    [House Hearing, 110 Congress]
    [From the U.S. Government Publishing Office]

              IMPACT OF RECESSION ON STATES AND LOCAL COMMUNITIES

    _______________________________________________________________________

                                    HEARING

                                   BEFORE THE

                           COMMITTEE ON APPROPRIATIONS

                             HOUSE OF REPRESENTATIVES

                           ONE HUNDRED TENTH CONGRESS

                                 SECOND SESSION

                                    ________

                                       S

                                    ________

             Printed for the use of the Committee on Appropriations
              IMPACT OF RECESSION ON STATES AND LOCAL COMMUNITIES
                                                                          ?

              IMPACT OF RECESSION ON STATES AND LOCAL COMMUNITIES

    _______________________________________________________________________

                                    HEARING

                                   BEFORE THE

                           COMMITTEE ON APPROPRIATIONS

                             HOUSE OF REPRESENTATIVES

                           ONE HUNDRED TENTH CONGRESS

                                 SECOND SESSION

                                    ________

                                       S

                                    ________

             Printed for the use of the Committee on Appropriations

                         U.S. GOVERNMENT PRINTING OFFICE
     46-227                     WASHINGTON : 2009

                                      COMMITTEE ON APPROPRIATIONS

                       DAVID R. OBEY, Wisconsin, Chairman

     JOHN P. MURTHA, Pennsylvania       JERRY LEWIS, California
     NORMAN D. DICKS, Washington        C. W. BILL YOUNG, Florida
     ALAN B. MOLLOHAN, West Virginia    RALPH REGULA, Ohio
     MARCY KAPTUR, Ohio                 HAROLD ROGERS, Kentucky
     PETER J. VISCLOSKY, Indiana        FRANK R. WOLF, Virginia
     NITA M. LOWEY, New York            JAMES T. WALSH, New York
     JOSE E. SERRANO, New York          DAVID L. HOBSON, Ohio
     ROSA L. DeLAURO, Connecticut       JOE KNOLLENBERG, Michigan
     JAMES P. MORAN, Virginia           JACK KINGSTON, Georgia
     JOHN W. OLVER, Massachusetts       RODNEY P. FRELINGHUYSEN, New Jersey
     ED PASTOR, Arizona                 TODD TIAHRT, Kansas
     DAVID E. PRICE, North Carolina     ZACH WAMP, Tennessee
     CHET EDWARDS, Texas                TOM LATHAM, Iowa
     ROBERT E. ``BUD'' CRAMER, Jr.,     ROBERT B. ADERHOLT, Alabama
    Alabama                             JO ANN EMERSON, Missouri
     PATRICK J. KENNEDY, Rhode Island   KAY GRANGER, Texas
     MAURICE D. HINCHEY, New York       JOHN E. PETERSON, Pennsylvania
     LUCILLE ROYBAL-ALLARD, California  VIRGIL H. GOODE, Jr., Virginia
     SAM FARR, California               RAY LaHOOD, Illinois
     JESSE L. JACKSON, Jr., Illinois    DAVE WELDON, Florida
     CAROLYN C. KILPATRICK, Michigan    MICHAEL K. SIMPSON, Idaho
     ALLEN BOYD, Florida                JOHN ABNEY CULBERSON, Texas
     CHAKA FATTAH, Pennsylvania         MARK STEVEN KIRK, Illinois
     STEVEN R. ROTHMAN, New Jersey      ANDER CRENSHAW, Florida
     SANFORD D. BISHOP, Jr., Georgia    DENNIS R. REHBERG, Montana
     MARION BERRY, Arkansas             JOHN R. CARTER, Texas
     BARBARA LEE, California            RODNEY ALEXANDER, Louisiana
     TOM UDALL, New Mexico              KEN CALVERT, California
     ADAM SCHIFF, California            JO BONNER, Alabama
     MICHAEL HONDA, California
     BETTY McCOLLUM, Minnesota
     STEVE ISRAEL, New York
     TIM RYAN, Ohio
     C.A. ``DUTCH'' RUPPERSBERGER,
    Maryland
     BEN CHANDLER, Kentucky
     DEBBIE WASSERMAN SCHULTZ, Florida
     CIRO RODRIGUEZ, Texas

                     Beverly Pheto, Clerk and Staff Director

                                      (ii)

                            APPROPRIATIONS FOR 2009

                                  ----------

              IMPACT OF RECESSION ON STATES AND LOCAL COMMUNITIES

                                  ----------

                                           Thursday, December 11, 2008.

                                   WITNESSES

    HON. JIM DOYLE, GOVERNOR, STATE OF WISCONSIN
    HON. JIM DOUGLAS, GOVERNOR, STATE OF VERMONT
    HON. JON CORZINE, GOVERNOR, STATE OF NEW JERSEY
    JULIE MURRAY, CHIEF EXECUTIVE OFFICER, THREE SQUARE, INC., LAS VEGAS,
        NV, FOOD BANK
    DR. SANDY BAUM, SENIOR POLICY ANALYST, THE COLLEGE BOARD, AND PROFESSOR
        OF ECONOMICS, SKIDMORE COLLEGE
    MARCIA KREUCHER, EXECUTIVE DIRECTOR, COMMUNITY ACTION AGENCY OF
        JACKSON, LENAWEE, AND HILLSDALE, MI
        Chairman Obey. Good morning.
        Well, as people who work on the Hill know, this is not our
    regular committee room; we had no idea whether we would have 66
    people showing up or six. I am glad we are somewhat above six.
    I appreciate the fact that everyone who is here is here despite
    the fact that we at least hope we adjourned last night
    depending on what the Senate does on the automobile bill.
        Let's get right to it. This country is in what appears to
    be the most dangerous recession since 1932, and I think both
    parties are pushing different explanations for what happened.
    The Democratic Party seems to generally claim that this
    recession started because of nefarious activities on Wall
    Street, and the Republican Party seems to suggest along the
    lines that it started in the housing areas. And I think,
    frankly, that that narrative is wrong on both sides.
        To me, what has happened is that if you go back to 1980,
    from 1980 through today, virtually 80 percent of all of the
    income growth that occurred in this country went to the
    wealthiest 10 percent of American families. And, in fact, in
    this decade, starting in the year 2000, about 95 percent of all
    of the income growth in the country has gone to the top 10
    percent. And so I think average families have tried to respond
    to what was essentially a freeze in their real income over time
    by trying to borrow.
        So they borrowed more for student aid to send their kids to
    college, they borrowed more for housing, they borrowed more for
    health care, they borrowed more for a lot of things they needed
    and probably some things they didn't need. And at the same time
    that that happened, you had all of these new instruments that
    were being developed on Wall Street, accompanied by a
    substantial reduction in regulation of those activities.
        And so I will readily grant that housing and Wall Street
    finance were the triggering events, but I think the basic
    problem is, as I just described, the long-term erosion of the
    ability of average, working people to raise their income over
    time. And so now we are faced with the consequences of that
    problem.
        We were told by an economist from Moody's, for instance, in
    the Democratic Caucus just two days ago that even if we pass
    the $700 billion, so-called stimulus package, that we can still
    expect unemployment--which right now is hovering close to seven
    percent--that we can still expect unemployment in a year and a
    half to be hovering around nine percent. I think that is
    totally unacceptable, and I think that indicates just how
    serious this recession could be.
        We have lost two million jobs in the last year. The growth
    in population and labor force means unemployment has expanded
    by even more, by 3.1 million; one in eight persons in the labor
    force is either unemployed or underemployed, and we are getting
    very, very sad-looking predictions and projections and
    forecasts from economists throughout the country. Even many
    conservative economists who normally advise the Congress to
    leave it to the Federal Reserve to respond to the recession are
    now advising Congress to shore up the economy with more
    temporary--and I emphasize temporary--spending. The Federal
    Government, it seems, is about the only game in town to provide
    a lift to the economy.
        As the economy shrinks, we can anticipate more large
    reductions in the real revenues coming into the States and
    coming into the Federal Government. And falling revenues are
    going to force those States to either cut important services or
    to raise taxes, and that will create a major fiscal drag on the
    economy.
        And we also will be experiencing a human dimension. Losing
    a job and not being able to find a new one undermines the
    dignity of unemployed workers and puts a financial strain on
    the whole family and the whole community.
        And so I think there is generalized agreement, we have to
    make every reasonable effort to prevent things from getting
    much worse. The downward momentum appears to be very strong,
    but it is to be hoped that a well-designed economic recovery
    program could help slow it.
        And so we have two panels that will be appearing before us
    today--one a panel of Governors, a bipartisan panel of
    Governors to walk us through what is happening at the State
    level; and, secondly, a panel of people who are experienced at
    seeing what happens on the ground level to people who are the
    most vulnerable to these downturns. And I am happy that we have
    both of those panels here today.
        Before I call on them, let me call on the distinguished
    gentleman from California, Mr. Lewis, the ranking member, for
    whatever comments he would like to make.
        [The information follows:]

        [GRAPHIC] [TIFF OMITTED] T6227A.001

        [GRAPHIC] [TIFF OMITTED] T6227A.002

        Mr. Lewis. Thank you very much, Mr. Chairman.
        As we go about welcoming Governor Corzine, Governor Doyle,
    Governor Douglas, I had first thought that my colleague from
    New Jersey was going to be the only one with us today, because
    he wanted to make sure to greet his governor. But the economy
    has been improving in Georgia lately, so Mr. Kingston has
    decided to show up as well. But he has assured us he won't be
    taking much of your time.
        In the meantime, what the Chairman said at the initial
    stages about the severity of our circumstances is felt by all
    of us; and it seems to me that it is really important for us to
    know that with the challenges that are out there across the
    country, it is very obvious that solving these problems has
    little or nothing to do with partisan politics.
        Indeed, we are in an environment in this country today
    where I have serious doubts about our ability to effectively
    encourage our children and grandchildren to become involved in
    public affairs because they look at the way our government is
    working, whether it be at the local or the State level, but
    certainly the Federal level, and they say, My goodness, there
    has got to be something better for us to have our children do.
    But the country's future and, I believe, the world's future is
    very dependent upon our being able to attract the best to our
    staff in a room like this, but also among the members, as
    reflected by many of the people in the audience.
        I was initially hopeful that today's committee meeting was
    to resume our deliberations and mark up the remaining
    unfinished spending bills for the fiscal year 2009. We are now
    into our third month of the new fiscal year, and many critical
    functions of government are operating under a continuing
    resolution that expires on March 6th.
        It is my understanding that our Appropriations Committee
    staff is now negotiating with their Senate counterparts on the
    nine appropriations bills that have yet to be considered by the
    House and the Senate. Those spending negotiations, you should
    know, many involving only subcommittee-passed bills that have
    not been debated in the Full Committee, are occurring without
    any Member or Senate input whatsoever, to my knowledge. I have
    heard from a variety of sources that both minority and majority
    staff in the House and Senate are very uncomfortable making
    these policy and funding decisions that should be addressed at
    a Member and Senator level.
        I am told that it is the intent of the House and the Senate
    leadership to combine these nine spending bills into an omnibus
    package to be presented to President-elect Obama shortly after
    he is sworn into office in January. But why would we put our
    new President, elected on a promise of change in the ways of
    Washington--why would we want to ask him to sign a spending
    package like this? I don't know. I can't think of a single
    reason why he would reward Congress for failing to get its
    works done.
        Perhaps the new team just wants to put 2009 behind us, and
    certainly all of us can understand why that might be the case.
    With our staff working around the clock, including weekends,
    and with the holidays upon us, it would be helpful to have some
    communication between the Committee, the Majority Leadership,
    and the incoming Administration on the end game--the sooner,
    the better.
        If our next President plans to extend the continuing
    resolution for the full year, I don't see any point in asking
    our staff to work right up until Christmas on a package that
    will never see the light of day. Frankly, I would rather see
    the staff enjoy time with their family over the holidays, and
    be rested and ready to go with the Committee's work early this
    coming year.
        With regard to today's hearing, there is no greater
    challenge facing working families than our Nation's struggling
    economy. The ability of consumers to secure loans to buy a car
    or a home, start a small business, or to care for loved ones
    with medical needs is critically important. But in order for
    taxpayers to be confident that Washington can address these
    challenges, Congress must propose real solutions that produce
    real results.
        Like other fast-growing suburban areas across the Nation,
    my district has been severely impacted by the economic downturn
    that the chairman mentioned, that unemployment is currently,
    nationally, pushing 7 percent. In 2007, unemployment in my
    region, in my own district, was 5.9 percent; today, it stands
    at 9.5 percent. New home starts have fallen by 50 percent, and
    nearly 20,000 home construction jobs have been lost.
        Thousands of families in our communities have lost their
    chance for the American dream. Nearly 100,000 homes are in
    foreclosure. And with the value of homes falling as much as 40
    percent, even more mortgage holders are in danger of defaulting
    on their loans.
        The typical Washington solution to every problem is, what?
    You know it better than we: to throw money at it.
        I would argue that we can no longer afford the typical
    Washington solution. My constituents want Congress to deliver
    specific economic solutions rather than spending money on
    programs that sound good with no near-term results.
        My understanding is that the incoming Administration is
    working with Speaker Pelosi and Senator Reid on a $500 billion
    or, as the chairman indicated, or more proposal for stimulus
    spending. While I have not yet seen any details of the
    proposal, members of this committee have an obligation to ask
    two very important questions: Will it work? And, where will the
    money come from? The typical Washington answer to a challenge
    of this magnitude is to write a blank check and hope for the
    best. But that is not good enough. Congress must demand
    results.
        A recent New York Times article made this observation:
    Government agencies usually don't even have to do a rigorous
    analysis for transportation projects on how it would affect
    traffic, for example, before deciding to proceed. In one recent
    survey of local officials, almost 80 percent said they had
    based their decisions largely on politics, while fewer than 20
    percent cited the project's potential benefits. If Congress is
    going to approve billions in new road projects, for example,
    will it also demand that this new spending result in less
    congestion?
        If President-elect Obama is serious about change, he must
    insist that any Federal funding for infrastructure projects be
    linked to tangible results. When it comes to spending bailouts
    using taxpayer dollars, we must insist on measurable results.
        Before turning to our panel, I would like to ask Chairman
    Obey if it is his intention to hold a Full Committee markup of
    this stimulus proposal in January. In other words, will the
    members of our committee have the opportunity to debate and
    amend the stimulus package before going to the House floor for
    consideration?
        Chairman Obey and I have had many an exchange regarding
    last year's fiasco in which we essentially suspended all of our
    work. It is important that we have subcommittee expertise
    applied to these questions and, in turn, to have those lines of
    expertise come to the Full Committee where we can possibly even
    consider amending what has been proposed. That has not been our
    pattern recently. I hope we will see quickly a return to
    regular order.
        I thank the Chairman for his guidance. I yield back the
    balance of my time.
        Chairman Obey. Thank you for those supportive remarks.
        Let me now call our first panel. First, Governor Jim Doyle
    from a place called Wisconsin; secondly, Governor Jim Douglas
    from the State of Vermont; and, thirdly, Governor Jon Corzine,
    Governor of the State of New Jersey, who, before he had the
    unfortunate judgment to leave Washington, also served us with
    great distinction in the United States Senate.
        Gentlemen, we are happy to have all of you with us. If you
    would take about five minutes or so to summarize your
    statement, we will insert your written statements in the
    record. And we appreciate your being here.
        Governor Doyle, why don't you lead off?
        Governor Doyle. Thank you, Mr. Chairman.
        And to Mr. Lewis and members of the committee, to my
    distinguished colleagues from Vermont and New Jersey, thank you
    for having us here today. And to the chairman in particular, I,
    of course, want to state my incredible appreciation for your
    leadership for the State of Wisconsin and your great leadership
    of this committee during very, very tough economic times, and
    your work to help move our State and this country forward.
        The country's economic crisis has created very serious
    challenges for Wisconsin, and I believe that unless they are
    addressed correctly, these challenges to our States will impair
    our country's ability to recover and to move forward.
        First, I want to acknowledge the attention to the State's
    infrastructure, and let you know that Wisconsin has been
    working hard to line up projects that are ready to go and that
    will really add value to our economy. And let me say in
    response to Mr. Lewis, we would be delighted to have
    accountability for the expenditure of that money, to make sure
    it is doing what it is supposed to be doing.
        Let me also say a quick word about State budgets and how we
    handle ordinary economic downturns. Unfortunately, all of us,
    as governors, know how to handle ordinary downturns, and pretty
    severe downturns, but we are dealing with something of a
    different magnitude here today.
        Wisconsin's budget is typical of, I believe, every other
    State in the country except, I think, Governor Douglas' in that
    we have to balance a budget; and I know he does it every year,
    but we, by our State constitution, have to balance our budget,
    so when the economy slows, we have to adjust. And until
    September, we were on course to meet revenue projections even
    in a very slow economy. Last spring, we adjusted to a bad
    economy by making major cuts in State government.
        I have made $270 million in cuts to our State government
    since June of this year. And those cuts, in combination with
    earlier cuts that we have made, total a half billion dollars of
    cuts that we have made to the budget of the State of Wisconsin
    over the last year and a half. These actions were recognized as
    an ability to adapt and manage a challenging fiscal situation;
    and, in fact, as a result of those cuts, prior to September,
    Wisconsin saw an upgrade in its bond rating.
        Unfortunately, this economic crisis is unprecedented in
    recent decades. We had based our budget on very, very modest
    revenue forecasts. And to just give you a sense of the
    dimensions that we now face, we were predicting even on very,
    very minimal budget forecasts from last June that we would have
    about $28 billion in revenues for the next biennial budget. But
    after what happened this fall, we now predict only $25 billion
    in revenues over that 2-year period a significant decline from
    what were already predicted to be very flat revenues.
        The projected drop in revenue, combined with what happens
    with States in these kinds of times of expected increases in
    programs such as Medicaid, leaves us facing our largest budget
    gap ever: $5.4 billion over the next 2 years, or 17 percent of
    our biennial budget.
        Due to the cuts we have made over the last few years, we
    approach this challenge in a situation where, in the State of
    Wisconsin, one out of ten of our State jobs are unfilled. The
    budget deficit we face in this economic crisis stands, at a
    minimum, to double the number of State workers that will be out
    of jobs. And no matter how many workers we let go, the most
    basic fact is that these people only comprise a small
    percentage of our budget. I could cut the workforce of the
    State of Wisconsin in half, and we still wouldn't be dealing
    with the full scope of the deficits that we now face.
        So what we are left with is cutting away our State's
    ability to carry out the most essential expectations that
    people have for our government. We will be forced to cut the
    very tools and services that people depend on to pull them out
    of a recession and move them ahead.
        Specifically, State budgets let our communities hire police
    officers and firefighters. They allow kids to go to good
    schools. They allow students to go to universities and
    technical colleges with affordable higher education. State
    budgets also make sure that a child who breaks his or her arm
    gets the appropriate medical care that he or she needs.
        So that is what is threatened in the current situation: our
    schools, our universities, our technical colleges, our access
    to health care, our local police and firefighters. These are
    the areas that determine State budgets; approximately 80
    percent of our State budget is in those areas. And aid to long-
    term capital projects, which is very beneficial to the future
    and which we truly believe will help stimulate this economy,
    will not close our budget shortfalls or ease these devastating
    cuts. And these cuts could undermine years of careful progress.
        As you know so well, Mr. Chairman, and that you have been
    so helpful on, in Wisconsin we have worked hard together to
    make sure that every child in Wisconsin has access to
    affordable health insurance; and we have worked hard to make
    sure that families can get their kids a good education that
    they can afford. We have worked hard to build a great
    university system with affordable tuition and sufficient
    financial aid; and we have worked hard to put more police
    officers on the street to help turn some of our most troubled
    neighborhoods around.
        For example, in Milwaukee, State funding has allowed the
    police department to launch a new, highly strategic data-driven
    neighborhood task force which is credited for reducing total
    crime in the city by 10 percent and homicides by 33 percent.
    This program is saving lives, and it is making the city
    stronger.
        The magnitude of the budget shortfalls will also force
    States to consider tax increases. So we recognize, as States--
    and I am sure I speak for every governor--that we are going to
    have to make even more cuts, and we are going to have to make
    even more difficult choices. We don't want to have to make
    those choices, but we are willing and will make those choices.
    There are more cuts coming in Wisconsin, painful cuts that will
    really matter.
        But we cannot allow our States' revenue shortfalls to be an
    obstacle in our efforts to recover from this recession and to
    move our State and this country forward. So I am here to work
    with you to do everything I can to help move our country ahead;
    and it is my deep belief that our approach must allow States to
    meet our citizens' most basic needs.
        It would be terrible if, at the end of this recession, that
    what we would find is that we have moved this country back 25
    years; that our schools are hurting, that our universities have
    become so unaffordable that ordinary people can't go to them.
        We all recognize that, unfortunately, this recession will
    move beyond this fiscal year. So far, the current estimates put
    the total State deficits at $150 billion in this fiscal year
    and the next.
        So, Mr. Chairman, again I thank you very much. And the
    committee, I thank the committee for listening to our concerns.
    We look forward to working with you to make sure that we assure
    that our schools remain good, that higher education remains
    affordable, that we have sufficient numbers of police and fire
    on the streets--safety on the streets, and that we are ensuring
    that people get the basic health care that they need.
        Thank you very much.
        Chairman Obey. Thank you.
        [The information follows:]

        [GRAPHIC] [TIFF OMITTED] T6227A.003

        [GRAPHIC] [TIFF OMITTED] T6227A.004

        Chairman Obey. Governor Douglas.
        Governor Douglas. Mr. Chairman, thank you very much.
    Congressman Lewis. We appreciate the chance to be here to talk
    about the current fiscal condition of the States and of our
    country, and how we might work together as State and Federal
    officials to speed the economic recovery of our country.
        I am the Governor of Vermont, of course--also vice chairman
    of the National Governors Association. I will offer a few
    thoughts on behalf of the entire association membership and
    some from my perspective as the chief executive of a small
    State.
        The residents of my State and all States, as you know, are
    anxious. They are hurting. In many cases, they are out of
    options and are really looking for help from us and the Federal
    Government. A week or so ago, 48 governors and governors-elect
    met in Philadelphia with the President-Elect and Vice
    President-Elect to talk about ways that we can work together as
    partners to spur economic growth and speed recovery.
        As Governor Doyle noted, the governors of our Nation are
    indeed making difficult choices now, and working with their
    legislatures to implement them. States have already cut $7.6
    billion from budgets during the current fiscal year and could
    be facing shortfalls of nearly $180 billion over the next 2
    fiscal years. As you noted, we don't have the option of not
    balancing our budgets, so we have to find ways to keep them in
    balance in these very difficult and challenging fiscal times.
        Vermont is a small State, but our financial pressures are
    no less acute. We have already reduced our revenue forecast for
    the current fiscal year twice. We have pushed through two
    rounds of very difficult budget cuts. Another rescission is
    being developed now. We have cut our State workforce by about 5
    percent, and for the next fiscal year, 2010, I have directed
    the departments to prepare budgets that reduce general fund
    appropriations by an additional 13 percent.
        So we are working hard to address this downturn. We are
    looking at all options to reduce expenditures. But these
    reductions will undoubtedly impact important State services,
    including those that affect the most vulnerable in our States.
        These actions and those that all States need to take to
    balance budgets can slow recoveries and make downturns worse.
    So one of the most efficient mechanisms that the Federal
    Government can use to speed a recovery, as economists across
    the political spectrum agree, is investing in existing Federal-
    State programs.
        NGA urges the Congress to invest in States as part of any
    national recovery strategy, specifically to temporarily enhance
    the Federal Medical Assistance Percentage for at least 2 years;
    to invest in ready-to-go infrastructure projects with no State
    match to spur job growth; to consider changes in the Federal
    Tax Code that can spur economic growth; and to avoid policies
    that preempt State authority, that shift costs to States, or
    that impose new unfunded mandates that work against the goal of
    economic recovery.
        I want the expand on a few of those recommendations very
    briefly.
        An enhanced FMAP is most effective, as a counter-cyclical
    measure, to implement at the onset of an economic downturn in
    order to boost recovery, but we believe it has to be in effect
    for at least 24 months. That allows States to meet anticipated
    increases in Medicaid costs for the duration of this economic
    downturn. To achieve a maximum effect, the funding should be
    between a third and a half of the budget shortfalls that States
    are facing this year and next.
        Another important safety net program is unemployment
    insurance, and Vermont and at least 33 other States are facing
    challenges maintaining adequate balances in our unemployment
    trust funds. I encourage the Congress to reconsider a Reed Act
    distribution to the States for the purposes of bolstering these
    balances. This will help blunt the impact on already
    overburdened and struggling businesses if unemployment trends
    continue as projected. The chairman indicated the likelihood of
    that trend if no action is taken, and we have to do everything
    we can to provide that safety net to the people of our State.
        Chairman Obey. If I could just interrupt. What I indicated
    was what the unemployment levels were expected to be even if we
    did take that action.
        Governor Douglas. Even if we did. Thank you, Mr. Chairman.
        I have read some testimony of an economist before another
    committee of the Congress suggesting that the difference
    between action and inaction could be as much as 2.5 percent. So
    your point is certainly well taken that this is a serious
    situation, and everything possible should be done to keep it
    from being more serious.
        Investments in ready-to-go infrastructure projects are a
    cost-effective creator of high-paying jobs. Estimates are that
    for every billion dollars in transportation infrastructure
    there are about 35,000 jobs created and about $5.7 billion in
    additional economic activity created as well.
        I think we should have a broad definition of infrastructure
    to have the most impact. That may be highways and transit
    systems and airports; it could be clean water and sewer
    projects; perhaps information technology, including broadband;
    environmental projects; higher education infrastructure, as
    well.
        And I want to emphasize, as my colleague Governor Doyle
    did, that we are not asking for a blank check. We want to work
    with the Congress to ensure that investments in infrastructure
    are tied to projects that are truly ready to go, and perhaps
    even include a use-it-or-lose-it provision to ensure that funds
    get into the economy as quickly as possible. These
    restrictions, though, ought to take into account regional
    limitations.
        For example, a 90-day requirement that I have heard
    discussed in some quarters to have shovels in the ground
    wouldn't make sense in northern States where the construction
    season doesn't begin until at least April and ends generally by
    November.
        I urge the Congress to temporarily lift the State matching
    requirements that would otherwise restrict the States' ability
    to begin projects due to fiscal restraints. We support efforts
    that have been initiated by my State's congressional delegation
    to extend a State match waiver to include all SAFETLU projects
    through next September.
        Just a couple other specific thoughts from our small State,
    Mr. Chairman: We practice what we call just-in-time delivery of
    bridge paving and road projects. We don't have a large number
    of ready-to-go projects waiting for funding. So we suggest a
    reasonable time frame to obligate stimulus funds would be no
    less than 180 days. We generally don't have large
    transportation projects in small States, but small projects
    come with large regulatory hurdles and red tape. So I would
    urge the Congress to streamline regulations and relax current
    eligibility criteria to allow stimulus funds to be used for
    maintenance-related activities.
        I might note that the President-elect in his comments to
    the governors last week talked about the need to cut through
    the red tape of the Federal Government to expedite these
    projects.
        A provision allowing or encouraging stimulus projects to be
    bid using Federal agency emergency procedures would allow
    States to use simplified bids and other procedures to expedite
    project delivery. And maintenance of effort or antisupplanting
    language should not be included, I would suggest. Any ready-to-
    go project ought to be eligible for stimulus funding, thereby
    allowing any displaced funding to be used for additional
    activities or projects.
        In my written comments, Mr. Chairman, I have included some
    thoughts about the Tax Code that I would urge you to take a
    look at. There is an EB-5 Immigrant Investor Visa program that
    we would hope is extended by the Congress to bring foreign
    equity capital into at-risk investments in our States. There
    are a number of ideas that I hope the committee will consider.
        I think it is quite clear that our Nation is at a
    crossroads at this very difficult time. Folks who are losing
    their jobs, their homes, and even their hope are looking to
    their leaders for help. I believe the timely targeted and
    temporary investments by the Federal Government that we have
    discussed this morning are needed now to get our economy going
    and put us on the road to recovery.
        Again, I thank you for the opportunity to be here this
    morning to offer these thoughts to this committee.
        Chairman Obey. Thank you very much, Governor.
        [The information follows:]

        [GRAPHIC] [TIFF OMITTED] T6227A.005

        [GRAPHIC] [TIFF OMITTED] T6227A.006

        [GRAPHIC] [TIFF OMITTED] T6227A.007

        [GRAPHIC] [TIFF OMITTED] T6227A.008

        [GRAPHIC] [TIFF OMITTED] T6227A.009

        [GRAPHIC] [TIFF OMITTED] T6227A.010

        [GRAPHIC] [TIFF OMITTED] T6227A.011

        [GRAPHIC] [TIFF OMITTED] T6227A.012

        Chairman Obey. Governor Corzine.
        Governor Corzine. Thank you, Mr. Chairman, and Ranking
    Member Lewis. I am pleased to be here with my colleagues from
    New Jersey, Congressman Rothman and Congressman Frelinghuysen,
    who work very ably in a bipartisan way to represent the
    interests of our State.
        I think it is testimony to the Chairman's leadership that
    we are focused very precisely on this very significant problem
    we have in the economy that is creating enormous dislocations
    at the State and local level. I have heard that from my
    colleagues already, and I am pleased to join them as well.
        Our story in New Jersey is not a lot different from what
    you heard from Governor Doyle. We face one of the biggest
    challenges we have had in history financially. We are
    constitutionally required, as 49 other States are, to balance
    our budget. The budget that ended last June, we collected $33.5
    billion. In the current year, estimates are that it will be
    $31.5 billion; and if I am wrong, it will be less, with sharply
    declining revenue collections month over month by comparison.
        As we put together our budget for next fiscal year, which I
    have to deliver to the legislature in February, we are looking
    at $29.5 billion as the likely target. That is $4 billion, in 2
    years, in absolute dollar reductions, 12 percent. And as I like
    to emphasize, those are absolute cuts, not baseline numbers,
    which I think budgeteers understand.
        There are automatic increases in health care costs that we
    face, just as everybody else in the economy does, contractual
    wage hikes and automatic safety stabilizers that kick in during
    times of recession. If we were to look at baseline cuts, it is
    over $8 billion, more than 24 percent cut from what would have
    been expected over that 2-year period.
        To compensate for the decline in revenue, we are doing the
    hard things that Governor Doyle talked about. We are cutting
    through the fat, and, frankly, I think we are dangerously into
    the bone. We have cut the State payroll by over 4,000 people.
    That is about a 6 percent decline in the last 2 years. We have
    changed collective bargaining arrangements, increased pension
    contributions, mandated cost sharing. I could go on.
        We have cut aid to our colleges, universities, and
    municipalities already. We will be more challenged on that area
    in the next round of cuts. It will hurt people and the economy.
    And, frankly, a lot of our budget is not open to cutting in a
    civil society.
        We are not going to shut down our prisons. There is only a
    minimum amount of cuts that you can make to public safety.
    Eliminating services to the developmentally disabled and
    mentally ill doesn't seem like a likely or proper direction. I
    could talk about child welfare agencies and others. And we have
    contractual obligations on debt service that go forward.
        So we are left with a very limited set of places where you
    can go cutting--programs like Medicaid, higher education, aid
    to municipalities are the most likely. And coming up with $4
    billion of those kinds of cuts goes at our most vulnerable
    citizens and the most important areas where we would like to be
    investing, our children and our future. These cuts are sapping
    an economy just as we ought to be strengthening the economy.
        And as I say, we are just one state. If you multiply it, 4
    billion times 50, you get an idea of what we are talking about.
    We are medium-sized, and so some of the bigger ones have larger
    and some of the smaller ones a little less.
        My central point: A Federal stimulus package targeted to
    States must include, in my view, help on the operating side. I
    am an enthusiastic advocate for infrastructure spending. As a
    matter of fact, a month ago in the same hearing room I
    testified to the proper use of that if it is properly
    metricized and responsible. But we need help on the operating
    side if we are not to have the kind of cuts that I have
    outlined and Governor Doyle did.
        I must say, we could end up having a $300 billion or $400
    billion--maybe a $500 billion--program to help the States and
    other stimulus activities, but it could all end up being a wash
    if we don't get help on the operating side of the state
    budgets. And we haven't accomplished a lot if that is the case.
        We are not looking about blank checks. The fact is that
    States and the local government already have the delivery
    systems, already have the programs in place, the infrastructure
    to deliver the broad-based stimulus program. The Federal
    Government has access to the resources, and we would love to be
    a partner in that process.
        We have already made significant cuts, but--I would support
    the FMAP kind of investment that has been previously talked
    about, but there are other places, some of them in the mandates
    that the Federal Government lays upon the States. I think
    everybody knows that IDEA, we are only funding 17 percent of a
    mandate that we are required to carry. Everyone knows that No
    Child Left Behind is putting unfunded mandates on the States.
    We need help along those lines.
        And the reality on Medicaid is real. In the last 5 months,
    we have had 40,000 increase in the number of people signed up
    for Medicaid. It is exploding in front of our very eyes. So I
    do hope that we get to FMAP; that we work in some of the other
    programs like ``DISH'' with respect to our hospitals,
    particularly in front of some hoped-for long-term fix for the
    uninsured.
        I do hope also that we don't lose track of the fact that
    creating jobs with our infrastructure program is real. It can
    make a huge difference, and I think it can be delivered in a
    very solid context. We have, for instance, spending ongoing in
    the State of New Jersey, about $2.8 billion of accelerated
    transit projects and another $1.6 to -7 billion in school
    construction that we have moved up 6 months to try to stimulate
    the economy today.
        But there are many things that we are not doing. Case in
    point, the State has already committed $5.7 billion towards one
    of the largest transit projects in the country, a new transit
    tunnel under the Hudson River, would create 6,000 jobs if we
    could get it funded today; 50,000 permanent jobs in the New
    York-New Jersey region is the estimate of the economists once
    it is completed, and it will carry 45 million passengers
    annually. There are real metrics and real positive elements
    associated with that.
        Just as the New Deal put together programs that have short-
    run benefit, those projects like the Lincoln Tunnel and Golden
    Gate Bridge, and the electrification of the Northeast Corridor
    that I took today with Vice President Biden, these projects put
    people to work then and they are paying dividends to our
    citizens today.
        There is enormous need on both the operational side and the
    infrastructure side, and I would encourage both the Committee,
    the Congress, and all of us to work as partners to offset what
    is a very, very severe decline in our economy.
        I would just close with: We had an antipoverty network
    hearing in Trenton this week. The use of our food banks is up
    over 30 percent in client usage. Applications for unemployment
    are so large that we had to shift 150 people out of other
    departments to actually deal with the ongoing crisis of
    servicing those who are applying for unemployment.
        It is time for us all to pull together, join hands
    together, and be partners, address this not only to stimulate
    the economy, but to service the basic, core needs of our
    communities.
        I appreciate having the chance to talk.
        [The information follows:]

        [GRAPHIC] [TIFF OMITTED] T6227A.013

        [GRAPHIC] [TIFF OMITTED] T6227A.014

        [GRAPHIC] [TIFF OMITTED] T6227A.015

        [GRAPHIC] [TIFF OMITTED] T6227A.016

        [GRAPHIC] [TIFF OMITTED] T6227A.017

        [GRAPHIC] [TIFF OMITTED] T6227A.018

        [GRAPHIC] [TIFF OMITTED] T6227A.019

        [GRAPHIC] [TIFF OMITTED] T6227A.020

        Chairman Obey. Thank you very much, Governor.
        Just one observation, and I will be frank about it. A
    number of my colleagues on both sides of the aisle will say to
    me in private, ``Well, yeah, I know these States have a lot of
    deficits.'' But if the governors are of the opposite party,
    some Members are saying, ``I don't want to help him. I want to
    deal with my problems.'' And others are saying, ``Well, why?
    This is the State's problem. I am a Federalist. Why should the
    Federal Government weigh in to give money to governors?''
        My friends know I like to quote Archy the Cockroach, and
    Archy once said, ``There is always a comforting thought in time
    of trouble, if it is not your trouble.'' What others have said
    to me is: ``We are seeing at the State level, or will see at
    the State level, that because of the actions you have to take
    to balance your budgets, the result will end up being a fiscal
    drag on the economy of somewhere around $200 billion.''
        And I have heard even higher estimates. And if that is the
    case, it means that if the Congress doesn't appropriate $200
    million to at least counter that, we are not only not staying
    neutral, we are making the problem worse. Or, at least, the
    problem is becoming worse.
        And so it seems to me that what we need to do is first,
    provide a reasonable balance between what the Federal
    Government does, what the local governments do, what State
    governments can do, and what the private sector and
    organizations can do in order to create jobs to counter the
    jobs we are going to be losing with what is happening in the
    economy; second, stabilize the budget situations at the State
    and local level; and, third, help the most vulnerable victims
    of this recession.
        And hopefully, at the same time, while we are at it, it
    would be nice if we could do all of those things in a way which
    would modernize and streamline and make more efficient some of
    our delivery systems and services around the country.
        So I appreciate your comments here today. And to give other
    members more time, I will decline to ask any questions at this
    time and turn it over to Mr. Lewis.
        Mr. Lewis. Thank you, Mr. Chairman. It is not my intention
    to ask any questions, but I do have a unanimous consent, if you
    will, to enter into the hearing record the additional
    materials. And it includes an op-ed from Governor Sanford, who
    is the chairman of the Republican Governors Association, and
    Governor Perry of Texas.
        Chairman Obey. Without objection, so ordered.
        [The information follows:]

        [GRAPHIC] [TIFF OMITTED] T6227A.021

        [GRAPHIC] [TIFF OMITTED] T6227A.022

        [GRAPHIC] [TIFF OMITTED] T6227A.023

        Mr. Lewis. Mr. Chairman, if I could take the balance of my
    time and yield it to my colleague from New Jersey, Mr.
    Frelinghuysen.
        Chairman Obey. Sure.
        Mr. Frelinghuysen. I thank the gentleman for yielding and I
    thank the gentleman for the time.
        And let me share--initially, I share the concern of our
    ranking member, Mr. Lewis, that so many of our appropriations
    bills were not debated and passed on the floor. I think in many
    ways that could have been a stimulus to get those bills through
    and money out on the street.
        I share with Mr. Mollohan oversight of the Department of
    Commerce, Justice, and Science portfolio, and there is a lot in
    those bills that would do a lot to stimulate the American
    economy.
        Having said that, gentlemen, thank you for being here. And
    particularly, it is a pleasure to welcome my own Governor Jon
    Corzine.
        The advertised topic of this hearing is the need for an
    economic stimulus package. I think we can all agree that we
    have an obligation to act to ensure that the current economic
    slowdown is as shallow and as brief as possible. There may be a
    need for targeted infrastructure investments as many of you
    have outlined. I am certainly familiar with those that need to
    be done in the New York-New Jersey area.
        The question that this Congress needs to debate is how we
    structure an assistance package that will be designed to
    stimulate or--will we structure an assistance package that will
    be designed to stimulate our economy or will it be structured
    in some ways to stimulate the growth and the size of our
    government? From my way of thinking, we must spur growth by
    using the traditional resilience of our economy and not relying
    on the sheer size of our U.S. Treasury.
        I understand that all of our States and our cities are
    hurting; as a result of the year-old recession, revenue
    collections are down. As Governor Corzine has stated, in New
    Jersey the revenue shortfall is expected to be at least $400
    million and could reach nearly $1 billion, based on projections
    produced by the nonpartisan Office of Legislative Services. My
    Governor's administration estimates that the revenue shortfall
    for fiscal year 2009 to 2010 could be nearly $4 billion.
        Let me say, some of the problems here are self-inflicted:
    too much spending, too much incurring of debt, and, quite
    honestly, too much borrowing, which has contributed. But I do
    think the Federal Government needs to step up to the plate.
        I have to say for the record, even in the State, in States'
    investments, the State investment portfolio is down $23
    billion. And that may be a nationwide trend. That is a huge
    impact.
        But I served in the State legislature for a number of
    years. One of the reasons that we have this is because things
    have been given away to a lot of the public employee unions,
    and it has been reflected in the municipal budgets--the pension
    benefits, the health benefits for employees. And so the
    question is whether we have the courage to sort of revisit
    those areas and gain some sort of fiscal stability.
        So I thank the gentleman for yielding, and I thank the
    Chairman for the time.
        Chairman Obey. Mr. Murtha.
        Mr. Murtha. Governors, I read through your statements. And
    I just want to say, we had this problem 25 years ago in western
    Pennsylvania. We lost steel and we got a lot of help from the
    government, and it made a hell of a difference.
        I hope you are making suggestions how to streamline,
    because we started sewage and water, where it took 4 or 5 years
    to get through the process, there are so damn many agencies
    involved.
        So I hope to the committee, the Appropriations Committee,
    and to Oberstar's committee to make suggestions about what
    would help streamline, so you can get that stuff out there. I
    know you have got all kinds of sewage and water projects and
    infrastructure projects, but we need to know from you what
    would help you get it out as quickly as possible.
        Chairman Obey. Mr. Kingston.
        Mr. Kingston. Thank you, Mr. Chairman. And I wanted to
    associate my remarks with Mr. Lewis in terms of last year's
    budget.
        Here we are, having the hearing on anticipated legislation;
    yet, we have not finished up the fiscal year appropriation
    process for the year. And one of the reasons why we are unable
    to finish that had to do with offshore drilling. And I believe
    that an abundant supply of domestic oil would actually be a
    long-term solution to some of our economic woes.
        So I think we could revisit some of these issues that we
    came apart on last summer, and it can be and should be part of
    this package.
        But I am also wondering, in terms of some of the unfunded
    mandates--and I had served in the State legislature as well,
    and know that one of the great difficulties of State government
    is that there are so many unfunded Federal mandates on it; and
    yet, in your remarks, they are mentioned, but not specifically.
        It would appear to me that the National Governors
    Association might say, ``Here is a list of very serious
    unfunded mandates that are very costly and well-intended. They
    are all well-intended, but some aren't practical, and many
    could be handled by State and local government discretion
    anyhow.''
        You pointed out in your comments that Vermont, while it
    doesn't have a balanced budget amendment, always balances its
    budget. Just because we don't mandate it doesn't mean that you
    are not going to do it anyhow. So I think on so many of these
    mandates we could get the word ``Federal'' out of there, and
    the States would do it, but the States could probably do it a
    lot more efficiently and inexpensively. And I hope that maybe
    today or in the coming weeks you can enumerate some of those
    mandates and, on a bipartisan basis, we can get rid of some of
    them.
        Governor Corzine. Mr. Chairman, if I might make a comment
    on unfunded mandates, and then I would also like to reemphasize
    that all governors are asking for accelerated processes, as we
    did with President-elect Obama last week with regard to
    streamlining of some of the processes that are associated with
    infrastructure projects.
        But make no mistake, almost every State has already gone
    through this prioritization process. We have in the State of
    New Jersey. We have ready-to-go shovel-ready projects that
    would meet both the Transportation Department standards that
    have to be met for matching funds. We have accelerated a large
    number of those in New Jersey, but we have a much longer list
    than what we have actually been able to fund with the resources
    that we have.
        The same goes with our school construction efforts that we
    have in place in the State. It is a $25 billion project. If we
    were to do what we have already identified as a responsible
    addressing of that issue, we would only cover, on our dime,
    about $5 billion of that.
        So I don't want people to come away saying that States
    haven't been doing their homework in getting prepared for
    shovel-ready, ready-to-go projects. I think we have that. And
    so--and I know that is the case on some of the water and sewer
    issues.
        There are a number of those same things that would be
    associated with energy projects, that conversion of public
    buildings. Most of that has been identified in a lot of the
    States. There is a huge backlog of maintenance and repair
    issues at our public universities that are identified that I
    think could be included in any kind of infrastructure.
        On the unfunded mandates, I think that some of them may be
    very appropriate. IDEA, which most people would strongly
    support in helping our at-risk children, our special needs
    kids, nobody thinks it is a bad program. The problem is that,
    since 1975, we have never gotten to full funding or anywhere
    close to full funding of what the Federal committed share is.
        For us it is about $500 million, we estimate, what we are
    getting in shortfall relative to it. The same thing on Leave No
    Child Behind. Now, you are right, there are some mandates that
    a lot of us would just, you know, there is no funding for at
    all. And mistakes happen, and we can work on that. But a lot of
    the mandates are the Federal Government has not put its
    partnership share into those and the States are picking that
    up. And that gets into that displacement issue that helps us
    funding.
        Chairman Obey. Thank you. Governor?
        Governor Douglas. Mr. Chairman, you did not pose a direct
    question at the outset of this part of the hearing, but I
    wanted to comment on whether this is an appropriate step for
    the Congress to take. And I think part of the answer is that
    this is a shared responsibility to administer most of the
    programs that we are discussing. Transportation programs are
    funded substantially by the Federal Government, administered by
    the States. That is true of Medicaid and other safety net
    programs. So as I have suggested in our meeting with my
    colleagues last week, we are all in this together from a
    Federal and State perspective.
        And secondly, I would not be here asking for the entirety
    of the budget gaps that the States are facing, because I think,
    and economists have weighed in on this, it is important to
    require some streamlining of State administration and programs.
    As we have noted today, we have been doing some heavy lifting
    in terms of cutting back and tightening our belts and doing
    things more efficiently. So we are certainly doing everything
    we can, and would welcome your participation in this effort so
    our mutual constituents can continue to get the service and
    benefits they deserve.
        Chairman Obey. Thank you. Mr. Dicks.
        Mr. Dicks. Well, I want to welcome the Governors here and
    congratulate our Chairman for having this hearing. I think this
    is great, to allow the American people to understand the
    problems that the States are facing. And after all, we are all
    in this together. We all represent the same people. And we have
    to be concerned about those people.
        I happen to be the Chairman of the Interior and Environment
    Appropriations Subcommittee, and we have jurisdiction over the
    EPA, clean water, and safe drinking water revolving funds. It
    has been my impression that loans are good to a certain extent,
    but at some point you got to have grants. We are now reduced to
    about 600 million or 700 million in STAG grants. During the
    Nixon administration, when Bill Ruckelshaus was the
    administrator of EPA, we had $6 billion a year in water and
    sewer construction grant programs. I think it was like 80
    percent or 80-20 or 90-10, some number like that. And to me,
    representing--I have urban areas in my district and rural
    areas. The rural areas simply are unable to do these projects
    because they cannot--the cost of paying back the loans gets to
    be so high that the constituents cannot pay the bill.
        So I think this is one area where we need--you know,
    Christine Todd Whitman, when she was Administrator of EPA, did
    a review of the whole situation; we have a $388 billion backlog
    nationwide in our wastewater treatment facilities. And if we
    are going to clean up the Chesapeake Bay and the Great Lakes
    and the Puget Sound, San Francisco Harbor, all these major
    estuaries in the country, we are going to have to do these
    projects.
        So I just do not know if you have any comment on that,
    about the fact that all we have today seems to be loans, with a
    few very modest grant programs. I think this is one area that
    we could change that would make a dramatic difference, create
    jobs, and also help us deal with some of our fundamental
    environmental problems.
        Governor Doyle. Mr. Chairman, could I----
        Chairman Obey. Governor Doyle.
        Governor Doyle. I agree wholeheartedly. In fact, we have in
    our list of ready-to-go projects identified a whole section of
    clean water and water treatment projects. The reason they are
    ready to go is they have been sitting, in many instances, just
    sitting there because of a municipality or sewage district not
    being able to finance the project. But in our list of ready-to-
    go projects, that is a very major section of them.
        Mr. Dicks. Thank you, Mr. Chairman.
        Chairman Obey. All right. Mr. Mollohan.
        Mr. Mollohan. Thank you, Mr. Chairman. Mr. Chairman, thank
    you for having this important hearing. I would like to join
    other members of the committee in welcoming the Governors here.
    I am chairman of the committee that funds law enforcement--
    served with Mr. Frelinghuysen--and the Federal Government has a
    program for State and local law enforcement that I am sure all
    of you are familiar with. Governor Corzine served with
    distinction in the Senate and is familiar with the COPS
    program, which was very robust during his tenure.
        I wonder, moving from the infrastructure side to the
    operations side, if you all would discuss a bit for us the
    impact the economy is having on your ability to fund State and
    local law enforcement and what extraordinary needs the economic
    condition has placed in that area on you and how we might step
    up and help in those areas.
        Governor Corzine. Thank you, Congressman. First of all, at
    the State level we have already pared back State police
    classes. So we are delaying and shrinking the number of people
    that we are offering into the workforce. And you can only go so
    long in that process or you end up having a major undermining
    of broad public safety in the State. This actually is part of
    the trickle-down problem that comes from this issue. This is a
    major problem among local communities. State aid is cut with
    broad general aid, and then the local communities have to look
    for the places to make their cuts. And the first and foremost,
    largest part of their budgets, go to public safety, fire and
    police. And while there can be arguments about whether the
    benefit packages are excessive or too attractive, the fact is
    that we need people in our communities.
        All of us are struggling with a gang problem. When you put
    dedicated police officers and technology into the streets, as
    Governor Doyle talked about, you get results and improvement in
    the quality of life in these communities. And I only hope that
    people understand that it is fine for us to adjust our budgets,
    our adjustments are going to be right out of the local support
    for law enforcement. That is why the COPS program was such an
    important ingredient, certainly would be something that I think
    most Governors, and certainly mayors, would be supportive of.
        Governor Doyle. If I could add, I agree with everything
    that was just said. In Wisconsin at least, the way we are
    structured, large parts of our municipal budgets come through
    local aids that the State provides. And when you are talking
    about the kind of deficits we are looking at right now, you
    know, 80 percent of our budget is made up of K-12 education, of
    higher education costs, of Medicaid, of local aids, and of
    corrections. And of those last two, local aids and corrections,
    obviously that is major public safety and law enforcement
    concern.
        I was the Attorney General of the State of Wisconsin during
    the years of the COPS program. I saw the enormous advantage
    that we saw throughout the 1990s, a steady and significant
    decline of our crime rates throughout that entire decade. There
    were a number of reasons for it, but I believe the COPS program
    was certainly one.
        But now we face these huge cuts to the Byrne grant program
    that have really affected not only our local law enforcement,
    but our juvenile prevention programs and other things in the
    State. And when we look at what our budget is really made up
    of, at these levels it means you have to cut local aids. And I
    gave an example in my remarks that I do not want to repeat, but
    it is exactly that kind of specific program that is at stake
    when the city of Milwaukee comes to the State and says we need
    help on more police overtime pay in order to have a targeted
    program directed specifically at reducing violent crime, and
    homicides in particular, in particular areas of the city, data
    driven, community-based police kind of efforts, we were able to
    do that with very demonstrable results.
        With this kind of deficit in front of us, and just trying
    to make sure kids can go to school, it is going to be very hard
    for us to be able to deal with those kinds of challenges.
        Governor Douglas. Mr. Chairman, could I respond to Mr.
    Mollohan's question as well?
        Chairman Obey. Sure.
        Governor Douglas. It is a little different in our State,
    because we have been through the cycle that Governor Corzine
    described of smaller classes at our police academy and
    underfunding our State police resources. So we are now
    increasing those resources. And despite the fact that we are
    having to make these tough budget cuts, I am actually
    recommending additional funding for our State police in the
    current and next fiscal year. We just have to, because although
    we are a small State, we are one of the safest in America, we
    have seen an increase in some areas of criminal conduct. And
    because we are on an international border we have drug
    smuggling that comes across. And in addition to the great work
    that the Border Patrol does, our State and local law
    enforcement agencies play a key role.
        It has gotten to the point in one small city in the
    northwest part of our State where they are having a very
    difficult public debate about whether to provide adequate
    support for the police department or the fire department. This
    is a serious situation because, as my colleagues have
    suggested, with cutbacks at the State level, it is going to
    have an impact on local agencies. So the Federal support for
    the COPS program and other similar appropriations is certainly
    welcome.
        Mr. Mollohan. Thank you, Mr. Chairman.
        Chairman Obey. Ms. Kaptur.
        Ms. Kaptur. Thank you, Mr. Chairman. Thank you so very much
    for holding these hearings.
        And welcome, Governors. I am really glad to have you here
    this morning. I wanted to say that I believe getting our
    economy growing requires that transfer payments, Federal
    transfer payments to our States, be targeted in a manner that
    achieves as much economic growth as possible, at the same time
    as the Federal Government tries to assist the States.
        And in that regard, if I look at, for example, the area of
    energy, I would guess maybe 10 percent of your State budgets, I
    am not sure, would go into paying energy bills for everything
    from Guard bases to the Governors' offices.
        And one of my questions really is it would seem to me that
    an investment in green energy in your respective States would
    have a long-term payout. If you could save 10 percent for the
    next 25 years, every year, it would get priority maybe over
    investments that would be dead in the ground, even though they
    might be important. And I wanted to get your comments on green
    energy.
        And then Governor Corzine, my question to you, New Jersey's
    economy is more like Ohio's than the other two States that are
    represented on the panel this morning. Do you agree that the
    mortgage foreclosure crisis has really helped to precipitate
    the situation we are facing today? And as a former CEO of
    Goldman Sachs, let me ask you to comment how you view the
    administration of the TARP and what we might do to deal with
    this mortgage foreclosure issue more effectively.
        So, first, on green energy and, secondly, on what you view
    as the precipitating factors that have tripped our economy into
    the downward spiral that we are all experiencing. Thank you.
        Governor Corzine. Thank you, Congresswoman. First of all, I
    think all of us, when we talk about infrastructure--and I
    tried--in my formal remarks that are a part of the record, I
    emphasized that green energy investments, conversion and
    efficiency of buildings, particularly public buildings and
    others, as one of those things that is ready to go. We know how
    to do it, we just do not have the resources to bring people in
    to do it.
        We are actually changing some of the structure, working
    with public utilities to try to get resources to do that on a
    broad basis across the State as a both an economic stimulus,
    but also for the long-run benefits that you suggest. And I
    absolutely believe it should be part of an overall
    comprehensive economic stimulus program. And I think I am
    hearing that talked about, and there should be in any $500- or
    $600-billion program, some allocation that I think actually
    primes the pump with regard to these directions.
        Ms. Kaptur. Governor, may I interrupt you? Do you know what
    percentage of the budget of New Jersey goes to energy costs?
        Governor Corzine. I think it is a little less than 10
    percent. You know, what most of us do in our budgets, and you
    have heard it from us, is we pass through, we either pass
    through to the educational system, our K through 12 or to our
    higher education. So some of those same kinds of questions,
    when you accumulate it, how we are spending the money that goes
    to education, how we are spending the money that goes to our
    municipalities, is going to energy. We just give a flat-out.
        So I think that there is a lot of work in the area that you
    are talking about that can create tremendous stimulus with
    long-run dividends.
        I am going to identify with the Chairman's remarks at the
    open. I think I might arrange them just a little bit different.
    I do think that there is a long-run problem in the country
    about the failure to have income, real income, grow for
    individuals for a very long period of time. And that has led to
    a build-up of debt, consumer debt.
        Same sort of thing has happened in government. It is a
    bigger problem at the State and local level than it is at the
    Federal, although I think we will, long run, have problems
    there. There is this accumulating debt that has grown because
    there has been a concentration of growth of wealth in a very
    narrow segment. That is a big strategic problem that I think
    the country has to address.
        But there is no question that the housing market, in my
    view, which is such a fundamental part of our overall economy,
    that is where savings exist for most people in America. The
    broad majority of folks, 70 percent, roughly 70 percent of
    people have home ownership. They save through their home. And
    when that fell apart, for lots of different reasons, including
    the greed that somewhat exists in various parts of our economy,
    both at local and on Wall Street, I think that was a spark that
    has led to an accumulation of problems. And you have to
    remember you are talking about probably about 20 percent of our
    economy associated with that. It impacts our consumer, which is
    about two-thirds of our economy. And I think unless we get to
    the roots of that problem, actually get into the mortgage
    modification and all those kinds of things--and I think that
    should be done with TARP money--I think we are just going to be
    suffering from those problems that have resulted in the
    weakening of the balance sheet of financial institutions as we
    go forward. I could talk for hours on this. I am sorry.
        Governor Doyle. If I could say something about the green
    energy, we could get to you the percentage, and I am not sure
    exactly what it is. I think it is a little less than 10, but it
    is huge.
        I tell you this, when I look at the University of
    Wisconsin's budget each year, the biggest lift in that budget
    is energy costs. So before you even start dealing with other
    issues that you need to deal with at the University, you have
    to just cover the increased heating bill. And particularly for
    us in cold-weather States, it is enormous. And let me add,
    particularly if you are a major research university. University
    of Wisconsin-Madison is always one of the top two or three NIH
    fund receivers in the country. Huge medical research building.
    And those institutions take up a lot and growing amounts of
    energy.
        On the green energy, I would like to bring up one other
    point to you that you might want to consider. I just recently
    had a discussion with a major utility. We have very significant
    RPS standards in Wisconsin. By 2015 they have to be 10 percent
    renewable. By 2020 they have to be 20 percent renewable. Right
    now they have a project ready to go, a major wind farm ready to
    go, that they cannot because of the restrictions in the credit
    market. The amount of money that they would have to pay in
    order to go forward with that project is so high that the cost
    to our ratepayers in Wisconsin would be enormous. The result of
    this economic crisis in our State is slowing our ability or may
    well slow our ability to hit the legally stated RPS standards
    that we have in place.
        Ms. Kaptur. Mr. Chairman, I want to thank the Governor. And
    I want to say that both Chairman Obey and I spent many years in
    those cold-blooded Wisconsin winters trudging up Bascom Hill.
    So I just have to put that on the record, and it is great to
    have you here, Governor.
        Chairman Obey. Let me ask the cooperation of the members of
    the committee and the witnesses. We are trying to hold the time
    frame for both the question and all of the answers to 5 minutes
    per Member so that every Member gets a chance to ask a question
    who desires to. With that, Mrs. Lowey.
        Mrs. Lowey. Thank you, Mr. Chairman, for holding this
    hearing. And I want to thank the Governors for their excellent
    testimony. You mentioned so many good points. I particularly
    want to thank you for your focus on FMAP. And certainly we saw
    in New York that during the last significant economic downturn,
    a temporary increase in FMAP resulted in an additional $600
    million for New York, generated more than $1 billion in
    additional economic activity.
        So I appreciate your shaking your heads, and I do hope that
    an increase in FMAP will be an important part of our economic
    stimulus, economic recovery package. And I thank you.
        On a related issue, in 2005 for the first time, health care
    exceeded manufacturing as a percentage of all jobs nationally.
    Unfortunately, despite the fact that hospitals are often the
    largest employer in a community, many of them are barely
    surviving, although we are asking them to expand emergency
    rooms and prepare, God forbid, we ever had an incident again
    that needed their involvement. They do not have the capital to
    do what they really have to do.
        So my question, gentlemen, do you agree, number one, that
    helping hospitals access capital to improve their facilities
    and operations will ultimately improve health care, reduce
    costs, and generate jobs? And secondly, would you support a new
    Federal program to provide grants and low-cost loans to
    hospitals to make desperately needed upgrades and improvements?
    And if you could respond, I would appreciate it in the minutes
    that we have left.
        Governor Douglas. Well, as my colleagues and I have
    suggested, Mr. Chairman, I would hope the Congress would be
    flexible in its definition of infrastructure, because the
    priorities differ from State to State. It may be a renewable
    energy project, as Congresswoman Kaptur noted, and we are proud
    of the fact that we have more wood-chip boilers in school
    buildings in Vermont than any other State. And we have three
    buildings heated by geothermal systems that are very cost-
    effective. And I hope we can do more.
        And obviously in terms of health care facilities, the
    better the infrastructure, the better the quality of care,
    means that there will be a favorable impact on the rates that
    are charged to customers. And of course the State government is
    a large payer of health care costs. So that certainly would
    indeed be beneficial.
        Mrs. Lowey. Thank you.
        Governor Corzine. I would concur with Governor Douglas'
    comments. But I would also emphasize that aid to the hospitals
    on the operating side, probably through the DISH program,
    disproportionate share issue, is also fundamental.
        Right now, as you all know, when people go through economic
    stress, one of the first things to go is the remaining folks in
    our society that have health insurance. That goes fast. They go
    to the emergency room. We end up picking up charity care. And
    it is just a vicious circle that is undermining the operating
    economic health of our hospitals.
        And so looking for ways to help get across this bridge,
    bridge this recession, I think is an important element with
    regard to the operations of hospitals, as well as their capital
    plans.
        Governor Doyle. If I could just add how important FMAP is
    to economic stimulus. Because if in fact, if you are just
    looking out over the next couple of years, if we have to cut
    our Medicaid budgets by 20 percent, the result of that in
    practical terms is that some fairly low-paid person working in
    a nursing home in the State of Wisconsin will be out of work.
    Somebody at the hospital, somebody, a technician, others, will
    not be working there. Those are jobs that are spread all across
    our States in every community and every place.
        And I love the people who build our roads, and we love the
    operating engineers and the people that do all that, but there
    are people who hold a lot of other kinds of jobs. And as you
    pointed out very, very aptly, many of those jobs are in the
    health care sector, and many are very, very dependent,
    particularly in long-term care, are very dependent on the
    Medicaid program.
        Mrs. Lowey. Thank you very much, and thank you, Mr.
    Chairman.
        Chairman Obey. Mr. Serrano.
        Mr. Serrano. Mr. Chairman, thank you for holding these
    hearings. And I want to call your attention to today's Daily
    News to contrast: The bottom is the Sinking City, Mike
    Bloomberg cutting a million and a half, and the top is the
    Yankees gave CC Sabathia $161 million. If I was not a Yankee
    fan I would be outraged, but since I am a Yankees fan----
        Governor Doyle. You know you are saying that to a Brewers
    fan.
        Mr. Serrano. I just noticed that. I probably should not
    have said that. I apologize.
        But my question speaks somewhat to what I mentioned here.
    And that is I spent 16 years in the New York State legislature,
    so I know how difficult it is to put budgets together during
    difficult times, and these are not just difficult, these are
    devastating in some ways. The people or the groups that suffer
    the most in these times, or suffer a lot, are the ones that do
    not have a constituency to lobby for them: the cultural
    institutions, the arts, beaches, tourism, recreational
    programs.
        Are we in danger of perhaps devastating our cultural
    institutions during this period of time to the point where they
    can never recover? And let me preface my last comment by saying
    that we understand what the priorities have to be. But at the
    same time, in the case, for instance, of New Jersey and New
    York, we worked jointly with our cultural institutions in both
    States, and they not only provide jobs but they provide a
    quality of life. And in many cases during difficult times they
    can make people just feel a little bit better. Are we in
    danger, as we focus on the needs that we have to deal with, of
    just having our institutions die to a point where they cannot
    recover?
        Governor Corzine. Well, I was with you until the last
    comment. I do not think that we will get ourselves into a
    position where we eliminate or pull entirely away from cultural
    and community-based activities. But at least in New Jersey we
    have made a very clear choice that educating our kids is the
    priority that we are going to protect the most significantly.
    Public safety is going to be protected. And that we are going
    to do as much as we can to protect the most vulnerable.
        And these cuts that Governor Doyle and I talked about
    include--I mean I do not know about in Wisconsin--but they
    include serious cuts for a lot of those things that you just
    mentioned, culture and arts. And we are trying to do it in a
    way that we again bridge until we have resources to come back.
    But you have to make incredibly agonizing choices, and making
    sure that our kids get educated, that we protect folks on the
    streets of our cities and communities and do everything we can
    for the most vulnerable. And that is why we are here to say we
    need to be partners in this process or we are going to have a
    very, very serious outcome at a human level, even on those most
    important priorities.
        Mr. Serrano. Thank you so much.
        Chairman Obey. Ms. DeLauro.
        Ms. DeLauro. Thank you, Mr. Chairman. And I want to say
    thank you to the Governors for being here today. Mr. Chairman,
    to you let me say I believe that this is the first hearing
    where we have focused on what is happening to those who are
    unemployed. They are not nameless, they are not faceless, they
    are not statistics. We focused on an industry, we focused on
    financial institutions. This is the first time we have said,
    What is going on in the lives of people who have lost their
    jobs?
        I want to focus in on the infrastructure piece if I can. I
    am supportive of FMAP, of food stamps, but on infrastructure--
    and I have three very quick questions, and one specifically
    that has to do with Governor Corzine. We have legislation up
    here that--we are trying to deal with an economic recovery
    program, not just stimulus, jobs that will look toward growth
    in the future.
        The legislation--and I will be self-serving in this sense--
    since 1994 something called the National Infrastructure Bank,
    which examines infrastructure projects in an objective way,
    uses proceeds from bond issues to fund the projects. I believe
    it ought to be part of an economic recovery package.
        Governor Corzine, you talked about the New Deal programs,
    Tennessee Valley Authority, which is similar to the entity that
    we have been proposing here. As Governors, I would like to get
    your thoughts on the extent to which your States would take
    advantage of such an entity that would provide loans for a host
    of these infrastructure projects.
        Specifically, Governor Corzine, what would the global
    markets do? Do we have an opportunity to get investors to deal
    with such an entity where they would be attracted to public
    benefit bonds?
        And again to the three of you with regard who is going to
    get these jobs in your State, do you have the capacity and the
    workforce development programs to create the opportunities for
    men, women, and minorities and young people to be able to get
    these jobs?
        Governor Corzine. Congresswoman, I believe that if you have
    the U.S. Government imprimatur on an infrastructure bank, which
    I presume in most models that I have seen, you will get
    significantly lower-cost financing than I think what we are
    doing at the States and authorities that are associated with
    the States, in coming together in raising capital in the
    capital markets. And yes is the short answer. I think it will
    actually improve it.
        I think the infrastructure bank actually will address some
    of the needs or concerns that the Ranking Member talked about.
    We ought to have to scrub to real metrics about the viability
    and the rates of return that are associated with the projects
    that go through that. So I am very supportive of that concept.
    I think it is one whose time has come.
        You know, the other questions, I believe that we work all
    the time in most of our States on our workforce development and
    to broaden access to encourage our labor unions to make sure
    that there is equal access to those jobs. Yes, the construction
    industry is on its back. Housing is down two-thirds in
    construction from where it was. There are plenty of people to
    go to work on infrastructure rebuilding. We just have to make
    sure that we are putting pressure, that it is a diversified
    workforce, that everyone has access to it.
        That is not to criticize organized labor, but we need to
    make sure that the apprentice programs are open to women and
    minorities as well as others. And we need to obviously be
    updating workforce skills for the 21st century. And all of
    those things are in place. We just cannot fund it to the degree
    we would like.
        Governor Doyle. On the first point let me, if I could, just
    tie it back to energy conservation as well, which I think, I
    hope, is part of infrastructure.
        Ms. DeLauro. Absolutely.
        Governor Doyle. And to talk about how such authority would
    be helpful. One of the things we have done in the last month of
    trying to really look at how you jump-start an economy is look
    not only at the public infrastructure needs, but the private
    needs as well. And we identified over $600 million of energy
    conservation projects that Wisconsin companies are prepared to
    do immediately.
        The reason we know this is because we have a fund that
    works through our public utility commission comprised of money
    that the utilities pay in. That goes out to businesses that
    come in and say this is how we want to retrofit our factories,
    this is what we want to do to save energy. And so we have a
    queue of those proposals and we can fund so many of them. But
    there is a list of about 600 million of those that are really
    not able to move forward because of lack of financing right
    now.
        So there are public opportunities, but I just give you this
    as an example of where we could put a lot of people to work for
    private companies in energy conservation on projects that they
    have ready to go.
        On workforce development, a huge issue, but I want to just
    say we recently have completed the biggest public works project
    in the history of the State of Wisconsin, the rebuilding of
    what we call the Marquette Interchange, which is the main
    interchange in the middle of the city of Milwaukee, about a
    billion-dollar project.
        We worked very hard, we figured out ways to get the
    contracts out in smaller lets so that minority- and women-owned
    businesses are able to build. And I am very proud to say that
    23 percent of the contracts that we bid on that project, which
    came in under budget and under time, went to minority, women-
    owned businesses, and that 25 percent of the workforce that
    worked on that road was minority as well.
        So we have developed some real efforts at how we let the
    bids and how we get them in a way that we are able to make sure
    that a lot of people are enjoying and having the opportunity to
    go to work.
        And we are now in another huge infrastructure project,
    which is the whole rebuilding of the Interstate between
    Milwaukee and Chicago. It is going to be a $2 billion project
    over the next 6, 7 years. We will do the same kind of work to
    make sure people who are ready to come and work hard have an
    opportunity to work on that road.
        Governor Douglas. Mr. Chairman.
        Chairman Obey. The gentlewoman's time--Governor?
        Governor Douglas. Very briefly----
        Chairman Obey. Briefly, go ahead.
        Governor Douglas. Our contractors believe they have the
    capacity to get the job done. We have energy projects, as
    Governor Doyle does, ready to go. And we launched a program we
    call the Next Generation Initiative a couple of years ago to
    provide more resources for scholarship, for loan forgiveness
    programs, and also workforce training. And I attended the
    launch of one recently to train workers specifically to install
    solar panels, solar installations as a renewable energy
    project. So I think we have got a lot of work to do to get the
    job done.
        Ms. DeLauro. Thank you, Mr. Chairman.
        Chairman Obey. Mr. Moran.
        Mr. Moran. Thank you very much, Mr. Chairman. And I
    appreciate Mr. Lewis and Mr. Frelinghuysen being here, but it
    is particularly encouraging that we have had more than two
    dozen members on our side of the aisle stay all day today, even
    though votes have concluded, showing the importance of this. It
    is encouraging.
        Mr. Chairman, clearly State and local government needs have
    been largely excluded from any of the assistance Congress has
    already adopted. And I note that both Treasury and Federal
    Reserve are pointing the finger at each other now for who is
    responsible for that. But the fact is no serious recovery
    package will work absent our efforts to focus on their short-
    and long-term access to the financial markets.
        While the TARP and Fed have generously backed corporate
    access to short-term debt for the corporate sector, both
    agencies have refused the State and local sector. While the
    legislation we adopted specifically directed the Treasury to
    give consideration to cities and counties, no such
    consideration occurred. I think a key goal of this package
    ought to include language to free up or at least ease and
    reduce the cost of access to the State and local credit
    markets.
        I see Governor Corzine vigorously nodding his head. I know
    he understands the importance of this. It is the single highest
    priority for a number of municipal leagues and Governors. It
    will be a prerequisite to any State and local capital
    investment, not to mention the ability and capacity to meet the
    matching requirements of Federal programs that we will be
    considering funding in this effort.
        With the Chair's permission, I want to submit statements
    for the record from the Government Finance Officers Association
    and the Bond Dealers Association showing the importance of this
    issue to State and local credit markets.
        [The information follows:]

        [GRAPHIC] [TIFF OMITTED] T6227A.024

        [GRAPHIC] [TIFF OMITTED] T6227A.025

        [GRAPHIC] [TIFF OMITTED] T6227A.026

        [GRAPHIC] [TIFF OMITTED] T6227A.027

        [GRAPHIC] [TIFF OMITTED] T6227A.028

        [GRAPHIC] [TIFF OMITTED] T6227A.029

        [GRAPHIC] [TIFF OMITTED] T6227A.030

        [GRAPHIC] [TIFF OMITTED] T6227A.031

        [GRAPHIC] [TIFF OMITTED] T6227A.032

        [GRAPHIC] [TIFF OMITTED] T6227A.033

        [GRAPHIC] [TIFF OMITTED] T6227A.034

        Mr. Moran. But if any of our witnesses would like to
    comment on their problems with getting access to State and
    local credit markets, particularly through municipal financing,
    I would like to hear from them. But that is the principal point
    I wanted to put on the record, Mr. Chairman. Thank you.
        Governor Corzine. Congressman, you hit a very sore point.
    Just last week the Port Authority of New York-New Jersey tried
    to issue $300 million worth of taxable bonds and did not have
    any bids. It is with strong double A, very, very secure funding
    source. State of New Jersey, which is not on the upgrade list,
    but not on the downgrade list either at Moody's and S&P, has
    good solid double A credit, is paying about 300, 325 basis
    points over Treasury's at a 10-year yield. There is no benefit
    to the tax exemption. And the market is very narrow. And it is
    not just New Jersey. It is those experiences.
        One of the most effective housing finance agencies are
    State mortgage finance agencies, which are basically shut out
    of the market. They have very low default rates. They could be
    actively involved in mortgage modification and other elements,
    and it is basically without ability to access capital. The
    breakdown of the bond insurance, what previously was mono-line
    and turned into multi-line, has undermined the cost structure
    of, in addition to the general concerns about it, and as you
    suggest, the Treasury and the Fed and others have looked at
    almost every other credit market, but one that is fundamental
    to the kinds of topics we are talking about in infrastructure
    today has been ignored.
        Mr. Moran. Thank you.
        Governor Doyle. If I could just add, at a time of the
    housing crisis, in addition to everything that Governor Corzine
    has said, I mean we have been out, we have been successful, but
    at prices we are going to pay for for years to come. But our
    Housing Authority, a very strong, solid organization, has not
    been able to get financing at all. And we have actually had to,
    at the most critical time that people need it, we have actually
    had to shut down our Housing and Economic Development
    Authority's ability to go out with new loans. And that has been
    entirely because of their inability to get access to the credit
    market.
        Governor Douglas. I might just add to that, student loan
    agencies are having trouble accessing the markets as well, so
    it is really across the board.
        Mr. Moran. Thanks very much, Mr. Chairman. It is
    interesting that Treasury's are paying virtually no interest,
    and yet States and municipalities are having to pay hundreds of
    basis points to get the access that is really not a credit risk
    for the lender, and yet you cannot access it. And it really is
    something that Treasury and Fed are going to have to help us
    with. Otherwise, even stimulus packages like this are not going
    to have the effect that they need. So thank you.
        Chairman Obey. Mr. Olver.
        Mr. Olver. Thank you, Mr. Chairman. And I too thank the
    Governors for your testimony today. I have a two-part question.
    In this recessionary economy, does your State need help to
    preserve and expand affordable rental housing? And if the
    answer to that is yes, what would be the most effective
    mechanisms available for the Federal Government to deliver
    economic recovery dollars for you to expend on affordable
    housing?
        Governor Douglas. Well, we certainly have difficulty, for
    the reason we just cited in response to Congressman Moran's
    question, access to the capital markets by our housing finance
    agencies both for single-family homes and for multifamily
    units. So access to capital I think is the most important
    problem that we are confronting with our housing finance agency
    now.
        Governor Doyle. I agree with that completely. We have very
    good programs in place. And this is a place where with adequate
    access to capital markets, we have strong housing
    rehabilitation programs directed at low or moderate home
    ownership and rental housing, and much of that has just stalled
    out right now because our Housing Authority cannot get to the
    market.
        Governor Corzine. Ditto that. But I would say that there is
    a way that also there could be significant help to tenants and
    renters. The line, the queue for section 8 vouchers, is so
    extended in the current environment, and it is growing. As
    people foreclose and they are unemployed, the application list
    gets to a point where you are talking 4 and 5 years.
        So I would hope that people would look. This is something
    we administer, it is not a State program, but is administered
    through the States, could be very helpful to the human beings
    that are actually struggling with the current market. There is
    rehabilitation work that needs to go on. And public-financed
    housing across the country is also a place where infrastructure
    spending could go.
        Mr. Olver. I think you have answered as concisely as I put
    the question. But I was surprised that the first thing was
    credit, provide credit, which is largely in the private market.
    And Governor Corzine, you got around to what I was wondering,
    what were the more public programs that would be involved.
    Thank you. Thank you very much.
        Chairman Obey. Mr. Price.
        Mr. Price. Thank you, Mr. Chairman. Let me add my thanks to
    our three Governors this morning for your helpful testimony. As
    each of you described the cuts that you are being forced to
    undertake, it seems to me two things are clear. First, that
    these cuts, as Governor Corzine put it, are dangerously cutting
    into the bone. And secondly, that they are likely to have a
    contractionary effect with respect to the overall economy, an
    effect that is precisely the opposite of the stimulus that we
    need. So for both of these reasons, we need to tend to this.
    And your testimony is very helpful.
        One item that was not mentioned as much as I thought it
    might be is your school construction needs. I am aware that
    this is not traditionally an area of primary Federal
    responsibility. On the other hand, if your State is like my
    State, there is a backlog of these school construction needs.
    There often is not the money available needed to initiate these
    projects. And where bond issuances have been approved, there
    are often issues about ratings and the marketing of those
    bonds. In any event, it has been identified by my State as an
    area of great need.
        And Mr. Chairman, if I might, I would like to insert in the
    record a couple of memoranda that I think are quite helpful,
    one from the State of North Carolina's Governor-elect, and the
    other from the Town of Cary, North Carolina.
        [The information follows:]

        [GRAPHIC] [TIFF OMITTED] T6227A.035

        [GRAPHIC] [TIFF OMITTED] T6227A.036

        [GRAPHIC] [TIFF OMITTED] T6227A.037

        [GRAPHIC] [TIFF OMITTED] T6227A.038

        [GRAPHIC] [TIFF OMITTED] T6227A.039

        [GRAPHIC] [TIFF OMITTED] T6227A.040

        Mr. Price. In any event, it has been identified as a great
    need by my State, and also as an area where many construction
    and renovation projects are ready to go. I mean ready to go as
    quickly as they could be approved.
        So I wonder how one or any of you would evaluate the
    potential of school construction as a component of a package.
    And to pick up on Mr. Olver's approach, what would be the
    mechanism? What would be the best device for rendering some
    assistance in this regard?
        Governor Douglas. We certainly have a backlog in our State.
    I expect that is not uncommon. We commit 30 percent of the
    construction costs of a school project to the municipality that
    undertakes it, and we have not been able to keep up with that
    in our capital budget. What has happened in a number of cases
    is that school districts have undertaken that responsibility
    entirely on their own; and at some point we will pay them, but
    they are carrying that extra debt service in the meantime.
        So I think, as I suggested earlier, a broad definition of
    eligible infrastructure projects would be very welcome so that
    States can establish their own priorities and allocate those
    resources where it is most important.
        Governor Doyle. I really want to echo that comment. We have
    identified, by taking all of the districts that have recently
    passed referendums on school buildings, meaning that they have
    projects ready to go--under Wisconsin law we put these out to
    the voters, they have been approved, and they are not currently
    being built. That is all ready to go.
        In addition, we have identified those where referenda did
    not pass, which probably did not pass because of the costs of
    the building. But those projects are ready to go.
        I will say this, though. I really urge flexibility, because
    in Wisconsin we have had a very, very major school building
    program over the last 5 to 6 years. You should go to Mr. Obey's
    hometown and look at Wausau East High School and see the
    quality of the school. So we have done a lot of really good
    school building in Wisconsin. We have a lot more to do. But I
    believe, you know, if the program were strictly school
    building, States that have made the huge investments in school
    buildings that we have may sort of lag a little bit behind
    other States. So I hope we have that flexibility. But that
    having been said, there clearly are school projects that are
    ready to go here, ready to go here today.
        Governor Corzine. I think I made the remark, Congressman,
    in my testimony that we are in the midst of a very significant
    long-term project of reconstructing schools, particularly in
    our urban communities. We have already executed a $8.5 billion
    program that ended about a year ago, and we are in the midst of
    another $5 billion tranche. And there are $25 billion worth of
    identified needs. And we have prioritized those already. We
    already have the blueprints and the plans on most of those.
    This is a ready-to-go area.
        The same thing could be said for higher education. In every
    one of our State colleges and universities and community
    colleges, deferred maintenance is a huge problem. Every time
    anybody gets in trouble, they just put off maintenance and
    capital expenditures, particularly in our higher educational
    units. And this is a place that I think is fertile for getting
    stimulus into the system quickly.
        Mr. Price. Thank you. Thank you, Mr. Chairman.
        Chairman Obey. Mr. Kennedy.
        Mr. Kennedy. Thank you, Mr. Chairman. Following up on that,
    on higher education, don't you think if there is ever a time
    when our young people could use a chance to go to get a higher
    education, this would be an excellent time? We are finding in
    my State, tuition fees are skyrocketing because of the lower
    reimbursement to our State colleges and universities. As you
    mentioned before, Governor Douglas about the fact that student
    loan assistance is increasingly difficult because of the
    markets out there for student loans. Shouldn't we take this
    opportunity to increase Pell grants and increase other forms of
    student aid and loans as an opportunity for us to increase the
    access for education to those students who want to take this
    time to get an education? You know, we are trying to create
    jobs on the one hand, but this would also be a good time for
    people to be getting an education. While we are in a kind of a
    downturn and a recession, people could also be getting an
    education. Could you comment on that?
        Governor Doyle. I believe this very strongly. We worked
    very hard to build more affordable higher educational access.
    Huge issue all across the country, certainly in our State. We
    have a great university system. The biggest pressure on it now
    is how do people get access to it? And you know, this is an
    area where if we were to impose the kind of across-the-board
    cuts people are advocating, just take the 17 percent, put it
    all across the budget, a 17 percent cut to our university would
    mean about a 30 to 35 percent increase in tuition. It would be
    devastating for higher education.
        I just would make one point about this that is really
    important. You know, we maintained good schools through the
    Great Depression. My parents went--my mother went to high
    school in Wausau, Wisconsin, and my father in Oshkosh,
    Wisconsin. They both went to the University of Wisconsin in the
    middle of the greatest depression our country knew. And thank
    God we made that investment, because those were the people who
    maybe it did not pay off for immediately, but they went out and
    won a world war and they came back and built our country over
    the next 40 years. And that is why it is so essential. And if
    we are forced to make these kinds of cuts--I am all for the
    Pell grants, and please do whatever you can on that, but in
    addition, State budgets, as you cut what you put into a
    university, it is a dollar-for-dollar increase in tuition; you
    either limit access or you increase tuition on the other side
    of that equation.
        Mr. Kennedy. Well, if you could get to us ways--as I said,
    obviously infrastructure and deferred maintenance is always a
    way these universities try to make up their deficits. So I know
    this is one way we could help. But I think a direct pass-
    through for students and entitlement support for education
    maybe for State universities and colleges, community colleges,
    you know, that might be the way to do it alone.
        But if you could get us some ideas, because this is the
    time for us to be educating our people for the workforce for
    tomorrow and for today, and also a good time for us to keep
    people, you know, busy when they cannot find work otherwise.
        And finally, I could not agree more, Governor Corzine,
    section 8, forget about it. All I hear is all my constituents
    who are trying to find affordable--the lists are too long. We
    need to increase that number substantially. In terms of public
    housing repair, you know, we have the deferred maintenance has
    been long overdue; and we need to make a major improvement in
    our public housing units; and that we have to put more money in
    as well. So thank you for that.
        Last question on the food stamp eligibility. What would you
    say is the percentage of use in your States of food stamps of
    those who are eligible?
        Governor Corzine. Well, the eligible is exploding. This is
    one of those places where unemployment goes up, or people shift
    jobs to lower paying jobs, then the food stamp usage goes up
    dramatically. And we have better metrics on the number of
    people that are actually using food banks, which are at now
    over 30 percent, and increase year over year. And the lines
    again, not unlike the unemployment lines, are just swelling
    dramatically with regard to applications for food stamps. This
    is a big issue.
        Mr. Kennedy. My big problem in Rhode Island is we do not
    have our people signing up for them. That is the problem, for
    those who are eligible. A lot of it is stigma, obviously. But
    we do have a big turnout at the pantries, but it is a big
    problem getting all those who are eligible to sign up for them.
    And that is a lot of missed Federal dollars being put into our
    economy.
        Governor Douglas. We have that problem, too, Congressman.
    We just expanded eligibility from 130 percent of poverty up to
    185 percent and eliminated the asset test, thanks to the
    flexibility the Federal law allows. So we are trying to get the
    word out. But you are absolutely right, there are a large
    number of eligible families who for one reason or another do
    not participate. And we just want to try to reach them and
    encourage them to do so.
        Chairman Obey. Mr. Hinchey.
        Mr. Hinchey. Thank you, Mr. Chairman. Governors, I want to
    thank you very much for being here, for your testimony, and for
    the very articulate responses to the questions that have been
    raised.
        There is no question that we are facing a very, very
    serious set of circumstances here in this country, one of the
    most difficult that we faced in history. And the examples are
    becoming more and more clear. We will have lost probably more
    than 2 million jobs by the end of this year, and that job loss
    is going to continue on into next year, and probably not just
    continue, but accelerate. The number of job losses is likely to
    continue. The impact that this is having on States all across
    the country is very severe.
        The budget deficits in the States now constitute I think
    more than half of the States. Something in the neighborhood of
    27, close to 30 of the States have now budget deficits, many of
    them very, very severe, including the State of New York. So we
    are dealing with a major problem here.
        And the attention that you have been paying to the basic
    infrastructure I think is very important. Obviously
    transportation, health care, education, and investment in new
    technology, technology that is going to deal with the energy
    issue particularly I think is very important.
        The big question that we are going to have to deal with,
    that this Congress is going to have to deal with coming up
    early next year, is going to be how much of an investment are
    we prepared to make in our own country? And that is a question
    that is very significant, because we have not made any major
    investment in this country internally in a long time, for
    decades, many decades. And we know that the last major
    investment we had was the Interstate highway system back in the
    1950s. And we had some water treatment and sewer treatment
    investment back in the 1960s, when people became aware of the
    environmental issues that we had to deal with.
        So we are overdue. We are facing a country that is falling
    apart physically, internally, at the same time that we are
    losing huge numbers of jobs. And the decline in the gross
    domestic product is going to continue to go down. The
    estimation is now that by the end of next year, the gross
    domestic product will have lost at least 4 percent. And if
    things continue to get worse, that number is likely to be
    higher.
        So the big question that we have to be able to answer here
    and engage in is, what kind of economic development package
    program are we going to be able to put together and how big is
    that going to be? If it is just tiny, it is not going to do
    anything. So it needs to be significant. Some are suggesting
    something in the neighborhood of 600, $700 billion, which is
    going to be probably less than--well, something in the
    neighborhood of 5 percent of the GDP. Others believe that we
    need at least 10 percent of that gross domestic product,
    something at least as high as a trillion dollars, or maybe
    something close to a trillion-and-a-half in order to make the
    difference that is going to have to be made to stop the decline
    of the economy, to stop job loss, and turn that into job
    creation and upgrowth, and to rebuild, maintain and rebuild the
    basic infrastructure, all of the things that you have been
    focusing our attention on very appropriately.
        I am wondering if you will give us any advice as to what we
    should do and to what extent we should do it. I am worried,
    frankly, that doing a little bit is not going to be nearly
    enough. And if we only do a little bit, we are going to be very
    unhappy about that over the course of time. So what do you
    think? What do you think we should do and how much should we do
    it?
        Governor Corzine. Fools rush in. Last week when we were
    with President-elect Obama, I made the statement that whatever
    big is, make it bigger. Because I think that what you are
    hearing from us is that the deterioration of the economy, not
    only as reflected in our budgets but within the reality of what
    we see on the ground in our communities, is really quite
    substantial. And whether it is a 3 or 4 percent decline in GDP
    or something larger--and I see people revising up, at least for
    this quarter and next quarter, numbers fairly substantially and
    looking for a decline through most of 2009, a 3 or 4 percent
    offset, if you would, would back into about a 450-, $500
    billion program just to stay even. And I certainly would argue,
    if making a recommendation on a macroeconomic basis, that it is
    a 2-year program. States, for instance, and a lot of our
    activities, the trouble lags even after the economy turns with
    regard to revenue flows and where we stand.
        And so when I am forced to answer that question, I do talk
    about 7- or 800 billion, but if I made a mistake I think it
    ought to be larger over 2 years; a trillion-dollar program
    would not be unreasonable in my mind, 75- to $100 million in
    operating and support programs for States, 150- to $175 million
    for infrastructure, and
        225-, $250 billion in tax relief in different programs is
    sort of the kind--certainly those are the buckets I hear.
        And I would argue that a 2-year program, and this is just
    personal, it is not--no NGA or anybody else is associating with
    it--I think makes sense. You need to have this be substantial
    enough that it offsets the decline that is going on in the
    economy, and hopefully sets in place multiplier impacts that
    will end up growing the economy.
        Governor Douglas. I think, Congressman, we do agree.
        Chairman Obey. If you could respond very briefly, because
    the gentleman exceeded his time.
        Governor Douglas. A 2-year program is critical. Mr. Zandi,
    the economist from Moodyseconomy.com suggested a $600 billion
    figure, the number that you cited. But I think the key is, as
    Governor Corzine said, some of these safety-net programs really
    begin to increase their demand toward the end of the
    recessionary period. The people begin to sign up for food
    stamps and other benefits. So 2 years is critical, and at least
    that figure that Mr. Zandi suggested I think is appropriate.
        Chairman Obey. Mr. Boyd.
        Mr. Boyd. Thank you, Mr. Chairman. Mr. Chairman, this is a
    very productive discussion. Thank you, sir, for holding this
    public hearing and welcome. Thank you, Governors.
        I want to shift the discussion just to a different element
    of this whole issue.
        Mr. Boyd. All of your States, maybe with the exception of
    you, have a balanced budget requirement. The Feds do not and
    most of our States do, as I understand it, many of the States
    though in the last 8 or 10 years, including my State of
    Florida, which does have a budget requirement, have followed
    the Federal Government budget management plan of drastically
    cutting taxes, revenue, while significantly increasing spending
    programs and our promise as public officials to provide lots of
    programs and services on one hand, and less cost on the other.
    You guys are chief executives unlike us, we are legislators. So
    you get to sign both sides of the check. We only get to sign
    the back. You sign the front and the back.
        So my question, as we move through this, what is your
    counsel and advice to us about how we deal with that? Do we
    take the States and ask them to remove their balanced budget
    requirements or do we put a balanced budget in place at the
    Federal level? How do we join hands and work together to do
    this very important project that is going to be done?
        Governor Douglas, it actually frightens me when I hear you
    say that you have a community that is making a decision whether
    to cut police services or fire services. Those are very basic
    services that the community, people should willing to pay for.
        Governor Douglas. I don't know if I can offer any counsel
    in terms of Federal budget policy. Frankly as an American, it
    is disconcerting to see the level of debt that the national
    government has incurred, but economists across the political
    spectrum have made it very clear at this point in the economic
    cycle an infusion of resources to the States is essential for
    recovery and will improve the outlook in terms of unemployment,
    as the chairman indicated in his opening comments, and allow
    the States to make fewer of those difficult choices, in terms
    of service cutbacks that we have described. So for the long-
    term I hope there will be, with all due respect, more
    discipline in the process into the future. But for the
    immediate term, where we are really facing these crises, I
    think the infusion of these resources is essential.
        Governor Doyle. Let me just say I don't think it is
    practical to say you can take the balanced budget restrictions
    off the States that are in our constitutions and, frankly, are
    probably very good. Nor do I think that deficit spending at the
    State level has any real effect on stimulating the economy. We
    are talking about a national and international economy, so we
    are just dealing with the practical side of it.
        And let me just emphasize I believe we've got to do our
    part in this. I don't think any of us are here saying here is
    our deficit, just pay the bill. We have and we are going to
    continue to make very deep cuts. We have, and a number of
    States are going to have to, looked at revenue increases. We
    are going to have to do our share of this. I guess I would
    really like to emphasize that.
        We we are not here saying, you know, here is how much our
    shortfall is here, please make it up. We are going to do very,
    very difficult things. But at the end of the day, you get to
    this point, are you really going to cut schools? Are you going
    to cut Medicaid so severely that people lose jobs and people
    can't get health care? Are you going to cut higher education
    costs to a point where tuition goes up? Are you going to raise
    State taxes so high that you actually have a negative effect on
    what you are trying to accomplish getting more money? I will
    give you an example in Wisconsin--I don't want to belabor it,
    but we have made some tax cuts in recent times, but they are
    exactly the kind that you would want. We no longer tax Social
    Security income. And I am not going to allow right now for us
    to go back to doing that because these are people that actually
    need the help. We now exempt health insurance premiums. They
    are fully deductible. And that is not one where right now we
    want to go back to the people in Wisconsin. We now allow
    families to deduct child care costs. These are exactly the
    areas that families in Wisconsin are really struggling with,
    health care costs, child care costs, obviously older citizens
    with Social Security.
        So we may, I hope not, have to do something on the revenue
    side. We may well come to that point because in the end I am
    not going to let our schools fall apart and I am not going to
    let our universities become so expensive. But we have to do our
    part to help out in this as well.
        Governor Corzine. I have to concur with everything Governor
    Doyle is saying. It would be a huge mistake to have the States
    take off fiscal governors like mandated balanced budgets. I
    think it would lead to a very sharp deterioration in credit
    quality and undermining elements of it. I think it is a Federal
    Government responsibility. And we do have a responsibility to
    cut our budgets and adjust our priorities accordingly in times
    of stress. I think a lot of us are doing it, and I think a lot
    of us are actually taking this difficult environment and
    actually reforming a number of elements within our operations
    in government at the same time. I think that is good. But we
    still need to make sure that the Federal Government is a
    partner in the process and since you don't have that balanced
    budget amendment I think you need help from it.
        Mr. Boyd. Thank you, Governors. Thank you, Mr. Chairman.
        Mr. Obey. The gentleman's time has expired.
        Mr. Boyd. For 15 seconds think about as we move through
    this, how we finance it and who finances it and who pays it
    back. We could look at history and gain some good ideas. Thank
    you.
        Chairman Obey. Mr. Fattah.
        Mr. Fattah. Thank you, Mr. Chairman. Let me thank you for
    holding this hearing. Let me first ask for unanimous consent to
    enter into the record a statement from the mayor of the City of
    Philadelphia, Michael Nutter, about the economic circumstances
    and how they are impacting our home City of Philadelphia----
        Chairman Obey. So ordered.
        [The information follows:]

        [GRAPHIC] [TIFF OMITTED] T6227A.041

        [GRAPHIC] [TIFF OMITTED] T6227A.042

        [GRAPHIC] [TIFF OMITTED] T6227A.043

        [GRAPHIC] [TIFF OMITTED] T6227A.044

        [GRAPHIC] [TIFF OMITTED] T6227A.045

        [GRAPHIC] [TIFF OMITTED] T6227A.046

        Mr. Fattah [continuing]. In a broader statement, and, Mr.
    Chairman, a broader statement from the U.S. Conference of
    Mayors around 11,000 infrastructure projects in America's
    cities that are ready to go if funding was available. So I ask
    unanimous consent that they be entered into the record.
        Chairman Obey. Without objection.
        [The information follows:]

        [GRAPHIC] [TIFF OMITTED] T6227A.047

        [GRAPHIC] [TIFF OMITTED] T6227A.048

        [GRAPHIC] [TIFF OMITTED] T6227A.049

        [GRAPHIC] [TIFF OMITTED] T6227A.050

        [GRAPHIC] [TIFF OMITTED] T6227A.051

        Mr. Fattah. Thank you, and I would say that it is a
    pleasure to see the Governors here today. I got a chance to sit
    through the entire meeting with President-elect Obama and the
    Governors. They met in my home City of Philadelphia on December
    2nd, and clearly it was very productive dialogue. First things
    first, we do have one President at a time and I wanted to know
    about interaction with the present administration with our
    Nation's Governors on these critical issues. There seems to be
    almost selective amnesia at work. We have difficulties for
    State Governments getting into the credit market and no action
    by the Treasury Department to respond to these needs.
        I used to chair the board of the student financing agency
    in Pennsylvania, PHEAA, student aid entities, locked out of the
    market, housing finance agencies. So I am wondering about the
    absence of President Bush in the middle of this crisis, and
    rather the Governors who have been on the front line, and I
    have seen the action that, you know, your program in Milwaukee,
    which is reducing the crime or Governor Douglas setting aside
    400 positions in Vermont, Governor Corzine really led the way
    in terms of turning this to an economic recovery effort with a
    job creation, tax credit of $3,000. Would you comment about
    whether we are wrong, whether the administration is acting,
    whether the President is not at some undisclosed location, is
    actually interacting with you as you are dealing with these
    challenges.
        Governor Douglas. Well, the National Governors' Association
    has a continued relationship with the administrative agencies
    as well as with the Congress and your staff and we continue to
    do that, but I think at this point everybody is looking
    forward, looking forward to the new Congress, the new
    administration and doing what we can to get through this, and
    so I appreciate the time that the chairman has set aside for
    this conversation today and hope that we can get the job done.
        Governor Doyle. Well, I guess I just speak for me
    personally. There hasn't been any contact, but I do want to say
    the new administration has been incredibly attentive and
    focused on this issue. They have been open to us. They have
    been discussing this with us in great detail. You know, I guess
    we believe hope is on the way, and certainly there has just
    been great attention being paid to this issue by the incoming
    administration, by the President-elect himself and certainly
    the people around him and the transition team, for which we are
    very grateful.
        Mr. Fattah. Governor, you know we just sold Treasury notes
    at auction yesterday at a negative benefit, and we have doubled
    the national debt. We have 10 million Americans without jobs. I
    want to know, I understand we have hope for the new
    administration. They don't have the reins of power right now.
    And so while you are dealing with these very challenging
    circumstance, I am just trying to figure out whether the
    impression that the present Commander in Chief is missing in
    action is accurate or not. Has he been helpful to you, Governor
    Corzine, in New Jersey?
        Governor Corzine. I think that the actions that the
    Congress and the President's administration took at the time of
    the explosion in the financial markets, while not anything
    anyone wanted to embrace, was actually a positive response to
    try to settle credit markets. I think there continues to be a
    philosophical concern about the involvement in broader aspects
    of the economy, and that is probably true with respect to some
    of the things that we have spoken about here, financing in
    municipal and State finance. I would like to see more action
    there. I would like, whoever it is, and I am one of those that
    would like to join my Governors, we are looking forward. But
    the Treasury should be, I think, seriously focused on the
    undermining of our ability to use traditional financing
    mechanisms to support a lot of the things that we have talked
    about today.
        Mr. Fattah. Thank you.
        Chairman Obey. Mr. Rothman.
        Mr. Rothman. Thank you, Mr. Chairman. I want to say good
    morning to all the Governors and thank you for being here,
    particularly my own Governor, Governor Corzine, who is one of
    the hardest working, smartest people I know and doing a great
    job for New Jersey. If I have heard you all correctly, there
    are two sides in relation to our jurisdiction here on the
    Appropriations Committee of the coin for you that need to be
    addressed if the Federal Government is going to help the
    States, and that is, number one, that what everybody has heard
    about, these infrastructure projects, roads, sewers, bridges,
    tunnels, rail, school construction, affordable housing, and
    other things, and people can sort of identify with that. We did
    it in the fifties. It was a real shot in the arm. And it had a
    lasting effect. As the Governor mentioned, the Golden Gate
    Bridge, the Lincoln Tunnel, although they were done not all in
    the fifties, but these major projects have a short-term
    positive effect for the country and long-term.
        But you also mentioned the operating side as well; in other
    words, the States need money to pay for critical services,
    police, fire, public colleges, food for the hungry who are
    lining up more than ever, 30 percent increase at our food
    pantries in New Jersey, 30 percent increase in the food
    pantries. That is just shocking.
        But it is true. And that indicates that there are terrible
    problems that people are suffering with. And if the States
    don't get their money, some help, well, I want to say a couple
    of things. If you get to the money that is talked about, aren't
    you still going to have to cut these services anyway? Or are
    you just going to take this money and just say let's continue
    things as usual and let everybody get extra bonuses and
    vacation time?
        I think I know the answer but I want to hear it from you,
    and I would also like to hear from my own Governor. We have
    this ARC tunnel project which we have invested in from New
    Jersey, billions of dollars in. Could you tell us about this
    ARC tunnel project that crosses the Hudson River from New York
    to New Jersey, a little more about school construction, and why
    you think affordable housing is a critical infrastructure need?
        Governor Corzine. First of all, there really are three
    areas where the Federal Government interacts with the State.
    One----
        Mr. Rothman. We don't have the tax part.
        Governor Corzine. Infrastructure, on the subject that we
    are talking about today, the infrastructure issue, including
    the ARC which is a program or a project of national
    significance that, as I said, would service as much as 45,000
    commuters. That gets at congestion, that gets at freeing up the
    ability of northern New Jersey and New York to get cars off the
    roads, all kinds of green energy kinds of related elements, but
    it puts 6,000 people to work today.
        Mr. Rothman. 45 million passengers.
        Governor Corzine. In a year. Operating budgets, we have
    talked about FMAP and a few other areas where some people would
    have just argued that we should have block grants for some
    piece of operating budgets, not all of them as Governor Doyle
    talked about. But then there are these whole host of State-
    administered Federal programs like section 8, like food stamps,
    where we are the tool of the Federal Government to provide
    those services. Those are really different.
        I am not saying we are mixing apples and oranges here, but
    the work on infrastructure and the work on the operating
    budgets is different than State-administered programs where
    there is a huge need, and so the unemployment compensation
    funds and other issues all fall into that category. And so I
    hope that when you sit down and put together a program it is
    taking into account all three of those areas and recognizing
    that they need to be comprehensively fit together.
        Governor Doyle. I agree generally on the categories. One of
    them is economic stimulus and what we can do as states. We
    clearly have delivery systems that are available as Congress
    really is working to get a stimulus going, jobs going, and
    people working. We have an infrastructure built up to----
        Mr. Rothman. But if you get the money you have to continue
    to cut.
        Governor Doyle. Exactly. The stimulus, while very
    important, isn't going to help us with our education costs and
    it isn't going to help us with paying for our universities and
    Medicaid and those sorts of things. So yes, I think in times of
    scarcity you have to really determine what your priorities are
    and, as I tell people in Wisconsin now, you are all going to be
    affected in some way or another. We have to make sure that in
    the areas that really matter they maybe don't take the hit
    quite as hard and don't take cuts in a way that really does
    permanent damage. And I say schools are the number one
    priority. So schools, they are not going to have a rosy 2 years
    no matter what you do. They are going to have a very difficult
    time in these next 2 years. But we have to make sure there are
    at least good schools and that there are teachers in the
    classrooms and classroom sizes don't explode and basic
    education goes on in this country. That is where you and the
    Congress and the States have to work very, very closely
    together.
        So no, this isn't going to be a great time. In fact, to the
    contrary, everybody is going to have to do with less over the
    next couple of years. But for these basic institutions such as
    education, which I think most important, we just can't cut
    funding to a point where the kids going to school right now,
    who have had nothing to do with overspending or too much
    credit, are the ones that pay the price for the predicament
    that this country finds itself in.
        Governor Douglas. Housing specifically, Congressman, I talk
    with a lot of employers in my State who say that because of the
    rural nature the Vermont and the fact that people have to drive
    a long distance to get to work that a lack of an affordable
    place to live is more critical to them than health insurance
    right now because they just can't find a place to live that is
    within their price range anywhere near where the job is and,
    although fuel prices have come down a little bit lately, they
    are still an important part of the family budget. So I think
    facilitating more affordable housing through access to capital
    through the section 8 program is critical, and it has the added
    benefit of stimulating the economy by creating jobs in the
    construction sector.
        I think, as we have suggested earlier, support for a
    Federal-State shared program like Medicaid is critical not only
    because of the increased caseload in that program itself but
    because it allows us to moderate the cuts that will be
    necessary in other programs in our State budgets.
        I also indicated earlier that I don't think it is all bad
    to force some efficiency and economy of administration of these
    programs. We have combined several divisions and departments
    within our administrative structure, and I expect my colleagues
    are finding ways to deliver services more efficiently than
    before. So we do need your assistance in this time of economic
    crisis, but we are certainly willing to do our part.
        Chairman Obey. Mr. Bishop.
        Mr. Bishop. Thank you very much. Let me echo my welcome to
    you Governors and let you know that my State of Georgia
    certainly faces the same challenges that you face. But let me,
    I appreciate all of the comments that I have heard this morning
    with regard to the infrastructure that is needed in the States.
    I am particularly concerned about rural infrastructure and of
    course, Governor Douglas, you are peculiarly sensitive to that.
    And of course all of you of course have rural areas. But I have
    a large rural area and of course the transportation and
    affordable housing is greatly needed. But as we look at bricks
    and mortar versus innovations in the future that--I mean
    obviously bricks and mortar will create immediate jobs, but we
    want to put the bricks and mortar there, but there has got to
    be some other non-brick and mortar infrastructure such as
    broadband that will allow accessibility in rural areas, for
    example. We have got to somehow marry the needs for innovation
    in our educational system not just to school buildings but into
    processes for educating our youngsters, improving the quality
    of teaching for our teachers, particularly the STEM
    disciplines, science, mathematics, technology, engineering,
    where we are falling woefully short, we are falling woefully
    short now. And without some rapid, rapid attention being given
    to that on a national scale with a national will with all 50
    States and the Federal Government, we will quickly lose our
    status as a superpower because we don't have the expertise. We
    don't have the generations coming up that are trained in those
    disciplines.
        Don't you think that as we invest in bricks and mortar for
    immediate infrastructure that we also need to give you the
    flexibility that you were talking about to also invest in these
    kinds of long-range innovations? And so that whatever we do,
    make it flexible enough so that States, and particularly States
    that have poor rural areas, where they don't have that kind of
    tax base, to make every aspect, every area in your States,
    capable of being able to participate now in this global and
    flat world that we are in.
        Governor Douglas. Congressman, I want to thank you for
    reemphasizing that point. I mentioned broadband infrastructure
    in my statement for the reasons you articulated. It is
    important to have that available in rural areas, especially
    where it is difficult for, or not cost effective, for a
    telecommunications company to make that investment. We
    established a telecom authority in Vermont this past year
    empowering it to issue some tax-supported debt to build out
    that infrastructure, but we could even do more with some
    support from the Federal Government. So flexibility is indeed
    the key. And as you noted, it may be more cost effective in
    rural areas not to build that additional school building or
    enhance one that is already there, but to have distance
    learning through interactive learning experiences. So I agree.
        Mr. Bishop. The same thing with telemedicine.
        Governor Douglas. Yes, and NGA has, I should note, a health
    alliance that we have undertaken to work with the public and
    private sectors to build out electronic medical records
    infrastructure that I think would be an important part of our
    health care future.
        Governor Doyle. Green energy is another area of
    technological advance that we can make major investments in
    that has huge advantages in rural areas. Just an example of one
    that we are very interested in building, a wood chip processing
    plant, for use of biofuels in an area of the State that is
    largely forested. It is an area that spreads out not just in
    our urban areas but across rural areas as well.
        Mr. Bishop. It is a job creator?
        Governor Doyle. It has proven to be a very big job creator,
    and so far green energy and particularly ethanol production in
    our State has been one of the great sources of strength in
    rural areas, and as we move into using our forest, much of,
    again, Congressman Obey's district is forest land, and as we
    look into its use to really be part of our energy solution, a
    lot of jobs are involved in that as well.
        Mr. Bishop. A lot of cellulosity.
        Governor Corzine. I just concur with the folks. I don't
    think I have much I can add.
        Mr. Obey. Thank you. Mr. Honda.
        Mr. Honda. Thank you, Mr. Chairman, and let me add my
    thanks to you for your leadership and having this hearing and
    the presence of the ranking member, also. And I would like to
    ask for unanimous consent to enter into the record a document
    that represents the California delegation and also add to the
    document a discussion on the issue of school modernization,
    school bonds and new school construction. I think that has been
    discussed before, but I will ask unanimous consent to have this
    entered into the record.
        [The information follows:]

        [GRAPHIC] [TIFF OMITTED] T6227A.052

        [GRAPHIC] [TIFF OMITTED] T6227A.053

        [GRAPHIC] [TIFF OMITTED] T6227A.054

        [GRAPHIC] [TIFF OMITTED] T6227A.055

        [GRAPHIC] [TIFF OMITTED] T6227A.056

        Mr. Honda. Mr. Chairman and Governors, thank you. Thank you
    very much for being here. I think that one of the things that I
    think is a positive outcome with this kind of discussion is
    that not only the folks who are here and the members who are
    present find this hearing instructional, but hopefully it is
    instructional for those viewers out there who are watching this
    and are starting to understand that governments cannot work in
    isolation, and when things don't work at one level, that stuff
    rolls downhill and eventually if you don't pay for it now you
    pay for it later. And I think this is a good example of a
    crisis that has occurred because of different kinds of missteps
    by certain industries, and also governments' misstep on how we
    create or don't create Federal revenues for the kinds of
    projects we are talking about today. We can disagree on the
    size of government, but I think that government has a role in
    people's lives, and I think it has become evidently clear
    though what role we do play because of the kinds of issues that
    the Governors are bringing up and the kinds of issues that we
    concur with.
        So I just want to thank the chairman for allowing us to be
    able to do this and then also prepare for the beginning of the
    next session. I can't think of anything more than this to be
    the very first step of the new administration. Although there
    may be results of the past administration, we still have the
    responsibilities to take care of people.
        These kind of issues are issues that are not evident on a
    daily basis to the public when times are good. It only rears
    its head when times are bad and we have to start talking about
    cutting back on services, and this is when people start to feel
    the pressure of what happens when we don't have a good economy
    or we don't have the necessary revenues to fulfill our
    obligations.
        One of the things I heard by the Governors, and
    particularly by Governor Doyle and Governor Corzine, is the
    comment about States can be efficient and they have delivery
    services that can deliver these kind of funds to the rest of
    the State. But having come from local government also, are
    there suggestions or are there efficiencies that we can realize
    in both time and costs by looking at, from the Federal
    Government's point of view, sending money out, funds out to
    localities, and municipalities and county governments that have
    a large size that can do their own distribution and thereby
    save time and money? And I would like to have some sort of
    response on that.
        Governor Doyle. I can speak for Wisconsin. There are
    certainly, if we were going to go in for sort of a wholesale
    change of our State laws on what is the responsibility of
    municipalities and counties in the State, it may be very worth
    doing that but in terms of if you are looking for a quick
    economic stimulus, we will be locked up in a political battle
    that will tie us up for several years. We have very clear lines
    of responsibility of what municipalities can bond for and what
    their infrastructure needs are and what they do independently
    and then what comes through the States. As State Governments,
    our capital budgets dwarf the municipal and county budgets by a
    large factor. So we can move much more quickly. But I do
    believe there is a significant role here for municipalities,
    sewage districts, and others that have their own bonding
    authority and their own capital budgets to be part of this
    effort and that they can get jobs moving as well.
        Mr. Honda. I understand that there is that large
    responsibility, infrastructure, like transportation and others,
    where it makes sense to award to the States but there are other
    arenas where counties and cities that are large enough, they
    have their own mechanisms. Those duties are passed on to local
    governments anyway, and it seems to me it would save time and
    money if we figure out how to do that more efficiently.
        Perhaps the other Governors have comments.
        Governor Douglas. Congressman, there is, as I understand
    it, a procedure where Federal agencies can proclaim an
    emergency and use emergency procedures that allow a simplified
    bid process, and I would think it would be useful in this
    discussion to allow for that so that the projects can be
    delivered as quickly as possible.
        Chairman Obey. The gentleman's time has expired.
        Mr. Honda. Thank you, Mr. Chairman. I just want to thank
    you for this opportunity, and this is a prerequisite to the
    next session and if we paid attention to this kind of hearing,
    Mr. Chairman, as we pay attention to Super Bowls, World Series,
    Olympics, I think that our country and our citizens will
    understand better the workings of what we try to do on a daily
    basis. Thank you.
        Chairman Obey. Mr. Schiff.
        Mr. Schiff. Thank you, Mr. Chairman. Thank you, Governors,
    for your testimony today. I find myself on the issue of
    infrastructure torn between two competing impulses, the one to
    want to get money into construction jobs as quickly as
    possible. Just look at those projects that are ready to go.
    California, as my colleague I am sure alluded to, is having a
    Herculean task trying to balance a budget that may be up to $40
    billion out of whack in the next year and a half. So we have a
    tremendous challenge. But between wanting to put money into
    construction projects that are ready to go and can immediately
    stimulate the economy on the one hand and on the other hand
    wanting to be strategic looking at what the State's greatest
    needs are, looking at things that we have not been able to
    invest in for decades, building more institutions of higher
    learning, investing in the State and in the country in a way
    that we haven't done in half a century, this is going to be an
    opportunity we won't see again for maybe half a century. How
    can we deal with these competing priorities, to pick things
    that are ready to go on the one hand, stimulate the economy on
    the one hand, but on the other hand to be a little bit more
    strategic about what we invest in so we can look back on this
    period and say, yes, it was an awful recession but look at the
    good that has come out of it, look at the investment in the
    America we were able to make? How do we deal with those
    competing priorities?
        Governor Corzine. First of all, I think that you have a
    responsibility in a legislative and deliberative process to try
    to identify the things that have priority, and I don't think
    one particular bucket actually covers that. We need a
    comprehensive infrastructure program. One of the reasons that a
    lot of folks have expressed support for an infrastructure bank
    is to have the discipline of screening and reviewing those, and
    one of the metrics that might be asked for that infrastructure
    bank to review projects on is how do they fit into an overall
    plan, not just with regard to transportation but also energy,
    maybe even health care, and obviously, help education. So I
    think that some judgment with regard to how you allocate those
    priorities is a perfectly reasonable thing for the Congress to
    do, and then setting down what metrics would be used would be
    the kind of debate that I think would go on with respect to
    what an infrastructure bank would end up accomplishing so that
    we don't end up with lower priority or at least we have made an
    effort to try to do the prioritization of the various elements.
        But it may very well be, and I know there is a debate
    about, you know, if you pave roads that is a bad thing or maybe
    that is not how we spend our money relative to broadband and
    you know there is some element of that is true, but if we don't
    have the paved roads, we are not going to have the ships that
    unload in Long Beach and metropolitan New York be able to get
    to the areas that are going to deliver the services in the
    private sector to our community. We need to make sure that we
    are maintaining our universities in a state of good repair so
    that our students can actually accomplish it.
        So I think there has to be a judgment about how much we
    want to put into so-called innovation versus making sure that
    our infrastructure is actually working to accomplish what we
    want today.
        Governor Doyle. In many of our programs, particularly
    transportation and building in Wisconsin, I am sure I speak for
    the States here and others, we have prioritized those projects.
    I mean you could look out for the next--in transportation in
    Wisconsin--the next 8 to 10 years, and we basically have the
    projects that for various rating systems we have determined to
    be most important, and then we just work down that list as
    money is available. Same is true with building our capital and
    university and other State building projects. So I think you
    can have some faith that in some of those areas that this
    prioritization has been done. But I really agree with you on
    some others.
        I will just give an example. We have under court order and
    I think we all support it, trying to get rid of a coal fired
    heating and cooling plant that sits right in the middle of the
    City of Madison, and it is at the University of Wisconsin's
    heating and cooling plant. So we are under the order and if we
    could get that moving quickly, we know that over the next 5 to
    7 years it is going to be a huge drain, it is going to be a big
    problem, issue that we are going to have to deal with. Now we
    don't have the design work done. We don't have the engineering
    work done. So I really do hope, and I think Governor Douglas
    alluded to this, that while it is important to get us going in
    90 or 120 days, although some of us with snow on the ground
    would have to wait a little longer most economists agree this
    isn't going to be over in the next year, and so if we can have
    a way as well that some of these other big term projects that
    if we can get them done over the next 3 or 4 years instead of
    the next 7 or 8 years, it will greatly benefit the State of
    Wisconsin for years and years to come.
        So I hope we aren't going to see this just strictly as,
    boy, this is a 90-day problem, but that we understand this is a
    multi-year problem we are dealing with.
        Governor Douglas. I agree with my colleagues, Congressman.
    We certainly go through the prioritization process. When a
    capital budget is formulated in our State the agencies'
    requests are always multiples of what is available for the
    coming fiscal year, and so I and ultimately the general
    assembly have to make those decisions on what is most urgent.
    And I might suggest again that one size doesn't fit all, that
    situations do vary quite a lot around the country.
    Infrastructure and transportation is older in the northeastern
    part of the country in many cases. We had a devastating flood
    in 1927 that destroyed huge numbers of bridges and rail tracks
    in our State. So a lot of our bridges are now 80 years old,
    having been built right after that flood and beginning to show
    their wear.
        So I believe, as Governor Doyle suggested, that the States
    can be entrusted with responsibilities of determining their
    priorities.
        Mr. Schiff. Thank you, Mr. Chairman.
        Chairman Obey. Ms. McCollum.
        Ms. McCollum. Thank you, Mr. Chair. And I want to thank you
    all for being here and the fact that you don't just discount,
    kind of paraphrase what you said, the impact of a Federal
    stimulus package. And like you I am ready to invest. I am ready
    to invest in our infrastructure, public works, roads, bridges,
    water systems, sewer systems, and I am ready to invest in
    people and education and in health care. And to a statistic
    that was just handed me today that there are three people
    waiting for every job now in this country, three people for
    every job. So we are ready to go. And I understand fully what
    you have been saying about the States are facing some major,
    major difficulties right now. But I need some reassurance here.
    I need to know that the funds that I am going to vote for for
    reinvestment are going to do just that, they are going to be
    used to reinvest, not to fill all the gaps that the States are
    facing; that is, it is not going to be used to balance the
    budget. And I will tell you, one of the reasons why I am
    concerned, and my Governor is not here, but I am going to quote
    from him from the paper, Governor Pawlenty, the former head of
    the Governors Conference, seems to have a change of heart in
    recent days for what he thought the stimulus could do. And he
    says he is going to, he has doubts about the Democratic plan to
    bolster spending on public works, in fact, and I am going to
    quote him directly, he doesn't see it doing anything for the
    looming budget deficit in Minnesota. So this stimulus plan is
    not supposed to be plugging the holes of the budget deficit.
    And we have kind of skirted around the issue a little bit in
    some of the conversations that we have had.
        What do I need to do to make sure that the stimulus package
    doesn't fail; in fact, it does stimulate the economy, it does
    create jobs, that it is not just used to fill budget holes?
    Gentlemen, I am asking you what can you tell me that you will
    do to reassure me that that won't be the case? And to
    Congressman Honda's point, if it is not going to be the case
    from the States, should I be looking at direct infusion for
    investments at cities, at counties and at school districts? Do
    we need strings?
        Governor Douglas. Well, first of all, I think all three of
    us have said at different times that we are more than committed
    to sharing in the adjustment process that is brought on by a
    national recession. The reality is if we don't offset some of
    the cuts that are going to be imposed in our operating budgets,
    we can end up reducing employment, cutting our support of our
    counties and local communities, and our universities by enough
    to offset everything that we might be doing in an
    infrastructure program. So we are not saying that you have to
    fill our budget gaps, but having some help in that makes sense
    so that we can continue to not have tax increases at a time
    when we are in a recession, that we don't see tuition hikes
    that ration out individuals from taking this time when there
    are fewer jobs to actually enhance their education, and that we
    continue to support as best we can some of the things that are
    actually mandated by the Federal Government, like IDEA, Leave
    No Child Behind. All of those things create budget gaps. They
    create them in regular economic circumstances. They are more
    severe now.
        Ms. McCollum. Governor, not to interrupt you. I understand
    that. I was a State representative. I was a State
    representative during the nineties. I understand it. I get it.
    But this is what is happening with education and I can only use
    my home State as an example. We increase Pell grants, the State
    decreases student aid. Those were before the times of the
    budget deficit. Where is my assurance that that is not going to
    continue to happen? That is my point. If it happened in the
    good times, what is going to happen as we face the bad times
    together?
        Governor Doyle. Well, first let me say, we will take the
    Minnesota part of the stimulus package on the Wisconsin side of
    the river if you don't want it.
        Ms. McCollum. I don't think so.
        Governor Doyle. But I do believe that, and this is what we
    really want to work with you on. I do believe that there are
    ways that if you want to say put strings attached, and I am
    only speaking for myself, not the NGA here, I think there are
    ways that you should seek assurance of what you are getting in
    this package. For example, let's take higher education. The
    fact is unless you do help us with the budget deficits we face
    there will be deep cuts in higher education which will result
    in higher tuition. It is that simple and you understand that.
        So, and again I don't know, I don't mean to say this is
    what, I would have to look at the numbers, but if you were to
    say that in exchange for help to the States you want to make
    sure that tuition increases stay below rate of inflation or
    something like that, I think there are ways that we can work
    together to try to accomplish this. What we are saying is yes,
    we want, we believe the stimulus is really important and that
    does move directly, as you know in Minnesota, I know it is true
    in Wisconsin, that moves to private companies that are doing
    that kind of construction and it moves very, very directly. But
    in terms of education, what we are--I believe that we are all
    facing deep cuts in education, deep and harmful cuts unless
    there is help. And I think we are more, I am more than willing
    to work with you to figure out how you make sure you get that
    value for what the Federal Government may do in education, how
    we set metrics or how we make sure that big cuts in education,
    that you don't give us, you don't help the States with
    education and then find out that we made the big cuts anyway. I
    think there are ways that we want to work with you to make sure
    that you have those assurances.
        Governor Douglas. This is a time of recovery, as the
    terminology of the proposal suggests, and I really believe that
    unless we take these steps we are going to see the kinds of
    cutbacks that we all fear. We are going to have to make some
    decisions. We already made some in our States to adjust
    expenditure levels to live within our means. But unless we get
    the support at a time when revenues are declining so
    precipitously we are going to have to make some decisions that
    affect the people of the State in ways that we don't want to
    do.
        So I think it is essential. And I am a former legislator as
    well, and most of them in my State are of the other party, but
    I trust them to work with me to come to some common
    understanding as to what we need to do to establish priorities
    that are in the best interest of our State.
        Ms. McCollum. Thank you, Mr. Chair. And I like your
    Governor.
        Mr. Obey. I do, too.
        Mr. Ryan. Thank you, Mr. Chairman. I represent Ohio, and
    Governor Strickland is facing about a 25 percent budget cut,
    which is just unfathomable, and those of us who get into public
    service don't get into it to cut mental health coverage and all
    the things that you were trying to deal with. So I just want to
    say thank you for all of your courage in this very difficult
    time.
        One of the things that, I represent Youngstown, Ohio,
    Akron, Ohio, and sometimes a crisis provides opportunity. And
    can you just share with us what do you think the opportunities
    are for us to restructure maybe from an economic development
    perspective, how local communities can approach economic
    development now in a different way, how can local governments--
    ``consolidation'' is not always a good word--but streamline and
    become more efficient, I know you each kind of touched upon it
    a little earlier, but how can we, when President Obama says we
    want a government now that can be nimble and flexible in the
    21st century reacting to the facts as they change on the ground
    instead of the industrial style government that we are all left
    to try to tinker with here, just try to share with us what do
    you think the opportunities may be to retool our government,
    and through this stimulus package is there anything that we
    could do to incentivize that kind of cooperation, that kind of
    regional economic development, if you have thought about that
    at all, because I think this is a unique opportunities for us
    where we are going to be spending a lot of money and I think
    you have articulated and the Members of Congress have
    articulated quite clearly what the critical problems are facing
    you and I think facing our constituents, but within that can we
    have a piece of this stimulus package that will help us create
    this new 21st century government based on the technology and
    communication capabilities that we have?
        Governor Douglas. I think the answer is certainly yes. I
    mentioned several administrative consolidations within my
    administration. I know my colleagues are doing the same. And at
    the local level a number of our school districts are looking at
    similar consolidations. We have had some communities decide to
    close small schools over the last couple of years actually, and
    some are considering that now, merging with neighboring
    communities to achieve that economy of scale. So I think this
    will facilitate that.
        And I want to come back to a point I made earlier. I would
    not recommend to you that you fill the entirety of a budget gap
    in the State. I think it is appropriate to force that
    efficiency, to insist that we be creative, that we use
    technology more to achieve some economy in our States. One
    example I like to use in Vermont is our tax department, that
    warm and fuzzy agency of State Government that has been doing a
    great job in terms of its responsibilities but has been able to
    reduce its staffing levels by nearly 10 percent because of the
    increase in electronic filing of returns. And so there are
    other ways that we can do that to increase efficiency, lower
    costs, and provide the quality of service to our residents.
        Governor Doyle. I agree with Governor Douglas. The fact is
    we shouldn't plug all these holes that the tight budgets are
    going to drive and are driving in Wisconsin greater
    efficiencies. But on the regional economic development, just an
    ideal place to explore, but in Wisconsin we have developed in
    the last 2 or 3 years regional economic development groups
    largely, they are primarily business driven and they recognize
    that, for example, Milwaukee shouldn't be competing against
    Racine and I am sure you have these same issues but it is
    regional economies. And to the extent that they help select and
    drive and focus on what the infrastructure and other economic
    development needs are as this stimulus package comes out, it
    will be very helpful again to give a specific example, and
    Milwaukee has identified water technology as one of its great
    strengths. We have thousands of people that work in different--
    because it is on the Great Lakes and that is where they make
    beer. Water is particularly important in Milwaukee, as it is in
    parts of Ohio, and there has just been a lot of business. They
    actually have identified that now and come together and
    developed an agenda for how to grow that water technology
    business, and to the extent that we can plug that kind of
    regional economic development efforts into the stimulus package
    I think will be very helpful.
        Governor Corzine. There are a number of agencies, I talked
    about this mass transit tunnel which is really a New York-New
    Jersey exercise, it would be executed through the Port
    Authority and--might very well be executed, not necessarily, by
    the Port Authority of New York, New Jersey, seems to be places
    where you can encourage the kind of action you are taking.
    There has been good cooperation on a regional basis,
    particularly with homeland security and a lot of the
    allocations of funds from the Federal Government where we are
    looking at regions and interoperability and some of the
    elements. I think a similar kind of strategy, both on green
    energy investments and certainly with regard to electronic
    medical communication, are all things that I think as the
    Congress and the administration come to setting those
    priorities, making bonus investments where people are actually
    operating in conjunction with that as an objective or part of
    the mission, I think is a very positive step forward.
        Chairman Obey. Mr. Ruppersberger.
        Mr. Ruppersberger. Thank you, Mr. Chairman. I represent the
    State of Maryland. And I have a letter here from our Governor
    O'Malley talking about a lot of the issues that you have talked
    about and I don't want to be repetitive, but I want to address
    the issue of legal authority. This stimulus package will be as
    President-elect Obama has said, the largest since we have built
    our interstate highways. We feel, a lot of us are concerned
    when we passed, people call it the bailout, I like to call it
    the recovery package also, initially, that people are concerned
    that when we gave money to the banks that the banks instead of
    putting money back in and lending the money it went to their
    buying other banks. So we want to make sure that we have the
    right legal authority and also the accountability to make sure
    if in fact we go forward with this stimulus package, which I
    feel that we should and that it will create jobs, because that
    is the key to come out of this recovery is to create jobs. Now,
    the legal authorities when we are writing the bill, we need to
    have some legal authority there, not only to make sure that
    when we give you the money that you are going to have the
    ability to go forward with these projects that are going to
    stimulate the economy right away, call them shovel ready or
    whatever you want to call them.
        Now what would you like to see in the bill to make sure
    that you have the ability to go forward with these
    infrastructure projects that will create jobs?
        Governor Douglas. A couple of thoughts, a reasonable
    deadline for obligating the funds, I suggested 180 days to
    accommodate the needs of northern States; secondly, a
    flexibility as to what type of infrastructure is eligible for
    the support; thirdly, some provision, as I suggested earlier,
    to allow emergency procedures to be activated so that the
    bidding process can be expedited to get the project delivered
    as quickly as possible; fourthly, not including a maintenance
    of effort provision or to make sure that any ready to go
    project is eligible for stimulus funding so that other
    displaced funding can be used for additional projects. I think
    those are the key elements of what we need to have in place so
    we can move forward.
        Governor Corzine. I would add that you probably do need a
    use-it-or-lose-it provision in this so that this needs to be
    put with, you know, reasonable debate about how long that
    should be. But I think actually a fairly short horizon to make
    sure that we are getting the stimulus that we are expecting
    from this process, and you are going to have chances to talk
    about refunding the Transportation Trust Fund and other things,
    in the next Congress. So some of the other projects I think
    actually fall to that category, but I wouldn't have any
    argument with the flexibility emergency procedure issues or
    maintenance of effort. I would say that I know our State would
    be more than happy to have to come review after the fact of how
    we used the money as well.
        Mr. Ruppersberger. Accountability is extremely important.
        Governor Corzine. And I think it is a perfectly reasonable
    thing to be asking since we are accelerating all this process,
    having an after-the-fact review would be useful.
        Mr. Ruppersberger. You are going to have issues on your
    side, too. When you are going ahead with contracts, do you put
    it out for competitive bid or do we have these projects ready
    to go and the obligation for you to be ready because if one
    State doesn't have the sophistication to be ready and the other
    does, we need to stimulate jobs. So it is extremely important,
    I think I mentioned to the Governors and the mayors, the county
    executives, and commissioners, that they are ready when this
    goes forward.
        Governor Doyle. If I could just add from my point of view,
    use-it-or-lose-it in a very tight decline is very helpful
    because we are going to have to clear away a lot of sort of
    regulatory measures on our part that slow things down. And if
    Congress is telling us very directly you have to move quickly
    and you are going to lose it if you don't it will help me to
    get done in our State what needs to get done to get our process
    as streamlined as possible to get the money out the door.
        Mr. Ruppersberger. I suggest you communicate with your
    attorney generals or your solicitors or whatever because you
    are going to have your own internal issues, legal issues on
    contract. And we have got to make sure that the whole purpose
    for a longer period of time was properly the issue of
    corruption. So we have got to really make sure that we don't
    cross over that line either.
        Ms. Wasserman Schultz. Mr. Chairman, I would like to ask
    unanimous consent to enter into the record the testimony of the
    Governor of my home State of Florida, Charlie Crist.
        Chairman Obey. Without objection.
        [The information follows:]

        [GRAPHIC] [TIFF OMITTED] T6227A.057

        [GRAPHIC] [TIFF OMITTED] T6227A.058

        [GRAPHIC] [TIFF OMITTED] T6227A.059

        Ms. Wasserman Schultz. Who by the way after tomorrow will
    be crossed off the list of eligible bachelors when he marries
    his bride to be. So we can congratulate him on their
    celebration.
        I want to return to education, and I know we covered the
    infrastructure needs in terms of education but my State, and my
    county, I represent the Sixth and I think the third largest
    school district in the country, Miami-Dade and Broward
    Counties, and just in the last year Miami-Dade County, for
    example, had to cut $89 million out of their budget, their
    school budget.
        Ms. Wasserman Schultz. My own county, the county that I
    live in, Broward, had to cut in the last 2 years 128 million.
    They are facing hiring freezes, potential layoffs of teachers.
    And for me being a mom of three school-aged children, it is a
    very present day-to-day issue that I think is incredibly
    important. Children only go around once. Once they go through
    the 13 years of their education, if they aren't in a well-
    funded, high-quality educational environment, they don't get a
    second chance at it.
        So what I wanted to ask you is, obviously I am sure your
    States are facing a similar situation on the operations side of
    education. How are you compensating for those cuts? What are
    you doing? And how do you think we can include the operations
    side of educational challenges in an economic stimulus?
        Governor Douglas. Well, the specific request of the
    National Governors Association is sort of two parts of the
    stimulus recovery package: one, the infrastructure support;
    and, secondly, some support for Medicaid, which is a State-
    Federal, shared responsibility, and one whose caseload
    continues to rise. And speaking from my perspective, without
    the additional support for that safety net program, support for
    K-12 education is more vulnerable in the budgetary process than
    it otherwise would be.
        Basically I look at the budget of Vermont this way. About a
    quarter of it is Medicaid, about a quarter is K-12 education,
    and everything else. And since it is such a significant part of
    what we do, it is going to be very vulnerable at a time of
    fiscal stress. So I think that is why the support for the
    budget and our FMAP participation rate is critical in order to
    minimize the impact on public education.
        Governor Doyle. In Wisconsin, far more than 25 percent is
    K-12 education. We at the State level fund two-thirds of the
    cost of public education in the State. And so when you look at
    a 17 percent budget deficit, you just can't stay away from our
    biggest item. We have provided so far--in fact, our schools
    have gotten a slight 2 percent to 3 percent increase in the
    fiscal biennium that we are in right now, and we did it,
    frankly, by making huge cuts to other places, because this has
    just been my priority. But I believe we are at a point in
    Wisconsin that, given this deficit, without help that comes in
    some ways, that education will suffer.
        And I would suggest that this is probably our Federal-State
    most important investment that we are making right now, and
    that, again, in Wisconsin, the way you would do that is if our
    budgets--if our budget we can deal with it, then education is
    going to be my number one priority, and we are going to protect
    it. And that is really why we need help badly on the operating
    budget side.
        I have told our educators, look, you are going to have to
    be part of this. It is not like it is going to be wonderful
    times for school districts. There aren't going to be big
    increases and big new programs and all of these things. But
    what we are going to try to do is get through this recession
    that we are in and will be in in a way that does not do harm
    and long-term harm.
        And I agree with you completely on these kids; this is
    their chance, and if they are not well educated--and I made the
    comment earlier, and I don't want to repeat it. But just
    remember, this country was built, the world war was won, and
    the country was built by people who got educated in the middle
    of the Great Depression. So our grandparents and great-
    grandparents were willing to make this investment in terrible
    times, and we have to make it, and we need Federal help in
    order to make that investment.
        Governor Corzine. I think that education is the number one
    priority, along with public safety, that we have to address.
    And while we can't ask you all to fill all the gaps that any
    individual State has, some basic support--some of that comes
    through FMAP, through displacement. If we help out on the
    Medicaid side, then the money that you didn't spend there is
    available for education, and some people would argue that is
    where it is.
        I would rather be direct about some kind of block grant
    that, even if it was limited for education purposes, that would
    sustain these budgets through these difficult times. That is
    one person's view, not speaking for anybody but myself. I know
    that there are a number of Governors that would prefer no
    attachments.
        As far as I am concerned, FMAP and then some kind of help
    within the education arena is the direction I would recommend
    with regard to the operating side, acknowledging that we are
    going to have to take up some of this problem on our own
    actions at our State levels.
        Ms. Wasserman Schultz. Governor, count two people for that
    plan. I couldn't agree with you more.
        And thank you, Mr. Chairman. I yield back.
        Chairman Obey. Mr. Rodriguez.
        Mr. Rodriguez. Thank you, Mr. Chairman. And thank you very
    much for allowing us this opportunity to talk to the Governors.
    And I want to thank the three Governors. And welcome back,
    Governor Corzine. Good seeing you.
        Let me just indicate, I served in the Texas House also
    about 11 years, and I know that there are a lot of mandates
    including, the special education one, where we fund less than
    17 or 18 percent, and I think we should have been funded at
    about 40 percent. That means, even if we double that amount
    right now just with special education, it won't even cover what
    we supposedly should be covering. And I was glad to hear some
    of your recommendations about a lump sum that might be helpful
    in some of those specific areas where it may be necessary.
        I wanted you to respond to two issues. One, from a
    congressional perspective; where we have been working on the
    Middle-Class Working Group on a basis very similar to what
    Chairman Obey talked about. In fact, one of the major problems
    is the debt of American families. How do we reach out from a
    Federal and State perspective in terms of meeting some of the
    needs of those middle-class families that are having
    difficulties?
        Another point you raised is the tuition for middle-class
    families that have kids in college, and the possibility of a
    tax cut or tax incentives for those families. But if there are
    any other proposals you care to comment on, please do, because
    I really believe the middle class is the anchor of the economy,
    and that is where we need to make an economic thrust.
        Secondly, another important issue is in Texas that a
    tornado hit my community and killed seven people. There have
    also been floods and droughts. Yet, from the Federal
    perspective, we are not responding appropriately from the State
    perspective. And so I just wanted to get your feedback on those
    two areas in terms of natural disasters as well as meeting the
    needs of middle-class Americans.
        Governor Corzine. Thank you, Congressman.
        I think that we have at different points in the hearing
    talked about ways that you can help the middle class. Section
    8. Maybe some people would say that is more moderate, but
    affordable housing is actually a very serious issue across the
    country. Certainly if we were moving as President-elect Obama
    has talked about with regard to tax cuts focused on the middle
    class in conjunction with some of the things that we have been
    talking about today with regard to stimulus and recovery, I
    think it is very sensible; some tax relief, different proposals
    out there that I think would be very important. Aid in higher
    education obviously is one of those places.
        I think that it has to be comprehensive. Whatever is going
    to be put together has to try to do as much as you can within
    the context of however the total amount that you in the
    Congress and the new President decide is going to have a
    meaningful impact on GDP. If we have, instead of 3 or 4 percent
    growth in GDP we have a 3 or 4 percent decline in it, we are
    losing $800 billion. It is not like doing nothing is without
    cost. One is an explicit cost in the budget, and the other is a
    real cost to the public.
        And so I think you are asking a question that I want to be
    supportive of, and the middle class, is how you drive the
    economy. If you want to stimulate it, you need to actually be
    working very strongly with the demand side that occurs there.
    And so I hope you have a very forceful, significant program
    that includes tax relief for the middle class, but also in some
    of these basic educational issues, some of the basic housing
    issues.
        Governor Doyle. I agree with all of that. One other area
    that we really struggle with as a State is the programs that
    are designed to get people to the middle class. Obviously, the
    stimulus package, to me, is the most important part. There has
    never been a social program created better than a decent-paying
    job. So we want to cooperate in every way to get people to
    work.
        An area of Federal-State responsibility has been TANF and
    subsidized child care. The TANF grants that come to our State
    have not increased since 1996. The result is that a large
    segment of cost that used to be picked up by TANF dollars now
    are picked up by State governments. We have a State earned
    income tax credit. We have work training programs and others
    that were originally funded out of Federal TANF funds, but
    since that money has never been expanded, more and more of it
    is now picked up by the State taxpayers.
        The same is true with child care grants, which are directed
    to help people get to the middle class by being able to go to
    work and have subsidized child care. Those grants, as I
    understand it, have not been expanded since 2001. So Wisconsin
    now puts hundreds of millions of dollars of our State tax money
    into subsidized child care that was originally funded primarily
    through the Federal child care subsidy programs.
        These are big areas that are directed not at welfare, but
    actually directed at trying to have people get into the
    workforce. So somebody working at a moderate--low-, moderate-
    wage job in Wisconsin--across the country, Wisconsin may be a
    little higher than other States--we subsidize that child care
    as we were directed to do under the Federal subsidized child
    care provisions. But as that money has just been flat-lined
    over many, many years, we now pick this cost up.
        It is an example of something that started as a major
    Federal-State initiative that the States have taken up more and
    more and more of the burden on that does really affect working
    people. These are programs that are the people who are going
    out into the workplace and who are getting jobs and are doing
    what they want to do and everybody wants them to do, but the
    cost of that is falling heavier and heavier on Wisconsin
    taxpayers.
        Chairman Obey. On that note, I know that a number of
    Members have statements that they wish to enter into the
    record. Without objection, they will be entered.
        [The information follows:]

        [GRAPHIC] [TIFF OMITTED] T6227A.060

        [GRAPHIC] [TIFF OMITTED] T6227A.061

        [GRAPHIC] [TIFF OMITTED] T6227A.062

        [GRAPHIC] [TIFF OMITTED] T6227A.063

        [GRAPHIC] [TIFF OMITTED] T6227A.064

        [GRAPHIC] [TIFF OMITTED] T6227A.065

        [GRAPHIC] [TIFF OMITTED] T6227A.066

        [GRAPHIC] [TIFF OMITTED] T6227A.067

        [GRAPHIC] [TIFF OMITTED] T6227A.068

        [GRAPHIC] [TIFF OMITTED] T6227A.069

        [GRAPHIC] [TIFF OMITTED] T6227A.070

        [GRAPHIC] [TIFF OMITTED] T6227A.071

        [GRAPHIC] [TIFF OMITTED] T6227A.072

        [GRAPHIC] [TIFF OMITTED] T6227A.073

        [GRAPHIC] [TIFF OMITTED] T6227A.074

        [GRAPHIC] [TIFF OMITTED] T6227A.075

        [GRAPHIC] [TIFF OMITTED] T6227A.076

        Chairman Obey. Let me simply thank our three witnesses. I
    think this has been an excellent hearing. You have really been
    very helpful, and I wish you luck with the problems ahead.
    Thanks again.
        Chairman Obey. If I could now ask the second panel to come
    forward.
        Mr. Lewis. And I thank the Governors very much for being
    here.
        Chairman Obey. You bet. And let me explain, the first panel
    consisted of Governors because we wanted to hear from
    government officials about the impact of this recession on
    their jobs. And now we want to hear from a number of private
    individuals who can explain what the human impact of this
    recession is on a wide variety of people.
        We have with us today Dr. Sandy Baum, who is one of the
    Nation's premier experts on issues relating to college access,
    college pricing, and student aid policy; Julie Murray, Chief
    Executive Officer of Three Square, Inc., Las Vegas, Food Bank.
    I must say, I have never seen a more spectacular effort in the
    food bank area than that. And Marsha Kreucher, Executive
    Director of Community Action Agency of Jackson, Lenawee, and
    Hillsdale, Michigan.
        Dr. Baum, why don't we begin with you.
        Dr. Baum. Thank you, Chairman Obey, Ranking Member Lewis,
    members of the committee, I am very pleased to have an
    opportunity to be here and talk with you today, and I commend
    you for your efforts in crafting a stimulus package that is
    focused on revitalizing our infrastructure.
        I am an economist. I do work, as you said, on college
    access and affordability, student aid, and college prices. I am
    a professor of economics at Skidmore College. I also do a lot
    of consulting work for the College Board and publish reports
    for them. I am here today as an individual, as an economist
    speaking about my own views on what I think the Federal
    Government's role in financing higher education in this
    economic emergency is.
        As we have been talking about infrastructure, there has
    been a lot of reference to higher education. I am pleased to
    hear that. I want to reiterate the importance of this. We are
    talking about physical capital and revitalizing physical
    capital, but we know that a major driver in the economic growth
    in the United States has been the increase in human capital, in
    the education, the skills, the training of our workforce. And
    we have already been concerned even before this crisis about
    the United States falling behind in educational attainment. We
    can't allow this crisis to exacerbate that problem.
        Historically we know that, in economic downturns, more
    people turn to higher education. They seek additional training
    to improve their opportunities in the labor force that they
    find particularly limited. At the same time that the demand for
    higher education increases, as we have just heard from the
    Governors, State budgets are, of course, severely constrained,
    and it becomes more and more difficult for States to fund their
    higher-education institutions appropriately. So we have this
    collision, where we have more people who need higher education,
    people have less and less money with which to pay for it, and
    the States aren't able to provide for it adequately.
        So what I believe the Federal Government really needs to do
    now is to increase funding for Pell grants so that students
    have more money to permit them to pay for higher education; and
    it also needs to assist the States in maintaining and
    increasing the capacity to educate these students. We have
    heard from the State of California, as well as from other
    States, that they may be forced to diminish the number of
    students that they can educate because they simply don't have
    the funds to do this. So I would like to address both of these
    sides of the question briefly.
        First is the increased need for Pell grant funding, which
    is urgent. We already know that there is a shortfall in the
    Pell grant program. The Pell grant is the best way for the
    Federal Government to assure that students will have the funds
    that they need to enroll and persist in college in these
    difficult times. Two-thirds of the student aid on which
    students depend comes from the Federal Government, and that
    includes about $18 billion in Federal grants, about 80 percent
    of which are in the Pell grant program.
        About 5.5 million students depend on Pell grants to help
    them finance college, and these funds are incredibly well
    targeted on students who really need help. Among the dependent
    students who receive Pell grants, about two-thirds of them come
    from families with incomes of $30,000 or less. About 60 percent
    of the Pell grant recipients are independent students. And
    almost 60 percent of these students had incomes in the previous
    year of under $15,000. There will, of course, be more and more
    students who fall into these income categories as the economy
    continues to sour.
        The Pell grant has created a lot of wonderful educational
    opportunities for people, but it has lost much of its power.
    Recent increases in the Pell grant maximum have been most
    welcome, but the current maximum of $4,731 is lower in 2007
    dollars than the maximum was 30 years earlier.
        So what we have is a situation where, Congress has
    continued to pour more money into Pell grants, although we now
    spend about $14.5 billion a year--the reality is that this has
    only allowed us to cover more and more students. The number of
    Pell grant recipients tracks closely the increased funding on
    Pell grants. So what that means is that the maximum Pell grant
    and the average Pell grant per student have not been able to
    increase in inflation-adjusted dollars.
        In fact, while we talk about the maximum Pell grant all the
    time, what really is important to individual students is, on
    average, how much they get. And in 2007-2008, that was $2,649,
    just about $100 more in constant dollars than was the case 30
    years earlier. So, on average, students are not getting nearly
    enough money from this program. That is even without taking
    into consideration the increase in college prices. That is just
    taking into consideration increase in the Consumer Price Index.
        In 1987-1988, the maximum Pell grant covered 50 percent of
    the published tuition fees, room, and board at the average 4-
    year college. That 50 percent has now declined to just under a
    third. At private colleges there has been a decline from about
    20 percent in 1987-1988 to about 13 percent of total published
    tuition fees, room, and board now.
        The Pell grant helps many independent students and many
    dependent students. There will be many more adults who are
    looking for assistance, looking to go back to school as their
    labor market opportunities are diminished. We have to make sure
    that we give them adequate funding.
        I had a conversation recently with a 31-year-old single
    woman who makes $16,000 a year working full time. She wants to
    go to her community college to increase her skills; and the
    Pell grant for which she is eligible is under $700. So she
    wanted to know how she is supposed to go back to school. That
    is her full income, if she can keep her job, $16,000. The child
    of a single parent making $40,000 a year would be eligible for
    a Pell grant of less than $1,500.
        So we have to think about the number of dollars we are
    giving to students, in addition to the aggregate amount of
    money, the maximum Pell grant, and the number of students we
    can serve. Raising the Pell grant is the most important thing
    that the Federal Government can do for students now in the
    short run to help them pay for college.
        Many students are going to continue to borrow, and Congress
    has done a good job of making sure that Federal loans remain
    available, but we have to do a better job of protecting those
    students who, through no fault of their own, get into trouble
    when it comes time to repay their loans. Of course, many more
    students will find themselves in that circumstance now because
    of the high rate of unemployment.
        In addition, if we want the Federal aid system to be more
    effective, and we want our taxpayer dollars to be used more
    efficiently, we have to simplify the system and make sure that
    students can access it with a simple application process and
    that we don't keep adding more programs.
        It would be wonderful if we can increase the Pell grant and
    make sure there is enough money in every student's hands, every
    potential student's hands, to make sure they have the
    opportunity to pay for college. But even if they have the
    money, but States are unable to fund institutions to have the
    capacity to educate those students, we won't accomplish our
    goals.
        There is an urgent need on the part of the States for help
    from the Federal government to provide these educational
    opportunities. In particular, community colleges and broad-
    access, public 4-year colleges are going to find many more
    people knocking on their doors looking for improvement in their
    skills, looking to be more successful in the labor market.
    Obviously, we want to get these people off of the unemployment
    roles and into environments where they can constructively be
    improving themselves for the jobs that we hope will be awaiting
    them when they finish.
        Assuring access to higher education is important from an
    equity perspective, but it is also important in terms of the
    efficiency of our economy. It is good economic policy. It will
    help us to reduce the excess supply of labor. It will help us
    to increase over the long term our human capital. And our
    economy will reap the benefits far into the future. If we don't
    do this, if we don't strengthen the Federal aid system, the
    Federal Pell grant program, if we don't assist educational
    institutions to provide opportunities, make sure they have
    capacity to educate our students, we will feel that pain far
    beyond the time that the economy begins to recover. So I urge
    you to make higher education a clear focus in your stimulus
    package designed to revitalize the infrastructure. Thank you.
        Chairman Obey. Thank you very much.
        [The information follows:]

        [GRAPHIC] [TIFF OMITTED] T6227A.077

        [GRAPHIC] [TIFF OMITTED] T6227A.078

        [GRAPHIC] [TIFF OMITTED] T6227A.079

        [GRAPHIC] [TIFF OMITTED] T6227A.080

        [GRAPHIC] [TIFF OMITTED] T6227A.081

        [GRAPHIC] [TIFF OMITTED] T6227A.082

        [GRAPHIC] [TIFF OMITTED] T6227A.083

        [GRAPHIC] [TIFF OMITTED] T6227A.084

        [GRAPHIC] [TIFF OMITTED] T6227A.085

        [GRAPHIC] [TIFF OMITTED] T6227A.086

        [GRAPHIC] [TIFF OMITTED] T6227A.087

        Chairman Obey. Ms. Murray.
        Ms. Murray. Good afternoon, Mr. Chairman and members of the
    House Appropriations Committee. As Chairman Obey mentioned, my
    name is Julie Murray, and I am the chief executive officer of
    the Three Square Food Bank in Las Vegas, and I am honored to
    have been invited to come and speak before you today. I always
    like to speak during the noon hour before the meal has been
    served, because then all of us can feel hunger and just have a
    really great understanding of how challenging it is. If I would
    have estimated my speaking time better, I would have brought
    food boxes for you from Las Vegas. But let me tell you first
    thank you for being here and for staying for our testimony. I
    appreciate it.
        So the Three Square Food Bank started over a year ago at
    the inspiration of Eric Hilton--he is the youngest son of
    Conrad N. Hilton--along with numerous other think-outside-the-
    box kind of community leaders in Las Vegas who declared that it
    was not acceptable in our community for people to go hungry.
        I am proud to say that we are the newest member of Feeding
    America, and are proud to be distributing food in southern
    Nevada. We are the 206th member in this network of food banks.
        If I would have testified a year ago, I would have said
    that thousands of families in my home State are living paycheck
    to paycheck and are just one disaster away from being in total
    ruin. However, I am sad to tell you that, as I testify before
    you today, those families have had that one crisis occur, and
    that crisis is the recession. And due to the recession, they
    are now living their biggest fear, which is living without a
    paycheck.
        Nevada's unemployment rate is no different than any of the
    others who have testified before me today. We have risen to 7.6
    percent, which is a full point higher than the national
    average, when traditionally we are about 1 percent or more
    lower than the national average. One out of every 91 homes in
    Nevada is in foreclosure, and nearly half of our State
    homeowners owe more on their mortgages than their homes are
    worth. New construction has screeched to a halt, causing job
    losses not only in construction, but in related industries. At
    our Three Square Food Bank, we see the people affected by these
    statistics every day, and I have four points that I want to
    share with you in my 5 minutes of testimony.
        Number one, the children who are facing hunger. In Clark
    County School District, nearly half of our children, which is
    132,000, qualify for free or reduced lunch. Picture that: 5 out
    of 10 children who are crossing the crosswalk on our way to
    school are struggling with hunger. When half of our children
    are struggling, we are living in a crisis mode.
        At the beginning of this school year, my Three Square Food
    Bank launched a weekend feeding program called the BackPack for
    Kids program that provides bags of nutritious, kid-friendly
    food to approximately 3,000 children weekly. I recently visited
    one of our BackPack partner schools where every one of the 733
    students qualifies for a free or reduced lunch. I asked one
    second-grade student, Isabel, what she thought about the bag
    and the food. She had a huge smile on her face and said how
    proud she was to be able to take food home for her family. Her
    mother had just been laid off, and this 8-year-old girl carried
    the 5-pound bag of food home on her back in the backpack every
    Friday and shared the food with her mother, her younger
    brother, and her dog.
        The next example: middle-class families who are living in
    crisis. So for every child in need, there are family members
    struggling to make ends meet. The ongoing layoffs in our
    normally recession-proof gaming industry are bringing more
    people to our food pantries. Representative Serrano asked if
    tourism and the arts are being impacted. Our gaming industry
    and other related industries are being impacted in ways we
    never could have imagined. There are people who have never
    before sought food assistance that are doing so. And let me
    illustrate a story of what Congressman Obey mentioned in his
    opening remarks when he said that it is so amazing what the
    loss of a job does to someone's dignity when they go through
    that experience.
        So while filling my gas tank recently on a Sunday
    afternoon, a white car pulled in next to me with a middle-aged
    man and two little girls in the back seat. The man approached
    me with a very ashamed look on his face and said he had never
    been out of work before, was recently laid off, and could not
    afford gas or food for his family. My heart broke for him, but
    my heart broke for the little girls who were in the back seat
    having to watch their dejected father beg for money. I gave him
    cash, and told him how to find a local food bank agency where
    he could receive some free groceries.
        As Nevada's unemployment rate grows, such stories will only
    become more common. Indeed, as the unemployment rate grows
    nationwide, you will hear such stories in every congressional
    district across the Nation.
        Number three, I would like to address the growing demand at
    charitable agencies. At our 1-year anniversary next week, which
    you are all invited to come to our food bank for, our food bank
    will announce that we have distributed 10 million tons of food,
    which represents 8.5 million meals that we have distributed.
    That food reaches hungry people----
        Chairman Obey. Did you say 8.5 million?
        Ms. Murray. Yes, 8.5 million meals per year--this year, in
    our first year of operation. That food reaches hungry people
    through our 211 agency partners. These community partners
    include food pantries, homeless shelters, rehabilitation homes,
    and programs for at-risk youth and seniors. Forty agencies who
    joined us this year never had been engaged in food relief
    before, but are doing so in response to the economic crisis.
    And our existing food pantries are hit particularly hard, many
    of them seeing a doubling of clients--a doubling of clients--
    over the course of this year.
        And, number four, my recommendations. My food bank will
    continue to work diligently, as will food banks across the
    country, to assist the people in their States. However, there
    is only so much that we can do to meet the overwhelming need;
    but there is so much that Congress can do to address hunger in
    America with the upcoming economic recovery package.
    Specifically, three points.
        Number one, an increase in the SNAP/food stamp benefits
    along with administrative funds for cash-strapped States.
        Number two, a boost to TEFAP and CSFP, the two commodity
    programs that provide nutritious food through food banks and
    other charitable organizations.
        Ms. Murray. Number three, increase funds to meet the
    growing demand in the WIC program.
        These crucial measures to strengthen our Nation's Federal
    nutrition programs will go a long way towards meeting the needs
    of millions of Americans devastated by the recession. Moreover,
    the inclusion of additional funding for SNAP food stamps and
    emergency food assistance will support economic recovery and
    help stimulate local economies. I can tell you, with food
    prices having risen so much, when cash-strapped families
    receive the higher food stamp benefit they will immediately
    spend it in their grocery stores.
        So in conclusion, I wanted to share with you that when my
    three children, who are all in college, come home for the
    holidays and are gathered around my kitchen table, we talk
    about you as if we know you. They have worked for you as
    congressional pages and as interns. We look at the decisions
    that you are making and the things you are doing. Please know
    that to my family and to millions of Americans, you are heroes;
    you are the ones who can and will pull this country out of the
    crisis we are in. We have faith in you and we are cheering for
    you.
        I would be happy to respond to any questions at the end of
    our time allotment. Thank you.
        Chairman Obey Thank you very much.
        [The information follows:]

        [GRAPHIC] [TIFF OMITTED] T6227A.088

        [GRAPHIC] [TIFF OMITTED] T6227A.089

        [GRAPHIC] [TIFF OMITTED] T6227A.090

        [GRAPHIC] [TIFF OMITTED] T6227A.091

        [GRAPHIC] [TIFF OMITTED] T6227A.092

        [GRAPHIC] [TIFF OMITTED] T6227A.093

        [GRAPHIC] [TIFF OMITTED] T6227A.094

        Chairman Obey. And now Ms. Kreucher.
        Ms. Kreucher. Thank you. My name is Marsha Kreucher, and I
    am the CEO of a community action agency in the southern central
    part of Michigan. And I am honored to be here today. I was
    asked by our new Congressman-elect Mark Schauer to talk a
    little bit about the face of poverty in Michigan and some
    community development-type projects that community action
    agencies get involved in that he thinks have potential for good
    economic development policy.
        I know that you have all heard that Michigan is facing some
    huge challenges. We may be leading the way of the downward
    momentum that has been discussed today. Our unemployment rate
    is well above the national average, over 9 percent; and median
    income, which in Michigan has always been high, has plummeted
    12.5 percent last year to put us below the national average for
    possibly the first time. We have record numbers of homes in
    foreclosure, housing values are falling, and we have one of the
    highest child poverty rates in our county right now at 40
    percent. It is just a stunningly dismal picture. In the 20
    years that I have been a community action director, I have
    never really seen things quite so bad.
        In the counties that our agency serves, we are mostly
    rural, we have three cities. The largest city has a population
    of 37,000; 13.5 percent of those residents are now unemployed,
    and 15 percent fall below the poverty level. We are heavily
    reliant on the automobile industry, mainly in our area of the
    State on the smaller parts suppliers and light manufacturing.
    We have lost thousands of jobs in the last 5 years and almost
    2,000 jobs just in this year alone. And these are working-class
    jobs. We have talked about the middle class and working-class
    jobs, and this has been a middle-class community. The erosion
    in income and the quality of life has just been stunning.
    People are frightened, I think, and that is one thing that we
    all feel.
        One of the things that I think can really help, and I would
    ask for your support, is the request to increase the
    eligibility for CSBG, which is the base funding for community
    action agencies, to help people that are at 200 percent of
    poverty as opposed to 125 percent. And that is because when you
    are looking at, like we are, legions of Michigan people who are
    unemployed and living on unemployment insurance, or who are
    working at low-wage jobs that are kind of piecemealed together,
    200 percent of poverty is barely enough to make ends meet. And
    it would, I think, really help to be able to reach a lot of
    these people.
        When people are laid off, they come to us for any variety
    of reasons. They may come to us because they have missed a
    house payment or they have had a utility shut off. It is
    generally not a population that is used to coming in to ask for
    help. They are people who, more often than not, now are looking
    at foreclosure. In our small city, we have about 400 homes that
    are owned by banks, that are vacant and are for sale.
        The banking industry is worried, the housing industry is
    worried. It drops--housing values. Crime is on the rise. There
    is an uptick in homelessness. And we have many, many families
    who, although we are a HUD-certified counseling agency, we are
    getting maybe 30 calls a week to help renegotiate loans with
    banks, and we have really no resources to help people who have
    gotten caught in the subprime loan mess. Sometimes we see
    grandparents losing homes that maybe it would be $3,500 or
    $5,000 to fix, and there really isn't very much help available
    to help these people. I think that we would all think that
    stabilizing neighborhoods is probably one of the key things
    that we can do.
        One of the projects we have been involved in, which I think
    is probably a good example of a community action agency in
    general, is that we got involved in a community revitalization
    project in the city of Jackson, which targeted 23 blocks
    immediately adjacent to the downtown; and we have mobilized
    about $12 million in investment in that area through private
    investors, Federal dollars, State dollars, local community
    dollars. We have been working with five churches and have built
    new homes, demolished blighted property, rehabbed many homes,
    both homeowner and rental property homes.
        And because we are a community action agency we also work
    with the Neighborhood Association, which has now become
    incorporated and has received some funding of their own, is
    hiring staff, running an after-school program for kids. And
    because we run the IDA program, we are helping people to
    increase home ownership in that area.
        We are working with Youth Build to add job skills and
    construction, and Habitat for Humanity to provide more housing
    there too.
        So what we have seen, just in that little project over 5
    years, is it has created a lot of jobs, and I think has
    probably shown one of the things community action is good at,
    which is, we are good multi-taskers and we are able to leverage
    funds from the private sector as well as the public sector and
    bring together the community to make things work.
        I won't talk too much about energy and home weatherization.
    I mean, that has been discussed today. I know it is on the
    radar screen of everybody. Clearly, there is great potential.
    We have been weatherizing homes since the 1980s. There are a
    lot of creative projects going on across the country with
    renewable energy and community action agencies with private
    investors.
        I will tell you that we have waiting lists for every one of
    our programs. Unprecedented. I would estimate that we have
    probably increased our waiting lists and people coming in for
    help 35 or 40 percent just over the last year alone. Children
    don't have food; they are on waiting lists to get--adults are
    on waiting lists to be able to get money or be able to afford
    to go to college. Children don't have winter coats; they are
    coming to school with sweaters on. It is just a terrible
    picture.
        So we encourage you. Congress has been very supportive of
    community action agencies over the years, and we appreciate
    that. We have always been on the front lines. This year it
    seems very dramatic; the front lines are much more complex; our
    problems are more complicated. And we appreciate your support
    and are enthusiastic about all that you are doing with the
    economic stimulus. Thank you.
        [The information follows:]

        [GRAPHIC] [TIFF OMITTED] T6227A.095

        [GRAPHIC] [TIFF OMITTED] T6227A.096

        [GRAPHIC] [TIFF OMITTED] T6227A.097

        Chairman Obey. Well, thank you all. Let me just ask one
    question of all of you, a little differently to each of you,
    but it is the same basic question.
        Dr. Baum, some Members of Congress might say to me, ``You
    know, Obey, student aid is fine and Pell grants are fine, but
    you guys are just using the recession in order to bump up
    spending for these student aid programs.'' I would ask you, Why
    should we be looking at student aid in a recession? Is there
    really a significant impact on American families with respect
    to their ability to send their kids to college during the
    recession?
        Ms. Murray, with you I would simply ask, Why should we add
    more money to food and nutrition programs? If this is a serious
    problem, why can't we expect the private sector and charities
    to pick up the slack in your area?
        And Ms. Kreucher, with you, the same question I asked Dr.
    Baum. Some people will say, ``Well, you just like this
    Community Service Block Grant and so you are using this
    recession as an excuse to pump money in.'' Why is there a
    qualitative or quantitative difference in terms of the job that
    you have to do in your locality? What kinds of things are you
    having to do today that county boards, city councils, are
    sloughing off on you because they just don't have the money in
    these times? Why don't we begin with you, Dr. Baum?
        Dr. Baum. It is certainly a reasonable question because
    everyone has been saying all along that we need more money for
    student aid.
        That said, there are several aspects to this. One is that
    if we do nothing, then the demand for Pell grants is going to
    increase because as more people are in these serious economic
    circumstances that have been described, they will simply
    qualify for Pell grants. So even without changing any of the
    provisions, clearly more money will have to be appropriated, or
    the amount of money that we provide to individual students will
    have to be diminished.
        But more than that, it is the issues that I touched on
    which involve the repercussions of an economic downturn. There
    will be more and more people who will not find labor market
    opportunities. And we can either have them be unemployed, we
    can try to provide unemployment compensation for them, or we
    can help them to go to school. And it is obviously in both the
    short-term and the long-term interests of the economy to make
    sure that we can have these people using their time
    constructively and developing their human capital. And that is
    true for higher education institutions as well. There have been
    struggles all along, problems of State funding pressures. But
    the reality is that right now there is much increased demand,
    as there always is in economic downturns. And to turn these
    students away would be a serious mistake. This is the result of
    the recession, that there is this kind of increased demand and
    this increased need.
        Chairman Obey. Thank you.
        Ms. Murray. Thank you, Mr. Chairman. Your question is, Why
    should you add to the food and nutrition programs currently in
    place?
        Chairman Obey. My question is simply, If this is an
    economic stimulus package, why should programs for nutrition be
    included? Why can't we simply rely more on private sector
    churches, charity, et cetera?
        Ms. Murray. Thank you for the clarification. I will give
    one example. I mentioned the children in the schools. In order
    for us to go communitywide with our BacPack program and be in
    every one of our schools, we had to collaborate with a lot of
    people. We had to collaborate and find a donor to fund the
    food; we had to collaborate and find someone to deliver it; we
    had to find community groups who would come out and load
    thousands of bags of food every week. And as food bank, we are
    doing everything we can to leverage what we have in the
    communities to provide as much food as possible. And you saw
    our food bank. We are very creative. We think outside the box,
    and we collaborate with lots of people.
        We are doing just as much as we possibly can to keep up
    with the demand. And just when we think we have met it, then we
    will go through a round of thousands and thousands of more
    layoffs. And our agency partners report that they are seeing
    increases of 66 percent in the numbers of families that they
    are feeding.
        So even though we are calling on our corporate leaders and
    our community and individuals and foundations, they can only
    give so much. And they are reeling from the tough economic
    times and giving as much as they possibly can.
        So just know that in States like all over the country and
    like mine, my food bank is doing everything we can to
    collaborate and think outside the box, but we just can't keep
    up with the demand because the numbers are so huge. So we do
    need help with what you have offered. Thank you.
        Chairman Obey. Ms. Kreucher.
        Ms. Kreucher. I would say that community action with
    Community Service's Block Grant just has a long history of
    mobilizing resources and working in collaboration with many,
    many sectors. There is no sector that has the ability to handle
    all of these problems alone. City dollars aren't going to do
    it, county commissions can't do it. Revenue sharing has been
    lost. Private sector, in places like Michigan, is a problem for
    investment. We have to be able to work with people who have had
    a history of working with us before and are willing to kind of
    step forward and help out during difficult times. I think we
    have a track record.
        One thing that I think is really important is the
    psychological and kind of morale-boosting piece. As we go in
    and start working in neighborhoods within the city of Jackson
    and in our communities, we are finding people who are saying
    that they are afraid. They feel like they have been forgotten.
    They don't know what is going to happen next. What are the next
    jobs that are going to happen?
        And there is something to be said about moving forward and
    creating jobs and working to renovate neighborhoods to show
    that they are still safe, to show that people are still
    involved; that there is going to be an infrastructure that
    makes people think that it is going to be okay in the end; that
    things still are happening as normal, and we will be
    continuing. And I think that is really an important piece.
        Chairman Obey. Thank you. Mr. Lewis.
        Mr. Lewis. Thank you very much, Mr. Chairman. And thank you
    all for not only being here but for the work that you are
    about. I was going to approach this a little differently when I
    began this meeting, but please forgive me.
        Dr. Baum, I will begin with you because I think you should
    know that two of my twin sons are both college professors, and
    so I am very empathetic to the challenges of a college
    professor, a professor at Skidmore. But in the meantime, I am
    curious to know what exactly the College Board is. You
    indicated that you were testifying as an individual not
    representing Skidmore or the College Board, but I would like to
    know exactly what the College Board is and what role you play
    there; is it a paid position or is it just additional
    compensation beyond being professor, et cetera.
        Dr. Baum. The College Board is a nonprofit membership
    organization with members being colleges, universities, high
    schools, and other kinds of educational organizations. And the
    College Board works on issues relating to college access,
    college success, the transition from high school to college.
    Everyone knows they have the SAT and the AP. They run some high
    schools in New York City. They have a lot of college
    preparation and curricular programs, a lot of college
    counseling programs and so on.
        I am not employed by the College Board; I am a consultant
    to the College Board. I do their publications on trends in
    student aid and trends in college pricing, and I spend a lot of
    time consulting for them. I also consult for other
    organizations, and I am employed by Skidmore College.
        Mr. Lewis. I appreciate that. That helps clarify some of
    the questions I had relative to that, because I noted when you
    testified before the Senate and also, in the presentation you
    gave on NPR in 2007, the testimony was very similar to that
    which you have presented today which would be very much a
    reflection of what you just described as the College Board's
    work, the work that you do for them.
        Dr. Baum. I would say that one of the wonderful things
    about my relationship to the College Board is that they
    subsidize me to do my research and to express my views, and not
    to be just a voice for the views of others. And so that is one
    of the contributions that they make.
        Mr. Lewis. One of the areas of concern I have that leads to
    just a very brief line of questioning, is the fact that we
    operate here under our rules in the House with a truth-in-
    testimony process. And sometimes when people describe
    themselves as speaking as an individual, that causes them not
    to feel like they need to respond to some very specific
    requirements.
        So let me ask this. Can you provide for the record a list
    of all grants, sub-grants, contracts, subcontracts received by
    the College Board in fiscal years 2008-2009, prospectively
    2009?
        Dr. Baum. The College Board obviously has such a list. I am
    here presenting my own views. No one told me what to say. I am
    not----
        Mr. Lewis. Can you provide such a report?
        Dr. Baum. I am just here expressing my own views, and I
    have no--I am sure that the College Board as an organization
    could do that, but they have not--I am not testifying----
        Mr. Lewis. Let me say this. In our records you are listed
    as----
        Dr. Baum. I am a consultant to the College Board and I am
    employed by Skidmore College.
        Mr. Lewis. So the second question is we would appreciate a
    list also, if you could consult with the College Board and
    provide a list of all grants, sub-grants received by the
    College Board in fiscal years 2007 and 2008.
        Chairman Obey. Let the Chair simply interject at this point
    to say that I am certainly interested in obtaining all of the
    legitimate information that we can obtain. But I think it is an
    open question as to whether someone who is a consultant to an
    organization has the authority or the ability, in fact, to
    provide the kind of information that has just been requested of
    the organization. I would think the organization itself would
    have to make that decision, and I would think they would make
    it at a time when someone was testifying on their behalf.
        Mr. Lewis. I appreciate the Chairman making that
    clarification for me. The listing we have for Dr. Baum is as a
    senior policy advisor for the College Board, and it seems to me
    that she might be able to provide that.
        But in the meantime, moving on, if I could. I wanted to
    mention to Ms. Murray that beautiful downtown Las Vegas is
    important to us, because in North Las Vegas there lives one of
    our daughters and two of our grandchildren and a very, very
    attractive donkey as well as a pig, two cats, and two dogs as
    well. It is a very prolific family.
        But in the meantime, just a few minutes away from here, is
    an organization in Mr. Moran's district, the Arlington Food
    Assistance Center just about 3 miles away. And it just occurred
    to me that--I am sure you experience this but all of us should
    think about--the work that you are about, which I think is
    fabulous work, can be accomplished and needs to be expanded by
    a lot more than just some stimulus package on the part of the
    Federal Government. Citizens being involved, volunteering,
    helping with the programs that you are about are a fundamental
    force as well. Some of my own staff participates in this
    Arlington organization, and they too are involved in providing
    and delivering food to thousands and thousands of people. And
    that work is not just commendable, it is very stimulating and
    exciting work. So thank you.
        I am interested in having at least the Chairman bear with
    me a moment. He doesn't really know this, but from about the
    time I went to college I thought I might want to be in public
    affairs one day, and I knew absolutely that if I was going to
    be, I would run as a Democrat. And between my junior and senior
    year in college, I had the privilege to participate in one of
    the early People to People programs that preceded the Peace
    Corps, known as Project India. And 12 of us, together with
    advisers, went to India and spent 3\1/2\ months. I will never
    forget walking down a mud pathway and turning, just as we were
    going to a village, and watching a mother with her baby lying
    in the mud brushing the flies away, and literally we watched
    that child starve to death. It was that and many another
    experience in the world's newest and largest democracy at the
    time that caused me to know I would be involved in public
    affairs one day.
        And indeed when I came back to school, knowing that, I knew
    I would be a Republican and not a Democrat. And I will let my
    Chairman guesstimate what that is all about. But in the
    meantime, we very much appreciate your work and thank you all.
        Chairman Obey. I would simply say that when I was growing
    up, I was a Republican and I converted to a Democrat. I guess
    what that demonstrates is the old rule of physics: To every
    action, there is an equal and opposite reaction. I am sorry the
    gentleman moved in the wrong direction, however. Mr. Dicks.
        Mr. Dicks. That was very interesting. First of all, I want
    to congratulate each of you for your testimony, but also for
    your careers, what you are doing to help other people. I can
    remember in the State of Washington in 1969, 1970, 1971, we had
    a huge downturn. We lost the SST. And I was at the time working
    for Senator Magnuson and we had 16\1/2\ percent unemployment in
    King County, and people who had been engineers, who had always
    had a job were unemployed. So we went through this. And it was
    interesting; kind of the way we worked through this was we did
    a number of congressional--I worked for Senator Magnuson in the
    State of Washington, and we had emergency extensions of
    unemployment compensation. I think you got three of them. But
    this was only for States with high rates of unemployment.
        Now, I am not sure you could do that in this era, Mr.
    Chairman.
        We also then, we had direct funding for the food banks. And
    I was interested in your emergency food assistance program.
    Does that program allow for direct funding of the food banks
    right from the Health and Human Services?
        Ms. Murray. Thank you, Congressman Dicks. Yes, there are
    food banks throughout the country. And not 100 percent of them
    have that direct, but most of them do. That is correct.
        Mr. Dicks. So they get some money from the Federal
    Government to operate the food banks.
        Ms. Murray. Correct.
        Mr. Dicks. Then you add surplus commodities and food
    stamps. Now, most States, you only could have one or the other
    program, you couldn't have both. Is that still the rule?
        Ms. Murray. Do you know, Congressman Obey knows this
    because he has visited our food bank. Our food bank is 11
    months old, so we do not currently have any of those items that
    you just outlined. So the 10 million pounds of food that we
    have achieved this year just have been through sheer donations;
    and so we are looking forward to our strategic plan in 2009 to
    be able to add those items that you just mentioned.
        Mr. Dicks. But can a State now have both a food stamp
    program--I think in those days, this is a long time ago, you
    either had a food stamp program or you had a surplus commodity
    program, and, in other words, to deal with the problem. But now
    I think you can have both?
        Ms. Murray. Yes. That is correct. Yes, you can.
        Mr. Dicks. So what else? Now, the WIC program--and I know
    these are all programs that the Chairman's committee is
    responsible for--does a fantastic job of making sure they are
    adequately funded in terms of what we can do with the reality
    of the situation.
        Ms. Murray. Let me just tell you that we are grateful for
    the funds that we have through programs like WIC and TEFAF and
    CSFP. But what has happened, though, even though the funding is
    good, with the huge growing numbers of people who need help, we
    just can't keep up. So when you look at food stamp--and I was
    sorry that Congressman Ryan isn't here because I know he did
    the Food Stamp Challenge--is that with the new Farm Bill people
    now on food stamps will get $1.33 per meal. And so even though
    we are grateful for that, it just needs to be more, because the
    suffering that is going on is just so great.
        Mr. Dicks. Let me ask you this. You talked about the school
    lunch program and it is at 50 percent. I have many schools in
    my district--and you mentioned one that was 100 percent--that
    are 70 percent. So I am very sensitive to what you are talking
    about. But, again, there is some limit to the funding for these
    school lunch programs.
        And you talk about the weekends, and I love your pack
    program where you can take these packs home and they can help
    their family help themselves. What would you recommend there? I
    mean, what should we do in terms of the meals that are provided
    at the school, through the school system; and what do you do
    about the summers? That is another part of the situation.
        Ms. Murray. Thank you so much for asking. As food banks,
    what we do is we work to understand where the children are who
    are food insecure, and then we look at tackling it in a very
    strategic way. So with the weekend program, we know how to get
    BackPacks in their hands so that they can have the bags of food
    for the weekend. Those same children often struggle with food
    in the summertime, and there is a program, the Summer Food
    Service Program, (for which we as food banks do get
    reimbursement from the Federal Government, which comes to the
    State which comes to us. However, with most of my colleagues in
    the food banking world, it is not nearly enough. The money that
    we get reimbursed isn't enough to cover it. So what we do is we
    raise money from donors so that it is a partnership; that if
    the Federal Government is helping to give some funds to the
    State, of which we get some at the food bank and it is not
    enough, we believe that we just all need to do it together. And
    if we are raising funds and you are helping and the States are
    helping, that is the only way we are going to get through these
    tough economic times is if we are all in it together, which I
    believe we are.
        Mr. Dicks. So it isn't just infrastructure alone. You have
    got to deal with the human element of this crisis, besides--and
    we all want to do infrastructure. I don't like the idea of just
    sending checks back to people and saying, You go spend the
    money. To me, I would rather see us do infrastructure, but have
    a response to these very legitimate social needs of the people
    that are going hungry.
        I mean, I think we made a pledge to ourselves during the
    Johnson era that we were not going to let people be hungry in
    this country. And yet what you are telling us is that that in
    fact is happening today. So I just congratulate you on your
    work.
        Andre Agassi, by the way, is a friend of mine, and he has
    come here to Washington to help us with the Washington Tennis
    and Education Foundation. You couldn't have a better person to
    work with.
        Ms. Murray. We are so happy to have him in our State. Thank
    you, Congressman.
        Chairman Obey. Does he give you free lessons?
        Mr. Dicks. It is beyond me. I am beyond hope.
        Chairman Obey. Ms. Kaptur.
        Ms. Kaptur. Thank you, Mr. Chairman, for bringing this
    excellent panel of really outstanding American women to testify
    and become a part of our record.
        I have two sets of questions, one for Dr. Baum, if you
    could just think about this while the other witnesses are
    testifying. I understand that the dropout rate across our
    country in colleges is at least half, and in many community
    colleges where the economy is not good, upwards of 75 percent.
    And my question is really, as we look at increasing Pell Grants
    and doing what we must in this arena, are there private
    companies that are targeting these dollars at the expense of
    students who then drop out? And what can we do about it?
        I have heard figures as high as 75 percent dropout rates,
    where companies benefit and churn the Pell Grants, and with
    open enrollment, then students go to another school perhaps. So
    I have a question about the efficiency, the quality, and what
    happens to the student, as well as the existence of the program
    itself.
        But in the food arena, I serve on the Agriculture
    Committee. I am passionate about agriculture. I know several
    things about our government. Number one, Federal programs do
    not integrate well at the community level. That is number one.
        Number two, we do not often use Federal subsidy dollars to
    spur opportunity, certainly in the food area.
        And thirdly, we do not use Federal dollars to create
    sustainable food systems and improve nutrition. It is not just
    food, it is nutrition that is so important, with just
    unbelievable rates of diabetes now and obesity among our
    population.
        And I also believe that there is no neighborhood in America
    that is poor. I know that there is income poverty many times
    and personal poverty, but it is a question of how we use those
    subsidy dollars. Are those dollars going in a given
    neighborhood for income--whether it is a veteran's check, a
    Social Security check, are they going to a payday loan company,
    or are they going into a community development credit union
    that could augment what you are doing?
        So these are views that I hold. And in the food arena, we
    are particularly bad at turning food subsidy dollars into
    opportunity. Several members of our subcommittee, including
    Congressman Jackson of Illinois, Congressman Farr of
    California, I, Congresswoman DeLauro, are very interested in
    how to use Federal dollars, to use food subsidy to spur
    opportunity. And let me just mention this and see how you
    react.
        First of all, how can we use Federal dollars in this
    program to deploy food technologies that are advanced? For
    example, 12-month-out-of-the-year Hoop Houses to engage some of
    the residents in producing their own food, including in inner-
    city areas.
        Number two, the expanded use of community gardens in
    communities across this country which can be picked to the
    ground for free. How do we work with our botanical gardens and
    others to do that, including in urban areas, where technology
    with drip irrigation and with aquaculture can now produce
    protein and excellent vegetables at a very reasonable price.
        How do we use gleaning across this country in Michigan, in
    Ohio at a much expanded rate with processing in order to
    provide canned goods and year-round food that we are now
    plowing under? A third of the production in this country is
    plowed under. How do we use these Federal dollars more
    creatively?
        And finally, how do we use the EBT transfer mechanism for
    our food stamps, the electronic benefits transfer machines, to
    empower local people setting up farmers markets and food
    production sites even in the heart of our cities where we have
    food deserts now.
        I am interested in the dollars. With rising prices in the
    food stores, my greatest fear is that, yeah, we can increase
    the amount of money in food stamps, but that does not mean you
    create empowerment or you use dollars going into communities
    wisely so that people are not perpetually poor, but we, rather,
    use food production as an economic opportunity in some of the
    poorest communities in our country that are absent
    supermarkets, that are absent community development credit
    unions, that are absent ways of helping themselves improve
    their lives.
        And let me just say in one neighborhood in my community of
    Toledo, Ohio, very close to Michigan, just one building of 146
    people that are mentally ill, elderly, fragile people, in one
    year $1.4 million comes into that building in the form of
    income from Federal subsidy alone. Where do those dollars go?
    They go up the street to a beer distributing place because
    there is no place for them to cash that check. That particular
    site could have a Hoop House, it could have an electronic
    benefits transfer machine working with other high-rise
    buildings in the area. We could produce food in the heart of
    the inner city and employ local people raising their own food.
        I would like you to react to that as you think about how we
    can make the food system help create opportunity and not just
    be a permanent subsidy trying to beg product from others. I
    know there is a transition that has to occur. But that is the
    part of the food system that excites members like myself.
        I will let Dr. Baum comment and then the two
    representatives of community action.
        Chairman Obey. I would ask them to be very brief, because
    the gentlewoman has almost reached the end of her time.
        Dr. Baum. Thank you. I am glad that you raised the question
    of graduation rates, because we as a society have done much
    better at providing access to higher education, despite all the
    gaps in access, than we have in helping, supporting students
    through to graduation.
        There are a variety of explanations, and the data are,
    first of all, quite poor, because it is very difficult; some
    people go to college and take a class, and that is all they
    wanted to do, and then they are counted as dropouts. But part
    of this has to do with people's academic preparation, part of
    it has to do with not having enough money.
        You are asking questions about certain types of
    institutions. And we know that in all sectors of higher
    education there are some institutions that do a great job, and
    then there are, unfortunately, a few institutions that do not.
    And certainly there have been institutions in the for-profit
    sector that have been found to be abusing Federal funds, but
    many of them also provide very high-quality educational
    opportunities to students.
        In terms of a solution, my proposed solution for that,
    which actually was articulated by a study group that I recently
    headed with foundation funding as well as help from The College
    Board, a group of scholars and public policy experts, we
    proposed that institutions should actually get a subsidy, a
    campus-based subsidy based upon the number of low- and
    moderate-income students that they not just enrolled, but that
    they helped to progress and graduate so that they would have
    funds that would help them to provide mentoring services,
    emergency funding, and so on. And they need to be pushed to see
    students through, not just to enroll those students.
        Ms. Murray. Thank you.
        The first thing that came to my mind is, I would love to be
    able to have much longer to talk to you because these ideas are
    brilliant. But just to answer in a very brief period of time, I
    will share with you the idea of wrap-around services, what you
    described of having the EBT and other services, food produced
    all in one hub. I love it.
        What we are doing in Las Vegas, our university is the
    University of Nevada-Las Vegas, UNLV. They are studying our ZIP
    codes to understand where are the hungry people and where are
    there pockets where they have no grocery store, no nonprofit
    agency, and no church. And what we are working to do then is
    strategically put hubs into those neighborhoods to get our
    fresh produce there.
        So, as an example, we have 55 grocery stores in our valley
    that have food that in 48 hours will expire. We have trucks on
    the road Monday through Friday picking that food up, and the
    grocery stores get the tax write-off, and we get fresh food and
    we deliver it. We are going to be delivering that fresh,
    perishable food, which is meats and cheeses and produce, for
    free to these hubs because of a donor who has said, I want to
    do this.
        So I love your idea about the wraparound services, about
    the EBT, about having all of those things in different pockets
    to effect change, and I would love to be able to have more than
    this time limit to further discuss it with you, Congresswoman.
        Ms. Kaptur. I would welcome that opportunity, and a number
    of my colleagues would as well.
        Ms. Murray. Thank you.
        Ms. Kreucher. I think those are great ideas as well. And
    sometimes I wonder if part of the issue is not what is being
    reported, because we may be reporting kind of in a siloed way
    for funding that we get from the Federal Government about a
    project.
        For example, in the revitalization project we are working
    in, we are looking at putting a supermarket in a neighborhood
    that does not have one. And we would probably use a small
    amount of CDBG or CSBG money as we are working to pull that
    together. But much of it would be private investors, and so we
    might not be reporting up in a way so that you are gathering
    the full impact.
        Ms. Kaptur. I hope you become a partial owner in that, and
    then you can fund your organization. You will not need Federal
    subsidy anymore over the years, really, when you look at the
    amount of food dollars that go into these neighborhoods.
        Ms. Kreucher. Actually, that is true. We run the WIC
    program in one of our counties. And so we have instituted a
    farmers market as a piece of it, just as a little kind of
    economic development project for them. I mean, we have it in
    our parking lot and open it to the community, as well as the
    WIC participants, to be able to get vegetables and food.
        We have community gardens at a neighborhood resource
    center, but I am not sure how they are all being reported up,
    because there may be a very small percentage of Federal dollars
    that are involved, even though it may be a Federal project to
    start with.
        So we may need to take a better look at that to make sure
    that you are very well informed of what we are all doing.
        Ms. Kaptur. Thank you.
        Chairman Obey. Thank you.
        Mr. Olver.
        Mr. Olver. Thank you, Mr. Chairman. And I want to thank the
    panel for your truly fine testimony today. And as one of my
    fellow colleagues previously, I think, has suggested, it would
    be wonderful if this kind of testimony would be available to
    every person, this kind of interaction that we have been able
    to have would be available and used by every Member of the
    Congress.
        Each of us, as Members, has a multiplicity of community
    action agencies and food banks. And, for instance, I myself
    have five community action agencies covering the territory of
    my district, and two food banks that cover central and western
    Massachusetts, a small State in area, and dozens of farmers
    markets. And the work you do in those areas is really and truly
    very important.
        You have reminded me that the programs that you are
    describing grew out of the war on poverty, basically, which may
    be forgotten by younger members. I am at an age where it is
    possible to remember quite back into that range.
        And we are in danger of a really severe and long recession
    here, and that will inevitably produce, if it comes to pass in
    its full form, a great increase in poverty, a huge increase in
    poverty, in the number of poverty families in this country. And
    it is heartbreaking to see that happen--after such real
    progress was made in the last third of the 20th century at
    reduction of poverty, to see that happen before our eyes. So
    what you are doing is very important indeed.
        And I just want to say that I, who follow the trajectory
    much more like the chairman of the committee, as he described
    it earlier--I would just like to say that I am a very strong
    supporter of all of the programs that you have been talking
    about this morning, this afternoon.
        I did want to just make an observation and a brief
    question. I am not really going to go through--I am having a
    good time listening to what your answers are to other people
    here and learning more and more by it. But I do want to just
    mention for Dr. Baum that Pell Grants, just a little bit of the
    statistics which--I bothered my staff here; I have gotten up a
    couple of times, you may have noticed.
        We will have--in this 2009 fiscal year, we will have issued
    something like 17 billion of Pell Grants. And, yes, we do need
    more and we should do more. No question. You stressed the Pell
    Grants, but the student loan capacities that are out there, the
    student loan values, the sum total of student loans that are
    extant now are something like $500 billion worth of student
    loans outstanding. And the yearly volume of student loans is
    roughly four, or a little bit more than four times, four to
    five times what the Pell Grant value is.
        And I just want to ask you, are we now yet seeing any
    statistics at all about what the student loan market is or is
    not? Just really for the fall loans, we were pretty much before
    the crash in credit, but when there are renewals of student
    loans for a second semester or subsequent semesters, there must
    be quite a problem with the credit crunch.
        Do you have any insights as to what is happening there and
    what we should be watching for?
        Dr. Baum. Well, all of the evidence is that the efforts
    that Congress and the administration have made to assure the
    availability of Federal student loans have been successful. A
    few lenders have gone out of business, it is true, but there
    are other lenders making these student loans. Many schools have
    joined the direct lending program because of concerns about the
    availability of student loans from banks.
        The credit crunch is having a significant impact on the
    private student loan market. These are loans that maybe about
    10 percent of undergraduate students take. Those who borrow do
    borrow a lot of money from these programs, and many of them are
    finding that those funds are not available.
        But this is a very separate issue, and my personal belief
    is that we would be much better off if students had all the
    funding they needed through their own income, savings, and
    assistance from Federal and State governments and they borrowed
    through the Federal Government and not through private loans,
    because these loans can get people into significant trouble.
    They do not have as favorable terms, they do not have good
    protection.
        So the Federal loans appear to be--I mean, I am sure we
    will find some individual students who run into some problem,
    but Federal loans are available. And I think that Congress has
    done a good job of making sure that is the case.
        Mr. Olver. Thank you very much.
        Chairman Obey. Mr. Hinchey.
        Mr. Hinchey. Thank you very much, Mr. Chairman. And thank
    you very much for this hearing. I think it has been very, very
    interesting.
        And all three statements that you delivered to us were
    fascinating and very, very important; and I am deeply grateful
    to you for taking the time to be here. What you are focusing
    on, among other things, of course, is the need to improve human
    capital, and through three essential elements: education,
    nutrition, and income. These are the most fundamental things
    that we have to deal with.
        And we have been dealing with some very adverse
    circumstances here over the course of the last number of years.
    What we have to do here in this Congress now with this upcoming
    new administration is, stop the damage that has been done and
    reverse it, go back, start making progress, start moving this
    country in the right direction.
        Oddly enough, there are such a number of people who for
    some mysterious reason are opposed to internal investment in
    our own country. They are in favor of spending money in a lot
    of reckless ways, but they do not want to spend it here to
    improve the circumstances in our own Nation--a real mystery to
    me, but nevertheless it seems to be the case.
        I would just ask you, if you could, all three of you, just
    tell us individually what you think should be the main focus of
    our attention and what you think we should do in the context of
    these next 2 years.
        Ms. Murray. Congressman, lives are being impacted and
    people are hurting; and I do not know any other way to describe
    it other than through what I see with the children and with the
    seniors and the families. And people who have never been
    unemployed before have been laid off and are suffering.
        And so when you go to meet in January and you look at what
    to pass with the economic stimulus package, we just really
    humbly ask you to be swift, to be aggressive, and to provide
    all the help you can. We realize that we have a responsibility
    on our end; if we as food banks and we in our State are not
    doing everything we can do to trim and to be creative and to
    fund programs, then we are not doing our job.
        But we are. We are being creative. And we ask you to be as
    generous as you can be. Because it is human beings, it is
    children and seniors who are suffering. And we will only do
    this if we all do this together.
        Dr. Baum. I think it is very important that we provide
    short-term relief and also that we think about our recovery in
    terms of the long-term implications of it.
        So, clearly, people have to be healthy and nourished in
    order to survive and to get through and to be productive
    citizens; and that is of primary importance. But, fortunately,
    if we give money for short-term relief to people who really
    need it, that from an economic perspective is money that people
    will spend immediately, and that has the biggest impact. It has
    to be given to people who will spend it.
        But we also have to be thinking about--I think the
    infrastructure direction is terrifically important. It will
    provide jobs. It will have an impact in the long run. And
    again, I would reiterate that that includes both physical and
    human infrastructure, and making sure that people have the
    opportunity both for quality elementary, secondary education,
    and for access to higher education; and training is a critical
    part of this effort.
        Ms. Kreucher. It is really hard to choose in times like
    this, but, you know, we talk about being investors in people
    and being investors in our neighborhoods. Clearly, that is what
    Congress is doing, making those investments.
        When I look at poverty, I do not think there is any
    question that education is the number one pathway out of
    poverty. We are a Head Start grantee, we are very deeply
    engaged in and believe in early childhood education as the way
    to start. And I think the quality of our school systems is
    tremendous. I think every child should be able to go to
    college. I think that is going to solve many of our long-term
    problems.
        But at the point where we are at right now in this country,
    I also think there has to be a hardy investment in economic
    development. I am looking at it through the lens of Michigan.
    We have many people who have been working people their entire
    lives, but there needs to be the creation of work for them as
    we move forward, providing education and some other long-term
    supports so that we can choose our new technologies and our new
    path for the future. That is going to be very, very important
    for us.
        Mr. Hinchey. I just thank all three of you for the insight
    you provided and the help you are giving us. Thank you very
    much.
        Chairman Obey. Mr. Honda.
        Mr. Honda. Thank you, Mr. Chair.
        And to the three of you, thank you very much for your work.
    I guess I was listening to the kind of work that you do and how
    you respond to our questions, and it just struck me that you
    are partly exemplifying the kinds of teachings that are found
    in the Book of Ruth, where you go out and you use your talents
    gleaning the fields. But what you are gleaning are the
    different kinds of philanthropic programs that are out there,
    government programs, and bringing them together for the purpose
    of helping those who need the help.
        And when times get bad, it seems like there is even less
    help out there. And so I was wondering whether, over these
    years that you have been doing this work, have you ever thought
    of the question, are there other ways that we can sustain this
    kind of effort, the kind of efforts that you are involved in on
    a daily basis when times do get tough?
        Because when times get tough, resources become more scarce,
    as you have described. But it is at that time when resources
    have to at least maintain themselves or increase a little bit.
    In the past, I guess we used to pool our wealth for the common
    good of others so that they could make it through.
        But as a government, as a society, what are some of your
    thoughts that if I only--if we only could persuade people to
    change the way we do things, this is what I would like to see
    so that we could sustain this kind of effort? Because a recent
    study just indicated that--a study that we had led--that among
    developed countries, the United States is the one that leads in
    poverty and in the gap between the wealthy and the poor. And
    you are the ones that are helping people make it.
        But I am just wondering about my question, whether you have
    any thoughts about that or some vision of how it can be done
    better.
        Ms. Kreucher. I would like to say that there are many
    community action agencies that are really leaders throughout
    the country that have done much work in developing for profit
    subsidiary corporations that have subsidized the work. I think
    it is important. Things have been changing dramatically in our
    universe in the last 5 years. I think there is much more fee-
    for-service-type work. There is much more entrepreneurial kinds
    of activity.
        I will give you an example. One of the programs we run is
    home weatherization and energy. There is a lot of time and
    energy being spent right now in talking about how we can move
    forward with renewable energies, how we can make low- and
    moderate-income neighborhoods more sustainable with renewable
    energies. There is an amazing amount of entrepreneurial
    activity out there right now in working with families that are
    upper-income families that may be able to pay for some of these
    services that will help subsidize the work that we do for the
    lower-income families, which I think makes a lot of sense.
        There are also private investors out there, and I know
    California has a great project that is getting ready to start
    with Morgan Stanley, with solar roof panels, that is a
    wonderful example of really entrepreneurial work that is going
    to boost the property value of homes, make energy sustainable
    for low-income families and be doing it with private investment
    dollars that are recouping their investment basically from
    carbon tax credits and incentives from State and Federal
    Governments.
        So I think there are plenty of examples out there, and I
    think it is the wave of the future.
        Mr. Honda. Taking it perhaps another step, if there are
    ways that moneys can be saved, perhaps through the technology,
    some of that money can be an income stream for public access
    funds for groups like yourself, so that when this technology
    works 24-7, is part of creating revenue 24-7, a portion of that
    should probably go into a particular fund.
        I was just wondering if that is something else that might
    work.
        Ms. Murray. Congressman, that is an excellent question. Two
    things to your point and your question is that an endowment
    fund--we are working so hard right now to raise the operational
    funds to keep our food bank going and to raise funds for our
    new kitchen, but the best process is to have an endowment fund
    so that when times get tough the endowment fund is producing
    revenue.
        Additionally, for non-profits, it is just so smart for any
    of us to try to find something that can provide recurring
    revenue. Paul Newman was one of the greatest examples I can
    think of, in that, for his foundation, he sold salad dressing.
    And there is something--I know in my arena of food banks there
    is something we can do to have recurring revenue coming in.
        So with the combination of endowments, a secure set of
    funds that produce revenue whether times are good or bad, and
    recurring revenue projects is what we are looking at doing.
    Thank you.
        Mr. Honda. Thank you.
        Chairman Obey. Thank you.
        Ms. McCollum.
        Ms. McCollum. Thank you, Mr. Chair. Mr. Chair, I think
    there has been a lot of statistical information that was given
    in the introductory remarks by our three panelists, but quite
    often we refer to percent of poverty. Percentage of poverty,
    even to most Members of Congress, they could not translate that
    into what is an actual salary, income level for a family of
    one, two, three, or four.
        So, Mr. Chair, I think especially with the advantage that
    we have at times of having America view and listen in on these
    important conversations that we are having, I would ask the
    Chair if we could maybe look at using numbers and dollars
    rather than percentages in the future to make the hearing more
    relevant in the information that is presented to people who
    might be listening. Just a suggestion.
        I have kind of three things, and I am going to be really
    brief:
        Pell Grants. Pell Grants, wonderful, fully support them.
    What we found in doing some research, though, quite often the
    Federal Government would increase Pell Grants and States would
    turn around and decrease their support of financial aid by the
    exact amount, because then it was a win-win for them. So if we
    were to increase Pell Grants, I would ask you if you think that
    there need to be strings attached; or if the States decrease
    their amount of financial aid by that amount, should they not
    be eligible for a Pell Grant increase in the future? Because if
    that is really to be an investment and increase from the
    Federal Government, an investment, then in my opinion it needs
    to truly be that, an investment.
        And then I would ask the other two panelists--and thank you
    so much for your testimony--when a child comes to school
    hungry, goes home hungry, is worried about the next meal,
    whether there is going to be a roof over their head, or whether
    they are going to see a doctor, or a sibling sees a doctor if
    someone at home is really, really sick, how successful should
    we expect that child to be at school? How accountable should we
    hold that school? How accountable should we hold ourselves as a
    community?
        I have heard, you know, the testimony about all the
    wonderful volunteers and needing to have more volunteers. But
    maybe if the two of you--and Doctor, you might have some
    personal stories to even share with us, because I am going to
    wrap up here so I can listen.
        I have been out visiting some food shelves and food banks,
    seen a lot of empty shelves, talked with a lot of staff, staff
    that has looked at maybe having to be laid off because of
    shortage of dollars coming in, volunteers who for years either
    helped with Christmas funds for the Toys for Tots-type of
    examples, drove for Meals for Wheels, stocked food shelves;
    they are now on the receiving end.
        Could you share with me a little more about what you are
    hearing and seeing out there--and without asking you to,
    personally, maybe have someone feel uncomfortable if they are
    listening to this testimony--some personal anecdotes you could
    share with the committee?
        Ms. Murray. Thank you, Congresswoman. First to your first
    item, I agree with using the dollar figures instead of the
    percentages. So to start with the BackPack program, the
    children that were in that school, their families have an
    income level of $20,000 or less for a family of four. And that
    school has 100 percent of the children. But I agree that it is
    a better descriptive term.
        In terms of children and test scores and ability to learn,
    let me share with you one chickenpox story. So one of the
    children also that was at this school that I visited, the
    teacher said that when the child had chickenpox for 2 days and
    had to stay home from school there was no food at the home, and
    so the child reached out to the teacher and said, ``Can I come
    back? I have no food. I need to come to school to get the
    meals.''
        And so how accountable should we be holding people? It is
    tough. When parents are laid off, it is not a reason for it,
    but for some reason children get the brunt of what is going on
    in the economy. When a parent is suffering, the child is the
    innocent one that does not have the ability to get the food.
        So I think it is inherent on all of us, whether it is us
    representing our organizations or you in Congress or folks in
    our States to work on this together. It is that important.
        And what we have are some tests that are being done now by
    our university partner to show the results of what is happening
    when children have a consistent supply of food. And what we
    think will happen is, we think that it will show that test
    scores will go up, that attendance will be better, that there
    will be less violence in the schools, and that all the bad
    factors will go down.
        Just one quick example to keep my story short is, we
    recently had a volunteer session with some executives from MGM
    Mirage, and we always invite some of our clients to come in and
    just join in together because we are all in this together. Two
    of the clients that came in were from homeless teen shelters,
    and they spoke about what they are seeing. So one beautiful 17-
    year-old girl said, ``Well, my mother was laid off. There were
    five kids, I was the oldest, so she asked me to leave.''
        The other girl that was with her to provide testimony, just
    because I like to have our volunteers and our community leaders
    understand who is getting the food we provide; the other young
    woman said--I asked her what her biggest challenge was, and she
    said it is the anger. She said, ``My father also just left me
    and abandoned me. We are angry, and we go to school or we go
    into our lives and we have so much anger that we have to
    control.''
        So what I am looking at is just a single focus of food. If
    I can make sure that we are providing that one basic element of
    food and we can eliminate that from what people are worrying
    about, then social services and education will be so much
    better if kids have food.
        So it is a huge challenge. And, again, the only way I know
    that we are going to come through this is if all of us are in
    it together at a local level, at a State level and a Federal
    level. The problem is so severe that if all three entities are
    not in it together, I worry what will happen to the kids if we
    do not get this under control.
        Thank you.
        Dr. Baum. I will address that Pell Grant question.
        First of all, there are 50 States with 50 different State
    grant policies. And in most of them, certainly getting a higher
    Pell Grant does not diminish the State grant that you will get.
        We have seen State grant funds for students rising very
    rapidly over time. There is a problem that an increasing
    portion of those dollars are going to students who do not have
    financial need. And I think that is a very big issue, because
    right now there are--you know, everybody is struggling, but
    there are some people who really cannot afford to pay and
    others who use that money, extra money, for other purposes and
    would go to college anyway.
        In States that have need-based State grant aid, the focus
    is the people who cannot afford to pay.
        I do think that the Federal Government has a role in
    providing incentives for States. I would not attach strings to
    Pell Grants; that would complicate the program and make it
    problematic. The Pell Grants have to be for students.
        However, there is a small, federally funded LEAP program
    that provides matching funds to States for need-based grants.
    That has over time deteriorated because there is hardly any
    funding. I think it is totally appropriate for the Federal
    Government to provide matching funds to States for need-based
    aid where they provide the incentive for the States to give the
    money to students who really need it, and there is, of course,
    considerable overlap between the Pell Grant recipients and
    recipients of other need-based grants.
        Many States do provide aid farther-up-the-income-scale than
    Pell Grants. And we all know that there are families with
    incomes above $45- or $50,000 a year who do need some
    assistance. So I think it is not clear that the State grants
    have to match the Pell Grants, but certainly it is appropriate
    for the Federal Government to provide incentives for States to
    both maintain and increase their State grant funds to students
    and to make sure that there is an incentive for those funds to
    be appropriately targeted to the students who need them.
        Ms. McCollum. Thank you.
        Ms. Kreucher. I will also mention numbers. When we look at
    a family of three, when we look at the Federal poverty level,
    that is $17,600. So, frequently, when we are enrolling children
    in our Head Start program, which would often be a single mom
    with two children, that is their income cap, $17,600.
        We talked earlier about encouraging changing eligibility
    requirements for many of the programs to what we call 200
    percent of poverty level, in the business, that is really
    $35,200. And a family making $35,000 a year is generally still
    making some compromises in just getting through paying their
    basic needs. So what we call poverty really does not have a lot
    to do anymore with what it really takes to live in the
    community.
        I wanted to mention, kind of starting at your last
    question, which was about layoffs of people that were working
    in organizations; and I think when I mentioned that education
    is the primary pathway out of poverty, that certainly counts
    with the staff that we have as well. There was a time in the
    early days of Community Action and Head Start that probably 60
    percent of our employees were former Head Start parents. The
    idea was, you brought people in from the neighborhood, taught
    them how to teach children, and then they were hired and became
    child educators.
        Well, now things are really different. Now the majority of
    our Head Start teachers have college degrees, many of them have
    ZA endorsements for teaching certificates. And sadly, but true,
    the first people when we have to cut back that get laid off,
    just as with any other organization, I think, are those who are
    the least skilled and have the least education, because
    requirements are changing everywhere. And I think that is a
    problem.
        We, as an organization, do a lot with providing tuition
    reimbursement and everything we can to support families in
    doing that, but it is a changing world with education as well.
        As far as children--we run the Head Start program--it is
    devastating. We see so many families in tremendous need.
        We have been involved in research projects with the
    University of Michigan and Michigan State University about
    nutrition, weight gain, obesity, all kinds of things using Head
    Start children. And it has been very interesting that those are
    all very positive. And the structure of a Head Start classroom
    and the meal structure does seem to decrease, demonstrate a
    decrease in weight gain and obesity problems. A full-day
    classroom seems to have even more gains than a part-day
    classroom, because we know children for a longer period of time
    in the day are getting better nutrition.
        I am an advocate. I think, when I look at schools, I know
    that teachers and others are struggling with trying to reach
    academic requirements and dealing with tremendous needs in the
    family. I am a supporter of school-based health clinics,
    because I do think that that does help.
        When I was a kid, we had nurses and we had social workers,
    and the schools really had a lot of support.
        And I am not quite sure how we can help children. I do not
    want to tag the, you know, responsibility onto the school
    district. But at the same token, we do know that if children
    are not healthy and are not eating well and do not have
    appropriate brain development when they are really little,
    their odds of success are going to be much slimmer.
        Chairman Obey. Thank you.
        Mr. Lewis, you wanted to comment?
        Mr. Lewis. Thank you, Mr. Chairman. We are about to wrap
    this up, but I want all of you to know that we are very
    appreciative of the work that you are about.
        Ms. Kreucher, fabulous responsibility and job.
        Dr. Baum, we appreciate very much your efforts as well.
        And, Julie Murray, you will hear more from me somewhere out
    there.
        In the meantime, Mr. Chairman, I want them to know that we
    may have some questions for the record. And if the witness
    could try to be responsive and come forward in a timely fashion
    We would appreciate it.
        Mr. Lewis. And further, just by way of our work here,
    because we are going to be receiving some kind of a stimulus
    package at some point, it may be that we will need additional
    witnesses and testimony.
        And so, Mr. Chairman, pursuant to section 5 of the
    committee rules and clause 2 of Rule XI of the Rules of the
    House, I am invoking the minority's right to call witnesses
    selected by the minority with respect to the matter being
    discussed at this hearing. I have a letter signed by 25 of our
    29 members invoking that right.
        [The information follows:]

        [GRAPHIC] [TIFF OMITTED] T6227A.098

        [GRAPHIC] [TIFF OMITTED] T6227A.099

        [GRAPHIC] [TIFF OMITTED] T6227A.100

        Chairman Obey. I thank the gentleman.
        Let me simply thank all three of you. You have provided
    spectacular testimony today as far as I am concerned, and I
    think you made quite clear that when we consider the kind of
    actions that should be taken to deal with the economic downturn
    that we are experiencing that it is not enough just to try to
    pump dollars into the economy for the purpose of raising
    consumer purchasing power; it is also necessary to deal with
    some of the human fallout that occurs. And I think you painted
    a very clear picture today of what some of that is.
        So thank you all very much. I appreciate it.
        The meeting is adjourned.

        [GRAPHIC] [TIFF OMITTED] T6227A.101

        [GRAPHIC] [TIFF OMITTED] T6227A.102

        [GRAPHIC] [TIFF OMITTED] T6227A.103

        [GRAPHIC] [TIFF OMITTED] T6227A.104

        [GRAPHIC] [TIFF OMITTED] T6227A.105

        [GRAPHIC] [TIFF OMITTED] T6227A.106

        [GRAPHIC] [TIFF OMITTED] T6227A.107

        [GRAPHIC] [TIFF OMITTED] T6227A.108

        [GRAPHIC] [TIFF OMITTED] T6227A.109

        [GRAPHIC] [TIFF OMITTED] T6227A.110

        [GRAPHIC] [TIFF OMITTED] T6227A.111

                                   I N D E X

                                  ----------
                                                                       Page
    Chairman Obey's written statement................................     3
    Dr. Baum's written statement.....................................   137
    Government Finance Officers Association's statement..............    51
    Governor Crist's statement.......................................   109
    Governor Corzine's written statement.............................    26
    Governor Douglas' written statement..............................    15
    Governor Doyle's written statement...............................    10
    Governor Patrick's statement.....................................   122
    Governor Perry's statement.......................................    37
    Governor Rell's statement........................................   118
    Governor Sanford's statement.....................................   128
    Governor-elect Perdue's statement................................    65
    Letter from Minority.............................................   118
    Mayor Nutter's statement.........................................    78
    Mr. Farr's statement.............................................   116
    Ms. Murray's written statement...................................   151
    Ms. Kreucher's written statement.................................   160
    Op-ed by Governors Perry and Sanford.............................    35
    Questions for the Record submitted by Mr. Lewis..................   194
    Questions for the Record submitted by Mr. Moran..................   185
    Regional Bond Dealers Association's statement....................    52
    State of California delegation statement.........................    95
    Town Manager of Cary, NC's statement.............................    69
    U.S. Conference of Mayors' statement.............................    85