Prepared Remarks of Treasurer Anna Escobedo Cabral on the Economic Stimulus Package

Secretary Henry M. Paulson, Jr. Remarks on the Economic Stimulus

Kansas City, Mo.--Thank you; it is great to be back in Kansas City.  I have just come from one of Treasury's bureaus here, the Financial Management Service Regional Financial Center, where they are printing the economic stimulus checks that will put money in the hands of American families and boost our economy this year.  It's fitting that I see this economic stimulus become a reality in Kansas City, because my visit here last December was among the events that convinced me that we needed to boost the U.S. economy, and do it early so it could make a difference in 2008.

In December, I was at the Bruce Watkins Cultural Heritage Center and Museum for a town hall meeting.  I met with and heard from many homeowners about mortgage and other housing difficulties.  They also talked of their concerns about the broader economy in Kansas City and Missouri.  During that week, I also spent time in Florida and California, where I heard similar concerns.  And when I got back to Washington, I talked to people in a variety of industries; I asked them what their business was telling them about where the economy was headed.  My travels, my discussions with industry leaders and a review of the economic data with the rest of the President's economic team convinced me in mid-December that the economy had taken a sharp turn for the worse and the risks were to the downside going forward.

The President recognized the downturn early, and took decisive action.  At the beginning of January, President Bush told the nation we were considering an economic stimulus package.  Congressional leaders also saw the weakening economy and the need for action.  The President directed me to work with Congress to craft legislation that would put cash in the hands of American consumers and help American businesses invest and create jobs.   And the President directed me to get this job done quickly, because we needed to bolster both consumer spending and business investment to protect the health of our economy. 

And today, we are seeing that our action couldn't have been more timely.  We didn't wait for the twenty-twenty hindsight of economic data to confirm a slow economy, we knew it was happening.  And because we didn't wait, the bipartisan stimulus package the President and the Congress enacted is injecting dollars into the economy now, when it can make a real difference. 

It was a pleasure to work in a bipartisan spirit with House and Senate leaders.  Together, we crafted a stimulus package that is big enough to have an impact, easy to implement, provides targeted payments and is temporary.  We acted quickly to support our economy and help create jobs this year.

The package includes stimulus payments to households, and tax incentives for businesses to invest and create jobs.  For households, single filers generally will receive a minimum of $300 and as much as $600, and joint filers will generally receive at least $600 and up to $1,200.  There is also an additional $300 payment for each qualifying child.  Total cash to households will be over $100 billion. 

In 2001 and 2003, tax relief payments to individuals and families stimulated the broader economy by increasing consumer spending.  Evidence suggests that households spent one-third to two-thirds of their 2001 and 2003 payments, and the current stimulus package is almost three times as large as what was enacted in 2001 --- $38 billion then, versus $100 billion now.

For businesses, there is a temporary change to the tax code that will allow them to buy new equipment this year and deduct an additional 50 percent of that investment cost in 2008.  In addition, the package expanded the current expensing limits for small businesses, allowing up to $250,000 of qualifying purchases to be deducted for tax years beginning in 2008.  Businesses will save approximately $50 billion in near-term taxes and lower taxes will help create new jobs this year.

At $150 billion – or around 1 percent of GDP --- these business and household measures are large enough to make a real difference as we weather the current economic slowdown and, by the end of this year, will lead to the creation of over 500,000 new jobs that would not have been created otherwise.  And just as important, these initiatives are temporary – so as not to impact our long-term fiscal position.   The cooperation between the Administration and the Congress demonstrated to the nation and to the world that we can come together to address the needs of the American people.

On February 13th the President signed the Economic Stimulus Act of 2008, the bipartisan bill that set this stimulus process in motion.   Just 75 days later, on April 28th, the first electronic direct deposits were sent into Americans' bank accounts.  Last week, the first week of payments, 7.7 million individual direct deposits averaging $920 were sent, amounting to more than $7 billion.  And we are continuing this process every week, until about 44 million stimulus payments have been made through direct deposits. 

This morning at the FMS center I saw employees printing checks non-stop on high speed printers.  There are machines manufacturing envelopes and wrapping the envelopes around the checks. Checks are being sorted by zip code and loaded onto trays for pickup by the U.S. Postal Service. Today is the first day that economic stimulus checks are being mass produced --- more than two million checks are being printed at FMS centers across the country, and this is just the first big batch.   During the rest of May, Kansas City will print 2.5 million checks a week.  In June and July, once the regular tax filing season is finished, we expect Kansas City will send 3.75 million stimulus checks per week.  FMS centers in Philadelphia, Austin and San Francisco are also preparing checks that will be, without a doubt, in the mail soon.  In total, we will send an estimated 88 million stimulus payments as paper checks through the mail.        

By the end of May, we will have pumped almost $50 billion into the economy and another $50 billion will follow --- by early July, about 130 million households will have almost $100 billion of payments in-hand.  

We expect that these payments will help right away --- help individuals, families and our economy.  Giving people cash means they can decide how best to use it.  Seniors, veterans, moms, dads and grandparents can each put their payments toward what is important to them --- whether it's gas for a summer vacation, clothes for back to school, or a trip to see the grandkids.

And these payments will provide a boost to the U.S. economy as we go through a difficult patch.  Our economy had been growing for more than six straight years when growth started to slow last winter.  And it has remained slow in the first part of 2008.  Wages have risen, but so have the costs of food, gasoline, and health care.

In addition, after years of unsustainable home price appreciation, we are experiencing an inevitable and necessary housing correction.  We are working  to minimize the impact of the housing correction on the rest of the economy, but we do not want to impede its progress --- because the sooner the correction is completed, the sooner we will see home values stabilize, the sooner we will see more people buying homes, and the sooner housing will again contribute to economic growth. 

The ongoing housing correction and volatility in the financial markets are causing many Americans to feel uncertain. That is understandable and reasonable, and it's also true that the long-term economic prospects of the United States remain solid.  I never tire of repeating that we have the most resilient economy in the world --- because it is true --- and that we will emerge from this period as we have emerged from past periods of difficulty and move on to new heights. 

These stimulus payments will reduce the impact of the downturn on households across the nation.  I am pleased to be here and have seen the evidence that when we say the check will be in the mail, we mean it.  Thank you.

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Reminder: Treasury Secretary to Visit Printing Facility in Kansas City
Thursday to Observe Stimulus Checks Rolling off the Presses

Washington, DC--Treasury Secretary Henry M. Paulson, Jr. will tour a Treasury Department printing facility in Kansas City Thursday to observe the first mass production printing and packaging of the 2008 stimulus checks.  He will also deliver remarks on the economic stimulus payments at the Kansas City Central Library.

"By the end of June nearly 130 million stimulus payments should be in the hands of Americans, providing an immediate boost to the economy and helping to create more than 500,000 new jobs by the end of the year," said Paulson. 

The following events are open to the press:

What  
Facility Tour with Treasury Secretary Henry M. Paulson, Jr.
When  
Thursday, May 8, 8:00 a.m. CDT
Where  
Kansas City Regional Financial Center
4241 NE 34th Street
Kansas City, MO
Note 
All media should RSVP to Francie Abbott at (816) 414-2151, or Lauren Ray (816) 414-2113 with the following information: full name, Social Security number and date of birth, position, and organization. 

***

What  
Remarks by Treasury Secretary Henry M. Paulson, Jr. on Economic Stimulus
When  
Thursday, May 8, 9:30 a.m. CDT
Where  
Kansas City Central Library
Helzberg Auditorium
14 West 10th Street
Kansas City, MO
Note  
Media will need to show ID at the door; RSVPs not necessary.

Treasury Economic Update 5.2.08

"Today's employment report indicates that the U.S. economy continues to work through substantial challenges from the housing adjustment, high energy and food prices, and financial market conditions.  The Treasury Department sent out 7.7 million economic stimulus payments to American households this week, and the payments will continue through mid-July.  These payments, combined with the business investment incentives also included in the stimulus package, will provide significant support to household and business spending in the middle of the year."
Assistant Secretary Phillip Swagel, May 2, 2008

Employment Fell in April: 
Job Growth: Payroll employment fell by 20,000 in April, following a decrease of 81,000 in March. The United States has added 8.0 million jobs since August 2003.  Employment increased in 39 states and the District of Columbia over the year ending in March. (Last updated: May 2, 2008)
Low Unemployment: The unemployment rate was 5.0 percent in April, down from 5.1 percent in March.  (Last updated: May 2, 2008)
 
Signs of Economic Strength Include Exports and Low Inflation:
Exports: Strong global growth is boosting U.S. exports, which grew by 9.5 percent over the past 4 quarters. (Last updated: April 30, 2008)
Inflation: Core inflation remains contained.  The consumer price index excluding food and energy rose 2.4 percent over the 12 months ending in March. (Last updated: April 16, 2008)
 
The Economic Stimulus Package Will Provide a Temporary Boost to Our Economy:
The package will help our economy weather the housing correction and other challenges. The Economic Stimulus Act of 2008, signed into law by President Bush has two main elements--temporary individual tax relief so that working Americans have more money to spend and temporary tax incentives for businesses to invest and grow.  Together, the legislation will provide about $150 billion of tax relief for the economy in 2008, leading to the creation of over half a million additional jobs by the end of this year. (Last updated: February 29, 2008)
 
Pro-Growth Policies Will Enhance Long-Term U.S. Economic Strength:
We are on track to make significant further progress on the deficit. The FY07 budget deficit was down to 1.2 percent of GDP, from 1.9 percent in FY06.  Much of the improvement in the deficit reflects strong revenue growth, which in turn reflects strong economic growth.  Looking ahead, higher spending on entitlement programs dominates the future fiscal situation; we must squarely face up to the challenge of reforming these programs. 
www.treas.gov/economic-plan 

President’s Council on Financial Literacy Supports Treasury Launch of Financial Access Pilot

Jacksonville, Fla. - The Treasury Department today launched a new initiative to increase financial education and bank and credit union accounts for Americans currently outside of the financial mainstream. The Community Financial Access Pilot will help selected U.S. communities provide low and moderate income people with needed access to financial services. The initiative was recommended by the President's Advisory Council on Financial Literacy.

"Through this pilot, Treasury will work with banks, credit unions, community leaders, and educational providers to target the nearly 10 percent of American households estimated to fall outside the financial mainstream," said Dan Iannicola, Jr., Deputy Assistant Secretary for Financial Education.

Iannicola announced the initiative in Jacksonville, Fla., one of eight communities participating in the new pilot program. The other participating communities include Brownsville, Texas; Cowlitz County, Wash.; Eastern Kentucky; Mississippi Delta, Miss.; Fresno, Calif.; Philadelphia, Pa.; and St. Louis, Mo.

"Having a bank account is a critical part of being able to participate in our vibrant economic system," said Charles Schwab, Chairman of the President's Advisory Council on Financial Literacy. "This pilot will target the low-income families who need access to basic financial services, so they can stop paying outrageous fees just to cash a check or pay a bill.  It will also give low-income families access to basic financial education so that they can begin to build a better future."

The number of families using alternative financial service providers is estimated to be as high as 50 million.

Jacksonville, Fla. Mayor John Peyton said, "We're honored to have Jacksonville chosen to participate in this worthwhile new initiative. Our existing efforts, under the leadership of FreshMinistries, recognized in 2005 by the U.S. Treasury for Excellence in Financial Literacy, and its partners RealSense Prosperity Campaign, Individual Development Accounts and Family Foundation will be able to reach more low-to-moderate income families and help them save for the future. Money management is an essential skill for everyone, and an important component of both individual and regional prosperity."

Reverend Dr. Robert V. Lee III, a member of the President's Advisory Council on Financial Literacy and the founder and chairman of FreshMinistries also attended the pilot's national launch in Jacksonville, Florida. Information on the Community Financial Access Pilot is available at www.treas.gov/financialeducation.

Treasury Officials to Visit Schools Across U.S. for Annual Teach Children to Save Day

The U.S. Treasury Department and the American Bankers Association Education Foundation once again are partnering today for the 12th annual Teach Children to Save Day. Fourteen Treasury department officials and staff members will volunteer their time to teach America's elementary and high school students the importance of saving.

This is Treasury's fifth year participating in Teach Children to Save Day, when bankers and Department officials connect with students in classrooms and after-school programs to share "real life" lessons about money. 

The following events are open to the media:

Anna Escobedo Cabral, U.S. Treasurer
Boys and Girls Club of Burlington
62 Oak Street
Burlington, Vt.
3:30 p.m.

Donna Gambrell, CDFI Director
View Park Preparatory Accelerated Charter Elementary School
3751 W. 54th Street
Los Angeles, Calif.
8:30 a.m., 9:30 a.m. & 10:30 a.m.

Dan Iannicola, Deputy Assistant Secretary for Financial Education
Longbranch Elementary
3723 Franklin Street
Jacksonville, Fla.
1:00 p.m.

Christine McDaniel, Deputy Assistant Secretary for Economic Policy
Chandler Middle School
201 E. Brookland Park Boulevard
Richmond, Va.
10:00 a.m. & 1:00 p.m.

Barry Wides, Deputy Comptroller for Community Affairs, Office of the Comptroller of the Currency
William Hallett School
36-36 10th Street,
Long Island City, N.Y.
10:00 a.m.

Stafford Via, Deputy Executive Secretary
Redbud Run Elementary
250 First Woods Drive
Winchester, Va.
9:30 a.m. & 10:15 a.m.

Stacy Carlson, Speechwriter to the Treasury Secretary
Wagner Jr. High School
1701 W. Chelten Avenue
Philadelphia, Pa.
9:00 a.m. & 10:15 a.m.

Ed Bodensiek, Outreach Office of Financial Education Office Director
Coeur d'Alene High School
5530 N. 4^th Street
Coeur d'Alene, Idaho
9:50 a.m.

Skyway Elementary School
6621 Courcelles Parkway
Coeur d'Alene, Idaho
10:50 a.m.

Tom Kurek, Office of Financial Education Program Coordinator
Weymouth High School
1 Wildcat Way
Weymouth, Mass.
11:00 a.m.

Mary Kertz, Special Advisor to Special Envoy for China and the SED
L'Anse Creuse Middle School North
46201 Fairchild
Macomb Township, Mich.
9:30 a.m.

L'Anse Creuse High School North
23700 Twenty-One Mile Road
Macomb, Mich.
11:00 a.m.

Jamie Davenport, Program & Financial Analyst and Erin McKevitt, Compliance Advisor
Running Brook Elementary School
5215 West Running Brook Road
Columbia, Md.
1:40 p.m. & 2:15 p.m.

Neal Carlton, Office of the Treasurer
Ocean Springs Middle School
3600 Hanshaw Road
Ocean Springs, Miss.
9:15 a.m.

Oak Park Elementary School
2230 Government Street
Ocean Springs, Miss.
10:15 a.m.

Lopez Elementary School
140 St. John Street
Biloxi, Miss.
2:00 p.m.

Alise DeLeon, Office of Financial Education Analyst
U.S. Bank, NA
425 Walnut Street
Cincinnati, Ohio
9:00 a.m.

Statement for the Treasury Borrowing Advisory Committee
of the Securities Industry and Financial Markets Association

Washington, DC--Economic growth slowed considerably in the first part of 2008, with consumer and business spending affected by the housing downturn, credit market disruption, and the impact of high energy prices.  These headwinds are expected to be offset in part by the stimulus payments and investment incentives enacted in February as part of the Economic Stimulus Act of 2008.  Even so, the U.S. economy is likely to grow at a rate below trend and the labor market to remain soft throughout the year.

Real GDP grew at an annual rate of just 0.6 percent in the fourth quarter of 2007, and data released so far indicate that growth remained quite sluggish in the first quarter of 2008.  The advance estimate of first quarter GDP will be released on April 30.

Household spending has been affected by a weaker job market, declining wealth from housing and equity markets, and rising energy costs.  Real personal consumption expenditures were flat in February after having risen only slightly in January.  Together with lackluster retail sales in March, it appears likely that consumer spending slowed considerably in the first quarter from the 2.3 percent annual rate posted in the fourth quarter. 

Labor market conditions deteriorated in the first quarter after the job market had broadly slowed in the second half of 2007.  The unemployment rate reached a 2-1/2-year high of 5.1 percent in March, after averaging 4.6 percent over 2007.  Nonfarm payrolls fell by about 77,000 per month on average in the first quarter – the first quarterly decline in payrolls since August 2003. 

Housing market indicators point to another large decline in real residential investment in the first quarter, following a drop of 25 percent at an annual rate in the fourth quarter of 2007.  Housing starts fell to a 17-year low in March, with starts of single-family homes down by 63 percent from the January 2006 peak.  Sales of new single-family homes also fell to a 17-year low in March and existing single-family home sales in March were near the lowest point in the past 10 years.  Prices for purchased homes edged up slightly in February according to figures from the Office of Federal Housing Enterprise Oversight (OFHEO), but remained 2.4 percent lower than a year earlier.  Other measures such as the Case-Shiller indices indicate as well that home prices are declining in most major U.S. cities.  Widespread weakness in the housing data reflects the fact that the U.S. is undergoing a necessary housing correction following years of what were, in retrospect, unsustainable house price increases. 

Housing appears likely to subtract a full percentage point or more from growth in 2008 after taking off nearly as much in 2006 and 2007.  Inventories of unsold homes are at historically high levels, building permits remain well below starts, and homebuilder optimism is close to an all-time low.  Mortgage delinquencies and foreclosures are projected to rise further in 2008; the additional foreclosures will slow the process of working through the inventory overhang and in turn put additional downward pressure on home prices. 

Business investment growth appears to have slowed in the first quarter of 2008 from the 6 percent pace in the fourth quarter of last year.  Shipments of nondefense capital goods excluding aircraft--a key input into equipment and software spending in the national income and product accounts--rose 1.2 percent in March, partly retracing February's 1.6 percent decline.  Private nonresidential construction declined for three consecutive months through February.  Tighter credit conditions are likely to affect business spending going forward.

Export growth remains a bright spot in the outlook.  Real exports were up 8.4 percent during the four quarters of 2007, the second straight year of more than 8 percent growth.  Data for early 2008 suggest that export growth remains strong.  Real imports rose by 1 percent over the four quarters of 2007.  Nominal data through February suggest that import growth accelerated in the first part of 2008, with much of the increase reflecting the rising value of petroleum imports.  The wider trade deficit through February means that net exports are likely to add less to first-quarter real GDP growth than was the case in the second half of 2007, when trade contributed more than 1 percentage point to real GDP growth.

Headline inflation has picked up with energy and food prices, but measures of core inflation remain contained.  Overall consumer price inflation reached 4 percent in the twelve months ending in March, up from 2.8 percent a year earlier.  Energy prices started to climb rapidly last fall, with the front-month futures price of light sweet crude oil topping the $100 per barrel mark for the first time in February and averaging above $117 per barrel in late April.  Food prices are up 4.5 percent over the year ending in March, up from food price inflation of 3.3 percent a year ago.  Despite the pickup in headline inflation, core inflation remains within the narrow range that has prevailed over the past four years.  The core consumer price index, which excludes food and energy prices, rose 2.4 percent over the year ended in March, compared to 2.5 percent a year ago.  Rising inflation eroded the 3.6 percent increase in nominal average hourly earnings and meant that real wage growth turned negative in late 2007, with real wages down by 0.6 percent through the 12 months ending in March.

Economic growth appears to have remained sluggish in the second quarter to date, with the labor market deteriorating further.  Initial claims for unemployment insurance have continued to rise, with the four-week average of new claims up to around 370,000 in mid April from an average of 351,000 in the first quarter.  Consumer sentiment fell to a 26-year low in April, and homebuilder confidence remained near a record low.  Regional measures of manufacturing activity point to broadly flat factory activity in April.

The Economic Stimulus Act of 2008 will provide an important boost to GDP in the second half of the year: more than $150 billion in payments to individuals and business tax relief this year, with the first payments going to consumers this week.  These stimulus payments are expected to provide significant support to household and business spending in the middle of the year. 

Other policy actions of the Administration have been aimed at helping individual homeowners affected by the housing market downturn.  These include measures to help increased numbers of families to refinance their mortgages into fixed-rate products guaranteed by the Federal Housing Administration (FHA); since August, FHA has helped more than 170,000 homeowners refinance.  The Administration has also worked with the HOPE NOW Alliance on measures being taken by private lenders to prevent avoidable foreclosures in cases where borrowers have the desire and financial wherewithal to afford their home in a more suitable mortgage product.  These efforts have produced meaningful results: HOPE NOW announced in April that about 1.2 million struggling homeowners have received either a loan modification or repayment plan since July 2007 to help them stay in their homes.  Preventing avoidable foreclosures limits further increases in the inventory of unsold homes, which would otherwise extend the housing correction.  Legislative action on FHA modernization and GSE reform would assist additional homeowners and strengthen the financial sector and thus the overall U.S. economy.

In sum, the economy faces strong headwinds, as the housing correction, high energy prices, and strains in financial markets will continue to weigh on growth through 2008.  Tax rebates and investment incentives in the Economic Stimulus Act of 2008 will support consumer and business spending in the middle of the year.  A resumption of strong and sustainable growth, however, requires that the U.S. economy work through the corrections in housing and credit markets.

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April 28, 2008
hp-943

Treasury Announces Marketable Borrowing Estimates

Washington- Treasury announced its current estimates of marketable borrowing today for the April – June 2008 and July – September 2008 quarters:

• Over the April – June 2008 quarter, the Treasury expects to pay down $35 billion of marketable debt, assuming an end-of-June cash balance of $45 billion. This pay down estimate is $87 billion lower than announced in January 2008. The decrease in the amount of the pay down, and corresponding increase in borrowing, is primarily due to lower receipts, redemptions of portfolio holdings by the Federal Reserve System, and lower net issuances of State and Local Government Series securities.
• Over the July – September 2008 quarter, the Treasury expects to borrow $112 billion of marketable debt, assuming an end-of-September cash balance of $45 billion.

During the January – March 2008 quarter, Treasury borrowed $244 billion of marketable debt, finishing with a cash balance of $46 billion at the end of March. In January 2008, Treasury announced marketable borrowing of $156 billion, assuming an end-of-March cash balance of $25 billion. The increase in borrowing was primarily the result of lower receipts, redemptions of portfolio holdings by the Federal Reserve System and adjustments to cash balances.

In the past, Treasury has announced marketable borrowing as the total net issuance of marketable Treasury securities to all entities, including the Federal Reserve's System Open Market Account (SOMA). The Federal Reserve has redeemed SOMA holdings in excess of $130 billion since August 2007. In order to more accurately reflect borrowing from private market participants, net SOMA redemptions have not been included in Treasury's marketable borrowing estimates above. The table below details the impact of excluding net SOMA redemptions in the estimates for the current quarter and the actual results for the three previous quarters.

	Jul-Sep 07	Oct-Dec 07	Jan-Mar 08	Apr-Jun 08
Marketable Borrowing (Including SOMA)	105	87	191	-62
SOMA Redemptions	11	39	53	27
Marketable Borrowing (Excluding SOMA)	116	126	244	-35

Additional financing details relating to Treasury's Quarterly Refunding will be released at 9:00 a.m. on Wednesday, April 30.

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REPORTS

• Sources and Uses Reconciliation Table

Secretary Paulson Recognizes Individuals for Dedication to Volunteer Service

Washington, D.C. – Secretary Henry M. Paulson, Jr. presented the President's Lifetime Volunteer Service Award to Clint Hogbin, Gwen Lee, Ethel S. Kennedy, and Rodney Stotts as part of the USA Freedom Corps Volunteer Service Recognition Program today. These individuals have answered the President's call to service by serving over 4,000 hours each to various volunteer activities over their lifetimes.

Clint Hogbin has been active in numerous recycling, solid waste and land preservation programs since 1992. In 2007, he alone worked 728 hours on these volunteer activities while working as an Information Technology Specialist at the IRS.

Gwen Lee has demonstrated the call to service by hosting information booths, stuffing information packages, and serving on committees promoting and encouraging good environmental practices. She recently rented a billboard on I-15 (in Utah) and posted pro-environmental messages, a different one each month for 12 months.

Ethel S. Kennedy, a founding and current board member of the Earth Conservation Corps, has used her considerable influence and passion to fight for the health of the Anacostia River by engaging the underserved young people of the Anacostia River communities. Kennedy negotiated with Pepco, the U. S. Department of Interior, and the District Government to help secure the Earth Conservation Corps' two environmental learning centers on the river, which to date has served over 50,000 youth and adults and 500 Earth Conservation Corps members.

In 1992, Rodney Stotts and eight other youth from Anacostia set the bar for environmental service by pulling 5,000 tires out of Lower Beaver Dam Creek. He also participated in re-introducing the bald eagle to the Anacostia Watershed after it had disappeared from the area for nearly 50 years. Stotts is now on staff at Earth Conservation Corps as Youth Program Coordinator and manages and coordinates the AmeriCorps program.

In his January 2002 State of the Union Address, President Bush called on all Americans to make a difference in their communities through volunteer service. He created USA Freedom Corps, an Office of the White House, to strengthen and expand volunteer service. Americans are responding to the President's Call to Service. Go to www.volunteer.gov or call 1-877-USA-CORPS to find an existing volunteer service opportunity in your area or to find more information about service programs, including national service programs such as the Peace Corps, AmeriCorps, Senior Corps, and Citizen Corps. USA Freedom Corps is also highlighting youth volunteer service. Visit www.volunteerkids.gov for games and ideas designed to show how America's youth are making a difference.

The President's Volunteer Service Award was created at the President's direction by the President's Council on Service and Civic Participation. The Award is available to youth ages 14 and under who have completed 50 or more hours of volunteer service; to individuals 15 and older who have completed 100 or more hours; and to families or groups who have completed 200 or more hours. For more information about the Award, please visit www.presidentialserviceawards.gov

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Opening Statement by Secretary Henry M. Paulson, Jr.
before the House Committee on Appropriations
Subcommittee on State, Foreign Operations and Related Programs
on the FY 2009 International Programs Budget

Washington − Chairwoman Lowey, Congressman Wolf, Members of the Committee: Thank you for the opportunity to discuss the President's FY 2009 Budget request for the Department of the Treasury's International Programs. This Budget request of approximately $2.241 billion reflects the Bush Administration's commitment to promote economic growth and reduce poverty in the developing world. The Budget request provides support for the on-going efforts of the multilateral development banks (MDBs), debt restructuring programs and technical assistance. In providing these resources, the United States invests in economic, social and political stability around the world. Our support for these programs helps countries establish the policies and programs necessary to create the conditions for long-term private sector-led growth.

The FY 2009 Budget request also includes funding for a new, multilateral clean technology fund that will help major developing countries move towards a low carbon growth path. I will talk about this new initiative first.

International Clean Technology Fund

In September 2007, President Bush proposed the creation of the international clean technology fund (CTF) to help developing countries adopt clean energy technologies. As these countries build infrastructure that will exist for 30 years or more, we need to assist them to take advantage of cleaner, more advanced technologies. Otherwise, developing countries may be locked into a legacy of highly-polluting, less efficient – though less expensive – technologies. The proposed CTF would help cover the cost difference between older, dirtier technologies and cleaner, more advanced technologies. It would be created as a multilateral trust fund administered by the World Bank, and implemented through the MDBs. This fund represents a truly international approach to reduce rapid greenhouse gas emission growth in major developing countries.

The FY 2009 budget request includes $400 million for the first installment of a total U.S. pledge of $2 billion over three years. With additional funding from other countries, we will help finance clean energy projects in the developing world, which will benefit people around the world.

Multilateral Development Banks

In addition to this new initiative, the President's FY 2009 Budget requests a total of $2.071 billion for MDB funding, including $42 million to pay a portion of outstanding U.S. arrears to the International Development Association. The Budget request also includes U.S. contributions to replenish the International Development Association and the African Development Fund. This replenishment pledge will cover the U.S. contribution to the Multilateral Debt Relief Initiative from FY 2009 to 2011.

Through U.S. leadership, the MDBs are reforming their business practices. We have seen important progress in how the banks measure results. They are better at encouraging private sector development and business climate reforms. The MDBs are also showing improvements in transparency, anti-corruption systems and strengthening performance-based allocation systems to ensure that countries with stronger policies receive higher funding priority.

This progress is reflected in the new replenishment agreements that require policies which should deliver results for the world's poorest people and improve the Banks' effectiveness as it works with fragile states such as Afghanistan and Liberia. These measures will also expand the MDB work on anti-corruption policies, regional economic integration, and climate change initiatives.

In response to U.S. urging, the MDBs have made substantial progress to improve the debt sustainability of many developing countries. This includes the 2005 Multilateral Debt Relief Initiative (MDRI) and last year's agreement by the Inter-American Development Bank to provide 100 percent debt relief to the bank's five poorest borrowing countries. To ensure the gains from debt relief are not lost, all MDBs now use the World Bank/IMF debt sustainability framework to determine the appropriate mix of grants and concessional loans.

While efforts to make the MDBs more effective must continue, the banks are more accountable, transparent and results-oriented today than when President Bush took office in 2001.

Debt Restructuring Programs

This request also includes $141 million for debt restructuring programs. These funds will meet U.S. commitments for bilateral debt reduction for Heavily Indebted Poor Countries (HIPCs) and U.S. pledges for contributions to the HIPC Trust Fund. This request also includes $20 million for the Tropical Forest Conservation Act. The HIPC initiative is lifting crippling debt burdens off many of the world's poorest countries, freeing resources for poverty reduction, when those countries have demonstrated both sound economic policy and a commitment to fighting poverty.

Technical Assistance

The third component of this request includes $29 million for Treasury's Technical Assistance program. This is a small program that never makes the headlines. But from my travels around the world I know that it is both cost effective and valuable. Treasury's financial experts help countries strengthen their capacity to manage public finances, lay the financial groundwork for private sector led growth, and combat money laundering and terrorist financing. Building that capacity is also a vital complement to investments in other areas – debt relief, for example – and to the effectiveness of development assistance generally. If developing countries' fiscal houses are not well managed, our investments in schools, hospitals, roads and other critical infrastructure will not be sustained, or will have to be sustained by us indefinitely.

Conclusion

Overall, we believe that full funding of these international programs will allow Treasury to work with and support developing countries throughout the world as they strive to lift their people out of poverty and provide greater opportunities for prosperity and security.

Thank you for your past support and for your current consideration of these programs. I look forward to working with you during your deliberations and welcome your questions.

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