Press Briefing on the President's Fiscal Year '07 Budget and Low-Income Programs

Dwight D. Eisenhower Executive Office Building, Room 66

PARTICIPANTS

Jim Towey, Director, Office of Faith-Based and Community Initiatives

Claude Allen, Assistant to the President for Domestic Policy

2:35 P.M. EST

MR. ALLEN: Good afternoon. I'm Claude Allen, Domestic Policy Advisor to the President.

DIRECTOR TOWEY: And I'm Jim Towey, Director of the Office of Faith-based and Community Initiatives.

MR. ALLEN: We wanted to start off by giving what we think are some highlights, and you've heard some of this before, but I think it's important to put everything we talk about, when we talk about low-income programs, into context; and what the administration's policy and philosophy has been behind what we've done in this area.

Unemployment has dropped 12.7 percent, lowest monthly rate since July of '01; 193,000 jobs created in the last month, since January; 2 million created in the past year; 4.7 million since August of '03. Home ownership has broadened to low-income individuals -- in fact, we have the highest rate of minority home ownership on record; in 2005, the rate was 51.3 percent; female-headed households at 59.4 percent; families below median income at 52.9 percent. And even young families with children, like Mr. Towey and I, at 64.8 percent. And so we see the indicators of what is a strong economy actually reaching down to low-income individuals.

In addition to that, the President has emphasized in his budget proposals fiscal discipline and also focus on priorities that impact the budget across the board. And we have focused on overall spending, reducing overall spending, in terms of non-discretionary programs. And, yet, we've actually increased funding for programs in this area by 44.5 percent since 2001. And these are core programs that impact low-income individuals.

And I think -- so the message that I want to leave with you today is that as far as the administration's proposals are concerned, when we look at core safety net programs that impact low-income individuals, the state of the union is not only strong, but in this area the programs are effective and are working.

And the areas that I want to focus on, I think we look at, when you talk about core safety net programs you're talking about housing, you're talking about food, you're talking about health care, education, and you can even throw work in as a means of folks coming out of poverty and low-income. So, again, the safety net is tight and strong and I think those are some very important points to bear in mind.

I'm going to let Jim talk a little bit about some of the specific programs he's working on, and then just open it up for questions. I wanted to just lay that out as a framework to discuss.

DIRECTOR TOWEY: Thanks, Claude. I just want to echo, I think, Claude's points.

When the President took office I don't think anyone could have anticipated the wave of extraordinary events of both dealing with the war on terror and the need to keep America safe, as well as Hurricane Katrina and as well as the pressures on the budget and the deficit. And in spite of these enormous challenges that have confronted the President, he's maintained a compassionate budget that meets essential needs of American citizens, and also seeks to fund effective programs that have a meaningful intervention in the lives of Americans.

During his time in office, the Faith-based and Community Initiative has been one of the President's signature efforts to mobilize America's armies of compassion to help the homeless and the addicted and the children of prisoners and the kids that are at risk of gang involvement, as well as helping some of the prisoners re-entering society. And this budget of the President proposes $323 million for these programs, which is a 36 percent increase from what was enacted in fiscal year 2006.

In addition, the President's budget continues America's humanitarian effort to resettle refugees from across the world. The number we settled last year exceeded 50,000; and the budget projects a similar number this year, with an increase of $45 million. And, of course, these re-settlement agencies often are faith-based and grassroots groups that provide this humanitarian assistance to the stranger that we welcome into our midst.

Of course, the PEPFAR funding in the budget this year is a very impressive amount of money, nearly a billion dollars over last year's budget request, continuing the President's compassionate initiative dealing with AIDS in Africa and elsewhere.

So there are a number of initiatives with the homeless, the community health centers and other programs that I think are evidence of the President -- during a very tight budgetary time with pressures from the wake of Katrina and the war on terror, to the budget deficit and the needs to rein in mandatory spending -- the President has put forward a reasonable budget that's compassionate.

MR. ALLEN: We'd be glad to open it up for questions.

Q: Mr. Towey, in the most general terms, what does the $323 million include?

DIRECTOR TOWEY: The $323 million, Mike, would include $40 million for the mentoring of the children of prisoners; $100 million for the Compassion Capital Fund, a program the President started, of which $50 million would go to the initiative Mrs. Bush has spearheaded, Helping America's Youth, to prevent kids from getting into gang involvement. The Access to Recovery program is $98 million. This is an innovated drug treatment program that allows addicts to choose where they're served; it's operating in 14 states and with one tribal government.

The Prisoner Re-entry Initiative is budgeted at $60 million. This continues the President's effort to address some of the needs of the 600,000 inmates that are returning to society this year. And then the new initiative the President announced in the State of the Union address dealing with AIDs -- I count in that $323 million, $25 million which is going to be targeted for outreach to the African American communities, which I think the statistics support we have a health crisis within our African American community when it comes to transmission of AIDS. There was a very interesting piece I'd commend your attention to in The New York Times over the weekend, that showed how one in five African American males age 40 to 49 has HIV/AIDS.

So we have an effort that's part of a $188 million initiative the President launched that's in the budget. But the $25 million I counted adds up to the $323 million, Mike.

Each one of those are targeted initiatives. I refer to them as that because they were announced in the State of the Union address and then carried forward through successive budgets. Some of them, like the Compassion Capital Fund, started receiving funding in 2002; and others, like the gang initiative, received its first amount of funding this year.

Q: If I may ask one other quick question. It's 36 percent over -- enacted last year. Do you know, by chance, about what it is over what was proposed last year?

DIRECTOR TOWEY: Sure. Enacted, $236 million -- I think I've got the numbers here, Mike; I'm going to try to do them by memory, and if I can't dig them up, I'll get them to you. But if my memory serves me correctly, PRA -- let's see, Compassion Capital Fund receives $64 million. Yes, Prisoner Re-entry received $25 million. The Access to Recovery received $98 million. And the mentoring of children of prisoners received $49 million. That sum is $236 million. And the budget this year will propose $323 million.

Q: Are those programs, like, say, the children -- prisoners' children, are those all run by faith-based organizations, or are they run by the government?

DIRECTOR TOWEY: No. They're openly competed grant programs, Richard, that provide funds for faith-based and community groups to compete. We'll be providing data next month on the 2005 grant totals, broken down by faith-based charities, secular not-for-profits, governmental entities; we'll be providing the statistics for 2005. But these are openly competed programs. And you'll see throughout government a range -- for example, some grant programs have very little faith-based group involvement and others have much higher levels.

Q: I guess I see a little bit of tension between what some in the low-income advocacy world see in the President's budget policies and what you're describing, Claude. You're talking about a core of programs that are increasing and are getting pretty healthy funding. But I think people in the advocacy world see other programs that maybe you don't regard as quite as effective that are getting cut.

MR. ALLEN: Sure, and I think it's very important to acknowledge that, indeed, individual organizations and interest groups are going to focus on the programs from which they get their funding from. But when you step back and look at this administration's policies and its funding, programs that serve low-income individuals, there is just -- you can only come to the conclusion that there is a very strong commitment to these programs.

Look at the housing area, for example, where there is a billion dollar increase in our Section 8 and home programs. That is an example. Notwithstanding that, if you go down and drill down and find a specific program, that when we look at it question is does it meet a high priority, is that program effective at achieving the goals, and can we measure that outcome. And if it doesn't meet that, then we're going to continue funding housing programs that serve low-income individuals, but we're going to target that money to the most effective programs to reach the most number of individuals who can be served.

Q: Well, the budget has 141 programs proposed to be cut. Do those include faith-based -- I know it may be core faith-based programs, but programs that would benefit faith-based or community organizations?

MR. ALLEN: Again, if the program is not deemed effective, or the program does not have demonstrated results, we're not going to shield a program from scrutiny because it may or may not be a faith-based -- program that faith-based organizations can benefit from. What we're looking at is, again, maintaining the priorities in the budget, maintaining a commitment to proven outcomes and a track record of demonstrated effectiveness, and then we'll go with it from there. But, yes, some of those programs may include and actually impact --

DIRECTOR TOWEY: And there's no litmus test here. The President is not interested in religion, he's interested in results and he's trying to fund programs that have proven to be effective. And it may be that some program's faith-based organizations find that they've received grant dollars from that have been cut, or they've been increased. But this budget has attempted to fund priorities of the administration.

MR. ALLEN: But I also would point out, too, that the administration has focused on opening more programs up by leveling the playing field for faith-based organizations to compete on a level playing field with other organizations. And so that has also happened in this budget. So a faith-based organization that may serve, again, in the housing section, for example, while a specific program may not have been funded at the level it had been in the past, there's still opportunity for them to compete for those funds.

Q: Are you able to quantify and -- kind of speaking in the big picture -- the extent to which under this President your, kind of, philosophical and ideological focus has shifted from government programs to private, faith-based programs in funding, and the extent to which those government programs might be more -- more of those have been cut, obviously, than faith-based.

DIRECTOR TOWEY: I think, again, the filter has been on effectiveness, Peter, and the effort has been to fund priorities of government, look at effective partnerships, remove barriers that prevented these groups from competing in the past, and then let the best group win. The reality is if you looked at the data last year in the category of competitive non-formula grants, the great majority of money went to secular not-for-profits and government entities, not religious charities. So I think there hasn't been any dramatic shift. What has happened, though, is barriers have been removed and now we're seeing groups competing for the first time for these grant dollars.

I'm going to Harrisburg, Pennsylvania, tomorrow; we've got a packed house of groups that want to learn how to compete. This is our 21st conference and each one of them, more and more groups are finding how they can work with government. We're going to have new data out in March that's going to show a dramatic increase in first-time grantees, continuing a trend since the President started this initiative.

So from my standpoint, the initiative has never been about religion, but about results and about funding the best provider, whomever it is. And I think that -- is there a sense that there's more competition for these dollars? You bet. There is a greater level of competition, and I guess that does threaten the status quo. But at a time when budget resources are tight because of the war on terror and other pressures, you need to have competition. The poor deserve it.

Q: Last year I remember there were questions about how you calculate the amount of money that actually is going to faith-based groups, across the agencies and across the budget. Have you all worked on a way to calculate that more accurately?

DIRECTOR TOWEY: Each year -- you'll see the data next month, Peter, and we'll be happy to give it to you. Each year I think we get a better focus. I don't know if you can ever get a hundred percent accurate picture because you have, at some point, to determine is the group faith-based or not -- if you're counting dollars to religious charities, and we let them self-identify. So we try as best as we can and we'll show you the data.

But I think what it's showing is greater competition, and we believe it's going to lead to more effective results.

And the budget also represents an effort on President Bush's part to promote individual choice in programs. The individuals can choose their provider, instead of being shuffled through a program that may be a failing program.

Q: In terms of the mental health sector, there are a bunch of conservative groups who argue mental health guides are medicalizing character, and in such light they feel that under this administration the mental health industry has been getting money for Teen Screen and for converting character flaws or behavior decisions into medical problems. They cite the new Freedom Commission, the SAMHSA support for Teen Screen and various other things.

Is there anything in this budget that would suggest you are moving to support character and community-based efforts on character and behavior, rather than the mental health industry?

MR. ALLEN: I would say probably the one that stands out to me most directly where we're focusing on helping young people avoid risk behaviors would be the Helping America's Youth Initiative, which is targeted at at-risk youth who are at risk of getting involved with alcohol, drugs, tobacco, sex and violence, particularly with the focus on young boys and their getting involved with gang activity.

I believe it's $150 million -- $50 million over three years, $50 million -- a three-year initiative, $50 million that really is working to identify science-based, research-based, evidence-based ways of working with young men and women, boys and girls, to help them navigate life successfully by equipping them with skills to address these risk behaviors.

Q: But $50 million versus tens of billions a year on mental health is not a lot of -- it's not a big comparison.

MR. ALLEN: Again, the substance is in the SAMHSA area. SAMHSA also is focused on risk avoidance programs, and not simply risk reduction programs. And the risk avoidance programs actually focus on giving kids assets that we know, based on science, work effectively -- that is connectedness to parents, connectedness to schools, and connectedness to communities. And so Helping America's Youth is actually an umbrella that brings in and helps focus what SAMHSA is spending its money on, in a way that will get results.

And so just as we're focused in every other area on outcomes and results, with young people we're also focused on those programs that work to help them be equipped so that they can actually make choices that are healthy and good choices for them.

Q: Is there any time you cut money for any of the groups or activities or approaches that you feel are less effective?

MR. ALLEN: In the SAMHSA area, we would have to -- I would defer to the budget folks on it because I can't think of --

Q: In the broader area. Can you cite any cuts you made because of competition, because one approach is better than another?

MR. ALLEN: Well, I can tell you that in the '07 budget we propose 141 programs that were deemed ineffective or otherwise not demonstrating results. And so that whole list you can find something in there. I don't have the list of the 141; maybe we can just get that for you.

DIRECTOR TOWEY: I think TANF is a good example of an approach where -- the funding for TANF is maintained -- has been maintained over the years, even though the caseloads have gone down. But there was an effort by Congress to try new approaches and to discard old approaches, and I think everyone agreed that in the 10 years since welfare reform took place we've seen dramatic changes for the better. And so those are examples --

MR. ALLEN: I think another area that I'd cite to you also is in the CDBG program. One of the major issues in that program is that we have some -- almost about an $800 million program, and about half of those programs are earmarked. So, therefore, without a regard to whether the community has a need for low-income individuals to be served, whether the program is effective, or not, half of the budget for the CDBG program is tied up in earmarks.

Well, the President has made a direct appeal to Congress to work with them in earmark reform. And so here's an example where we can work with targeting limited resources to the communities that have the highest needs, as opposed to giving it to the wealthiest communities in the country because it has been earmarked in that direction. So those are some of the areas that we focus on, as well, in the budget.

And along with programs that have been effected -- I think you had mentioned the 141 programs in the '07 budget, but the history of it is, is in '05 we had, I believe it was 65 programs that were proposed for elimination or reduction, and Congress enacted seven of them -- the cuts, and that was about $300 million worth of programs. In '06, the President proposed 154 programs to be slated for elimination or reduction; Congress approved of 89 of them, for $6.5 billion. And this year we're proposing the 141, for about $13.5 billion.

And so we see Congress coming along, working with us as we provide them more and more information on effectiveness of programs and whether they meet the priorities for what we're serving. So even Congress is working with us to address this issue as we find challenges in the budget areas.

Q: Is the CDBG in this year's cuts?

MR. ALLEN: Actually, CDBG -- we are preparing for a -- you may recall the Strengthening America's Communities Initiative last year, that did not receive a lot of strong attention, even though there's a recognition that there needed to be reforms in the CDBG program. That program will go back -- HUD is preparing a proposal right now to go to Congress for legislation that would actually bring the reforms that we were speaking about in the program, changing the funding formula, and then compete it by making a pot of money available for communities that are performing well to actually compete for it.

The numbers for CDBG -- let me make sure I've got those for you -- it goes from the '06 enacted level of $3.7 billion down to $3.0 billion. And we get there by consolidating 17 programs under the -- and going after largely the administrative dollars that would be from the consolidation. And most of those would be consolidated in the Department of Commerce, and then HUD will also be focused on getting some performance out of those programs that will come into CDGB at HUD, as well.

Q: Jim, in the five years since the Faith-based Initiative has been up and going, how many of the primary barriers have been removed, in your estimation, in terms of allowing groups to compete for funds?

DIRECTOR TOWEY: When the President took office, at Housing and Urban Development, for example, there were regulations that said if your program has, "any religious influence," you can't receive government monies. Regulations like that had a chilling effect in competition as well as in allowing the poor to access effective programs and providers.

So through 15 regulatory actions in eight federal agencies, we were able to remove these barriers. We're now working with 31 governors that have Faith-based and Community Initiative offices, so that they can do the same at the state level, where tens of billions of dollars of federal funds are administered. Today I expect -- while we speak, right now, in Pennsylvania, we have state and local officials meeting with federal folks to talk about the equal treatment regulations.

So we're seeing those barriers removed, and as a result, we're seeing much greater interest in application, and we'll be able to document that group. So we're pleased with that.

In terms of Congress passing the reauthorization of the welfare reform, the TANF bill, Temporary Assistance to Needy Families, that will extend charitable choice protections into the year 2010. This is a first during the President's time in office to see these religious hiring protections guaranteed again. And so we're excited about that, and we'll expand to a new program, through that legislation.

So the President is moving forward with the initiative effectively, and now we see the conferees in the House and Senate looking at incentives for more charitable giving. So those provisions are now before that conference. So there's progress on all fronts. And we've seen the barriers removed.

Q: So with that progress, as you stated, is the challenge then to educate or train these groups through these conferences? Is that kind of shifting as the primary goal now?

DIRECTOR TOWEY: It certainly is part of it, to provide them technical assistance -- them and anyone. We enroll any comer. It's first come, first served registration for these regional conferences to give them the technical assistance, because we think that heightens the competition and leads to the best providers. In the past, often grants went to the best connected provider or the one with the best grant writer, and not necessarily the most effective program.

And I'll give you an example. Take the mammoth Head Start Program. Even though it's considered a competitive grant program, the reality is it's very hard once you've been certified as a Head Start provider to ever lose that, whether they're effective or not. And that has crowded out faith-based organizations from even being able to compete for the funds.

That's one of the single biggest barriers -- program barriers that are out there. When you look at HHS's numbers next month, you'll discover that one area where there's a concern is in Head Start, because there's a strangle hold on those funds by the existing providers. Some of them are very effective, don't get me wrong; but some aren't. And right now there's no way to -- Claude is serving the President, and his predecessor, Margaret, have been looking at reforms in Head Start. But the reality is, when you talk about difficulties in making changes, very often it's been the faith-based group that's been shut out, or the small grassroots group that's not connected, in favor or the provider that's been there for a long time, and some have been effective, some haven't.

Q: Jim, you've been giving out grants to the large organizations, small organizations. What's the range for grants? What's the biggest grant you give out? What's the smallest? Is there some kind of an average --

DIRECTOR TOWEY: We don't have an average, Richard, but we have a mini-grant program at HHS in the Compassion Capital Fund this year that gave out 300 grants of $50,000 each. For small grassroots groups, not-for-profits, they can do wonders with $50,000. The larger grants typically would go in Section 202 housing. Those can be in the millions of dollars each. So it will vary. Typically, the Section 202 HUD housing program, roughly half of the providers are faith-based organizations.

Q: Can I ask about two programs that aren't very closely related? One is LIHEAP, and the other is the Community Services Block Grant. This is a block grant to goes to, as you well know, community action agencies. You actually hand out some of the LIHEAP money. The way we're looking at the budget, both of those are getting squeezed a little bit, although in the case of the CSBG, it's getting zeroed. Although, I think that money may be heading somewhere else. But can you just talk about the philosophy behind those two?

MR. ALLEN: Yes, I think, again, looking at, particularly CSBG program, the question is, whether the program was effective, and could we track what the program was doing. And, frankly, we could not. It is very difficult, because of the way the money goes down to states, localities, it is -- they can spend it on just about anything. And therefore there's no way to track whether it is going to effective -- to programs or to specific needs, and whether it's effective, in terms of meeting the objectives of the programs. And so there are other block grant programs that are more effective that we thought would be most appropriate to find those resources going into.

Q: That's where that money is going then?

MR. ALLEN: Well, no, I don't want to make it set up -- it goes from CSBG to another program specifically, and I don't want to make that comparison, because, no, that's not the way we've looked at the budget. We didn't say, let's close down the CSBG program and take all that money and transfer it somewhere. No, that's not the way we've done it.

What we're looking at is whether there's coverage for the types of programs for which CSBG money has been used. One area where it has been effective is, again, in terms of addressing Katrina. We have requested additional funding in these programs to serve the evacuees and to respond in the disaster area. For example, in the social service block grant program we requested $500 million for that purpose, and that money was serving a very specific and targeted purpose, as opposed to what the program typically would be very broad, and how it could be utilized. So we did that and looked at that that way.

Q: Can I interrupt and ask, are the same agencies, administer that money, the Social Services Block Grant?

MR. ALLEN: Yes, both of those are administered out Administration for Children and Families, the FSBG program in large part. CSBG has some also, I believe, in HUD, and maybe in a couple of other agencies, but primarily ACF has the lead on those two block grant program.

DIRECTOR TOWEY: Office of Community Services, as well.

Q: And on LIHEAP?

MR. ALLEN: On LIHEAP, there actually has been increase in LIHEAP. In fact, I believe -- I want to make sure I give you the right number -- the request is $2.032 billion off of '07, an increase from $1.98 billion in '06, enacted number. And, again, working with Congress, we know that Congress moved the '06 money into '07, and we're willing to work with them on how they try to deal with the '06 need for LIHEAP funds. We've been very fortunate to have --

DIRECTOR TOWEY: That's the contingency --

MR. ALLEN: Yes, the contingency fund is also a huge increase, of $750 million in '07, over $181 million in '06. So the administration has responded, and responded in a big way, to the concerns for the energy needs of the season. Fortunately, January has been a warmer month than anticipated, and so we hope that we'll be able to continue to work to provide heating assistance to --

Q: Can I ask you a quick follow up? There was an advocacy agency that says LIHEAP is actually getting a cut to $1.7 billion, and they may be basing that on your BA or something? I don't know --

MR. ALLEN: I'm not sure where that number comes from. We'd have to look at it. Again, I think when you look at the numbers that we've got going up for the request, there is significant increase in LIHEAP. I think what they may be looking at is what Congress did, and that is, is I believe Congress took what we had for '06, which was $1.7 billion -- yes, I think what Congress did -- we had a request of -- let me see, '07 is $2.8 billion. Yes, we had initially supported an additional $1 billion in '06 to address this year's energy needs around the country, but Congress added it to the '07 figure. And so we are willing to work with Congress over how they fund '06 in this area.

DIRECTOR TOWEY: John, if I can add on the issue of the advocacy groups, because I meet with them a lot, Claude meets with them a lot. I've never met a group that didn't want to see more funds going to the organizations for which they advocate. That's the nature of advocacy. And I think the difficulty, of course, is those groups that are advocating on the human services front do not have the responsibility of conducting the war on terror or decreasing the deficit or providing for Katrina relief and all the other pressures that are brought to bear on the budget.

So had not these enormous events intervened during this administration, who knows what the budget would look like today. But the reality is the President has to play the hand he's dealt. And when you have a war on terror and you have the requirements of the homeland security and you have Katrina relief that's $88 billion that came out nowhere -- when Claude and I were first doing budget meetings last year, in the summer, there's $100 billion that wasn't anticipated that's gone -- $88 billion now, and there's another $18 billion placeholder in the budget. So, you know, we're looking at this evolves from year to year, and it puts a lot of pressure. We can understand the advocacy organizations' concern about funding, but the reality is, the President has to look at the whole pie and he has to keep the economy running.

MR. ALLEN: But I think with the numbers it would be very difficult for me to see where any organization would suggest that this administration has not responded to the needs for LIHEAP funding when we have an emergency request of $750 million for the '07 budget request contingency fund, and we've increased the base funding, as well to $2.032 billion. So I don't understand, again -- that doesn't -- the figures that we have.

And I think that's the message I think you take away. When you look at this administration's track record from '01 to present, there has been a significant increase in resources targeted to low-income Americans across the board, whether that -- again, as I said, when you look at housing, you look at health, you look at education, you look at food. The WIC programs received significant increases in funding, very much so.

And even when you look at work-related issues, this administration has demonstrated a commitment to low-income Americans.

Q: Jim, on the refugee resettlement, what's the new goal for that? And is that complicated politically because we're kind of in the midst of the immigration thing?

DIRECTOR TOWEY: As you know, the refugee resettlement program after September 11th came to a near halt as they dealt with the security issues of screening individuals before they came to America from all these different refugee camps. But the program happily was resuscitated through efforts by the President and the Secretary of State. And this past year for the second continuous year, we've had over 50,000 refugees resettled. I believe the ceiling this year, Peter, is 55,000. But I'd ask -- you're going to have to get the number from State.

I think the budget is sufficient to handle at least 50,000 refugees resettled. And the President has made it clear that's his commitment. They are experiencing difficulties in some camps, I'm told, with some delays in getting clearances for refugees to be resettled. But the President's commitment is unmistakable. And he spoke of the refugees in his State of the Union.

Q: That's not back up to the pre-9/11 levels, is it?

DIRECTOR TOWEY: It is not. I believe it's equivalent to it, Peter. If you look at it historically during the spike-up during the boat people resettlement, we had hundreds of thousands resettled. It then tailored off after -- into the late '90s. And I think when the President took office, it's equivalent, but it may be a little under. I think you're right. I think it's a little below.

Q: In terms of watching the political struggle over the reallocation of funding, as you seem to be offering, what should I be watching in Congress for -- for incumbent advocacy groups seeking to establish rules to protect their share of the spending?

MR. ALLEN: It's called earmarks. (Laughter.) Again, I think that the President has made a commitment to working with Congress to reform earmarks. It is vitally important that we do so. The President rolled out last week the American Competitiveness Initiative. As an example, in the research area in science and technology, making sure that America remains competitive, we see a large number of earmarks. And these earmarks, whether it's in the discretionary programs or in the mandatory side where we find earmarks, it actually takes away from the executive branch's ability to target resources to priority areas in a timely fashion. And so we believe it's critically important to work with Congress for real earmark reform.

HHS, the Labor H bill, we saw that bill go through that had no earmarks in it. That shows that Congress can do it when it puts its mind to it, and we will work with them on that.

Additionally, I think the other key message to recognize is that we have focused largely on the discretionary budget. I think it's very important that we recognize that the mandatory budget -- that is largely Social Security, Medicare, Medicaid, the President has called for -- to work with Congress to reform each of those programs because if we do not do so, by 2030, those three programs will eat up about 60 percent of the budget. And we'll continue to see how do we address priorities when a portion of the budget becomes more and more out of reach because we haven't taken on the difficult task of reforming it. So those are some areas that you'll find that we'll be focusing with Congress on, as well.

Q: You say the earmarks interfere with the program's ability to target resources. What about the argument on Capitol Hill that earmarks are placed by individual members who presumably know what is needed by their district, and therefore it's better for them to be able to allocate the funding in that --

MR. ALLEN: Well, I think that's why it's important for us to work with Congress because again we want identify priorities. What are their priorities that need to be addressed. And exactly -- for example, in the area of science, we know the National Science Foundation, the Department of Commerce's Office of NIST, and the Department of Energy's Office of Science where many of the dollars that are going towards maintaining America's competitiveness are earmarked, that takes away the ability to focus on things such as energy independence, to focus on next generation research because it's being taken -- siphoned off for a specific project or proposal.

Again, I cite the example of the CDBG monies, where we see, yes, a congress person, a congressman or senator may deem that there's an area in their state that should get some CDBG money, but when you're looking at nationally where the highest priorities for low-income individuals are, and the needs for those communities, you need somebody who is able to step back and look at that in an objective way to say that we're going to target resources to the most needy.

The President in the State of the Union address said that we will take care of the poor and the elderly. And working with Congress to do that means we must have meaningful earmark reform.

Q: The HHS Secretary earlier today addressed new initiatives in the HHS funding, including things like private-public cooperation for hereditary disease research, and even the health savings accounts, those sort of things. Will you recruit or solicit the help of faith-based and community organizations to help, I guess, maybe -- even with the health savings accounts, they said they need to get more information out there for people.

MR. ALLEN: Absolutely. In part because we will not leave any partner unturned that is going to work with us to address these issues because health savings accounts, again, if we have more people in the faith community who are members of a congregation of faith to take advantage of health savings accounts, that benefits all Americans. So it doesn't make sense that we would cordon off a portion of the team to work with on these issues because they happened to be faith-based.

Again, we're not -- we'd want to include them in these activities because there is -- many Americans are members of communities of faith; many Americans in communities of faith have clearly health care needs, and we need to work with them, just as we work with them in terms of our obesity campaigns; our other messaging campaigns to address issues that are confronting their congregants, we will do the same to solicit their support as we go forward on these initiatives.

Jim, you have anything else to add?

DIRECTOR TOWEY: Hit it on the head.

Q: One other question. On the TANF reauthorization and the Budget Reduction Act, you said it extends charitable choice. And did I understand you correctly when you said it will extend to one more program? And which one is that?

DIRECTOR TOWEY: The new program, the Fatherhood and Marriage Initiative that's in the bill will have charitable choice protections.

Q: Does the Marriage Initiative have those also?

DIRECTOR TOWEY: I believe all those programs are under the umbrella of TANF. And they're both newly authorized, and they will have charitable choice protection. So this is an important development and continues, I think, the President's evidence of his commitment to persevere on the initiative, both on the regulatory front and in Congress.

And when Claude talked about earmarks, if you asked the Attorney General what the biggest barrier his faith-based and small groups face in Justice to access juvenile delinquent dollars or other at-risk youth, he'll point out earmarks. Some of his programs are 100 percent-earmarked. And when you look at who actually gets the funds, it's a very small percentage of religious charities. And the question arises, how were those screened, and how fair is that for the groups out there competing. So the earmark issue is not only a budgetary issue, it's also a fairness one.

MR. ALLEN: And I think even beyond that, the question is, is whether the programs that are getting it under an earmark are effective. That really is the driver. Are they as effective as another program that might be able to compete for that if it were not earmarked?

DIRECTOR TOWEY: We had two legal cases this year regarding the First Amendment and the Faith-based Initiative that involved earmarked programs.

Q: Are those disputes -- of which I've read about and written about occasionally -- about freedom of religious, church-state and also sexual orientation or autonomy, are those arguments ever used to protect incumbent grantees from competition?

DIRECTOR TOWEY: The White House doesn't grant money. You'd have to ask the departments what they face. But what our interest is, is a level playing field; let the best program win.

Q: Going back to the Helping America's Youth Initiative -- you said $50 million is going to be earmarked for that program --

MR. ALLEN: Not earmarked, but included in the budget. (Laughter.)

Q: Okay, sorry. Of that, how much is going to mentor youth? Do you know that, by any chance?

MR. ALLEN: I don't know the exact dollar figures. We do have a program that really focuses on mentoring youth.

DIRECTOR TOWEY: A separate program -- mentoring of the children of prisoners, the budget has $40 million for that program this year, within the $50 million diverting children from gang involvement. This will involve outreach workers. There will be a competitive grant program like we have seen in the Compassion Capital Fund from year to year to year. It will be a competitive program where we will target areas of the country where gang involvement is high.

And then organizations will have to demonstrate an ability -- a proven record and ability to engage that community and divert youth from it. Some may be mentoring programs. Big Brothers and Big Sisters is a good example of a program that not only will mentor the children of prisoners, but is also involved in diverting kids from gang involvement. So that grant programs specifics, this year there will be $30 million being spent on it in the '06 enacted money. For the $64 million of the Compassion Capital Fund, $30 million will go to the at-risk youth this year.

And I believe Claude has additional funds that have been identified for the Gang Prevention Initiative. But then the budget for '07 proposes $50 million of CCF, half of the money to go for these gang prevention activities. And I'm sure some of the grantees -- we don't tell them what their application has to show; we want the result, which is diversion from gang involvement.

Q: So is that -- but in terms of the amount that's given in 2006, is it more than 2005?

DIRECTOR TOWEY: '05 didn't exist.

MR. ALLEN: It didn't exist. The program did not exist.

DIRECTOR TOWEY: He proposed that program in the State of the Union in '05.

Q: Thank you.

END 3:17 P.M. EST