Hearing of the Senate Committee on the Budget - President's Budget Proposal

Federal News Service

HEADLINE: HEARING OF THE SENATE COMMITTEE ON THE BUDGET

SUBJECT: PRESIDENT'S BUDGET PROPOSAL

CHAIRED BY: SENATOR DON NICKLES (R-OK)

LOCATION: 210 CANNON HOUSE OFFICE BUILDING, WASHINGTON, D.C.

WITNESSES:

JOSHUA BOLTEN, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET

BODY:
SEN. PATTY MURRAY (D-WA): Mr. Chairman, thank you very much. And I appreciate the accommodation of the House in being here. I would ask, Mr. Chairman, since many of our offices aren't open and we are going to have difficulty getting things to you, if we could hold the record open --

SEN. NICKLES: Certainly.

SEN. MURRAY: -- of this committee hearing to submit our questions once our staff get back into our office to be able to --

SEN. NICKLES: That's an excellent suggestion, thank you.

SEN. MURRAY: Thank you, Mr. Chairman.

I just have to say that I am really concerned about the budget that's been presented to us by the president. I go home every weekend to Washington state. We have had the first or second highest unemployment since September 11. We're now at fourth highest, so that feels a little better, but it isn't good. And what people in my state are really worried about is healthcare, the cost of healthcare, they're concerned about jobs, they're concerned about an investment in transportation, they're especially concerned about security.

And what I see in this budget, which is a statement of priorities, is a real lack of investment in those, and I want to get to those in just a second.

But I just got your opening statement this morning and listened to you give it, and I was kind of befuddled by what you were presenting to us because, as Senator Conrad has pointed out, you are telling us all that the deficit will be reduced by half and you're sending over legislation to kind of make that happen. You talk about reinstating caps, pay-as-you-go requirements, but you're saying tax increases, pay-as-you-go would not apply.

Well, I don't understand how that works when the tax cuts take money out of the budget. I don't know what you're going to go to is that, well, they'll create jobs. But what I think we've seen, and part of what Senator Domenici was talking about, is that the jobs are not being created here. Many of the corporations who are taking advantage of tax cuts are having jobs go overseas and we're not seeing people here, as you predict, create a better revenue, but forecast the future by increasing taxes because they're not being paid here.

Now, I am a supporter of trade agreements, but I think we have to ask the question if tax cuts are put in place permanently and the jobs are not created here, how are we ever going to get to a deficit that's cut in half that's been promised by this budget and by the White House?

MR. BOLTEN: Senator, first the tax cuts that we're talking about, the ones we're proposing be made permanent in the code, are not corporate tax cuts. These are individual taxes that we're talking about.

SEN. MURRAY: But I would assume that you're saying that these people will invest back in this economy. That's not what we're seeing.

MR. BOLTEN: They will invest and in particular with respect to the top rate, many of the small businesses of America, Subchapter S corporations, pay their taxes through the top income tax rates and those are not people typically who are sending their jobs overseas. Those are people who are investing, buying plant and equipment here in America, who are the real engines of job growth.

SEN. MURRAY: Well, I think we're all very concerned that where we're seeing job growth is not here in this country. And I don't want to get into an argument with that, I just-observation that we're not going to cut the deficit in half if we continue to give tax cuts out. We see no job growth here, and it's a dynamic that we're going to have to deal with as a country.

But let me ask you a specific question because it's one I am deeply concerned about. You said one of the priorities of this budget was protecting the homeland. I don't think any of us disagrees with that. I think all of us realize that this last week three Senate office buildings were shut down because of a small bit of ricin. I would let all of you know that if one container comes in to any one of our seaports in this country, we now understand the dramatic impact to this economy if those seaports were to be shut down and the products that couldn't get to stores in the middle of the country, let alone the jobs that are lost immediately on our ports, and of course the lives that would be involved in that.

And I was really disappointed to see that this administration identified $1.7 billion for Coast Guard port, waterway and coastal security activities, including $100 million for the implementation of the Maritime Transportation Security Act-that's a port security initiative.

First of all, Mr. Chairman, I want to point out that the Coast Guard commandant testified last September that it would take approximately $7.3 billion over 10 years to implement the Maritime Transportation Security Act, including $1.5 billion for the first year. So this program is woefully underfunded. And that $1.7 billion figure represents 90 percent of the administration's proposed port security budget and about a half of the Coast Guard's discretionary budget for its traditional missions of port, waterway, coastal security.

The Coast Guard is doing an excellent job. Any of us who live on coastal states will tell you that. But they are stretched to the max. They are working overtime, long hours and I don't think this budget offers any relief. I want to know how this administration expects the Coast Guard, which is already stretched thin, to accomplish its traditional missions, including fisheries enforcement, search and rescue, all those, take on 90 percent of the homeland security duties and implement MTSA with only 7 percent, that's $100 million of the $1.5 billion, of what the commandant has told us they need?

MR. BOLTEN: Senator, we have the Coast Guard, I think, very substantially funded. I agree completely, they've taken on a great burden, they do a terrific job. The Coast Guard funding over the course of this administration has been dramatically increased. We're proposing in this budget --

SEN. MURRAY: At the behest of Congress, I would add, not --

MR. BOLTEN: Yes, with the cooperation of Congress, I think.

And I think we agree that that's an area that has needed a great deal of strengthening in this country. Their overall budget in our '05 submission is going up, I believe, 9 percent in total. The program you referred to, we are planning to fund and I think we have baked into our figures full funding for the port security program at the Coast Guard over the course of the 10-year period, but we need to focus our money where we think we can do the most good most quickly.

SEN. MURRAY: Well, I would just disagree with the priorities. And I would say eliminating Operation Safe Commerce-which is a project that is ongoing in our largest ports right now to determine what is the best way to provide port security-eliminating that and underfunding this is going to cost us in the future. And it makes it very hard to believe that homeland security is one of the primary missions of this budget.

Thank you, Mr. Chairman.