Nussle Says Budget Would Promote Continued Economic Growth

On Monday, we received the President's budget request for fiscal year 2007, which marks the traditional start of Congress' budget planning for the coming year.

We have with us today the Director of the Administration's Office of Management and Budget, Josh Bolten, to walk us through the President's proposal. As always, the President's request is based upon OMB's budget and economic forecast, so I think one of the goals of this hearing today is to get a solid understanding of that foundation.

But before we hear from Mr. Bolton, I would like to take a few minutes to review what Congress' budget experts -- the Congressional Budget Office -- had to say about the budget and economic outlook, in their report released a few weeks back, since that has more often than not been the basis Congress has used for developing our budget.

Revenues

So let's start with the good news -- and that's revenues.

Over the past few years, we've lowered the tax burden for all Americans, 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 can make for them.

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. The economy as a whole has grown at a strong average of 3.8% since the tax relief we passed in 2003. Over 4.7 million new jobs have been created in the past 2 1/2 years, and the unemployment rate has fallen to 4.7% -- the lowest level in years.

As our economy grows, more jobs are created and personal incomes increase. As a direct result of that growth, revenue coming into Washington rises. In fact, we saw that revenues coming into the federal government have increased -- by almost 15% -- last year alone.

Let me say that 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.

And, according to our own Congressional Budget Office -- assuming we don't increase taxes -- that trend is set to continue.

So, that's the good news.

Spending

But of course, that's only one half of the picture. The problem -- and our challenge -- lies on the spending side of things.

Over the past few years, we've seen a major -- but necessary -- shift in our nation's spending priorities. We were already faced with the ongoing demands in critical domestic areas -- such as education, transportation, and the environment.

And now, we're now facing the continuing threats of international terrorism, the nearing retirement of the baby-boomers, and the growing pressures of inadequate domestic energy supply and skyrocketing medical costs.

All of these needs place greater demands on an already stretched federal budget. And it doesn't get any easier from here. Getting control of the budget requires that we understand -- and manage -- this ongoing shift in the balance of our priorities.

Last year, we set a bold PLAN to keep our economy growing strong and creating jobs, control spending -- across-the-board -- and continue our progress in reducing the deficit.

We followed that PLAN, and -- even in the face of an ongoing war and debilitating natural disasters -- we made some real progress.

We kept our economy pumping along at a robust pace, and -- as I've noted -- have seen the creation of millions of new jobs, unemployment rates at historical lows, and increases in revenues coming into the federal coffers.

We held our non-security discretionary spending to a near freeze -- tighter than last year's 1.3% growth, and a marked improvement from the previous 5-year average growth of about 6.3%.

And just last week, we completed work on The Deficit Reduction Act of 2005, which the President will sign into law later today. This legislation begins the process of reforming the federal government's largest -- and least sustainable -- programs for the first time since the Balanced Budget Act, and in the process saves taxpayers almost $40 billion over the next five years.

As a result of all this, we've also accomplished dramatic deficit reduction the past few years.

But as OMB tells us today -- after $200 billion in consecutive deficit reductions -- we now have a short-term increase of $105 billion in our deficit picture. This increase is due to the $85 billion in emergency spending we provided to help folks on the Gulf Coast following Katrina, and the additional $70 billion that the President proposes to fully fund our soldiers in Iraq and Afghanistan and provide for addition hurricane relief.

And we know that -- had our economy not been so resilient -- the bump in the deficit would have been much worse.

That setback served as a pretty 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.

FY07 Budget

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

Our priorities are clear: We must support our economy's continued strong growth and job creation; ensure our freedom and security here at home and abroad; continue our efforts to reform and strengthen our most critical programs -- and do all of this while continuing to reduce deficits.

Our challenge is also clear: We must determine the best course - - and craft the right PLAN -- to proceed from here. And that process starts today.

The President this week presented his plan in his budget request to Congress, and today, we have the pleasure of having with us his Office of Management and Budget Director, Josh Bolten, to walk us through that plan.

Director Bolten, welcome back, and we look forward to hearing your testimony.

With that, I'll turn it over to Mr. Spratt for any opening statement he wishes to make, and then we'll receive the testimony of Director Bolton.

Mr. Spratt?