Federal News Service February 3, 2004 Tuesday
Copyright 2004 Federal News Service, Inc.
Federal News Service
February 3, 2004 Tuesday
HEADLINE: HEARING OF THE HOUSE WAYS AND MEANS COMMITTEE
SUBJECT: THE PRESIDENT'S BUDGET PROPOSALS FOR FISCAL YEAR 2005
CHAIRED BY: REPRESENTATIVE WILLIAM M. THOMAS (R-CA)
LOCATION: 1100 LONGWORTH HOUSE OFFICE BUILDING, WASHINGTON, D.C.
JOHN W. SNOW, SECRETARY, DEPARTMENT OF THE TREASURY
REP. WILLIAM M. THOMAS (R-CA): Good afternoon. Today begins our first in a series of hearings to examine President George W. Bush's proposed budget for Fiscal Year 2005. We are honored to have Secretary John Snow of the U.S. Treasury Department to join us today. Welcome. We look forward to hearing your testimony.
Mr. Secretary, since your appearance before the committee during last year's budget hearings, Congress passed and President Bush signed into law tax relief to put more money back in the pockets of hard working Americans. Since the president took office in 2001, his sound economic policies have pulled our country out of recession and created more and better jobs. I'll ask you about what I believe to be the undeniable record in the area of economic growth, productivity, inflation and interest rates remaining low and what this bull stock market means in terms of the future of revenue in 2004.
Additionally, the president's common sense economic policies continue to funnel more money back into the U.S. economy. I again want to talk about the enhanced economic growth and how it translates into more federal revenue not only to help us with the deficit, bring our budget in balance but provide us with the wherewithal to do those kinds of things that this society needs to do for itself.
However, pretty obviously, our work is unfinished. Once again, this year President Bush outlined plans during his State of the Union address. He detailed important policies in his budget to assist and continue that economic growth especially making the tax relief enacted in the 2001 and 2003 permanent. We cannot inflict a tax increase on the U.S. economy at a time when we are beginning to experience growth and prosperity.
After passing a monumental Medicare bill last year, we now turn our attention to other healthcare challenges facing Americans, including the large number of families and individuals who lack health insurance. We will explore policy options to enhance access to affordable and quality healthcare so more Americans can enjoy the peace of mind health insurance offers. The recently enacted Health Savings Accounts in the Medicare Bill allow Americans to save money on a tax free basis to better prepare for medical expenses. These accounts encourage Americans to take vital steps today to ensure their health security tomorrow.
We look forward to your and the president's plans about other saving structures. It will be an important step forward if we can assure Americans that their thrift is being recognized in tangible ways by their government eschewing taxes either on the initial savings allowing a tax free build-up and exploring ways in which there is no tax or tax reduction on pay-out. Partners in this area is what we need to pursue.
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REP. THOMAS: The gentleman from California, Mr. Becerra, wish to inquire?
REP. XAVIER BECERRA (D-CA): Thank you, Mr. Chairman.
And, Mr. Secretary, thank you very much for being here and certainly for your patience, as we go through all the different questions. By the way, let me also thank you for the conversation we had prior to the commencement of the hearing with regard to the ITINs and the work that Treasury will be doing to try to make sure that we affirm the sanctity of the ITINs. Thank you very much for that.
Something you said, Mr. Secretary a while back, it's probably been about 30 to 45 minutes. You talked about your priorities. Congressman Lewis asked you about them. I'd like to key on that because I thought it was important. You mentioned the war on terror, the need to make sure the homeland is secure, and economic security for Americans. Those are the three that I heard most. And I would agree with you on those three.
But I think, going along with some of the questions that have been asked, and I would join with Congressman Tanner in his line of questioning that just concluded, in stating that I think a number of us are very concerned about the fiscal health, not just of the federal budget but of the American economy. Because as any American that has a mortgage and owns a house, or has taken out an auto loan to purchase a car or a personal loan to buy the new clothes washer knows, you've to pay on that loan. And it can be very expensive if you have a high interest rate.
And as I look at where we are today with a, according to your numbers, more than $500 billion deficit for the fiscal year, and if we make these tax cuts that the president is proposing, make them permanent, you would add another $2 trillion to the deficit over 10 years. I did some quick math because I think for most Americans, including my parents when I was trying to explain to these things, they lose it when you talk in not just billions but trillions. And so I did some quick math here on the calculator. The cost to each and every American of a $2 trillion increase to the size of the debt, $2 trillion over 10 years in deficits, would be $6,800 for each and every American, man, woman and child in this country.
If we talked just about the $520 billion or so deficit that the administration is predicting for 2004, that's $1,800 for every man, woman and child in America. That's a tax on every man, woman and child in America. If you're talking just in terms of the households, because not every child obviously files an income tax return, but just the tax filers, and there's some 130 million tax filers of the 290 or so million Americans, that would be a tax of $3,900 on every tax filing family in this country by this current fiscal year deficit.
But if we're going to add to it another $2 trillion and on top of that we've got the costs of Iraq and Afghanistan, we've got to deal with the AMT or middle class Americans who would otherwise pay more in taxes, it's going to add up and add up. You add that all to the $4.4 trillion debt that we currently have and that must be something in the order of $15,000 for every man, woman and child in this country that we have to pay or our children and grandchildren will have to pay, it adds up. And if it's going to grow in the next 10 years, by some of the policies that the president is proposing, to more than $6 trillion to about $6.5 trillion, I think a lot of us are wondering how will we be able to do what we need to do?
And the final comment I'd make is that-and then ask for your response-is that it seems that the president is trying to hold the line on certain spending. Non-defense, non-homeland security spending, which means for the most part, education, health, the environment, veterans' benefits. And it seems like for the fiscal year, we're going to save about $12 billion. Now, if the math I did is correct and the information I go from the Brookings Institution is correct, the tax cut benefits in that same fiscal year, the coming fiscal year, for the one percent richest Americans, just the one percent richest Americans, will be about four times greater than the cuts you'll make in every education program, healthcare program, veterans' program and senior program, environmental program.
Why would we want to go down a road where we continue to give such massive tax cuts to folks who are extremely wealthy-many of them would be willing to sacrifice a little bit along with our soldiers-and then have to make cuts to even start family literacy programs, which your budget eliminates completely, the Eisenhower math and science programs which would be killed completely as well, the vocational adult education program which we need for a lot of folks who've been losing their jobs-that would be slashed by 35 percent. You eliminate completely the money for dislocated workers who lost their jobs as a result of the North American Free Trade Agreement.
Give me a sense of how we can have some comfort and stability for the markets, if that's the right way to go.
MR. SNOW: Thank you, Congressman. Let me just and try that in perspective. First of all, the administration has, in this budget, shown a path to reduce the deficit to below two percent of GDP, which, by historical standards, is quite low.
REP. BECERRA: That's still about a quarter of a trillion dollars every year.
REP. THOMAS: The gentleman's time has expired. The chair notes the ability to ask a question until the red light comes on. That doesn't mean the chair is going to indulge a verbal answer. The gentleman's question deserves to be answered and perhaps it might best be answered in written form.
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