Prepared Opening Statement for
Chairman Jim Nussle
Markup – Fiscal Year 2007 Budget Resolution

Introduction

The Committee on the Budget will come to order.

Good Morning everyone, and welcome. Today, we will mark up the House budget resolution for fiscal year 2007; and I’d like to start by outlining how today’s proceedings will unfold.

As all of you who’ve been through this before know, this process is not particularly quick or easy – and will likely take us through most of the day, and a good part of the evening. So settle in, and do your best to get comfortable.

We will start with opening statements – first by me, second by the Ranking Member, Mr. Spratt, followed by budget presentations of 35 minutes each by both sides.

We’ll follow that with the staff walk-through of the budget.

We’ll then break for an hour, prior to beginning the consideration of amendments.

Chair: Again, today’s meeting will likely last well into the evening, and I understand that we will have votes on the floor today, so I ask unanimous consent that I be authorized to declare recesses at any time.

Chair: Without objection, so ordered.

Chair: I ask unanimous consent that the Ranking Minority Member and myself each have 35 minutes to control – following opening statements – for the purpose of making presentations on the budget resolution. Members also may insert their statements into the record, and I will hold the record open until the end of the day in order to accommodate those Members who may not have prepared written statements.

Chair: Without objection, so ordered.

We’ll get started now, and I’ll begin with my opening statement.

OPENING STATEMENT

OVERVIEW

As most of you know, this year is my last as chairman of this committee. So in preparing my remarks for today, that was certainly on my mind – as was the incredible set of challenges and changes our nation has had to work through since I first took this chair.

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We’ve endured the searing events of 9-11, and the ongoing war against terrorism; We’ve worked our way through an economic recession, and the worst national disaster in our history.

We’ve also created a new cabinet department for Homeland Security; adopted major education reforms, finally updated Medicare to include prescription drugs, and not only buoyed our economy out of recession; but into a path of strong, sustained growth and job creation.

Finally – this year – we’re seeing a solid reminder that a major turning point in our nation’s demographics is now at hand. As the President noted in his State of the Union address, the first of the baby boomers – about 78 million strong – are turning 60 this year, signaling not only their coming retirement, but also the massive burdens it will add to our government’s entitlement programs.

Simply put, our nation’s most fundamental priorities have shifted dramatically in just the past few years – some by choice, some by circumstance. But the changes are real, many are permanent, and all place even greater demands on an already-stretched federal budget.

Getting control of the budget requires that we understand – and manage – this ongoing shift in the balance of our priorities.

RECENT DEVELOPMENTS

For the past three budgets – after recovering from the initial shock of 9-11 – we’ve set a bold PLAN to shore up and strengthen our defense and homeland security; get – and keep – our economy growing strong and creating jobs, control spending, and continue our progress in reducing the deficit.

We’ve followed that PLAN – adjusting it last year to make a down-payment on the immense new hurricane spending – and we’ve made real progress. But the setbacks resulting from Hurricane Katrina – both in our efforts to control spending and reduce deficits – served as a solid reminder that controlling the budget isn’t a one-stroke fix. It’s a long-term, step-by-step commitment – and one that takes resolve, particularly when extraordinary circumstances make it difficult.

So, that takes us to today, and the challenges – and opportunities – of crafting this year’s budget.

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THE FISCAL YEAR 2007 BUDGET

The key to crafting a solid budget is to FIRST determine priorities. OURS are clear.

The first is STRENGTH – We will further build on our nation’s greatest strengths, including our nation’s defense and homeland security, and the robust growth of our nation’s economy and jobs market.

The second is SPENDING CONTROL – We will continue our efforts to control spending – across-the-board – by further restraining non-security discretionary spending, and by building on our progress to reform and find savings in mandatory programs.

The third is REFORM – In addition to reforming federal government programs, we will begin to reform the budget process itself, to better reflect and address how federal government dollars are actually spent.

Now, here’s how we translate these priorities into THIS year’s budget plan.

STRENGTH

The Economy

As I just noted, our underlying strength comes from the nation’s economy and in the past few years, it has truly delivered.

• After adjusting for inflation, our economy has grown at a robust average of better than 3% a year since 2003.
  


• Nearly 5 million new jobs have been created in the past 2 ½ years,
  


• The unemployment rate has fallen to 4.8% – a historically very low rate.
  

Even in the face of higher energy prices and the worst natural disaster on record, our economy has proven remarkably resilient and strong – growing, creating jobs, and increasing personal incomes.

Clearly, the real credit for this growth goes to the people of this country, who work and save and invest to make our economy grow. But we in Congress did support their efforts – by lowering their tax burdens.

And we did this because it is our fundamental belief that the people back home make better decisions about their daily lives – and the investment in their businesses and their families and their communities – than the federal government could ever make for them.

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And as a result of giving Americans more control over their money, we’ve seen more investment, more jobs and greater opportunities in this country.

Further, as a direct result of the growth Americans produced, revenue coming into the federal coffers has risen. In fact, we saw federal revenues increase by almost 15% – last year alone – even with the acceleration of the tax relief. Again – we lowered the tax burden – told people to keep more of their own money to spend as they saw fit – and federal revenues actually went up.

In short – our economy has gone from recession – just a few short years ago – to a strong, sustained period of growth. To ensure the strength and upward momentum of economy continues, this budget will not increase taxes.

National Security

This budget will also continue to provide whatever is needed to support our American troops, and to ensure that our nation’s defense remains the strongest in the world.

The President’s budget – not including war funding – has requested an increase of 7 % – from last year’s enacted level.

This budget will accommodate that request.

We will also – as we have for the past two budgets – place $50 billion in reserve to fund the wars in Iraq and Afghanistan.

But even as we provide these resources – which are ample – the Administration must understand that we need a full accounting of how this money is being spent, and what the implications are for the future.

Particularly in the area of defense, we’ve got to do a better job to ensure that every dollar we’re pouring into this critical area is actually hitting its intended target to make our country safer. I can’t think of any activity that deserves more diligent oversight. And frankly, I don’t believe the oversight we’re seeing now is adequate.

For homeland security, we will also provide whatever is needed to ensure our safety at home.

The President has proposed a 3.8% increase in this area, which our budget will also accommodate.

But – just as with defense – we’ve got to do a better job in seeing that these funds are spent wisely, and are actually working to make our nation more secure.

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CONTROLLING SPENDING

Other Discretionary

With the necessary shift of our nation’s priorities to provide for these areas after 9-11, we’ve come to employ a kind of shorthand to effectively divide our discretionary spending into two categories: security – which includes defense and homeland security; and non-security – which covers everything else – education, veterans, agriculture, environment, etc.

And as my colleagues will detail in a moment, we’ve increased our security appropriations funding at a truly incredible rate these past few years. And I’d imagine if we had to do it all again, we would.

That said, when we decided that our nation’s security was our highest domestic priority – that then meant that everything else – all the non-security needs – must come after.

Although many seem to regularly forget – the federal government simply doesn’t have an infinite supply of money – nor should it. So when we decide to increase spending in an area we’ve determined a top priority, we’ve got to then reduce spending somewhere else. That’s what budgeting is all about.

Last year, we held our non-security spending to a near freeze – tighter than the previous year’s 1.3% growth, and a marked improvement from the previous 5-year average of about 6.3%.

This year, the Administration has asked for a near freeze – according to CBO’s estimate – for all non-defense, non-security spending.

And our budget will assume a freeze to non-security spending.

That said, it’s important to note that while our budget sets the overall number, it is the work of the Appropriations Committee to determine how that money is allocated. High-priority programs can still receive funding increases, while lower-priority or under-performing programs will have to do with less – or not at all.

General Mandatory Spending

Now to our biggest challenge in federal budgeting – the problem of mandatory, automaticpilot, entitlement spending.

Don’t misunderstand. Our entitlement programs are very well-intended, and they provide assistance to millions of Americans. But their costs are out of control.

Currently, mandatory spending is growing at about 5.5% – per year. That’s far faster than our economy, far faster than inflation, and far beyond our means to sustain it.

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To put this another way: if our budget were balanced right now, today, these entitlements would drive it back into deficit a year from now. And as I’ve mentioned, with the first of about 78 million baby boomers turning 60 this year, medical costs skyrocketing, and a steady decline in the number of workers for each retiree – this problem only gets worse from here.

We’ve got to acknowledge – on both sides of the aisle – that ignoring this problem, offering NO solutions on how to fix them, and fighting against those who are trying to help – isn’t going to benefit one single person today – and is going to do great harm to the millions of Americans who will rely on these programs for help in the future.

Just throwing more and more money at these enormous programs isn’t going to get us anywhere but deeper in debt. That is not what these programs need. They need reform. They need adaptation, improvement, greater efficiency – constant oversight and commonsense updates to make them less wasteful, more efficient, more effective, and better able to serve the people for whom they’re intended. That’s reform.

Last year – for the first time in nearly a decade – we took the first step to reform some of our largest – and least sustainable – mandatory programs, saving taxpayers nearly $40 billion in the process.

This year’s budget will continue to build on those savings by again reforming mandatory programs – and establishing an annual process of reform that we intend to continue every year from now on.

Again, these programs didn’t get to this point in a year, and we’re not going to fix them in a year. But we’ve got to continue the habit of REGULARLY reforming these programs if we want them to be sustainable.

REFORM

Emergency Supplemental Spending

To some extent, we’re still learning lessons from Hurricane Katrina. But one that became clear early on was this: if we don’t have good control of spending, it becomes very difficult to manage the unforeseen events that inevitably face us. Now, no one could have foreseen a disaster on the scale of Katrina. But we all know that natural disasters do occur – and on a pretty regular basis.

So this year, not only will we build on the reform of our mandatory programs, and further restrain our non-security discretionary spending, we will begin to reform the budget process itself to better reflect our actual spending – such as that currently, regularly spent OUTSIDE the normal budget process – as well as the means available to control all of our spending.

The Budget Committee has always taken a lead in proposing reforms to the budget process – and this year will be no different.

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In addition to the emergency reforms contained in this resolution, the Budget Committee will continue the reform process this year.

CONCLUSION

As I mentioned at the outset, the priorities of this country have changed dramatically in the past 6 years. Some of these changes were forced on us, some were by our choice, and some we’ve been expecting for years.

But in responding to these, we have a choice:

We can pretend that what our nation really needs is for the Federal Government to spend more money, and then chase that higher spending with higher taxes. OR, we can embrace the challenge that these new priorities have dealt us. We can trust our strengths, control our spending, and commit ourselves to consistent, ongoing reform.

It’s not too late to do these things – if we set a plan and stick with it.

I’m proud to present our PLAN, and I thank my colleagues for their careful consideration of this budget.

Now I’ll turn it over to Mr. Spratt for his remarks.