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**Highlights of the President's Fiscal Year 2007 Budget Request**

February 6, 2006

-   The President's budget proposes \$2.77 trillion in total spending
    (including additional supplementals), an increase of \$61 billion or
    2.2%, as measured in federal outlays. Total spending over five years
    would amount to *\$14.807 trillion*.

-   Discretionary spending (excluding emergency spending) would total
    \$870.7 billion, an increase of \$27.4 billion or 3.2% over FY 2006.
    Defense would total \$439.3 billion, an increase of \$28.5 billion
    or 6.9% over FY 2006, while \$33.1 billion is provided for homeland
    security spending, an increase of \$1 billion or 3.3% over the prior
    fiscal year. *Non-security discretionary spending would be reduced
    by \$2.2 billion or 0.5% below FY 2006*.

-   Mandatory spending---programs on "auto-pilot" accounting for 63% of
    total spending---would increase by \$64 billion or 3.8% over FY
    2006, as measured in outlays. The President proposes \$75.2 billion
    in gross savings over five years that is offset by \$14.8 billion in
    new spending---resulting in *\$60.4 billion in net savings over five
    years*. **Note**: The \$65 billion figure in mandatory savings,
    reported in the press, does not include the outlay costs associated
    with proposed refundable tax credits. Overall, mandatory spending
    would grow at an average of 6.0% over five years.

-   The President's budget projects a FY 2007 deficit of \$354 billion
    (*including* the anticipated supplementals), the fourth largest
    nominal deficit in history and the 36^th^ largest as a share of the
    economy. The budget meets the Administration's goal of cutting the
    deficit in half as a share of GDP by 2009 (see table below).

  --------- ------------ ------------ ---------- ---------- ---------- ---------- ---------- ----------
            **FY04**                                                                         

            **Budget     **Actual**   **FY05**   **FY06**   **FY07**   **FY08**   **FY09**   **FY10**
            Estimate**                                                                       

  Unified   -521         -412         -318       -423       -354       -223       -183       -205
  Deficit                                                                                    
  (-)                                                                                        

  \% of GDP -4.5%        -3.6%        -2.6%      -3.2%      -2.6%      -1.5%      -1.1%      -1.2%
  --------- ------------ ------------ ---------- ---------- ---------- ---------- ---------- ----------

-   \$140.3 billion in emergency spending *is assumed* in the
    President's submission---\$120 billion for the Global War on Terror,
    \$18 billion further hurricane relief, and \$2.3 billion in avian
    flu preparedness---for FY 2006-2007. However, this funding is not
    offset, and it is unclear how such emergencies are either sudden
    ("quickly coming into being, not building up over time"), urgent
    ("pressing and compelling, requiring an immediate action"), or
    unforeseen ("not predictable or seen beforehand as a coming need")
    as defined on pg. 215 of the President's *Analytical Perspectives*.

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-   Medicare spending would increase by \$49 billion or 14.5% over FY
    2006 and grow at an average of 7.7% through FY 2011---even after
    including the President's proposals to save \$35.9 billion in
    Medicare funding over five years.

-   Social Security would increase by \$31 billion or 5.6% over FY 2006
    and grow at an average of 5.6% through FY 2011, as measured in
    outlays. In addition, the President funds two years of the
    transition to proposed Social Security personal accounts, costing
    \$81.6 billion over two years.

-   Medicaid and SCHIP spending would increase by \$7 billion or 3.5%
    over FY 2006 and grow at an average of 6.4% through FY 2011---after
    including both the President's proposals to save \$4.9 billion and
    spend \$3.5 billion over five years.

-   Veterans medical care would increase by \$2.2 billion or 9.6% over
    FY 2006.

-   The budget proposes to terminate or reduce 141 programs (a detailed
    list of the programs from the Administration is still pending).

-   The budget would prevent \$178.6 billion in tax increases over five
    years by making permanent the tax cuts from 2001 and 2003, while
    proposing an additional \$202.9 billion over five years in tax
    relief, including \$51.7 billion for health care-related tax
    provisions. Only one year of AMT relief is proposed (\$20.5 billion
    in FY 2007).

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-   The budget includes most of the provisions of the RSC consensus
    budget process reform legislation, the Family Budget Protection Act
    (H.R. 2290) including: a joint budget resolution, discretionary
    spending caps, a pay-as-you-go (PAYGO) provision for mandatory
    spending, emergency designation reforms, a line-item veto to
    withstand constitutional challenge, biennial budgeting, government
    shutdown protection, and a sunset commission.

**Staff Contact:** Russ Vought, x68581 or
[russell.vought@mail.house.gov]{.underline}