be achieved and would improve overall health care. Currently, if a patient sees a DoD doctor on Wednesday, it is very difficult to ensure that treatment and medication are consistent with those the patient obtained from a VA doctor on Monday. Managing care is critical to well-being. One of the Administration's E-Government initiatives is Health Care Informatics, and development of a patient record system falls under its scope. Hence, developmental efforts in both Departments will focus on interoperable information technology solutions. This is a major effort, which will likely require a sustained, multi-year effort to implement completely. SMALL BUSINESS PRPGRAMS Question: Two prime grants are currently supporting ten programs around the State (OR) in their efforts to serve disadvantaged microentreprenuers. These programs serve Lincoln City, Yamhill County, Northeast and Southeast Portland, Ontario, Lane County, Coos, Curry and Douglas Counties, and Josephine, Jackson Klamath and Lake Counties. Citing duplication, the budget would eliminate PRIME, as it proposed last year, but Congress restored modest funding. It is my understanding that PRIME is not duplicative, as suggested in the Administration's budget, rather it emerged from an extensive survey of microenterprise practitioners who cited the lack of basic business training and support for lower-income entrepreneurs. Unlike other SBA programs, PRIME's legislation targets low-income individuals, regardless of whether they take out loans. It serves a very important niche within the microenterprise market. PRIME has always enjoyed bi-partisan support, it has never been controversial and yet, it seems this budget proposes to eliminate one of the most promising small business programs in the government. Do you really think it makes sense to reduce basic business training for people who have shown the desire and inclination to start a very small business? Doesn't this type of training make common sense and help very small businesses grow? Answer: The President's Budget does not request additional funding for the Program for Investment in Microentrepreneurs (PRIME) because we believe its objectives can be achieved through other Small Business Administration (SBA) programs. Specifically, SBA operates Business Information Centers (BICs) where entrepreneurs can get information and counseling by volunteers through the Service Corps of Retired Executives (SCORE) on a range of issues facing start-up and existing small businesses. SBA works with the over 1,000 Small Business Development Centers nationwide to provide management assistance to current and prospective small business owners. The SBDC network includes centers in the following Oregon cities: Albany, Bend, Eugene, Grants Pass, Gresham, Klamath Falls, LaGrande, Lincoln City, Medford, Milwaukie, North Bend, Ontario, Pendleton, Portland, Roseburg, Salem, Seaside, The Dalles, and Tillamook. SBDCs offer one-stop assistance to small businesses by providing a wide variety of information and guidance in central and easily accessible branch locations. Question: Mr. Daniels, the Microloan program has begun to flourish as demand for its services has increased dramatically over the past five years. This program now has $110 million in loans outstanding and will have more than $130 million next year. These funds are then relent by non-profit intermediaries-including three excellent programs in Oregon-in loans averaging just $15,000 which are followed by intensive technical assistance to grow these start-up businesses. This technical assistance has been key in building business and protecting the investment the SBA makes in them. Last year, the SBA ran out of loan capital. This year, technical assistance grants were cut by 40 percent. The budget figures you propose would cause organizational funding to fall even further. Why is the Administration not providing more support for a program that creates jobs and builds businesses-particularly in places like Oregon, which has the highest unemployment rate in the country? Answer: The President recognizes the enormous role small businesses play in our national economy. The President's Small Business Agenda will give small business owners the jump-start they need to create new jobs, support their workers, and improve our economy. The Administration is committed to: providing new tax incentives; giving small business owners more power to provide health care for their uninsured employees, and improving the health care options for employees who already have insurance; tearing down the regulatory barriers and giving small business owners a voice in the complex and confusing federal regulatory process; saving taxpayers dollars by ensuring full and open competition to government contracts; and providing small businesses with the information they need to succeed. We anticipate that the President's Small Business Agenda will assist entrepreneurs in every state start, maintain, and grow small businesses. In addition, the Administration is providing support for the Microloan program. In fact, the Budget includes $3.465 million in subsidy budget authority to support over $26 million in Microloans. We agree that the technical assistance portion of the Microloan program plays a significant role in increasing the likelihood of borrower success. As such, the Budget provides $17.5 million for technical assistance. BONNEVILLE POWER ADMINISTRATION Question: I am pleased that the President's 2003 Budget request includes support for a $700 million increase in borrowing authority for the Bonneville Power Administration. It was my understanding that this increased borrowing authority would not subject to annual appropriations, just like BPA's current borrowing authority. Does the Administration support this increase in borrowing authority not subject to annual appropriations? Answer: Yes, the President's Budget, which proposes the increased borrowing authority, would be enacted in an authorizing bill, not through appropriations. Once authorized, the increase would be treated just as BPA's existing borrowing authority is treated and would not be subject to annual appropriations. Bush Administration officials claim that up to 6 million uninsured people would obtain health coverage next year under full implementation of a multi-pronged plan they outlined today to expand access to health care. Estimated to cost $110 (sic) over 10 years, the plan mixes coverage subsides for workers displaced by the recession, tax credits for those without employer-subsidized insurance, increased funding for community health centers, extended availability of State Children's Health Insurance Program funds, and a budget increase for the National Health Service Corps. . .all of which you have been publicly supportive of (just in higher $$ amounts). Question: I was very happy to see that the President has increased his request this year for funds for tax credits to help the uninsured obtain health insurance. Clearly he recognizes that the problem of the uninsured is sizable and growing— and will not go away on its own. The President's proposal is a good start in addressing the issue, but by his estimates, if implemented, his proposal will only reach 6 million of the uninsured next year. There are 40 million uninsured people in this country-and the number is growing. I would like to work with you to find a way to cover the remaining 34 million uninsured, many of whom will be from my home State of Oregon. Can you tell me how we can go about this? Answer: I certainly agree with your interest in addressing health coverage for the uninsured. As a first step, the Administration introduced the Health Insurance Flexibility and Accountability Demonstration Initiative (HIFA) in August 2001 to give States new flexibility to increase health insurance coverage through support of private group health coverage through the Medicaid and SCHIP programs. Two states have HIFA waivers approved, and several states have submitted HIFA applications to the Department of Health and Human Services (HHS). The Administration will continue to build on the HIFA demonstration initiative in FY 2003 by developing proposals that encourage States to use program resources to reduce the number of people without health insurance coverage. The President has introduced a comprehensive set of proposals to ensure that all Americans have affordable health insurance coverage options, with a particular emphasis on creating affordable options for the uninsured. As you mentioned, the President's FY 2003 Budget includes $89 billion for health credits for the uninsured. The President's Budget also eases the restrictions on Medical Savings Accounts (MSAs) and Flexible Spending Accounts (FSAs) to encourage employers to offer health insurance to their employees, continues Medicaid coverage for families in transition from welfare to work in FY 2003, and strengthens the State Children's Health Insurance Program (SCHIP) by making available an estimated $3.2 billion that under current law would return to the Treasury at the end of FY 2002 and 2003. Finally, the FY 2003 Budget includes a $114 million increase for Community Health Centers to expand access to primary care and other health services. This increase builds on the Community Health Centers Presidential Initiative to increase and expand the number of health center sites by 1,200 and serve 6.1 million more patients by 2006. THE PRESIDENT'S FISCAL YEAR 2003 BUDGET PROPOSALS WEDNESDAY, FEBRUARY 6, 2002 U.S. SENATE, COMMITTEE ON THE BUDGET, Washington, DC. The committee met, pursuant to notice, at 10:03 a.m., in room SD-608, Dirksen Senate Office Building, Hon. Kent Conrad (chairman of the committee) presiding. Present: Senator Conrad. Staff present: Mary Ann Naylor, staff director; and Chad Stone, chief economist. For the minority: G. William Hoagland, staff director; and Bob Stein, chief economist. OPENING STATEMENT OF CHAIRMAN CONRAD Chairman CONRAD. Why don't we begin? Senator Domenici will not be with us this morning. Senator Domenici went into the hospital last evening for some tests, and we certainly hope those tests find everything is positive and that he is on his road to recovery. We eagerly await his return to this committee where he plays such an important and productive role. And our thoughts are certainly with him, and I know I speak on behalf of every member of this committee that we wish him well and a speedy recovery. I want to thank the witnesses for being here. On our side we have six Senators who have indicated they will be here at various points. As you know, this morning turned out to be a very important morning with respect to votes on the floor. I regret that for the purposes of this Committee, but those were important votes to have and important debate to have as well. Virtually every committee is meeting on the Enron question, so those are all things that are occurring which we could not have predicted when we scheduled this hearing. But I want to thank our very distinguished witnesses for being here. I am going to make a very brief opening statement, and then, as others arrive, we will hear from them after we have gone to the witnesses. So let me just begin. The Director of the Congressional Budget Office delivered to us earlier the sobering news that much of the projected surpluses over the next 10 years have disappeared. Last year we were told there was going to be some $5.6 trillion of surpluses over the next 10 years. The Congressional Budget Office came back after their review, their most recent review, and said there is not going to be $5.6 trillion, there is not going to be $4.6 trillion, there is going to be $1.6 trillion. And that is before the President's defense buildup, before additional funds for homeland security, before his stimulus package, before a new farm bill, before a whole series of other spending initiatives that the President has proposed. And so that $1.6 trillion is clearly optimistic. Surplus Declines by $4 Trillion in One Year Change in Unified Surplus (FY 2002-2011) The other shoe dropped with the report to us yesterday by the President's Director of the Office of Management and Budget, Mr. Daniels, that with the President's budget, the $5.6 trillion we were anticipating is now done by their calculations, using their budgets, to less than $1 trillion, in fact, about $600 billion. That, too, is probably overly optimistic. We are informed that when the Congressional Budget Office does their review of the President's proposal that it is more likely they will come in at about $200 billion because the President's budget has given an overly optimistic view of Medicare expenses and in other areas as well. |