side, the entitlement side, mandatory, and the 
discretionary side. If our argument is that tax cuts are a good 
thing, then let us pay for it with spending cuts somewhere 
else. I think that is what we need to do.
    Mr. Lungren. Mr. Spratt.
    Mr. Spratt. Mr. Shays, I will state so I can tell you what 
I told Representative LoBiondo earlier after I listened to his 
testimony.
    Mr. Shays. What is that?
    Mr. Spratt. Asking for CDBG, Corps of Engineers, a number 
of different things, I told him, take a good look at the 
Democratic resolution when it comes forward because I think it 
will cover a lot of the bases that are of concern to you.
    Give us a chance, and we will do a double-edged pay-go. I 
absolutely agree with you. It is effective. And no less a 
person than Alan Greenspan sat that three times and said I was 
a cynic, I was a skeptic to start with, but the budget process 
rules made a difference in the 1990s, and this one in 
particular should be extended.
    Mr. Shays. Now that I am no longer vice chairman of the 
Budget Committee, I have a little more flexibility, Mr. Spratt. 
I intend to vote for pay-go that looks at both sides of the 
equation.
    Now, if you combine it with a lot of other things that I 
don't like, you make it difficult, but if you provide us some 
opportunities to isolate some of these votes, not only would it 
be very hard to vote against, I would be frankly eager to 
support them.
    Thank you. Thank you very much.
    Mr. Lungren. Thank you, Mr. Shays.
    Congresswoman Watson, You have 10 minutes.

  STATEMENT OF THE HON. DIANE E. WATSON, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Ms. Watson. Yes, and thank you very much. I, too, thank 
you, appreciate that allotment of time, and I want to thank you 
and the Members for permitting the testimony here today about 
the same issue, Community Development Block Grant programs, 
because I am deeply concerned about the cuts that the 
President's budget imposes on a community--on community 
development programs, particularly the Community Block Grant 
Program, or CDBG, which I will refer to as that. I am further 
troubled by the proposal to move a number of HUD programs, 
including CDBG, to the Department of Commerce.
    The Community Development Block Grant program is our 
Nation's source of Federal funds for local community and 
economic development. Unlike most of what comes out of 
Washington, Community Development Block Grants permit local 
community groups, as was said before, to design and carry out 
programs tailored to the specific local needs of our 
neighborhoods. For 30 years, the CDBG program has empowered 
local groups to revitalize their communities and create 
economic opportunities.
    CDBG funds are at work in neighborhoods all across my 
hometown of Los Angeles. For instance, in Hollywood, the Public 
Health Foundation Enterprise's ``Aztecs Fire Fuels Crew'' 
trains ex-gang members how to become firefighters. In south Los 
Angeles, the Unity Collaborative, an alliance of community-
based organizations, has worked to mediate peace agreements 
between violent gangs in south Los Angeles, on the west side in 
Watts and in Baldwin Village. Along the Crenshaw Corridor, the 
Marlton Square Project is seeking to reinvigorate a decades-old 
shopping center with new housing and retail development, and 
the project will create jobs and offer more housing 
opportunities.
    The Los Angeles County Community Development Commission 
uses CDBG funds to operate its business technology center, 
California's largest business high-tech incubator, creating 
high-tech jobs for an impoverished neighborhood. The BTC 
currently serves 39 tenant and affiliate firms with high-tech 
specialties.
    CDBG is not a government hand-out; rather, it is one of the 
most effective tools cities and neighborhoods have to fight 
economic distress and to create jobs and to lead to creating 
wealth. Part of what makes CDBG such a powerful tool is that 
local governments have used CDBG funds effectively to leverage 
private sector dollars.
    Unfortunately, the President's budget for HUD effectively 
eliminates the Community Development Block Grant Program. The 
President's budget includes a proposal to consolidate 18 
programs, including CDBG, into a new program to be administered 
by the Department of Commerce. Proposed funding for this 
consolidated program would be 35 percent lower than the 
combined fiscal year 2005 appropriated level for these 18 
programs. The pro rata reduction for CDBG alone would be $1.42 
billion. But what is even more troubling is that this change is 
being put forward before the relevant committees here in 
Congress have a chance to hold hearings to judge the impact or 
the efficacy of these changes.
    For example, last year, $1.16 billion of CDBG funds were 
used for housing, resulting in 112,000 homeowners receiving 
assistance to rehabilitate their homes, 11,000 families 
becoming first-time homebuyers and 19,000 rental housing units 
being rehabilitated. But one might assume that after moving to 
the Commerce Department, these funds would not be eligible for 
use on housing. This would cripple local affordability housing 
efforts at a time when housing prices are skyrocketing. In Los 
Angeles, half of all families rent, and local fair market rents 
already are out of reach for more than half of these renting 
families.
    Another cause for concern is the President's replacement of 
CDBG's existing funding formula. The President's proposal notes 
that CDBG funds currently go to many communities with lower 
poverty rates, but simply because the community is not 
overwhelmingly poor does not mean it is not home to poor 
people. Changing the funding formula in the way suggested by 
the proposal could kneecap the effort of moderate-income 
communities to bring their poorer and excluded residents into 
the economic mainstream.
    While the President's goal of balancing the budget is 
laudable, it is shortsighted to do it by cutting a program that 
has been as successful as CDBG. As you draft the budget for 
fiscal year 2006, I urge you to restore full funding for the 
Community Development Block Grant programs and keep it at HUD.
    So, again, Mr. Chairman and Members, I would like to thank 
you so much for giving me this time, and I would like at this 
particular point to yield to Ms. Sanchez.
    I do have, Mr. Chairman, some supporting documents to be 
included in the record, and I have a list of those, and I will 
present it to staff.
    Mr. Lungren. They will be included in the record.
    [The prepared statement of Diane E. Watson follows:]

    Prepared Statement of Hon. Diane E. Watson, a Representative in 
                 Congress From the State of California

    Thank you, Mr. Chairman, and members of the committee, for 
permitting us to testify here today about the Community Development 
Block Grant program. I am deeply concerned about the cuts the 
President's budget imposes on community development programs, 
particularly the Community Development Block Grant program, or CDBG. I 
am further troubled by the President's proposal to move a number of HUD 
programs, including CDBG, to the Department of Commerce.
    The Community Development Block Grant program is our nation's 
largest source of Federal funds for local community and economic 
development. Unlike most of what comes out of Washington, Community 
Development Block Grants, or ``CDBGs,'' permit local community groups 
to design and carry out programs tailored to the specific local need of 
our neighborhoods.
    For thirty years, the CDBG program has empowered local groups to 
revitalize their communities and create economic opportunity. CDBG 
funds are at work in neighborhoods all across my hometown of Los 
Angeles:
    In Hollywood, the Public Health Foundation Enterprise's ``Aztecs 
Fire Fuels Crew'' trains ex-gang members how to become firefighters.
    In South Los Angeles, the Unity Collaborative, an alliance of 
community-based organizations, has worked to mediate peace agreements 
between violent gangs in South Los Angeles, on the Westside, in Watts, 
and in Baldwin Village.
    Along the Crenshaw Corridor, the Marlton Square project is seeking 
to reinvigorate a decades-old shopping center with new housing and 
retail development. The project will create jobs and improve local 
housing opportunities.
    The LA County Community Development Commission uses CDBG funds to 
operate its Business Technology Center, California's largest high-tech 
business incubator, creating high tech jobs for an impoverished 
neighborhood. The BTC currently serves 39 tenant and affiliate firms 
with high-tech specialties.
    CDBG is not a government handout rather, it is one of the most 
effective tools cities and neighborhoods have to fight economic 
distress and create jobs and wealth. Part of what makes CDBG such a 
powerful tool is that local governments have it used CDBG funds so 
effectively to leverage private sector dollars.
    Unfortunately, the President's budget for HUD effectively 
eliminates the Community Development Block Grant program. The 
President's budget includes a proposal to consolidate 18 programs, 
including CDBG, into a new program to be administered by the Department 
of Commerce. Proposed funding for this consolidated program would be 35 
percent lower than the combined FY 2005 appropriated level for these 18 
programs. The pro rata reduction for CDBG alone would be $1.42 billion.
    But what is even more troubling is that this change is being put 
forward before the relevant committees here in Congress have had a 
chance to hold hearings to judge the impact or efficacy of these 
changes. For example, last year, $1.16 billion of CDBG funds were used 
for housing, resulting in 112,000 homeowners receiving assistance to 
rehabilitate their homes, 11,000 families becoming first-time 
homebuyers, and 19,000 rental housing units being rehabilitated. But 
one might assume that, after moving to the Commerce Department, these 
funds would not be eligible for use on housing. This would cripple 
local affordable housing efforts at a time when housing prices are 
skyrocketing. In Los Angeles, half of all families rent, and local fair 
market rents already are out of reach for more than half of these 
renting families.
    Another cause for concern is the President's replacement of CDBG's 
existing funding formula. The President's proposal notes that CDBG 
funds currently go to many communities with lower poverty rates. But 
simply because a community is not overwhelmingly poor does not mean it 
is not home to poor people. Changing the funding formula in the ways 
suggested by the President's proposal could kneecap the effort of 
moderate income communities to bring their poorer and excluded 
residents into the economic mainstream.
    While the President's goal of balancing the budget is laudable, it 
is short-sighted to do it by cutting a program as successful as CDBG. 
As you draft the budget for FY2006, I urge you to restore full funding 
for Community Development Block Grant program and keep it at HUD.
    Thank you again, Mr. Chairman and members, and before I yield to 
Ms. S nchez, I'd just like to ask that some supporting documents be 
included in the record. I have here:
     a letter from the Mayor of Los Angeles, Jim Hahn;
     a one-pager from Los Angeles County on how these cuts will 
impact them;
     a resolution passed by the National League of Cities, 
which represents 478 cities in California alone, opposing the community 
development cuts;
     testimony from Jim Hunt, a councilman and former mayor of 
Clarksburg, West Virginia, who is currently in the leadership of the 
League of Cities;
     and testimony from Donald Plusquellic, the Mayor of Akron, 
Ohio, and President of the United States Conference of Mayors, as well 
as an additional statement from the Conference.
    Thank you, and I yield to Ms. Sanchez.

ELIMINATION OF THE COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM: IMPACT ON 
                             33RD DISTRICT

    The following are sample projects funded in the unincorporated 
areas of the First, Second and Third Supervisorial Districts which 
provide services to residents in the 33rd Congressional District:
    Big Brothers Big Sisters of Greater Los Angeles--Mentor Outreach 
Project: Provides funding for big and little sister matches and case 
management services through an intensive outreach campaign to recruit 
mentors; girls to be matched are at-risk for teenage pregnancy, gang 
membership and drug/alcohol abuse.
    Community Development Commission--Single Family Grant Program: 
Provides funds for safety repairs to families, seniors and the disabled 
for single-family residential units.
    Foundation for the Junior Blind--Infant Family Project: Provides 
home-based early intervention services for infants and toddlers from 
birth to 3 years of age who are visually impaired and have multiple 
disabilities.
    Los Angeles County Department of Consumer Affairs--Homeowners Fraud 
Prevention Project: Provides assistance to low- to moderate- income 
homeowners from being victims of fraud in the purchase of a home, home 
equity transactions including identity theft, and the purchase of 
household goods and services.
    Additionally, the participating city of Culver City received a FFY 
2004 CDBG allocation to provide services to benefit the residents of 
its city. Below are a sample of some of those projects:
City of Culver City
    Citywide Curb Cut Project Phase III--Provides for the construction 
of 40 curb cuts for disabled access, citywide.
    Coordinator of Services to the Disabled--Provides funding for staff 
support for programs, assistance and referral services to low- and 
moderate-income, severely disabled residents.
    Washington Boulevard Streetlight Replacement Project-- Provides for 
the upgrade and installation of eight streetlights and the lighting 
conduit systems in the city's Redevelopment Project Area.
    Los Angeles Urban County Community Development Block Grant Program.

ELIMINATION OF THE COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM: IMPACT ON 
                           LOS ANGELES COUNTY

Background
    The Community Development Block Grant (CDBG) program funds a broad 
range of housing revitalization, community and economic development 
activities, job creation, and public services, primarily for the 
benefit of low- and moderate-income persons. Except for set-asides, 
CDBG funds are allocated by formula to state and local governments. 
Total CDBG funding was cut from $4.93 billion in FY 2004 to $4.85 
billion in FY 2005 with formula grant funding decreasing from $4.33 
billion to $4.11 billion. Total CDBG formula grant funding for state 
and local governments in California fell from $555 million in FY 2004 
to $526 million in FY 2005. The President's FY 2006 Budget proposes to 
eliminate the CDBG program.

Impact on Los Angeles County
    The President's proposal to eliminate the CDBG program would hurt 
the County's economically disadvantaged residents, who are main 
beneficiaries of CDBG-funded services. According to 2000 Census data, 
17.9 percent of all Los Angeles County residents had incomes below the 
poverty level, a far higher poverty rate than the 12.4 percent national 
average. In fact, the County had more poor residents than any single 
state, except for New York, Texas, and California.
    In FY 2005, a combined total of $184.3 million in CDBG formula 
grants have been allotted to local governments in Los Angeles County, 
including $34.6 million to the County of Los Angeles, which operates 
the nation's largest Urban County CDBG program. The County administers 
CDBG funds for unincorporated areas and 48 of the 88 cities in Los 
Angeles County.
    Over the past 4 years, CDBG funds have assisted Los Angeles County 
residents by:
     Providing nearly 2 million units of services through 
after-school and recreation programs to over 156,000 youth;
     Providing over 800,000 services, including meals, case 
management, and other needed services to over 67,000 seniors;
     Rehabilitating close to 7,000 homes;
     Developing almost 9,000 affordable housing units; and
     Creating or preserving over 2,000 jobs.
    Eliminating the CDBG program would result in the curtailment of 
such needed services as well as the many community and economic 
development projects and public infrastructure improvements that have 
been funded by CDBG. In addition, its elimination could lead to 
defaults on existing loans for community and economic development 
projects that are being repaid using CDBG funds.

   Resolution by the Board of Directors, League of California Cities

               COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM

    WHEREAS, for thirty years America's cities, including both large 
and small cities in California, have used Community Development Block 
Grant (CDBG) grants to create jobs, provide affordable housing, 
eliminate blight and generate new economic investment; and
    WHEREAS, CDBG funds have played a critical role in community and 
economic development in California; and
    WHEREAS, CDBG funds have been a powerful economic engine and a job 
creator, allowing California cities to leverage private investment in 
numerous business projects that create new employment opportunities and 
attract equity investment; and
    WHEREAS, CDBG funds represent a catalyst for creating more 
affordable housing, helping cities to leverage the private investment 
needed to build new rental housing units, revitalize single-family 
homes. CDBG funds also allow additional homes to be hooked up to sewer 
lines. All of these endeavors help to provide California families with 
clean, decent, affordable housing; and
    WHEREAS, the CDBG program offers a mechanism for building public 
infrastructure, helping California cities to redesign roads, build 
sewerage systems and other much-needed infrastructure improvements; and
    WHEREAS, the CDBG program is helping California cities remove 
blight, reduce drug trafficking and other crime, and thereby enhance 
the quality of life in California; and
    WHEREAS, the President has proposed a new ``Strengthening America's 
Communities Initiative'' which combines 18 direct grant programs, 
including CDBG, into one within the Economic Development Administration 
(EDA); and
    WHEREAS, at $3.71 billion, the new program (which combines 18 
programs) is nearly $1 billion less the current CDBG program alone; and
    WHEREAS, without proper funding for CDBG, we risk undermining the 
economic well being of our communities, the future generations that 
live there, and the nation as a whole.
    NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE 
LEAGUE OF CALIFORNIA CITIES that we hereby request Congress to enact a 
FY 2006 budget and appropriations package that funds CDBG formula 
grants at no less than $4.355 billion, which is level with FY 2005 
allocations; and
    RESOLVED FURTHER, that Congress maintain the CDBG as a separate and 
distinct program from other economic development programs that provides 
a direct and flexible source of funding to local governments; and
    RESOLVED FURTHER, that Congress maintain the current ``dual 
formula'' system where 70 percent of CDBG funds go to entitlement 
communities based on population; and
    RESOLVED FURTHER, that we will send copies of this resolution to 
all members of the California Congressional Delegation.
    ADOPTED by the board of directors of the League of California 
Cities this 28th day of February 2005.
                                                Pat Eklund,
                              President and Council Member, Novato.

                                            Chris McKenzie,
                                                Executive Director.

Comments by Donald L. Plusquellic, Mayor of Akron, President, the U.S. 
Conference of Mayors, to the House Subcommittee on Federalism, March 1, 
                                  2005

    Good morning. Chairman Turner, I would like to thank you and the 
members of the Subcommittee for inviting the Conference of Mayors to 
share our thoughts on the Administration's proposal to eliminate the 
Community Development Block Grant.
    You were a strong leader within the Conference when you served as 
Mayor of Dayton, and we appreciate your continued leadership now in 
Congress.
    I am also very pleased to be here with my local government 
colleagues with whom we are united.
    The Conference of Mayors is 100 percent opposed to the budget 
proposal that would eliminate the CDBG program by merging it with 17 
other programs, moving the function to the Commerce Department, and 
cutting overall funding.
    We stated this position when the proposal was first announced--an 
announcement that came without prior consultation with us--and 
unanimously reaffirmed this position during our Winter Leadership 
Meeting this past weekend when we met with Dr. Sampson and told him 
directly of our opposition.
    CDBG has been successful for 30 years, and based on this success, 
the nation's mayors urge Congress to continue the program's present 
funding level of $4.7 billion and to keep it at the Department of 
Housing and Urban Development.
    Our written statement, submitted by both elected and appointed 
officials, is replete with data which show clearly the outstanding 
performance of CDBG over the past 30 years.
    In 2004, using CDBG funds:
     more than 78,000 jobs were created or maintained;
     nearly 160,000 households received housing assistance, and 
of that amount 11,000 become new homeowners;
     9 million persons were served by new or reconstructed 
public facilities and infrastructure;
     13 million persons received assistance from CDBG-funded 
public services; and
     CDBG provided loans to businesses in distressed 
neighborhoods, with more than a quarter of these loans made to minority 
businesses.
    These statistics and many more specific success stories are proudly 
displayed on the HUD website I would note.
    In my city * * * (if you want)
    In your cities * * * (see attachment for cities)
    Much has been said about OMB's rating of CDBG and the perceived 
lack of performance outcome measures. Let me make two points on this 
issue.
    First, I know that national organizations representing appointed 
officials worked for a year with OMB to develop a new performance 
outcome measurement system. We are very disappointed that OMB turned 
aside an agreed-upon framework of sound performance measures and 
instead proposed the elimination of CDBG.
    Second, I believe it is unfair to compare performance results 
between programs like CDBG with much smaller programs like EDA at 
Commerce. To me, this is like comparing the results of a doctor who 
treats older, less healthy persons with a doctor who treats fairly 
healthy young people.
    Simply stated, CDBG is targeted at some of the toughest problems 
our cities face, and some of the most distressed pockets of poverty and 
blight.
    I believe that the positive leveraging results mayors and local 
leaders have demonstrated using CDBG should be credited not degraded.
    OMB contends that 38 percent of the communities receiving CDBG have 
less poverty than the national average, and that this statistic is 
another reason for eliminating the program.
    The implication from the misleading OMB statistic is that somehow 
wealthy people are benefiting from CDBG. This is a gross distortion of 
the truth.
    The program's funds are targeted to those ``pockets of poverty'' or 
places in a city or county where there is blight, housing needs, or 
serious economic development needs.
    In addition, positively addressing blight and distress helps 
communities prevent the spread of these conditions to neighboring 
areas.
    Business leaders representing groups such as the Real Estate 
Roundtable and International Council of Shopping Centers are standing 
with us. These business leaders have said that CDBG is a cornerstone 
for the type of public-private partnerships that have led to the 
renaissance that has occurred in many of our cities in recent years.
    As perhaps the most accountable elected officials in the nation, 
mayors are always open to improving government performance and 
providing better service to our constituents.
    I want this subcommittee to know that once we secure a commitment 
to fully fund CDBG at $4.7 billion and keep it at HUD, we would be 
happy to discuss possible improvements to this highly-successful 
program.
    Thank you for this opportunity to testify and look forward to the 
comments from my colleagues and to our discussion this morning.

 Testimony of Hon. James C. Hunt, City Councilor, Clarksburg, WV, Vice 
 President, National League of Cities, Before House Government Reform 
                        Committee, March 1, 2005

    Chairman Turner, Ranking Member Clay and members of the 
subcommittee, thank you for the opportunity to appear before you today 
to discuss the Administration's proposed shift of Community Development 
Block Grant (CDBG) program to the Department of Commerce. My name is 
Jim Hunt. I am City Councilman and former Mayor of Clarksburg, West 
Virginia and am appearing before you today as First Vice President of 
the National League of Cities.
    The National League of Cities, the nation's oldest and largest 
organization for municipalities, represents 18,000 cities and towns and 
over 140,000 local elected officials. Its mission is to strengthen and 
promote cities as centers of opportunity, leadership, and governance, 
and to serve as a national resource and advocate for the
    municipal governments it represents. No matter the size of city, 
programs like the Community Development Block Grant (CDBG) program have 
played a critical role in rejuvenating distressed communities and 
alleviating economic decline throughout our nation's cities.
    CDBG has played a critical role in rejuvenating distressed 
neighborhoods and alleviating economic decline in all types of 
communities. It is one of the best and only tools currently available 
to spur economic growth. However, CDBG is not just a jobs creator or 
economic development incubator, it is also a catalyst for affordable 
housing and new public infrastructure.
    Take my city of Clarksburg, West Virginia, as an example. Using 
CDBG grant funds, Clarksburg recently constructed a new water line that 
serves the FBI's new Criminal Justice Information Services Division 
building. The facility employs over 2,700 people in and around my 
community.
    This project also opened up hundreds of acres of land that are now 
a hotbed of economic development activity. Before the project, these 
properties were either blighted or idle because they had no reliable 
access to water. Today, these lands generate jobs, spur economic 
activity, and provide housing and green space. They also generate new 
revenue for the city, the state, and ultimately, the Federal 
Government.
    This story is echoed in cities across America:
     Tuscaloosa, Alabama used $2 million in CDBG funds to 
renovate an area near the University of Alabama. The project helped 
create more than 100 new jobs and retained many more.
     Milwaukee, Wisconsin used the program to rehabilitate or 
construct more than 700 affordable housing units--and help more than 
250 low income, first-time home buyers live out the American dream.
    Unfortunately, the Administration is proposing to eviscerate the 
CDBG program by shifting its funding to a new and significantly smaller 
program within the Department of Commerce. For reasons to be outlined 
shortly, NLC urges you to reject the Administration's proposal and to 
maintain CDBG as a distinct and separate program within the Department 
of Housing and Urban Development (HUD).
    A. The Administration's Strengthening America's Communities 
Initiative (SAC) Would Not Serve the President's Goal of Supporting 
Economic Development.
    The Administration's Strengthening America's Communities Initiative 
(SAC) will have a tremendous impact on the way the Federal Government 
allocates community development funds. Unfortunately, it has offered 
little in the way of details to the various stakeholders. Therefore, it 
is difficult to quantify one's concerns without knowing the specifics. 
However, based on the documents released by the Administration in 
support of the proposal, local governments have these initial concerns
    Specifically:
    1. The proposal would drastically reduce community development 
funding by roughly $2 billion--funding local governments will not be 
able replace.
    2. The proposal would significantly alter eligibility requirements 
to the disadvantage of some low- and moderate- income communities.
    3. The proposal would narrow the performance standards from that of 
the current CDBG program to only economic criteria, a step that would 
drastically reduce the flexibility and effectiveness of community 
development moneys.
    1. The Administration's SAC Program Would Drastically Reduce 
Funding for Community Development Programs That Cannot Be Recovered.
    The Administration's SAC proposal collapses 18 current programs, 
whose combined fiscal year 2005 budgets total approximately $5.5 
billion, into a single grant program funded at $3.7 billion. The 
Administration's proposed budget for SAC grants represents a funding 
cut of nearly 35 percent from what Congress allocated in fiscal year 
2005 for all 18 programs. This cut disproportionately harms CDBG 
funding because CDBG's fiscal year 2005 funding level of $4.7 billion 
represents nearly 80 percent of the $5.5 billion of combined funding. 
Moreover, the proposed $3.7 billion for SAC grants is $1 billion short 
of CDBG's current funding level.
    The Administration claims that it is seeking to ``retarget and 
refocus'' these funds to create new program efficiencies. However, from 
a practical standpoint, NLC questions whether moving the programs from 
HUD, where administrative and professional infrastructures already 
exist and function well, to the Department of Commerce will generate 
any real savings because building the agency's capacity to administer 
the programs alone would likely consume any cost savings derived from 
consolidating these programs.
    2. The Administration's New Eligibility Criteria Would Ignore the 
Needs of Many Low- and Moderate--Income Communities.
    The Office of Management and Budget claims that SAC will better 
fund communities most in ``need of assistance'' by creating new 
eligibility criteria around national job loss, unemployment, and 
poverty rates. Too many communities, it says, receive funding that they 
no longer need, even though many of these communities have poverty 
rates below the national average.
    The details are still unclear as to which communities will be 
eligible for SAC grants, but it seems clear that they must, at the very 
least, have poverty and job loss rates above the national average. If 
this is so, then Administration has made the mistaken assumption that 
impoverished neighborhoods no longer exist in communities ranking above 
the national average on the poverty and job loss index. We at the local 
level know however, that this is far from reality.
    Using national averages to measure assistance needs ignores the 
reality that our nation is comprised of local economic regions that are 
unique. For example, the majority of families who earn below the 
regional median household income in the greater Washington, D.C.--
Baltimore metropolitan area may earn more than the national poverty 
rate, but they are just as much in need of assistance because the cost-
of-living in this region is significantly higher than the national 
average.
    Throughout West Virginia, when you travel to virtually every city, 
from large to small, you don't have to drive very far to find the areas 
of our cities and towns that have been forgotten; where poverty and 
despair reign. This one-size-fits-all approach proposed by the 
Administration will likely stifle the flexibility and effectiveness 
currently found in CDBG. The result will be that many cities and towns 
will still be forgotten and poverty and despair will continue to reign.
    3. The Administration's Proposal Would Narrow Performance 
Standards, Drastically Reducing the Flexibility and Effectiveness of 
Community Development Moneys.
    The Office of Management and Budget claims that programs like CDBG 
have no measurable results. The Administration's proposal suggests new 
performance standards like job creation, new business formation rates, 
commercial development and private sector investment as tools to 
determine whether communities receiving SAC funds are achieving results 
and thus, their eligibility to retain funds or to earn bonus grants.
    Unfortunately, measuring results by these criteria makes little 
sense for communities that are chronically impoverished, have little to 
offer in the way of resources, and are unlikely to show significant 
progress over relatively short periods. In short, these communities are 
being set up to fail.
    For example, Clarksburg recently used a $250,000 CDBG grant to 
demolish vacant and dilapidated buildings in certain neighborhoods 
throughout our city. These structures were havens for crime, targets 
for vandalism and fires, and an attractive nuisance for our children. 
The city used the vacant lots created by the project to expand 
businesses as well as create space for larger yards and garages for our 
residents.
    Unfortunately, it is very difficult to assess the impact of 
removing a drug den from a neighborhood using economic criteria alone. 
Moreover, it is difficult to assess economic impact in relation to this 
type of project over a short period. Yet, the Administration's proposed 
criteria would try to do just that. Closing down a drug den may not 
immediately create job growth, spur new business formation, or 
encourage new commercial and residential development. However, it will 
immediately increase the quality-of-life of its neighbors. That is 
measurable and is the foundational beginning for any plan to attract 
new commercial and residential development in the future.
    Since its creation in 1974, CDBG has had a three-pronged mission 
to: (1) benefit low- and moderate-income individuals and households; 
(2) eliminate slums and blight; and (3) address the urgent needs of 
communities faced with a serious and immediate economic or health 
threat. These goals have allowed local government broad latitude in how 
it uses grant funds, and whether that use is for the creation of new 
economic development opportunities, affordable housing, public 
facilities, or services. Ultimately, these goals have given cities the 
latitude to address ``urgent needs'' like eliminating drug dens and 
other cancers on our communities--latitude not found with other 
programs. It is because of CDBG's flexibility and autonomy of local 
control that the CDBG program has become, from the local government 
perspective, the most effective form of Federal assistance currently 
available.
    If the Congress alters the CDBG program as proposed, however, we in 
West Virginia fear that the state's entitlement cities will be placed 
in direct competition with non-entitlement cities as well as with 
larger municipalities located across the nation. CDBG communities have 
already faced reduced funds from the program. This problem does not 
necessarily stem from huge cuts in CDBG funding. Instead, it is the 
result of a continued and growing need. More simply put, more 
communities have been competing for a static or slightly decreasing pot 
of money. Now the Administration proposes to cut that scarce funding by 
a total of nearly $1 billion ($2 billion if one includes the other 17 
community development programs). This cut can only exacerbate the 
problem and increase competition among localities. To say that the SAC 
proposal is a compassionate attempt to bring more money to distressed 
areas like those in West Virginia is to deny the reality that there 
will be less funding for an ever-larger universe of need.
    B. The CDBG Program Should Remain Flexible and Distinct from Other 
Community Development and Economic Development Programs and Should Be 
Level Funded for FY 2005.
    The long-standing goal of community development has been to improve 
the physical, economic, cultural and social conditions and 
opportunities a community offers its residents. For this reason, NLC 
urges the Congress to work with state and local governments as a full 
partners in achieving this goal. Over the last 30 years, the CDBG 
program has served as an excellent example of a successful Federal and 
local community development partnership. For this reason, NLC will 
continue to advocate in Congress for a fully-funded CDBG program at the 
Department of Housing and Urban Development that is distinct and 
separate from other economic and community development programs.
    NLC will strongly support legislation that funds CDBG formula 
grants at no less than $4.35 billion and the overall program at $4.7 
billion. Moreover, NLC will support legislation that keeps the CDBG 
program within the HUD account and provides a direct, flexible and 
reliable source of funding to local government. Lastly, NLC will seek 
to maintain the current ``dual formula'' system where at least 70 
percent of CDBG formula funds go directly to cities.

    Statement by U.S. Conference of Mayors; National Association of 
  Counties; National League of Cities; National Association of Local 
Housing Finance Agencies; National Association for County Community and 
   Economic Development; National Community Development Association; 
National Association of Housing and Redevelopment Officials; Council of 
   State Community Development Agencies to the House Subcommittee on 
                       Federalism, March 1, 2005

    The U.S. Conference of Mayors (USCM), National Association of 
Counties (NACo), National League of Cities (NLC), National Association 
of Local Housing Finance Agencies (NALHFA), National Association for 
County Community and Economic Development (NACCED), National Community 
Development Association (NCDA), National Association of Housing and 
Redevelopment Officials (NAHRO), and the Council of State Community 
Development Agencies (COSCDA) appreciate the opportunity to present 
this statement to the House Subcommittee on Federalism and the Census. 
We offer this testimony in strong support of the Community Development 
Block Grant Program (CDBG) and in equally strong opposition to the 
Administration's ``Strengthening America's Communities Initiative.''
    The Administration's FY 2006 budget proposes the total elimination 
of CDBG. In CDBG's place, the Administration is proposing the creation 
of a smaller program within the Department of Commerce that will focus 
solely on economic development. We strongly oppose this substantive 
policy change for several reasons. First, CDBG is the nation's premier 
community development program with a long record of success. Second, 
the Department of Housing and Urban Development (HUD) and the 
Department of Commerce each play an important role in an 
intergovernmental partnership with respect to community and economic 
development. These roles must be preserved. Overall there is no reason 
to eliminate CDBG or create a new program within the Department of 
Commerce to administer Federal community development funds.
    CDBG was signed into law by President Gerald Ford in 1974. Now in 
its 30th year, CDBG is arguably the Federal Government's most 
successful domestic program. The CDBG program's success stems from its 
utility i.e., providing cities, counties and states with flexibility to 
address their unique affordable housing and neighborhood revitalization 
needs. Based on HUD's most recent data, in FY 2004 alone the CDBG 
program assisted over 23 million persons and households.

                        CDBG HAS POSITIVE IMPACT

    HUD, OMB and grantees celebrated CDBG's anniversary last September 
under the theme ``Performance Counts.'' This was entirely appropriate 
because CDBG has been performing at a high level for 30 years, and it 
continues to produce results. In fact, according to HUD, more than 
78,000 jobs were created or retained by CDBG in FY 2004. In addition, 
in FY 2004, 159,703 households received housing assistance from CDBG. 
Of this amount 11,000 became new homeowners, 19,000 rental housing 
units were rehabilitated and 112,000 owner occupied homes were 
rehabilitated. In FY 2004, over 9 million persons were served by new or 
reconstructed public facilities and infrastructure, including new or 
improved roads, fire stations, libraries, water and sewer systems, and 
centers for youth, seniors and persons with disabilities from CDBG 
funds. In addition, more than 13 million persons received assistance 
from CDBG-funded public services in FY 2004, including employment 
training, child care, assistance to battered and abused spouses, 
transportation services, crime awareness, and services for seniors, the 
disabled, and youth. In addition, over time grantees provide CDBG-
funded loans to businesses located in distressed neighborhoods, with 
minority businesses receiving approximately 25 percent of the loans.
    CDBG has been achieving results like this throughout it history. An 
analysis performed by Professor Stephen Fuller of George Mason 
University in 2001 shows that over the first 25 years of the CDBG 
program CDBG-funded projects created 2 million jobs and contributed 
over $129 billion to the Gross Domestic Product (GDP).

                        EXAMPLES OF CDBG AT WORK

    Consider the following examples of CDBG at work in the community. 
These projects were all award winners at last September's 30th 
Anniversary Celebration of the CDBG program.
    The City of Jacksonville-Duval County, FL has invested more than 
$20 million to revitalize the Royal Terrance neighborhood, one of its 
oldest and poorest. The improvements included extensive drainage, 
sewer, paving and curbs and gutter improvements. Since 1998, CDBG, 
together with HOME funds, has been expended to rehabilitate the homes 
of 72 low- and moderate-income residents. In addition, CDBG funded-
rehabilitation has resulted in 75 homes of low- and moderate-income 
persons being hooked up to sewer lines. A $700,000 Section 108 loan 
guarantee assisted with the rehabilitation of a 200-unit apartment 
complex where all of the residents receive
    Section-8 rent subsidies. A private investor contributed $4.5 
million to the rehabilitation. CDBG funds also addressed part of the 
rehabilitation of vacant buildings in the Royal Terrance neighborhood 
that have now been converted into commercial facilities that house 
businesses.
    Los Angeles County used CDBG funds to develop its Business 
Technology Center, the largest high-tech business incubator in 
California. Opened in 1998, the BTC is a 40,000 square-foot facility in 
a minority community that was developed with CDBG funds ($3.5 million) 
and Economic Development Administration funds ($2 million). This is a 
good example of the programs of the two agencies complementing each 
other. Development of the facility removed a blighted structure, 
provided an anchor to revitalize a commercial corridor, and used 
technology to jump-start a disadvantaged community. Today, the BTC 
serves 39 tenant and affiliate firms with specialties ranging from fuel 
cells to biometric software to make DNA micro arrays more effective. 
Over 45 percent of the BTC firms have received more than $65 million in 
equity investment and created more than 475 jobs.
    The City of Portland, Oregon's Rosemont project involved the 
redevelopment of an eight-acre site to preserve the historic Villa St. 
Rose School and Convent while creating a range of affordable 
homeownership and rental housing opportunities. Completed in 2002, 
Rosemont integrates several different housing types, provides a 
spectrum of affordability, and includes much-needed community services. 
There are 100 units of senior rental housing in the preserved and 
expanded Villa St. Rose Convent building. There are 18 new family 
rental units, 17 affordable homes for first-time homebuyers, 30 town 
homes, several single-family homes for sale at market rate, and a Head 
Start facility that will have five classrooms and administrative 
offices. The City provided $3.9 million in permanent CDBG financing to 
develop the senior housing, helped with the site planning, made street 
and other public improvements, and provided homebuyer assistance.
    Yuma, Arizona's historic Carver Park Neighborhood is a 22-block 
area that is 73 percent Hispanic and has a high rate of unemployment 
with nearly half of its residents living in poverty. The City 
designated it a Neighborhood Revitalization Strategy Area under the 
CDBG program in 2000. As a result, significant improvements and 
additions have been made to the neighborhood's housing stock. Thirty-
six town homes and 89 units of new rental housing (constructed with 
Low-Income Housing Tax Credits) have been built. An additional 40 units 
of private single-family units have been added to the housing stock, 
53-units have been rehabilitated, and two homes were reconstructed. HUD 
also approved a Section 108 loan guaranteed for homeownership 
activities. The neighborhood just celebrated the opening of the Dr. 
Martin Luther King Neighborhood Community Center, a safe place for 
youth to gather. The improvements made in this neighborhood demonstrate 
the impressive leveraging of public and private funds and programs to 
maximize CDBG funding. To date a total of $27.5 million in additional 
investment has been leveraged for neighborhood revitalization from a 
total CDBG investment of $4.1 million.
    The City of Dayton, Ohio has focused its community development 
efforts on eradicating blight from its neighborhoods and making large 
abandoned commercial sites available for re-use and redevelopment in 
order to create jobs. From 2000 to 2003, the city spent $3.8 million to 
clear 61 acres of blighted commercial properties in order to make these 
brownfields sites available for business re-use. Of the 61 acres, 10 
have been developed for a new business incubator and the expansion of 
Select Tool, a Dayton manufacturing firm that retained 55 jobs and will 
create 100 new jobs. In addition to brownfields redevelopment, the City 
spent over $600,000 for business loans and grants to 29 businesses, 
resulting in the creation of over 56 jobs for low- and moderate-income 
residents. In addition, from 2000 to 2003, the City spent over $350,000 
in workforce development programs and partnered with such local 
agencies as the home builder's association to equip under- and 
unemployed residents in accessing living wage jobs. Over 800 low- 
income residents were served through the City's workforce development 
partners and 172 were placed in full-time, living wage jobs. Overall, 
from 2000 to 2003, the City leveraged $61 million in additional private 
and public funds for every CDBG dollar it allocated.
    When disaster strikes, Congress usually turns to the CDBG program 
to help provide relief as it did for Florida in the wake of last year's 
devastating hurricane season. CDBG has also been an effective resource 
in helping New York City rebuild after the September 11th tragedy. HUD 
has provided New York with $3.483 billion in CDBG funds to be 
administered by the Empire State Development Corporation (ESDC) and its 
subsidiary the Lower Manhattan Development Corporation (LMDC). Of that 
amount, $700 million has been committed to ESDC and $350 million to 
LMDC for business retention/attraction and economic loss compensation. 
An additional $305 million is being used by LMDC for a residential 
incentive program, training assistance and administrative costs. The 
process of designating the balance of the funds continues, and CDBG 
will continue to play a critical role in the City's recovery.
    The Self Help Virginia water and sewer program is able to bring 
centralized water or sewer service (and often both) to remote, 
undeserved, low-income rural communities where conventional 
infrastructure financing (loans or grants) would not be economically 
feasible. The program takes advantage of local volunteer labor to 
provide water and sewer services where those services would be 
difficult or unaffordable to provide through conventional needs, 
particularly in the state's Appalachian counties. In the past 6 year's 
the state has provided over $6.1 million in CDBG funds to assist 30 
projects. Over 100 miles of pipe have been laid. Over 2,800 people now 
have (or will soon have) reliable water and sewer service. The state 
has further supported revitalization in these areas with housing 
rehabilitation grants and other community development investments. The 
state has stretched its dollars by combining CDBG funds with 
Appalachian Regional Commission funds and local dollars. The state 
estimates the cost savings from this program to be $10 million (a 62 
percent reduction from the estimated ``retail cost'' of these projects 
if they had been contracted out).

                     CDBG WORKS, WHY ELIMINATE IT?

    CDBG is popular on both sides of the aisle, and the private sector 
recognizes its value as well. Senator George Voinovich (R-OH) said 
recently at the U.S. Conference of Mayors Winter Meeting that ``CDBG is 
the finest Federal program ever to impact cities * * * [it] should be 
increased, not decreased.'' The President of the Mortgage Bankers 
Association of America, Michael Petrie, was quoted at the same meeting 
as stating ``we need to work together to preserve funding for HUD 
programs such as CDBG.'' Senator Christopher Bond, Chair of the Senate 
HUD Appropriation's Subcommittee, and someone who has considerable 
experience with CDBG as a former governor and as chair, was quoted in 
the February 8th edition of the Washington Post as saying that the 
proposal ``makes no sense.''
    We are frankly puzzled that the Administration offered this 
sweeping proposal. In late January, HUD Secretary Alfonso Jackson told 
the Winter Meeting of the U.S. Conference of Mayors that the Bush 
Administration is `` * * * committed to the CDBG program. He said that 
CDBG `` * * *is a good program and the Administration is committed to 
seeing that it meets its responsibilities.'' He said that the FY 2006 
budget `` * * * would be fiscally conservative but it will allow you 
[mayors] to carry out your responsibilities.'' What a remarkable turn 
of events to see that the FY 2006 budget completely eliminates the CDBG 
program.
    The organizations represented by this testimony do not agree with 
the poor rating the program received by the Office of Management and 
Budget (OMB) as part of its Performance Assessment Rating Tools (PART) 
process. Our analysis of the PART suggests that it is an inappropriate 
measure of a block grant program's performance. Instead, it lends 
itself to an assessment of categorical programs. As described above, 
contrary to the results of this inappropriate rating tool, the program 
does work well. Since its enactment in 1974, the program has been, and 
continues to be, a critical affordable housing and neighborhood 
revitalization tool for communities. While providing essential services 
to citizens nationwide, CDBG also acts as an engine of economic growth. 
It creates jobs and retains business, and it provides communities with 
the tools to make needed infrastructure improvements, all with t a 
focus on low- and moderate income persons and their neighborhoods.
    The PART review of CDBG states that the program lacks performance 
outcome measures. NCDA, NACCED, NAHRO, and COSCDA worked with OMB and 
HUD for nearly a year on performance outcome measures for HUD's four 
formula grant program: CDBG, HOME Investment Partnerships Program, 
Emergency Shelter Grants (ESG) and Housing Opportunities for Persons 
with AIDS (HOWPA). Through a consensus, the group has developed a 
framework and specific outcome measures to evaluate the effectiveness 
of these programs. OMB helped develop this and has signed off on the 
framework and the outcome measures. HUD is in the process of 
implementing it. We worked in good faith with OMB and HUD in developing 
sound performance measures for CDBG; all parties supported the existing 
program. Why suddenly has OMB shifted its support of the program? Why 
did it develop a whole new ``Strengthening America's Communities'' 
(SAC) Initiative to replace CDBG when all parties agreed that CDBG had 
great accomplishments that could now be reported through our newly 
created Performance Measures system?

   ADMINISTRATION'S ``STRENGTHENING AMERICA'S COMMUNITIES'' PROPOSAL

    It has been reported that a ``Cross Cutting Working Group'' of 
senior staff from Federal agencies recommended these changes and that 
is the genesis of the Strengthening America's Communities Proposal. 
This is patently untrue. That group met last year to develop common 
outcome measures for certain Federal programs. The work of that group 
was to collect information in a common way about programs that helped 
communities. However, each of the Federal programs proposed to be 
eliminated plays a different role, and each is still very much needed.
    It is difficult for us to comment on the Administration's proposal 
without knowing the full details. The Initiative is undefined and 
unknown at this point. What is clear is that 18 programs that touch on 
urban and rural economic development, at an FY 2005 funding level of 
$5.5 billion, are proposed to be turned over to the Department of 
Commerce and reemerge as a new program whose funding level is proposed 
at $3.71 billion, a reduction of nearly $2 billion. We do not support 
such an initiative. We do not support the elimination of the CDBG 
program in any form nor do we support the transfer of its funding or 
the funding of any other HUD program to the Department of Commerce.
    With the creation of this Initiative, the Administration seems to 
be suggesting that CDBG is only an economic development program. In FY 
2004, 25 percent or $1+ billion in CDBG funds went to housing 
activities--assistance to first-time homebuyers, and single- and multi-
family housing rehabilitation. Another 40 percent of the funds went to 
support public infrastructure--water and sewer facilities, streets and 
sidewalks, fire stations, and community centers, all in low- and 
moderate-income neighborhoods.
    It is also reasonable to question whether the Commerce Department 
has the capacity to administer a multi-billion dollar program. Its 
$257.4 million economic development grant and loan programs are dwarfed 
by HUD's $4.7 billion CDBG program. HUD, together with its more than 
1100 urban, suburban and rural CDBG grantees, constitutes an effective 
infrastructure for program administration. State and local grantees are 
intimately familiar with the CDBG statute and implementing regulations. 
It begs the question, why not move Commerce's economic development 
programs to HUD for it to administer?
    Moreover, programs currently located within the Department of 
Commerce's Economic Development Administration (EDA) portfolio already 
address several of the issues contemplated by the new initiative. EDA's 
grant and loan programs are utilized by local governments to stimulate 
private sector job growth, ease sudden and severe economic distress and 
promote long-term economic development planning. They are critical to 
the nation's distressed areas across the country. EDA's programs were 
reauthorized last year through FY 2008, a move strongly supported by 
local governments. The severe impact created by the loss of these 
important resources cannot be understated.
    In addition, a major concern for us, and the communities we serve, 
is the issue of repayment of Section 108 guaranteed loans. Section 108 
is a component of CDBG and allows communities to fund large scale 
projects pledging future CDBG allocations to repay these loans. Many 
communities across the country have undertaken projects financed by 
Section 108 guaranteed loans and depend on their CDBG allocations for 
repayment. Without CDBG, these communities would be forced to repay 
these loans with their own funds. This would put many communities at 
risk of repayment and/or reduce already diminishing local general 
revenues.

                                SUMMARY

    In summary, we find this new proposal totally unacceptable, and we 
are extremely disappointed that this tactic is being used as an excuse 
to eliminate CDBG and cut much needed resources to communities. A key 
priority of the Bush Administration is stimulating the domestic economy 
by creating jobs and expanding homeownership, and that is exactly what 
CDBG does. CDBG is good business and is the foundation of our nation's 
communities.
    The fact is, CDBG is working, and it will work even better once HUD 
implements the new performance outcome measurement system. It needs to 
remain at the Department of Housing and Urban Development and funded in 
FY 2006 at a funding level of at least $4.7 billion, with no less than 
$4.35 billion in formula funding. This funding level approximates the 
FY 2004 funding level and the amount requested by the President in his 
FY 2005 budget.

    Mr. Lungren. Now, Ms. Sanchez.

  STATEMENT OF THE HON. LINDA T. SANCHEZ, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Ms. Sanchez. Thank you. I would like to thank acting 
Chairman Lungren and Ranking Member Spratt for allowing me to 
speak today. I will talk about an issue today that transcends 
community and party boundaries, and that is the possible 
gutting of Community Development Block Grants in the 
President's 2006 budget.
    Community Development Block Grants, or CDBGs, can be used 
for a seemingly endless variety of projects aimed at improving 
the quality of life in needy areas around our country. Let me 
share with you some stories and statistics from cities that 
will be affected by CDBG cuts.
    One of the cities that has expressed grave concern over the 
loss of funding is the city of La Mirada in my district. The 
mayor over there, Susan Tripp, took the time to explain to me 
just how much her city would be injured with the potential 
cuts.
    The pride of the city of La Mirada is the Community Senior 
Center, which was completed in 2001. More than $1.8 million of 
the center's $3.2 million cost came from CDBG, or Community 
Development Block Grants. That is more than half of the 
funding. The Senior Center now serves as a hub where La 
Mirada's large, elderly population benefits from computer 
literacy classes, nutrition programs and health screenings. 
Without CDBG funding, the construction could have been delayed 
for years.
    La Mirada also uses CDBG funning to enact a loan program 
for needy families. The repayment of the principal and interest 
is then put back into the loan system. There is more than $1 
million circulating in the loan program, creating and 
sustaining opportunity.
    In the city of Whittier, which is also in my district, CDBG 
moneys are used to fund the Salvation Army, the Interfaith Food 
Center, the Southeast Area Social Services Funding Authority 
and the Social Service Commission Scholarship Program. These 
programs fund an emergency shelter, food for low-income 
families, services for seniors, and recreational scholarships 
for needy children. The total cost to do all of this in 
Whittier with CDBG funds is less than $65,000. I honestly 
cannot imagine a more efficient use of Federal money.
    The final city that I would like to talk about is Long 
Beach, CA. I believe the numbers speak for themselves on what 
an impact CDBG has for the community. Long Beach received $10.6 
million for fiscal year 2004-2005. That money was used to 
remove 109,000 graffiti tags from more than 34,000 sites. It 
was used to improve more than 1,200 housing units. It was used 
to provide services for 23,000 homeless persons. I think most 
impressively, CDBG funds were used to serve 95,031 youth with 
after-school and weekend recreation activities.
    I hope that these examples have helped demonstrate to the 
committee here today that these funds play an enormous and 
important role in the day-to-day survival and successes of our 
cities.
    I would like to close my testimony with a quote from a 
local official: ``A key priority of this administration is 
stimulating the domestic economy by creating jobs and expanding 
home ownership. One of the best tools that mayors of cities 
across America use to achieve these and other important goals 
is the Community Development Block Grant program. At a time 
when city budgets are severely challenged and have significant 
community and economic development needs, this cut and 
realignment will have a devastating impact on local 
governments' ability to provide resources to those communities 
and neighborhoods most in need.''
    This quote eloquently captures the vital nature of CDBG 
programs in our cities. Mr. Chairman, this quote did not come 
from a Democratic colleague or anyone here in Washington. It is 
from the mayor of Long Beach, CA, and vice president of the 
U.S. Conference of Mayors, Beverly O'Neill, a local leader who 
knows what the effect of these cuts would be.
    Community Development Block Grants work, and they are 
efficient. They are supported across the board by local 
community leaders regardless of their party affiliation. I 
strongly urge that CDBG funding be kept at the current level 
and that it be kept as a separate and distinct program. I thank 
you for your indulgence and yield back.
    [The prepared statement of Linda T. Sanchez follows:]

   Prepared Statement of Hon. Linda T. Sanchez, a Representative in 
                 Congress From the State of California

    I would like to thank Chairman Nussle and Ranking Member Spratt for 
allowing us to speak today.
    I'm going to talk today about an issue today that transcends 
community and party boundaries--the possible gutting of Community 
Development Block Grants in the President's 2006 Budget.
    Community Development Block Grants can be used for a seemingly 
endless variety of projects aimed at improving the quality of life in 
needy areas around our country.
    Let me share with you stories and statistics from cities that will 
be affected by CDBG cuts.
    One of the cities that has expressed great concern over the loss of 
funding is the City of La Mirada. Mayor Susan Tripp took the time to 
explain to me just how much her city would be injured.
    The pride of La Mirada is the Community Senior Center, which was 
completed in 2001. More than $1.8 million of the center's $3.2 million 
cost came from Community Development Block Grants. That's more than 
half.
    The Senior Center now serves as a hub where La Mirada's large 
elderly population benefits from computer literacy classes, nutrition 
programs, and health screenings.
    Without CDBG funding the construction could have been delayed for 
years.
    La Mirada also uses CDBG funding to enact a loan program for needy 
families. The repayment of the principal and the interest is then put 
back into the loan system.
    There are more than 1 million dollars circulating in this loan 
program--creating and sustaining opportunity.
    In the City of Whittier, in my district, CDBG moneys are used to 
fund the Salvation Army, the Interfaith Food Center, the Southeast Area 
Social Services Funding Authority, and the Social Service Commission 
Scholarship Program.
    These programs fund an emergency shelter, food for low income 
families, services for seniors, and recreational scholarships for needy 
children.
    The total cost to do all of this in Whittier with CDBG funds is 
less than $65,000. I honestly can not imagine a more efficient use of 
Federal money.
    In the final city I would like to talk about, Long Beach, 
California, I believe the numbers speak for themselves on what an 
impact CDBG has for the community.
    Long Beach received $10.6 million for Fiscal Year '04-05.
    The money was used to remove 109,000 graffiti tags from more than 
34,000 sites.
    It was used to improve more than 1,200 housing units.
    It was used to provide services for 23,000 homeless persons.
    And, I think most impressively, CDBG funds were used to serve 
95,031 youth with after school and weekend recreation activities.
    I hope that I have helped demonstrate to the Committee here today 
that these funds play an enormous and important role in the day to day 
survival and success of our cities.
    I would like to close with a quote from a local official:
    ``A key priority of this Administration is stimulating the domestic 
economy by creating jobs and expanding home ownership. One of the best 
tools that mayors of cities across America use to achieve these and 
other important goals is the Community Development Block Grant 
program,''
    ``At a time when city budgets are severely challenged and have 
significant community and economic development needs, this cut and 
realignment will have a devastating impact on local governments' 
ability to provide resources to those communities and neighborhoods 
most in need.''
    This quote eloquently captures the vital nature of CDBG programs in 
our cities.
    Mr. Chairman, this quote did not come from a Democratic Colleague 
or anyone here in Washington. It is from The Mayor of Long Beach, 
California, and Vice -President of the U.S. Conference of Mayors, 
Beverly O'Neill--a local leader who will feel the effects of these 
cuts.
    Mr. Chairman, Community Development Block Grants work and they are 
efficient. They are supported across the board by local community 
leaders regardless of party affiliation.
    I strongly urge that CDBG funding be kept at the current level and 
that it be kept as a separate and distinct program.
    I thank the Committee for its time.

    Mr. Lungren. Thank you for the testimony of both of you. I 
don't know how timely it could have been, Congresswoman 
Sanchez, but Beverly O'Neill is an old friend of the family. My 
dad was a doctor of her family for years and years. I don't 
know if you knew that and put that in at the very end to get 
me, but you got me.
    Ms. Watson. I just want you to know, Mr. Chairman, she 
bears my family, my mother's maiden name, too, O'Neill, so I 
feel like she is in the family as well.
    Mr. Lungren. I know it is late, and I know people want to 
get moving, but just let me ask the two of you one simple 
question. That is we are charged with the responsibilities of 
trying to bring down this deficit, trying to bring some 
restraint in government, trying to give the appropriating and 
authorizing committees as much flexibility as possible without 
telling them exactly what to do, but without telling them what 
targets to hit. If, in fact, we would not do what the President 
wants to do with CDBG grants, where would you suggest we look 
for that money in the area of HUD?
    Ms. Watson. What I would suggest is that you don't look 
here. I have participated in a press conference with my mayor, 
Jimmy Hahn, I think you know Jimmy, and with agency directors 
and the people who receive services from those agencies. We 
have been able to improve in really a minor way the conditions 
of life in our city by removing some homeless, by putting up 
affordable housing.
    I have been working with the city leadership on the Marlton 
project for over 20 years now. I have worked with the former, 
now deceased, Mayor Tom Bradley. We got our first project done.
    There are two projects back to back, and this is the second 
one. The proprietors of the shops in that area had been waiting 
years and years and years to move out and to move on so we can 
do 240 units of affordable housing and upscale and up-end shops 
to be able to bring the revenues and cycle them through that 
community.
    So, you know, it is a matter of whose ox is being gored. I 
would not want to say cut this program, but save ours, but what 
I wanted to do is look at the programs that are really 
effective in terms of the needs of our urban cities and then 
look at other programs that are distant, removed and consider 
those, because ours certainly has been effective in Los 
Angeles.
    Thank you, Mr. Chairman.
    Ms. Sanchez. If I might respond briefly. I am mindful that 
Congress has a very big task in trying to set a path of fiscal 
responsibility and to try to spend moneys wisely, and I don't 
pretend to be an expert. That is what this committee is charged 
with doing. I do want to say that. But a huge cut, like the 
cuts that are anticipated as a third of the funding of CDBG, 
would be extraordinarily severe for a project that has so much 
benefit to local communities and has the type of flexibility 
that cities rely on to try to improve quality of life in each 
of the local communities.
    So although I can't say specifically where the money might 
come from, I would advocate that perhaps if there are cuts that 
need to be made, you look at making them in smaller increments 
across the board in many different programs rather than gutting 
one of, again, the most successful programs that cities have 
for serving their local communities.
    Mr. Lungren. I appreciate your comments. This goes back to 
what Alan Greenspan said yesterday. He said he didn't want to 
be in our shoes, because he knew that we had to make decisions 
among values; that all of these programs are valuable. I am one 
who believes that you can't get to where we want to go merely 
by getting rid of waste, fraud and abuse, because, frankly, we 
probably have to figure out which are more valuable given the 
fact that probably all of them have value.
    So I appreciate your representation of support for these 
particular programs.
    Mr. Spratt.
    Mr. Spratt. Let me simply say that we will do everything we 
possibly can to answer your concerns in the Democratic budget 
resolution. I am a firm believer in the CDBG in my district, 
which is mainly small towns and rural areas. This has been a 
very, very, very effective Federal program. It stood the test 
of time. While the other grants made were going, the CDBG has 
lasted simply because people can point to demonstrable results 
of the program, and I hope we can save it intact and fully 
funded.
    Mr. Lungren. Thank you very much, Ms. Watson and Ms. 
Sanchez.
    Now Congressman Bishop is recognized for 10 minutes.

 STATEMENT OF THE HON. TIMOTHY H. BISHOP, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF NEW YORK

    Mr. Bishop of New York. Thank you, Mr. Chairman. I want to 
thank you and Ranking Member Spratt for this opportunity to 
testify on the upcoming fiscal year 2006 budget. In my view, 
the President's recent spending requests do not accurately 
balance America's priorities, and I intend to touch on some of 
the more problematic areas in the budget. I will also convey 
some of the specific concerns that my constituents on Long 
Island have with the proposed budget.
    The administration's proposal forces working families, in 
my view, to pay for short-sighted spending choices at the 
Federal level in the form of a reduced return on their tax 
dollars for government services, combined with higher State and 
local taxes. The President's budget for fiscal year 2006 
contains drastic cuts which he says are necessary to cut the 
deficit in half in 5 years.
    There are several things wrong with this claim, not the 
least of which that it simply isn't true. The administration's 
5-year budget projections omit such significant costs as the 
continuing presence of our troops in Iraq and Afghanistan, the 
enormous cost of privatizing Social Security as the President 
proposes, and no corresponding growth in interest costs, even 
though these activities would be funded entirely by additional 
borrowing.
    As a former college administrator, and as a member of the 
House Committee on Education and the Workforce, I am keenly 
sensitive to the needs of our students. The President's budget 
reduces overall education funding by nearly 1 percent below 
last year's level, which is a more pronounced decline when 
compared to current authorized levels. In addition, the 
administration's proposal cuts the overall education budget for 
the first time in more than a decade and proposes to eliminate 
funding for 48 programs such as vocational education, teacher 
quality and training, TRIO and the Safe and Drug-Free Schools 
Program.
    I want to just focus on one part of the President's budget 
that I find particularly troubling. The budget does a 
disservice to both colleges and college students by calling for 
the recall of the Federal share of institutions involving loan 
funds for Perkins loans. These funds are made up of Federal 
capital contribution, institutional matches and repaid Perkins 
loans and up until now have been used to make new loans to 
students from low- and middle-income families.
    In 2004, colleges made over $1.2 billion in these types of 
loans. They averaged $1,875; went to 673,000 needy college 
students. The recall of the Federal share of Perkins loans will 
amount to a recall of more than $7 billion over 10 years, with 
$6 billion of the amount collected going toward deficit 
reduction, not to the current practice of investing that money 
back into Federal financial aid.
    The President's tax cuts and deficit spending have pushed 
us over the precipice of fiscal balance into a budget climate 
that supports cutting back aid for disadvantaged students to 
pay for misplaced priorities and tax cuts for people whose 
children will never need a Perkins loan.
    The President's proposal specifically targets my district 
on Long Island by nearly eliminating funding for programs that 
directly benefit the people I represent.
    My district includes over 300 miles of shoreline, and the 
local economies of Long Island depend on a clean, a hospitable 
ocean environment and welcoming local waterways to spur tourism 
throughout the region.
    The integral relationship between coastal health and local 
economies appears to have been overlooked during consideration 
of many agency budget proposals. The administration 
consistently supports the idea of regional partnerships between 
the EPA and local governments, but even as Federal officials 
are discussing those efforts the President's budget tells a 
different story.
    Regional programs designed to serve local areas are 
eviscerated under the 2006 budget. The Long Island Sound study, 
for example, which last year received nearly $7 million, is an 
entirely regional program designed to clean up a long neglected 
body of water bordering both New York and Connecticut. Under 
the current budget, if enacted as is, the worthwhile regional 
program would be gutted and only receive $477,000, a 94 percent 
cut.
    Similarly, the Fire Island to Montauk Point study will 
allow the Army Corps of Engineers to complete a multiple decade 
study of 83 miles of coastline in my district, allowing for a 
comprehensive plan to alleviate environmental concerns and 
guarantee the safe passage of commercial and recreational 
fisherman.
    Long Islanders are eagerly anticipating the economic and 
quality of life benefits to finish this study, and the 
President proposes no funding for its completion. There seems 
to be no conceivable reason to eliminate funding for a 20-year 
project that is only a year and a half from completion, 
particularly when completion will only cost $1.7 million.
    As we continue our military conflict overseas, we are 
experiencing an increasing number of returning soldiers who are 
maimed or incapacitated as a result of injuries sustained in 
battle. Even as our current troops are in harm's way, the 
proposed budget contains egregious cuts and taxes for the men 
and women who came before the currently returning troops.
    These members of the greatest generation now rely on a 
health care system that is under attack by misguided budgeting. 
As was the case in previous years, the President submitted a 
budget calling for a $250 veterans health care tax and an 
increase in prescription copayments of more than 100 percent.
    Congress rightfully rejected those proposals over the last 
few years, and I am hopeful that this will again be the case. 
But there is now a new attack on the health of our older 
veterans. Many providers of long-term care for veterans, most 
notably State veterans homes, are faced with the sobering 
prospect that their ability to provide care for deserving vets 
will plummet by over 60 percent from the current year, forcing 
veterans already in State veterans homes to find other options.
    This is not a way to treat Americas heroes, and our 
veterans deserve the care that they have earned. Let's just 
reflect on this. We give millionaires 6-figure tax breaks and 
we take away nursing home care for World War II veterans. I do 
not see any how reasonable person can justify that.
    I urge this committee to take a hard look at the issues I 
have raised and to work to address the country's need for a 
sound fiscal policy and the tendency to abandon positive 
programs benefiting both the Nation and Long Island.
    I thank the Chairman and I thank Ranking Member Spratt, and 
I look forward to working with you as these issues move 
forward. Thank you.
    [The prepared statement of Timothy Bishop follows:]

   Prepared Statement of Hon. Tomothy H. Bishop, a Representative in 
                  Congress From the State of New York

    I want to thank Chairman Nussle, Ranking Member Spratt and all of 
the members of the Budget Committee for allowing me the opportunity to 
testify on the upcoming fiscal year 2006 budget. During this time of 
conflict in the world it is imperative to support America's operations 
overseas, while making domestic spending choices that enhance the 
greater good.
    In my view, the President's recent spending requests do not 
accurately balance America's priorities, and I intend to touch on some 
of the more problematic proposals in the budget. I also will convey 
some of the specific concerns that my constituents on Long Island have 
with the proposed budget.
    The administration's proposal forces working families to pay for 
shortsighted spending choices at the Federal level in the form of a 
reduced return on their tax dollars for government services, combined 
with higher state and local taxes.
    The President's budget for fiscal year 2006 contains drastic cuts, 
which he justifies as necessary to cut the deficit in half in 5 years. 
There are several things wrong with this claim, not the least of which 
is that it is simply not true. The administration's 5-year budget 
projections omit such significant costs as the continuing presence of 
our troops in Iraq, the enormous costs of privatizing Social Security 
as the president proposes, and no growth in interest costs, even though 
these activities, as well as a great many others, would be funded 
entirely by additional borrowing.
    As a former college administrator, and a Member of the House 
Committee on Education and the Workforce, I am keenly sensitive to the 
needs of our students. The President's budget reduces overall education 
funding by nearly 1 percent below last year's level, which is a more 
pronounced decline when compared to current authorized levels. In 
addition, the Administration's proposal cuts the overall education 
budget for the first time in more than a decade and proposes to 
eliminate funding for 48 programs such as vocational education, teacher 
quality and training, TRIO and the Safe and Drug Free Schools program.
    The President's budget does a disservice to both schools and 
students by calling for the recall of the Federal share of 
institutions' revolving loan funds for Perkins loans. The funds, which 
are made up of Federal capital contributions, institutional matches, 
and repaid Perkins loans, are used to make new loans to students from 
low and middle-income families.
    In 2004, colleges made $1.263 billion in loans, which averaged 
$1,875 to 673,000 borrowers through the Perkins program. The recall of 
the Federal share of Perkins loans will amount to more than $7 billion 
over 10 years, with $6 billion of the amount collected going toward 
deficit reduction, not to the current practice of investing that money 
back into Federal financial aid. The President's tax cuts and deficit 
spending have pushed us over the precipice of fiscal balance into a 
budget climate that supports cutting back aid for disadvantaged 
students to pay for misplaced priorities and tax cuts for the wealthy; 
people whose children will never need a Perkins Loan.
    The President's proposal specifically targets my district on Long 
Island by nearly eliminating funding for programs that directly benefit 
the people I represent. There are over 300 miles of shoreline in my 
district and the local economies on Long Island depend on a clean, 
hospitable ocean environment, and welcoming local waterways to spur 
tourism throughout the region. The integral relationship between 
coastal health and local economies appears to have been overlooked 
during consideration of many agency budget proposals.
    The Administration consistently supports the idea of regional 
partnerships between the EPA and local governments, and as Federal 
officials are discussing these efforts, the President's budget tells a 
different story. Overtly regional programs, designed to serve local 
areas, are eviscerated under the fiscal year 2006 budget proposal. The 
Long Island Sound Study, which received nearly $7 million last year, is 
an entirely regional program designed to clean up a long neglected body 
of water bordering New York and Connecticut. If the current budget were 
enacted as drafted, this worthwhile regional program would be gutted 
and only receive $477,000.
    The Fire Island to Montauk Point Study will allow the Army Corps of 
Engineers to complete a multiple decade study of 83 miles of coastline 
in my district, allowing for a comprehensive plan to alleviate 
environmental concerns and guarantee the safe passage of commercial and 
recreational fisherman. Long Islanders are eagerly anticipating the 
economic and quality of life benefits to finish this study, and the 
President proposed no funding for its completion. There seems to be no 
conceivable reason to eliminate funding for a 20-year project that is 
only a year and a half from completion, particularly when completion 
will only cost $1.7 million.
    As we continue our military conflicts overseas, we are experiencing 
an increasing number of returning soldiers who are maimed or 
incapacitated as a result of injuries sustained in battle. Even as our 
current troops are in harm's way, The proposed budget contains 
egregious cuts and taxes for the men and women who came before the 
current returning troops. These members of the greatest generation now 
rely on a health care system that is under attack by misguided 
budgeting.
    As was the case in previous years, the President submitted a budget 
calling for a $250 veterans' health care tax and an increase in 
prescription co-payments of more than 100 percent. Congress rightfully 
rejected these proposals over the last few years and I am hopeful that 
this will again be the case. There is now a new attack on the health of 
our older veterans. Many providers of long-term care for veterans, most 
notably state veterans' homes, are faced with the sobering prospect 
that their ability to provide care for deserving vets will plummet by 
over 60 percent from the current year, forcing veterans already in 
state veterans' homes to find other options. This is not the way to 
treat America's heroes, there is no expiration date for valor, and our 
veterans deserve the care they have earned. Let's reflect on this: we 
give millionaires six figure tax breaks and we take away nursing home 
care from World War II veterans. No reasonable person could justify 
this.
    I urge this committee to take a hard look at the issues I have 
raised, and work to address the country's need for sound fiscal policy 
and the tendency to abandon positive programs benefiting Long Island 
and the nation. Thank you Mr. Chairman and Ranking Member Spratt, I 
look forward to working with you on these issues as we move forward.

    Mr. Lungren [presiding]. Thank you, Congressman Bishop. 
Something you said intrigued me to ask a question which is on 
my mind. I think it is directed toward the comments you made, 
and that is your discussion on education funds.
    And it is my observation that no matter what the Federal 
Government does by way of support for higher education, whether 
it is grants, whether it is loans, et cetera, there is an 
inexorable rise in tuition charged by institutions, both 
private and public, that far exceeds anything else perhaps 
except medical costs, and I have always been at a loss to 
figure out why that is the case. Frankly, it doesn't matter, it 
appears to me, in the budget whether we add more money or don't 
add more money, the colleges just seem to charge more and more 
and more for both private and public institutions.
    I just wonder if you could give me a little----
    Mr. Bishop of New York. I can give some--at least my own 
insight on that. I was a senior administrator of a college, and 
I was in fact responsible for maintaining and developing the 
institutional budget where I was for about 20 years, and I 
would make a couple of comments. One, increases in tuition at 
State supported schools are largely the result of reduced State 
appropriations to subvent the cost of the students who are at 
those schools. At private schools, the increases roughly have 
been about double the Consumer Price Index dating back to the 
early 1980s, but they have pretty much tracked something called 
the HEPI, the Higher Education Price Index, which is a market 
basket of costs that are driven largely by wage costs, by 
fringe benefit costs. About 60 percent to 70 percent of total 
expenses at a private college are in salary and fringe.
    The other costs that colleges encounter that rise at a rate 
more rapid than the Consumer Price Index are keeping pace with 
instructional technology, keeping pace with library resources. 
And then for private colleges, a huge area of growth is 
essentially discounted tuition. Colleges, particularly 
unendowed colleges, take in tuition and then give it back in 
the form of unfunded student aid, the consequence of which is 
that student prices go up.
    Mr. Lungren. Does it have anything to do with lower 
classloads with faculty? I have at least observed that both at 
private institutions and public institutions, other than our 
community colleges, where I see faculty maintaining rather 
heavy classloads.
    Mr. Bishop of New York. Yes. An issue, particularly for the 
more research-oriented institutions, is lower teaching loads 
for the faculty, which is generally covered by adjunct 
instruction as opposed to the hiring of more full-time faculty.
    I think most, again most underendowed or unendowed private 
colleges are at a 12-hour load, most community colleges are at 
a 12- or 15-hour load, although the heavily endowed research 
oriented institutions some have faculty teaching loads as low 
as 6 hours.
    Mr. Lungren. Thank you very much. Mr. Spratt.
    Mr. Spratt. Mr. Bishop, Mr. Lungren and I both served here 
with Carl Perkins, and in my State in particular technical 
education has been a huge success. It has been the underpinning 
for the industrial development that we have been able to 
achieve in South Carolina as we move from an agrarian State to 
an industrial State, and the Perkins loans have been an 
integral part of financing all of that.
    And for that little bit of money and the great good it 
does, I simply cannot see requiring the repayment of the 
Perkins fund loans. It is going to leave these schools with 
nowhere to turn, at least in the short term.
    Mr. Bishop of New York. And the thing that I find so 
frustrating is I applaud the President's effort to increase or 
proposal to increase the Pell Grant maximum by $100 a year for 
5 years so it will go up by $500. But it is completely offset 
by taking away Perkins loan funds, which averaged $1,800 per 
student. We are giving with one hand and taking away rather 
heavily with the other.
    Mr. Spratt. Thanks for your testimony. It is clear that you 
know of what you speak.
    Mr. Lungren. Thank you very much.
    Mr. Bishop of New York. Thank you.
    Mr. Lungren. Now, we have Congresswoman Barbara Lee, who is 
here for her 10 minutes of presentation. Thank you.

STATEMENT OF THE HON. BARBARA LEE, A REPRESENTATIVE IN CONGRESS 
                  FROM THE STATE OF CALIFORNIA

    Ms. Lee. Thank you, Mr. Chairman. Good to see you. Thank 
you, Ranking Member Spratt, for this opportunity to take the 
time to listen and hopefully incorporate some of these ideas 
into your budget deliberations.
    How the President chooses priorities for his budget each 
year really does define, our commitment as a Nation to what our 
priorities are, and I believe unfortunately that this budget 
falls way short of what our commitment should be. Especially in 
a time of war, everyone agrees, myself included, that spending 
on national security and defense is a priority. Yet the 
President's fiscal 2006 budget in terms of homeland security, 
for example, is cut by about 18.1 percent. So as a Member 
representing one of the largest ports in the country it is 
clear to me that, our national security priority funding list 
should include at the top a significant increase, not a 
decrease in port security funding.
    However, the President's budget also eliminates the 
Department of Homeland Security's Port Security Grant Program 
by combining it with other transportation security programs. 
This move I believe unwisely sets up a competition between 
different types of transportation security priorities from 
really the same pool of funds.
    And at the same time that we discuss national security, we 
must also include the importance of economic security for all 
Americans. If our country is to be secure from within, our 
citizens must not feel vulnerable, should feel secure, should 
be strong within our own America, and unfortunately, I believe 
that the President's budget underfunds critical programs that 
ensure this economic security for all Americans in terms of 
their access to affordable health, housing, education, and 
other vital types of programs and issues and services.
    I serve on the Housing and Community Opportunity 
Subcommittee of the Financial Services Committee, and we heard 
the budget presentation this week by the Secretary.
    Consider the fact that in this budget, for example, the 
Community Development Block Grant program is really eliminated. 
Even though it is transferred into Commerce it is for the most 
part gone. This program provides formula grants and other 
financial assistance toward improving housing and economic 
conditions in low and moderate income neighborhoods. In 2005 
this represents crucial funding of about $4.6 billion. The 
President's budget slashes by nearly, I think it is about 10 
percent, $250 million funds for our local public housing 
authorities, for capital repairs, improvements for housing 
stock. Housing for the disabled, I was really quite shocked to 
see that has been cut by 50 percent from 2005 levels. The 
brownfields redevelopment programs which provide incentives for 
hazardous site cleanup and redevelopment; that is eliminated.
    I asked the Secretary during our hearing, what about the 
disabled? What about senior citizens? What about children who 
will be affected now because the lead grant programs have been 
cut? Children will get sick as a result of this. And the 
Secretary responded there just wasn't enough money and he had 
to prioritize the budget he had.
    And, of course, I was concerned because it didn't appear, 
and I asked him if he fought for additional resources. And his 
response was he had to prioritize within the deck he was dealt, 
in essence.
    The President's budget also does not go far enough in 
funding HIV/AIDS programs, and we all know that the President 
in his State of the Union speech mentioned the glaring 
escalation in HIV/AIDS rates in the African American community, 
especially with African American woman.
    The Ryan White Care Act is underfunded by $500 million, and 
this is just what it takes to keep people off the waiting list 
for life-saving drugs, in terms of just the money that we would 
need just to do that, and that does not even deal with 
prevention and education. So we need $500 million just to get 
people off of the waiting list.
    The Minority Aids Initiative has been flat funded yet 
again, no additional resources. Yet the problem is getting 
greater. Essentially this is a cut, as each year more and more 
people are infected, and again people of color, African 
Americans primarily.
    The President's budget even cuts funding, and again this 
goes under the HUD budget, but the funding for people living 
with AIDS. It is called HOPWA. That is cut this year by about 5 
percent. Again, the Secretary said that it is about priorities. 
Cuts like those to HOPWA really punish people, by making them 
choose between their health care needs and their housing needs.
    And, sadly, I think this overall budget is filled with 
similarly unfair examples. And still the standard response to 
anyone who questions the administration's priorities is that 
there are not enough funds. As Secretary Alphonso Jackson said, 
there are just not funds to ensure this economic security for 
all Americans.
    But I beg to differ. We can ensure that components of our 
national security, including economic security, are fully 
funded if we rein in the billions of dollars in waste, fraud 
and abuse at the Defense Department.
    In fact, and I reference this January 2005 GAO report. It 
notes, and let me quote from that report. It said the lack of 
adequate transparency and accountability across DOD major 
business areas results in billions of dollars of wasted 
resources annually.
    The reports of waste, fraud and abuse at DOD are 
staggering. Consider these two examples, for example. In 2003, 
GAO uncovered that the Army lost track of 56 planes, 32 tanks, 
36 Javelin missile command launch units. This represents more 
than $1 trillion in taxpayer money.
    In 2002, the GAO documented that the DOD database system 
for tracking billing and financial operations is so duplicative 
across the Department that it wastes about $18 billion 
annually. The President could help reach the funding goals of 
nearly all of our essential national and economic security 
programs if only he began by eliminating unnecessary waste and 
fraud in programs at DOD.
    The Center For Defense Information estimates that the 
President's budget could free up $41 billion by defunding cold 
war era weapons systems like Missile Defense Initiative and the 
B-2 bomber.
    Mr. Chairman, Ranking Member, the President's budget I 
believe erodes our economic security, it weakens our 
communities, and it leaves our infrastructure crumbling. The 
President's support of outdated weapons systems and wasteful 
defense programs relegates economic security priorities really 
to the back burner, and it should not be.
    So I urge you to take into account these economic security 
concerns as you work to develop a Congressional budget 
resolution. I look forward to assisting you with this task, and 
I thank you for your time.
    [The prepared statement of Barbara Lee follows:]

 Prepared Statement of Hon. Barbara Lee, a Representative in Congress 
                      From the State of California

    Chairman Nussle and Ranking Member Spratt, thank you for taking the 
time to listen, and hopefully incorporate some of these ideas into your 
budget deliberations.
    How the President chooses priorities for his budget each year 
defines our commitment as a nation to the issues. Unfortunately, the 
President's FY06 budget falls short.
    Especially at a time of war, everyone agrees that spending on 
national security and defense is a priority. Yet, the President's 
fiscal year 2006 (FY06) Department of Homeland Security budget is cut 
by 18.1 percent.
    As a Member representing one of the largest ports in the country, 
it is clear to me that topping our national security priority list must 
be significant increases in port security funding. However, the 
President's budget eliminates the Department of Homeland Security's 
Port Security Grant Program by combining it with other transportation 
security programs. This move unwisely sets up a competition between 
different types of transportation security priorities from the same 
pool of funds.
    At the same time, any discussion of national security for all 
Americans must include the important component of economic security for 
all Americans. Unfortunately, the President's budget underfunds 
critical programs that ensure all Americans have access to affordable 
housing, health care, education, and other vital services.
    Consider the fact that the President's budget eliminates the 
Community Development Block Grant (CSBG) program. This program provides 
formula grants and other financial assistance toward improving housing 
and economic conditions in low- and moderate-income neighborhoods. In 
2005, this represents crucial funding of $4.6 billion. The President's 
budget slashes by nearly 10 percent (or $252 million) funds for local 
public housing authorities for capital repairs and improvements for 
housing stock. Housing for the disabled is cut by 50 percent from the 
2005 levels. The Brownfields Redevelopment programs, which provide 
incentives for hazardous site clean-up and redevelopment is eliminated.
    The President's budget also does not go far enough in funding 
important HIV/AIDS programs. The Ryan White CARE Act is underfunded by 
$500 million; and this just represents how much it would take to keep 
people off the waiting list for live-saving drugs. The Minority AIDS 
initiative has been flat funded yet again. Essentially, this is a cut 
as each year more people of color are infected. The President's budget 
even cuts funding for Housing for People with AIDS (HOPWA) by 5 
percent. Mr. Chairman, cuts like those to HOPWA punish people by making 
them choose between their health and housing. Sadly, this budget is 
filled with similarly unfair examples.
    Still, the standard response to anyone who questions the 
administration's priorities is that there are not enough funds to 
ensure economic security for all Americans.
    Mr. Chairman, I beg to differ. We can help ensure that components 
of our national security, including economic security, are fully funded 
if we rein in the billions of dollars in waste, fraud, abuse at the 
Department of Defense (DoD).
    In fact, a January 2005 U.S. General Accounting Office (GAO) report 
notes that 'the lack of adequate transparency and acoountability across 
DoD's major business areas results in billions of dollars of wasted 
resources annually.'"
    The reports of waste, fraud, and abuse at the DoD are staggering. 
Consider these two examples:
    1. In 2003, the GAO uncovered that the Army lost track of 56 
planes, 32 tanks, and 36 Javelin missile command launch units. This 
represents more than $1 trillion in taxpayer money.
    2. In 2002, the GAO documented that the DoD database system for 
tracking billing and financial operations is so duplicative across the 
Department, it wastes the DoD $18 billion annually.
    The President could help reach the funding goals of nearly all the 
essential national and economic security programs if only he began by 
eliminating unnecessary programs at DoD. The Center for Defense 
Information estimates that the President's budget could free up nearly 
$41 billion by defunding Cold War era weapons systems like missile 
defense initiatives and the B-2 bomber.
    Mr. Chairman, the President's budget erodes our economic security, 
weakens our communities, and leaves our infrastructure crumbling. The 
President's support of outdated weapons systems and wasteful defense 
programs relegates economic security priorities to the back burner.
    I urge you, Mr. Chairman, to take into account economic security 
concerns as you work to develop a congressional budget resolution. I 
look forward to assisting you with this task. Thank you for your time.

    Mr. Lungren. Thank you, Congresswoman Lee. I have asked 
some others that in the categories where they have suggested we 
should not cut, tell us where they would cut instead. And I 
take it from your comments that instead of, for instance, 
finding cuts to offset the ones suggested by the administration 
in HUD for the CDBG program, you would suggest that we actually 
can achieve savings in waste, fraud and abuse in the Department 
of Defense and take care of the cuts that you object to in the 
other departments. Is that correct?
    Ms. Lee. That is exactly it, Mr. Chairman, and I think we 
would be better for it as a country, and I would think we could 
achieve some bipartisan support for it. I don't think the 
American people want to see their tax dollars being wasted, and 
that is what is going on. I think they would rather see real 
economic and national security efforts being paid for.
    Mr. Lungren. But you would also include Missile Defense 
Initiative and B-2 bomber in that category, correct?
    Ms. Lee. I would definitely include B-2 bomber. I 
personally, there is a lot of debate about the effectiveness of 
missile defense, but I certainly would include missile defense 
in that category. But even if you do not include missile 
defense, there is still billions of dollars in the waste, 
fraud, and abuse.
    Mr. Lungren. Mr. Spratt.
    Mr. Spratt. Thank you for your testimony. I can assure you 
we will take your concerns into account when we put together 
the Democratic budget resolution.
    Mr. Lungren. Thank you, Congresswoman Lee. And you being 
the last member I see in attendance, the hearing is now 
adjourned.
    [Whereupon, at 6:50 p.m., the committee was adjourned.]

                                  
