Hearings Committee on the Budget United States Senate
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HRG. 107–543 CONCURRENT RESOLUTION ON THE BUDGET FOR FISCAL YEAR 2003 HEARINGS BEFORE THE COMMITTEE ON THE BUDGET UNITED STATES SENATE ONE HUNDRED SEVENTH CONGRESS SECOND SESSION January 23, 24, 2002—THE BUDGET AND ECONOMIC OUTLOOK January 29, 2002—THE BUDGET AND THE ECONOMY February 5, 6, 12, 13, 14, 2002—THE PRESIDENT’S FISCAL YEAR 2003 BUDGET PROPOSALS February 7, 2002—THE PRESIDENT’S FISCAL YEAR 2003 BUDGET AND REVENUE PROPOSAL DEBT MANAGEMENT February 26, 2002—THE EFFECT OF THE PRESIDENT’S FISCAL YEAR 2003 BUDGET PROPOSALS ON THE ARMY CORPS OF ENGINEERS, THE FEDERAL HIGHWAY ADMINISTRATION, AND THE DEPART- MENT OF EDUCATION February 27, 2002—THE LONG-TERM BUDGETARY OUTLOOK February 28, 2002—THE PRESIDENT’S FISCAL YEAR 2003 DEFENSE REQUEST: WINNING THE WAR, TRANSFORMATION, AND REFORM ISSUES March 6, 2002—THE CONGRESSIONAL BUDGET OFFICE’S ANALYSIS OF THE PRESIDENT’S PROPOSALS FOR FISCAL YEAR 2003 ( U.S. GOVERNMENT PRINTING OFFICE 80–544pdf WASHINGTON : 2001 For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800 Fax: (202) 512–2250 Mail: Stop SSOP, Washington, DC 20402–0001 Printed for the use of the Committee on the Budget COMMITTEE ON THE BUDGET KENT CONRAD, North Dakota, Chairman ERNEST F. HOLLINGS, South Carolina PETE V. DOMENICI, New Mexico PAUL S. SARBANES, Maryland CHARLES E. GRASSLEY, Iowa PATTY MURRAY, Washington DON NICKLES, Oklahoma RON WYDEN, Oregon PHIL GRAMM, Texas RUSSELL D. FEINGOLD, Wisconsin CHRISTOPHER S. BOND, Missouri TIM JOHNSON, South Dakota JUDD GREGG, New Hampshire ROBERT C. BYRD, West Virginia OLYMPIA J. SNOWE, Maine BILL NELSON, Florida BILL FRIST, Tennessee DEBBIE STABENOW, Michigan GORDON SMITH, Oregon HILLARY RODHAM CLINTON, New York WAYNE ALLARD, Colorado JON S. CORIZINE, New Jersey CHUCK HAGEL, Nebraska MARY ANN NAYLOR, Majority Staff Director G. WILLIAM HOAGLAND, Staff Director (II) C O N T E N T S HEARINGS Page January 23, 24, 2002—The Budget and Economic Outlook ................................. 1, 71 January 29, 2002—The Budget and the Economy ................................................ 117 February 5, 6, 12, 13, 14, 2002—The President’s Fiscal Year 2003 Budget Proposals................................................................................... 169, 237, 311, 343, 375 February 7, 2002—The President’s Fiscal Year 2003 Budget and Revenue Proposals ............................................................................................................... 277 February 26, 2002—The Effect of the President’s Fiscal Year 2003 Budget Proposals on the Army Corps of Engineers, the Federal Highway Adminis- tration, and the Department of Education ......................................................... 431 February 27, 2002—The Long-term Budgetary Outlook ...................................... 515 February 28, 2002—The President’s Fiscal Year 2003 Defense Reguest: Win- ning the War, Transformation, and Reform Issues ........................................... 553 March 6, 2002—The Congressional Budget Office’s Analysis of the President’s Proposals for Fiscal Year 2003 ............................................................................ 599 STATEMENTS BY COMMITTEE MEMBERS Chairman Conrad............. 1, 71, 117, 169, 237, 277, 311, 343, 375, 431, 515, 553, 599 Senator Bond ............................................................................................................ 433 Senator Corzine ............................................................................................................ 142 Senator Domenici ........................... 10, 73, 119, 180, 311, 372, 378, 435, 518, 555, 606 Senator Feingold .......................................................................................... 115, 373, 421 Senator Frist................................................................................................................. 378 Senator Grassley .......................................................................................................... 361 Senator Johnson ........................................................................................................... 511 Senator Murray ........................................................................................................ 512 Senator Smith .............................................................................................. 168, 281, 397 Senator Snowe .............................................................................................................. 421 Senator Stabenow......................................................................................................... 283 WITNESSES Bixby, Robert L., Executive Director, The Concord Coalition .............................. 250 Chase, Robert, President, National Education Association .................................. 466 Crippen, Dan L., Director, Congressional Budget Office ......................................13, 608 Daniels, Mitchell E. Jr., Director, Office of Management and Budget ................ 183 Flowers, Robert B., Lieutenant General, Chief Engineer, United States Army Corps of Engineers ............................................................................................... 452 Greenspan, Alan, Chairman, Board of Governors of the Federal Reserve Sys- tem ......................................................................................................................... 74 King, Larry, Secretary American Association of State Highway and Transpor- tation Officals ....................................................................................................... 479 Lew, Jacob J., Executive Vice President for Operations, New York University 244 O’Hanlon, Michael E., Senior Fellow, The Brookings Institute ........................... 562 O’Neill, Hon. Paul, Secretary, United States Department of the Treasury ........ 285 Orszag, Peter R., Senior Fellow, The Brookings Institute ................................... 131 Parker, Michael, Assistant Secretary of the Army Civil Works, Department of the Army ........................................................................................................... 445 Peters, Mary E., Administrator, Federal Highway Administration .................... 438 Powell, Hon. Colin L., Secretary, United States Department of State ............... 314 Reischauer, Robert D., President, The Urban Institute ....................................... 121 Santos, Richard ........................................................................................................ 217 Till, Thomas A., Executive Director, Amtrak Reform Council ............................. 488 Thompson, Loren B., CEO, Lexington Institute ................................................... 575 Thompson, Hon. Tommy G., Secretary, Department of Health and Human Services ................................................................................................................. 381 iii Page Walker, David M., Comptroller General of the United States ............................. 520 Wesbury, Brian S., Chief Economist, Griffin, Kubik, Stephens and Thompson, Inc. ......................................................................................................................... 144 Weston, Josh S., Former CEO, ADP Inc., and Co-chair, Tail to Tooth Commis- sion, Business Executives for National Security ............................................... 556 Wolfowitz, Paul, Deputy Secretary, United States Department of Defense ....... 345 ADDITIONAL MATERIALS AND CHARTS SUBMITTED Questions and answers—Committee members to witnesses, written: Chairman Greenspan ....................................................................................... 116 Director Daniels ................................................................................................ 228 Secretary O’Neill .............................................................................................. 308 Secretary Thompson ......................................................................................... 422 (III) iv CONCURRENT RESOLUTION ON THE BUDGET FOR FISCAL YEAR 2003 BUDGET AND ECONOMIC OUTLOOK WEDNESDAY, JANUARY 23, 2002 U.S. SENATE, COMMITTEE ON THE BUDGET, Washington, DC. The committee met, pursuant to notice, at 10:02 a.m., in room SD–608, Dirksen Senate Office Building, Hon. Kent Conrad (chair- man of the committee) presiding. Present: Senators Conrad, Hollings, Sarbanes, Murray, Feingold, Johnson, Byrd, Nelson, Stabenow, Clinton, Corzine, Domenici, Grassley, Gramm, Snowe, Smith, Allard, and Hagel. Staff present: Mary Ann Naylor, staff director; and Jim Horney, deputy staff director. For the minority: G. William Hoagland, staff director; and Cheri Reidy, senior analyst for budget review/revenues and Bob Stein, chief economist. OPENING STATEMENT OF CHAIRMAN CONRAD Chairman CONRAD. The hearing will come to order. First, I want to thank Director Crippen for being here today. We certainly appreciate the extraordinary efforts that you and your staff have made given the shortness of time between when Con- gress left town and the need to reassess our fiscal condition. We appreciate very much the efforts that you have extended as well as your excellent staff. As I look at the numbers, I’m reminded of the phrase ‘‘What a difference a year makes.’’ It really is quite startling. Last year, as we convened, we were told that we could expect surpluses of $5.6 trillion over the period of