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December 15, 2005

Saving for a Rainy Day

Madam Speaker, the poet Longfellow once wrote: "Thy fate is the common fate of all; into each life some rain must fall.'' How true this is.

We know that calamities will come to our Nation. We know that terrorists are trying to attack us again and that Osama bin Laden wants to strike us with weapons of mass destruction. We know that in years to come hurricanes, earthquakes, tornadoes, and other natural disasters will devastate our shores, our towns, our homes, and most terrible, our very lives.

We must prepare, not only with a strong military and good infrastructure but also with 0a reserve of funds to cushion the impact to our economy and to meet the needs of the victims. Part of being prepared is doing what many families know as saving for a rainy day.

America has seen both prosperity and depressions, periods of unbridled growth and periods of stubborn stagnation. We have seen strong budget surpluses and huge budget deficits.

While any economy has periodic cycles of expansion and contraction, we know that fiscally irresponsible policies of an administration or a Congress can abbreviate an upturn or prolong a downturn.

Today, a lack of revenue, uncontrolled spending and faulty planning have put our national debt so high that putting our fiscal house in order seems out of reach. I am here to tell you that it is not out of reach. It will take time, but it is possible and it must be done.

The Blue Dog Coalition has put together a comprehensive 12-point plan to make needed reforms to our budget process, and one of these critical reforms is the creation of a rainy-day fund to set aside money for good times to pay for disasters, which we know will eventually come.

Madam Speaker, as you know, unlike the Federal Government, States must balance their budgets each year. In tough times States must raise revenue or cut spending. And generally, they cannot put these decisions off for another year or another generation. But many States have been resourceful. Forty-five of them, including my own home State of California, have created their own rainy-day funds. These funds are still small, too small and the States are in poor fiscal health. But they have begun the process of planning for their own rainy days.

According to the Center on Budget and Policy Priorities, since 2001, States have used around $30 billion from their rainy-day funds and general fund balances to help offset more than $250 billion in deficits.

Even during these weak economic times, States must continue to maintain and grow the viability of their rainy-day funds. In California we understand only too well that an earthquake, wildfire, or other calamity can strike our State without notice; and these funds will be crucial to helping Californians deal with the crisis.

The Federal Government must also be prepared for the Nation's next crisis; but, sadly, we are not. Even today, this Congress struggles with the unprecedented task of rebuilding the gulf coast after the worst natural disaster in our Nation's history.

Because the Federal Government failed to make the proper investment into the levees protecting New Orleans, one of our prized cities now lies in ruins. If we had had the foresight to establish a national rainy-day fund prior to Katrina, immediate fiscal decisions of this Congress could have been so much less painful, the cuts so much less devastating, and we would not have to go so far deeper into debt to come to the aid of our fellow citizens.

Imagine also that if Congress properly invested each year into the rainy-day fund, the interest from this fund could be used to make needed infrastructure improvements, the same type of improvements that could have saved the city of New Orleans from such devastating flooding.

Congress has so far provided more than $62 billion in emergency funds to respond to Hurricane Katrina, but we know that so much more will be needed. So much more was spent after September 11 and still our Nation's needs are not met.

Let us do what we encourage all of our children to do and save for the future. I encourage this Congress to take a strong look at the Blue Dogs' 12-point plan and establish a rainy-day fund.