A telephone conference call between reporters and Jim Towey, Director of the White House Office of Faith-Based and Community Initiatives on February 7, 2005.

MR. DUFFY: Good afternoon, everyone, thanks for participating. This afternoon we have an on the record conference call -- that's right, on the record -- with Jim Towey, who's an assistant to the President and the Director of the Office of Faith-based and Community Issues, on the compassion related items in the federal budget -- well, specifically, the faith-based items. So I'll just turn it over to Jim for a quick summary and then we'll get to your questions.

MR. TOWEY: Thanks, Trent. Earlier this afternoon, Josh Bolten spoke of the need to sustain economic growth and restrain discretionary spending and proposed funding that sets priorities and rewards performance and also move in the direction of cutting the deficit in half -- and all the while doing this at a time when the country is fighting terrorism and promoting freedom abroad. And in that budget climate, and in light of tight budgetary times, President Bush today submitted a budget for 2006 that I think is compassionate, that continues to support partnerships between faith-based and community groups and government, so they can work together to address pressing social problems. In addition, I think not only is President Bush's budget compassionate, it gives greater choices to the poor and disadvantaged, in terms of social service providers and access to programs, and it maintains a vital safety net for those in need.

When you look at the history of President Bush's budget submissions since he took office in 2001, you've seen that his compassion agenda has been a high priority. He has proposed in his faith-based and community initiative over the years a number of distinct programs addressing specific needs in our country. For the five programs I'm going to speak specifically of -- the mentoring of the children of prisoners, the Compassion Capital Fund, the access to recovery drug treatment program, prisoner re-entry and maternity group homes -- those five budget accounts in the 2006 budget that President Bush submitted today, the request is for $385 million. This represents $150 million increase over 2005 appropriated amounts for those programs.

Included in that request of the President is the new gang prevention initiative, which he announced last week in his State of the Union address. This initiative seeks to promote positive youth development and help at-risk youth avoid the lure and attraction of gangs so that they can find more productive use of their time and, in a way, to develop to their full potential. And that initiative is $50 million in the budget this year, part of the $100 million requested in the Compassion Capital Fund the President asked. If you look historically, since the President took office, those programs have received a half-billion dollars in appropriations.

The budget, itself, of course, you've had an opportunity to look at and you've seen a number of them. I wanted to certainly highlight these faith-based and community initiatives, because we feel they hold so much promise in addressing the problems of at-risk youth, prisoners reentering society, children in need of mentoring. Certainly the Compassion Capital Fund, we've already awarded $100 million in grants to nearly 3,000 -- I'm sorry -- 3,000 sub-grants and then 152 mini grants, and 45 intermediary grants. Those are providing vital social services and technical assistance to faith-based and grassroots groups all over the country.

And, of course, many providers are faith-based; some are -- many providers are secular not-for-profits or governmental agencies, all of them working together to mobilize armies of compassion in the country. So we feel, when you look at the budget in light of the different pressures that the budget faces this year, the President has been able to bring forward a compassionate budget that meets the vital needs of people; and also, when you look at the homeless programs and the community health centers and other initiatives -- which Claude Allen, the President's Domestic Policy Advisor can address -- I think you see that the President, in spite of the difficult budgetary times, has come forward with a compassionate budget.

I'd be very happy now to answer any questions.

Q Thanks, Jim. I'm sorry, you were moving quickly. I was wondering if you could go back over the numbers -- the increase over -- across the board for the compassion and faith-based programs? And also maybe discuss from a philosophical standpoint how these increases kind of relate to some of the cuts that are going to come in other social service programs that are not necessarily done through faith-based programs and agencies, like HHS, and there's been a lot of talk today of the Medicaid cuts and all these other things.

MR. TOWEY: Sure. Well, I'll go -- I'll walk you through the numbers quickly, Peter. The 2006 budget request for the mentoring of the children of prisoners, that's $50 million for 2006. That's the same funding as was appropriated in 2005. The Compassion Capital Fund, the President is requesting $100 million. Last year, that was appropriated at $55 million. The Access to Recovery drug treatment program includes a $50 million increase. He's asking for $150 million in 2006. Right now, there are 14 states and one tribal government that have received access to recovery grants. The President wants to expand that to additional states this year, and that's why he has increased his request.

Prisoner reentry initiative, $75 million. That's $45 million above the appropriation for 2005. It's consistent with what the President outlined in his 2004 State of the Union, when he proposed a four-year, $300 million initiative. And then maternity group homes, he's requested $10 million this year to help at-risk moms and others -- women who have their babies and receive supportive services. So that's where he billed the $385 million, as compared to the $235 million for appropriations for those accounts.

I think when you look at -- all budgets reflect priorities, as well as prioritizing programs that are effective, and to look at ways in which we can meet the needs of the American people, especially those in need. I'd also point out his budget includes, as it has in the past, more incentives for charitable giving. I think he loves the involvement of the American people in these efforts, as well. And so once again he's proposing provisions for enhanced food donations, as well as a proposal for allowing retirees to take some of their retirement account money and roll it over into a charity without it being taxed, the so-called IRA rollover. So he's hopeful that Congress will act on that, as he has proposed in past budgets.

I think you can look at the budget, and many will examine it. When I look at the overall budget, and look at it in the context of previous submissions, I think it's a compassionate budget, in light of tight budgetary times. And when you see some of the new programs, such as the increase in funding on homeless grants and the community health centers -- which Claude Allen will speak of -- and then of course the increases here on faith-based and community programs, I think you see the President is maintaining this as a priority.

I want to stress though, when I speak of faith-based and community initiative grants, and the $385 million request, those are funds that go to secular not-for-profits, faith-based organizations, as well as governmental agencies and universities. And so our office, of course, is very much involved in, as the President makes this a priority for these programs, but keep in mind the grantees are a very diverse group of grantees. I think the President has balanced the issues and interests well and has come up with a compassionate budget in a tight budgetary time.

Q Can I ask a quick follow up?


Q I wonder if it's possible to draw conclusions, though, about kind of the general philosophy that the administration is coming from, where there are cuts to these more traditional social service programs, but in terms of percentages, fairly dramatic increases in some of the faith-based programs. I mean, does that indicate where you guys are coming from, in terms of your thinking on the future of social services?

MR. TOWEY: I'd have to defer to Claude Allen on the overall picture. I can simply say from my perspective that you look at traditional programs -- you know, Section 202, housing for the elderly, that's maintained at the same -- the President is asking for what was appropriated this year -- the social service block grant program. There is a number of traditional programs that are being maintained and I think Josh earlier spoke about a focus on performance. So I think in setting priorities, all budget documents set priorities. I think the President has chosen to go with the programs he thinks are the most effective and, of course, he has continued to maintain a strong belief that partnerships between government and America's armies of compassion mean a lot in the lives of our poor.

MR. DUFFY: And, Peter, just to add to that, as far as Medicaid is concerned, I don't know if you've seen Secretary Leavitt's speeches and his proposals, and his summaries of this -- talking about closing what is a pretty flagrant loophole with financing of Medicaid to ensure that the program doesn't grow so fast and so out of control that we cannot even afford to provide health care for those people that Medicaid was initially proposed for. So I would encourage you to take a look more specifically at the Medicaid proposal. Medicaid is still growing very fast, it's just -- a 7 percent clip, or something like that -- it just won't grow as fast if it can deal with some of these -- they're called inter-governmental transfers.

But if you're not familiar with the transactions, I'd be happy to walk you through them. I just think it's a little misleading to just call it a cut. If this were -- this is basically double-billing. It is. And Secretary Leavitt laid that out; he was a governor, and we want to work with the states on this, but we're very concerned in Medicaid that, unless we get a handle on it, that we're going to lose sight of the original people that we all wanted to cover. And let's not forget the President proposed SCHIP and Cover the Kids campaigns. We want to make sure that the federal dollars are going to federal Medicaid services. And that's currently, unfortunately, not the case.

Q Thanks.

Q My question has to do with a point that you made, Jim, about incentives for charitable giving. One thing that I'm wondering if you care to comment on is the fact that the budget does not include a provision that would allow non-itemizer -- non-itemizers to deduct charitable contributions, which is something that the administration had previously talked up a little bit. Do you have any thoughts about that?

MR. TOWEY: Well, I think the President, this year, when he was looking at the tax provisions of his budget, also looked at the landscape on things that he had requested year after year after year, that did not go anywhere in Congress.

As you may know, those provisions not only are costly, but the authorizing committees -- both Ways and Means and Senate Finance -- often struggled with the non-itemizer provision. And so I think what he was doing is in recognizing -- I think the President has put forward a very pragmatic budget that's looking at the art of the doable. And I think he believes that food donation provisions and the IRA rollover, which had enormous broad support, not only in Congress, but with the philanthropic communities and America's charities, I think he went forward with that and is hopeful that Congress will enact them.

MR. DUFFY: Okay. Thanks again for calling in, everyone. If you have any further questions, you know how to reach me.

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