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**RSC FY 2007 Budget:**

**Contract with America RENEWED**

Rep. Mike Pence, RSC Chairman

Rep. Jeb Hensarling, RSC Budget & Spending Task Force Chairman

[www.house.gov/pence/rsc](http://www.house.gov/pence/rsc)

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March 8, 2006

To the American People:

This year's Republican Study Committee's budget alternative is about
freedom and opportunity. It is about allowing American families to keep
more of their own money and spend it on their own priorities rather than
Washington's, a reality that can only be accomplished through less
government, lower taxes, less federal spending, and economic prosperity.
This budget therefore is about renewal and change.

In 1994, Republicans across the country embraced a legislative platform
of freedom and opportunity, of getting spending under control, reducing
the tax burden, and shrinking the size of the federal government. The
principles of this "revolutionary" path were laid down in the Contract
with America, a "detailed agenda for national renewal" designed to
"restore the bonds of trust between the people and their elected
representatives." The nation responded to the Contract's vision by
transforming the political landscape in the House of Representatives and
Washington.

In 1995, the new Majority in the House acted boldly and with initial
success to enact the reform agenda it promised in the Contract. In
particular, the first House Republican budget resolution that year
(H.Con.Res. 67) sought to rein in the size and growth of government as
the Contract called for, with all but one member of the new majority
voting in favor. The Contract budget sought to balance the budget,
strengthen national security, and cut taxes while providing over \$1
trillion in deficit reduction. The budget poignantly stated:

> America stands at a crossroads. Down one path lies more and more debt
> and the continued degradation of the Federal Government and the people
> it is intended to serve. Down the other lies the restoration of the
> American dream...we choose the second of these roads. We do it because
> it's right. We do it because it's sensible. We do it because America's
> future does not belong to the Congress, or the administration, or any
> political party. It belongs to the American people themselves.

Unfortunately, we are once again at a historic crossroads in the
nation's future. Despite initial successes, Republicans today are
confronted with familiar challenges: expanding government, a worsening
fiscal position, and an explosive growth in spending and earmarks. In
fiscal year 2005, the federal government spent \$2.47 *trillion*---49%
more than it spent in fiscal year 1995 after adjusting for inflation.
The deficit for the current fiscal year is projected to be upwards of
\$400 billion, the largest nominally in history. In 1995, the public
debt limit stood at \$4.9 trillion; it now stands at \$8.2 trillion, up
67% and yet again in need of an increase. This is not the result of war
and economic challenges, as is often claimed, but rather an
unwillingness to make choices and trade offs.

In particular, nonpartisans such as the Congressional Budget Office and
the Government Accountability Office have been warning Congress that the
growth in direct spending (i.e., spending that is on auto-pilot and
outside the annual spending process) is occurring at an unsustainable
rate due to well-known demographic trends and other factors. By 2040,
Social Security, Medicare, and Medicaid alone will consume the entirety
of today's budget, as these programs fund the retirement and increased
healthcare costs of the baby boom generation. If we do nothing to
address the structural flaws, many intentionally embedded by big
spenders of the past, future lawmakers will have to either raise taxes
to obscene levels, destroying any chance our children and grandchildren
will have of a life of prosperity and opportunity, or deny funding to
literally every other federal program regardless of its
priority---defense, border security, veterans, and so forth. All will go
without, if our fiscal situation is not addressed now.

This is not the legacy the Members of the Republican Study Committee
wish to leave, a massive government and a crushing burden on future
generations. In crafting this year's budget, we have sought to update
the budget passed by the first House Republican majority in a
generation. Obviously, the replica is not exact; many things have
changed in the past decade and much good has been done. However, with
regard to the work that remains, we have tried to adhere closely to the
policy assumptions of that first budget and renew our commitment to
balancing the budget without raising taxes. We too believe that America
is at a crossroads, and we too choose the path that leads to the
restoration of the American dream. We propose for your consideration the
"RSC Budget: The Contract with America Renewed."

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Chairman, Republican Study Committee Chairman, RSC Budget & Spending
Taskforce

**TABLE of CONTENTS**

> Summary Table Page 5
>
> Function 050 -- National Defense Page 7
>
> Function 150 -- International Affairs Page 10
>
> Function 250 -- General Science, Space, and Technology Page 14
>
> Function 270 -- Energy Page 16
>
> Function 300 -- Natural Resources and Environment Page 19
>
> Function 350 -- Agriculture Page 24
>
> Function 370 -- Commerce and Housing Credit Page 27
>
> Function 400 -- Transportation Page 30
>
> Function 450 -- Community and Regional Development Page 35
>
> Function 500 -- Education, Training, Employment, and Social Services
> Page 38
>
> Function 550 -- Health Page 49
>
> Function 570 -- Medicare Page 54
>
> Function 600 -- Income Security Page 57
>
> Function 650 -- Social Security Page 61
>
> Function 700 -- Veterans Benefits and Services Page 63
>
> Function 750 -- Administration of Justice Page 64
>
> Function 800 -- General Government Page 66
>
> Function 920 -- Allowances Page 69
>
> Function 950 -- Offsetting Receipts Page 70
>
> Revenues Page 71
>
> Budget Process Reforms Page 72

  --------------------- ------------ ---- ----------- ----------- ----------- ----------- ----------- ----------- ------------
  **RSC Budget                                                                                                    
  Alternative\--Total                                                                                             
  Spending and                                                                                                    
  Revenues**                                                                                                      

  (In millions of                                                                                                 
  dollars)                                                                                                        

  Fiscal year                             2006        2007        2008        2009        2010        2011        2007-2011

  **Summary**                                                                                                     

  Total Spending                     BA   2,694,484   2,645,451   2,671,165   2,728,886   2,771,292   2,847,709   13,664,503

                                     OT   2,668,934   2,708,717   2,717,105   2,741,513   2,797,768   2,856,003   13,821,106

                        On-Budget    BA   2,265,157   2,197,306   2,208,964   2,247,453   2,271,960   2,329,022   11,254,705

                                     OT   2,242,021   2,262,787   2,257,421   2,263,020   2,301,476   2,340,846   11,425,550

                        Off-Budget   BA   429,327     448,145     462,201     481,433     499,332     518,687     2,409,798

                                     OT   426,913     445,930     459,684     478,493     496,292     515,157     2,395,556

  Revenues              Total             2,312,444   2,400,743   2,521,714   2,639,493   2,763,878   2,866,870   13,192,698

                        On-Budget         1,704,036   1,758,926   1,845,251   1,927,713   2,016,539   2,084,848   9,633,277

                        Off-Budget        608,408     641,817     676,463     711,780     747,339     782,022     3,559,421

  Surplus/Deficit (-)   Total             -356,490    -307,974    -195,391    -102,020    -33,890     10,867      -628,408

                        On-Budget         -537,985    -503,861    -412,170    -335,307    -284,937    -255,998    -1,792,273

                        Off-Budget        181,495     195,887     216,779     233,287     251,047     266,865     1,163,865

  Debt Held by the                        4,952       5,270       5,477       5,591       5,637       5,637       na
  Public (end of year)                                                                                            

  Debt Subject to Limit                   8,524       9,156       9,690       10,146      10,542      10,916      na
  (end of year)                                                                                                   

  **By Function**                                                                                                 

  National Defense                   BA   561,112     510,580     481,271     481,126     481,099     481,134     2,435,210
  (050)                                                                                                           

                                     OT   525,953     534,623     502,489     489,152     484,908     486,641     2,497,813

  International Affairs              BA   29,750      25,820      24,179      22,456      22,443      22,432      117,330
  (150)                                                                                                           

                                     OT   32,673      29,603      25,863      22,853      20,894      19,817      119,030

  General Science,                   BA   25,192      23,666      21,531      21,237      21,096      17,901      105,431
  Space,                                                                                                          

  and Technology (250)               OT   24,300      23,804      22,073      21,206      20,882      18,672      106,637

  Energy (270)                       BA   1,911       817         41          -169        -395        -509        -215

                                     OT   625         247         -1,116      -1,398      -1,583      -1,693      -5,543

  Natural Resources and              BA   33,701      28,230      27,649      27,419      27,340      26,629      137,267

  Environment (300)                  OT   32,809      31,991      30,547      29,435      29,284      27,859      149,116

  Agriculture (350)                  BA   28,915      26,006      20,430      18,742      18,392      18,534      102,104

                                     OT   27,310      25,581      19,739      18,006      17,506      17,767      98,599

  Commerce and Housing               BA   12,629      14,853      10,528      10,300      7,404       6,838       49,923

  Credit (370)                       OT   5,565       6,025       4,525       5,035       388         -575        15,398

                        On-budget    BA   14,529      15,853      13,028      12,000      11,504      11,298      63,683

                                     OT   7,465       7,025       7,025       6,735       4,493       3,885       29,163

                        Off-budget   BA   -1,900      -1,000      -2,500      -1,700      -4,100      -4,400      -13,700

                                     OT   -1,900      -1,000      -2,500      -1,700      -4,100      -4,400      -13,700

  Transportation (400)               BA   74,433      69,371      67,054      63,686      19,197      15,594      234,902

                                     OT   72,221      70,226      72,017      68,586      50,759      32,178      293,766

  Community and                      BA   19,354      9,080       7,963       7,963       7,965       7,967       40,938
  Regional                                                                                                        

  Development (450)                  OT   54,630      26,942      21,875      12,974      9,423       8,466       79,680

  Education, Training,               BA   106,413     78,706      75,421      73,973      72,876      71,986      372,962
  Employment                                                                                                      

  and Social Services                OT   99,958      86,415      77,978      74,089      72,155      70,929      381,566
  (500)                                                                                                           

  Health (550)                       BA   268,932     269,698     279,170     291,222     300,435     312,928     1,453,453

                                     OT   265,610     272,369     279,387     288,810     299,486     311,802     1,451,854

  Medicare (570)                     BA   342,270     359,207     376,393     395,226     413,594     437,641     1,982,061

                                     OT   336,790     364,668     376,441     394,815     413,906     437,686     1,987,516

  Income Security (600)              BA   351,610     346,496     355,080     365,727     376,340     390,469     1,834,112

                                     OT   356,727     355,735     361,544     369,553     378,687     391,965     1,857,484

  Social Security (650)              BA   556,897     585,379     613,241     645,216     680,429     717,599     3,241,864

                                     OT   554,483     583,164     610,724     642,276     677,389     714,069     3,227,622

                        On-budget    BA   15,173      16,918      18,817      20,697      22,869      26,483      105,784

                                     OT   15,173      16,918      18,817      20,697      22,869      26,483      105,784

                        Off-budget   BA   541,724     568,461     594,424     624,519     657,560     691,116     3,136,080

                                     OT   539,310     566,246     591,907     621,579     654,520     687,586     3,121,838

  Veterans Benefits and              BA   71,956      73,806      75,996      76,885      77,271      81,471      385,429

  Services (700)                     OT   69,763      72,887      76,254      77,093      77,312      81,289      384,835

  Administration of                  BA   41,809      42,307      40,721      40,620      40,514      40,404      204,566
  Justice (750)                                                                                                   

                                     OT   41,677      42,166      41,941      41,375      40,785      40,382      206,649

  General Government                 BA   18,701      18,206      17,880      17,988      18,100      18,142      90,316
  (800)                                                                                                           

                                     OT   18,941      18,353      17,962      17,849      17,905      17,940      90,009

  Net Interest (900)                 BA   217,793     244,718     261,330     268,261     271,855     269,615     1,315,779

                                     OT   217,793     244,718     261,330     268,261     271,855     269,615     1,315,779

                        On-budget    BA   316,593     351,718     377,930     395,761     411,255     421,915     1,958,579

                                     OT   316,593     351,718     377,930     395,761     411,255     421,915     1,958,579

                        Off-budget   BA   -98,800     -107,000    -116,600    -127,500    -139,400    -152,300    -642,800

                                     OT   -98,800     -107,000    -116,600    -127,500    -139,400    -152,300    -642,800

  Allowances (920)                   BA   0           -2,830      -2,830      -2,830      -2,830      -2,830      -14,150

                                     OT   0           -1,685      -2,260      -2,545      -2,685      -2,770      -11,945

  Undistributed                      BA   -68,894     -78,665     -81,883     -96,162     -81,743     -86,296     -424,749
  Offsetting                                                                                                      

  Receipts (950)                     OT   -68,894     -79,115     -82,208     -95,912     -81,493     -86,096     -424,824

                        On-budget    BA   -57,197     -66,349     -68,760     -82,276     -67,105     -70,567     -355,057

                                     OT   -57,197     -66,799     -69,085     -82,026     -66,765     -70,367     -355,042

                        Off-budget   BA   -11,697     -12,316     -13,123     -13,886     -14,728     -15,729     -69,782

                                     OT   -11,697     -12,316     -13,123     -13,886     -14,728     -15,729     -69,782
  --------------------- ------------ ---- ----------- ----------- ----------- ----------- ----------- ----------- ------------

**NOTE**

The specific items presented in this budget are for illustrative
purposes only. The authorizing committees with jurisdiction over the
programs mentioned in these functions would make final determinations
about the program changes needed to meet the spending levels indicated.
The proposals below are intended simply to indicate suggestions of one
path toward reaching a balanced budget by fiscal year 2011.

**FUNCTION 050: NATIONAL DEFENSE**

This function consists of spending for all military activities of the
Department of Defense (DoD) and for defense-related activities of the
Department of Energy (DoE).

[Summary of Policy Assumptions]{.smallcaps}

  -------------------------- ------------ --------- --------- --------- --------- --------- --------- -----------
  **RSC Recommendation**                                                                              

  **Function 050: National                                                                            
  Defense**                                                                                           

  \[In millions of dollars\]                                                                          

                                                                                                      

  Fiscal Year                             2006      2007      2008      2009      2010      2011      2007-2011

  National Defense Function  BA           561,112   510,580   481,271   481,126   481,099   481,134   2,435,210
  Totals                                                                                              

                             OT           525,953   534,623   502,489   489,152   484,908   486,641   2,497,813

                                                                                                       

  **DISCRETIONARY**          **Changes                                                                
                             from RSC                                                                 
                             Baseline**                                                               

  Increase Spending to       BA           70,444    77,572    48,776    48,017    47,209    46,350    267,924
  Admin. Request                                                                                      

                             OT           22,767    79,105    60,942    52,987    50,512    49,015    292,561

  Reduce Funding for Applied BA           0         -1,105    -1,105    -1,105    -1,105    -1,105    -5,525
  Research                                                                                            

                             OT           0         -575      -997      -1,069    -1,091    -1,098    -4,830

  Speed Disposal of Excess   BA           0         -15       -27       -6        -3        0         -51
  Naval Vessels                                                                                       

                             OT           0         -15       -27       -6        -3        0         -51

  Introduce HSAs as a        BA           0         -20       -81       -193      -203      -203      -700
  TRICARE Option                                                                                      

                             OT           0         -16       -68       -169      -197      -201      -651

  Eliminate Dual-Use         BA           0         -982      -1,964    -1,964    -1,964    -1,964    -8,838
  Technology Develop.                                                                                 

                             OT           0         -501      -1,393    -1,850    -1,930    -1,950    -7,624

  Consolidate the Military   BA           0         -82       -143      -202      -202      -202      -831
  Exchanges                                                                                           

                             OT           0         -57       -120      -179      -197      -200      -753

  Reduce the Maritime        BA           0         -78       -78       -78       -78       -78       -390
  Security Program                                                                                    

                             OT           0         -72       -78       -78       -78       -78       -384

  Close the Domestic         BA           0         23        -38       -103      -158      -215      -491
  Dependent Schools                                                                                   

                             OT           0         14        -15       -74       -132      -188      -395

  **DIRECT**                                                                                          

  Speed Disposal of Excess   BA           0         -52       -55       -6        -7        0         -120
  Naval Vessels                                                                                       

                             OT           0         -52       -55       -6        -7        0         -120
  -------------------------- ------------ --------- --------- --------- --------- --------- --------- -----------

[Discussion of Policy Assumptions]{.smallcaps}

[Discretionary Savings]{.smallcaps}

*Increase Defense Spending to the President's FY 2007 Request.* The
level of defense spending in this function accommodates the President's
requested level, as adjusted for the savings proposals described below.
Excluding emergency spending, total defense spending in FY 2007 would
*increase* by \$25.2 billion or *5.8 percent* over the prior fiscal
year. This budget also includes a \$50 billion bridge fund for FY 2007,
in anticipation of additional needs in Afghanistan, Iraq, and the Global
War on Terrorism, as proposed by the President. In fiscal years
thereafter, this fund will be deficit-neutral, thus encouraging the
President and Congress to search for offsets in low-priority,
non-defense spending to pay for additional defense spending in the
coming fiscal year *or* fund needed spending through regular order. (In
addition, the budget adjusts FY 2006 levels to accommodate \$70.4
billion in supplemental funding for these activities in the current
year). These defense spending increases are significant evidence of this
budget's commitment to meeting the nation's security needs. However, any
serious effort to balance the budget must not allow the Department of
Defense (DoD) to escape the scrutiny that other departments of
government will receive.

*Reduce Funding for the Applied Research Program.* The Applied Research
Program at DoD focuses on developing and assessing military technology,
taking the results of basic research and applying it to their potential
use in the field. However, in recent years, Congress has provided more
funding than the President requested due in part to significant
earmarking within the program. This budget would reduce funding for the
Applied Research Program to the FY 2006 funding level.

*Simplify and Speed the Disposal of Excess Naval Vessels*. The sale,
lease, or grant of excess naval vessels to other nations must be
authorized by Congress if the vessel is over 3,000 tons or less than 20
years of age. Other older defense articles, such as military jets and
tanks, can be sold by simply notifying Congress. The delay that
Congressional authorization creates costs an estimated \$4 million per
ship to mothball and store. The budget would eliminate administrative
red tape, speeding the sale of these naval vessels and saving taxpayers
money. This proposal was included in the RSC's "Operation Offset" in
2005.

*Introduce Health Savings Accounts as a TRICARE Option*. Under the
Department of Defense's health care plan, TRICARE, military personnel
would have *the option* of receiving a cash allotment to purchase a less
comprehensive health care plan and keep the remaining cash or remain in
their current plans. The less comprehensive plan would encourage
individuals to be more cost-conscious when purchasing health care
products by including deductibles, co-payments, and a maximum annual
out-of-pocket expenditure limit. This proposal was included in the RSC's
"Operation Offset" in 2005.

*Eliminate Certain Dual-Use Technology Program.* The Pentagon funds a
variety of applied research and development programs to develop dual-use
technologies (i.e., both military and civilian uses). According to the
Cato Institute, such research grants often subsidize large companies,
such as Boeing or Hewlett Packard. This budget would eliminate the
following dual use programs: the Advanced Electronics Technologies
Program, the Computing Systems and Communications Technology Program,
the Materials and Electronics Technology Program, the Small Business
Innovation and Research & Technology Program, and the Robert C. Byrd
Institute for Advanced Flexible Manufacturing (at Marshall University).

*Consolidate and Encourage Efficiencies in Military Exchanges*. The
Pentagon operates three separate military exchanges, the Army and Air
Force exchange, the Navy exchange, and the Marine Corps exchange.
Consolidating these three exchanges into one would eliminate
inefficiencies from duplicative purchasing, different personnel
departments, warehouse and inventory systems, and management
headquarters while retaining the current ability for service members and
their families to receive a wide selection of goods at a low price. This
proposal was included in the RSC's "Operation Offset" in 2005.

*Eliminate the Department of Defense's Elementary and Secondary
Schools.* The Pentagon operates special elementary and secondary schools
on several domestic bases *in the United States*. This system is
separate from the one in operation for military children overseas. This
option would phase out these domestic schools over time and shift these
military children into the local public school systems. These programs
date to the time of segregation when public schools in the South did not
serve an integrated military, and most military bases nationwide do not
currently contain such schools. This proposal was included in the RSC's
"Operation Offset" in 2005.

**FUNCTION 150: INTERNATIONAL AFFAIRS**

This function covers all spending on international programs by various
departments and agencies. It includes spending by the Department of
State to conduct foreign relations, economic and humanitarian aid to
developing countries, military and other assistance to strengthen allied
nations and enhance U.S. security, radio and television broadcasting and
exchange programs to promote democracy and U.S. ideals, and financing
for the export of U.S. goods and services.

[Summary of Policy Assumptions]{.smallcaps}

  ----------------------------- ------------ -------- -------- -------- -------- -------- -------- -----------
  **RSC Recommendation**                                                                           

  **Function 150: International                                                                    
  Affairs**                                                                                        

  \[In millions of dollars\]                                                                       

                                                                                                   

  Fiscal Year                                2006     2007     2008     2009     2010     2011     2007-2011

  International Affairs         BA           29,750   25,820   24,179   22,456   22,443   22,432   117,330
  Function Totals                                                                                  

                                OT           32,673   29,603   25,863   22,853   20,894   19,817   119,030

                                                                                                    

  **DISCRETIONARY**             **Changes                                                          
                                from RSC                                                           
                                Baseline**                                                         

  Cease Supporting Int.         BA           0        -1,273   -1,273   -1,273   -1,273   -1,273   -6,365
  Develop. Banks                                                                                   

                                OT           0        -113     -702     -1,149   -1,204   -1,229   -4,397

  Reduce Peace Corps by 10      BA           0        -32      -32      -32      -32      -32      -160
  Percent                                                                                          

                                OT           0        -25      -31      -31      -31      -31      -149

  Eliminate Export and          BA           0        -170     -169     -186     -206     -219     -950
  Investment Subsidies                                                                             

                                OT           0        -25      -67      -106     -140     -162     -500

  Eliminate USAID               BA           0        -1,896   -3,596   -5,302   -5,302   -5,302   -21,398

                                OT           0        -654     -1,778   -3,216   -4,320   -4,838   -14,806

  Eliminate Millennium          BA           0        -1,745   -1,750   -1,755   -1,760   -1,765   -8,775
  Challenge Accounts                                                                               

                                OT           0        -131     -611     -1,251   -1,656   -1,677   -5,326

  Eliminate Economic Support to BA           0        -503     -503     -503     -503     -503     -2,515
  Egypt                                                                                            

                                OT           0        -115     -286     -368     -435     -470     -1,674

  Reduce UN Peacekeeping        BA           0        -517     -517     -517     -517     -517     -2,585
  Contribution                                                                                     

                                OT           0        -517     -517     -517     -517     -517     -2,585

  Reduce Contributions to       BA           0        -147     -147     -147     -147     -147     -735
  Internat. Organ.                                                                                 

                                OT           0        -144     -147     -147     -147     -147     -732

  Reduce Duplication in US      BA           0        -208     -148     -148     -148     -148     -800
  Foreign Policy                                                                                   

                                OT           0        -110     -164     -163     -148     -148     -733

  Eliminate Radio Free Europe   BA           0        -75      -75      -75      -75      -75      -375
  and Liberty                                                                                      

                                OT           0        -75      -75      -75      -75      -75      -375
  ----------------------------- ------------ -------- -------- -------- -------- -------- -------- -----------

[Discussion of Policy Assumptions]{.smallcaps}

[Discretionary Savings]{.smallcaps}

*Cease Supporting the International Development Association (IDA),
Multilateral Development Banks (Excluding the World Bank), and the
Global Environment Facility.* IDA, an affiliate of the World Bank, is
supposed to make low-interest loans to the world's poorest nations. The
Multilateral Development Banks (MDBs), including the Inter-American
Development Bank, the Asian Development Bank, the African Development
Bank, and the European Bank for Reconstruction and Development, finance
development projects in less developed countries. Under this proposal,
the U.S. would continue to be a member and stockholder in the banks but
would stop supplying new capital. The Global Environment Facility, which
provides technical assistance and funding for projects to protect the
global environment, would also be eliminated. A similar proposal was
included in the original budget resolution (H.Con.Res. 67) passed by the
House of Representatives in 1995.

*Reduce Peace Corps by Ten Percent.* The Peace Corps provides funding to
send Americans overseas to work in underdeveloped countries. While the
program's goals might be laudatory, it is questionable whether such
activities fit within the federal government's proper role, especially
with the availability of private charitable organizations. This proposal
would reduce Peace Corps funding by 10 percent. A similar proposal was
included in the original budget resolution (H.Con.Res. 67) passed by the
House of Representatives in 1995.

*Eliminate International Export/Investment Agencies.* This proposal
eliminates the Overseas Private Investment Corporation (OPIC), the U.S.
Trade and Development Agency, and the Export-Import Bank. OPIC is a
government corporation that provides financing and political risk
insurance to U.S. companies investing in developing regions, a function
that can be performed through the private sector. The Export-Import Bank
promotes U.S. exports by providing subsidized financing to foreign
buyers of U.S. goods. The bank makes loans set at below-market rates and
guarantees private lending without receiving full compensation for the
contingent liabilities. Likewise, the U.S. Trade and Development Agency
(TDA) provides grants for feasibility studies for major development
projects in the developing world. A similar proposal was included in the
original budget resolution (H.Con.Res. 67) passed by the House of
Representatives in 1995.

*Eliminate Development and Humanitarian Assistance.* The Agency for
International Development (USAID) administers development-related
projects and provides technical advice to roughly 100 countries. In many
cases, these programs have been wasteful and ineffective. According to
the Heritage Foundation, over the past 45 years, the U.S. has spent
roughly \$1.5 trillion "with few development success stories---none
clearly attributable to provision of development assistance." This
proposal eliminates USAID funding. A similar proposal was included in
the original budget resolution (H.Con.Res. 67) passed by the House of
Representatives in 1995.

*Eliminate Millennium Challenge Accounts.* President Bush's initiative
to restructure foreign aid to reward and therefore provide incentives to
countries taking steps towards economic independence has been added on
top of, *instead of replacing*, the USAID budget. While this program is
arguably far more effective in dispensing foreign aid than other
programs, any effort to balance the budget must make tough choices and
prioritize funding decisions. This proposal was included in the RSC's
"Operation Offset" in 2005.

*Eliminate Economic Assistance to Egypt.* Since 1979, Congress has
provided foreign aid to Egypt, as many other nations do. However, Egypt
has been unable to spend all of our funds and delayed internal reforms
needed to foster self-sustaining growth. Despite being the second
largest recipient of U.S. foreign assistance, Egypt's democratic
development has been extremely limited and its human rights record
remains poor, according to the Department of State's Country Reports on
Human Rights Practices for 2004. Egyptian authorities continue to
mistreat and torture prisoners, arbitrarily arrest and detain persons,
hold detainees in prolonged pretrial detention, and occasionally engage
in mass arrests without charge. For instance, according to recent press
reports, the runner-up in the last presidential contest, Ayman Nour, was
placed behind bars on spurious charges, and in December, 27 Sudanese
refugees (including infants and grandparents) were beaten by a Cairo
police squad. In addition, according to Freedom in the World 2005,
"corruption in Egypt is a serious problem," discrediting claims that
such U.S. aid is being spent as intended. This proposal would reduce
funding for the Economic Support Fund by eliminating such assistance to
Egypt (funding through the separate Foreign Military Financing Program
would continue). A similar proposal was included in the RSC's "Operation
Offset" in 2005.

*Reduce Funding for U.N. Peacekeeping Operations*. The United States is
the largest financial contributor to the U.N. peacekeeping budget.
Current military obligations in Iraq and Afghanistan, including U.S.
peacekeeping efforts in the region, are not deducted from what the U.N.
assesses the U.S. in dues. In addition, U.N. peacekeepers have been
involved in a litany of scandals. In 2002 and 2003, Human Rights Watch
accused peacekeepers in Sierra Leone of systematically raping women. In
2005, peacekeeping staff ran up more than \$500,000 in unpaid
international calls. Currently, peacekeepers stand accused in the
Democratic Republic of Congo of widespread sexual exploitation of
refugees. According to recent press reports, waste is rampant: The UN
paid \$10.4 million to lease a helicopter in East Timor when it could
have been secured for \$1.6 million, \$2.4 million to buy aircraft
hangers in Congo that were never used, and roughly \$193 million in
fraudulent contracts (nearly *20 percent* of the \$1 billion in
contracts that were examined). This proposal would reduce funding for
U.N. peacekeeping operations by 50 percent. A similar proposal was
included in the original budget resolution (H.Con.Res. 67) passed by the
House of Representatives in 1995.

*Cease Contributions to International Organizations.* The United States
pays assessed contributions through the Department of State for
International Organizations and Conferences, including the Organization
for Economic Cooperation and Development (a Paris-based organization
that supports higher U.S. taxes), the International Labor Organization,
the United Nations Industrial Development Organization, the Universal
Postal Union (encourages a "universal, efficient" postal service), and
the Bureau of International Expositions. A similar proposal was included
in the original budget resolution (H.Con.Res. 67) passed by the House of
Representatives in 1995.

*Reduce Duplication in Foreign Policy.* Several small agencies, such as
the U.S. Institute of Peace, the Asia Foundation, the National Endowment
for Democracy, the East-West Center, and the North-South Center, perform
foreign affairs activities that duplicate functions conducted by the
Department of State. This proposal would eliminate these agencies and
allow for a more coherent foreign policy. A similar proposal was
included in the original budget resolution (H.Con.Res. 67) passed by the
House of Representatives in 1995.

*Eliminate Some Overseas Broadcasting.* Radio Free Europe (RFE) and
Radio Liberty (RL) broadcast country-specific news to Eastern Europe and
the former Soviet Union, respectively. This proposal would eliminate or
privatize RFE and RL, now that the Cold War is over. Voice of America
broadcasting would remain intact. A similar proposal was included in the
original budget resolution (H.Con.Res. 67) passed by the House of
Representatives in 1995.

**FUNCTION 250: GENERAL SCIENCE, SPACE, AND TECHNOLOGY**

This function includes federal funding for broadly based scientific
research and development. It includes research funding for three
agencies: the National Aeronautics and Space Administration (NASA), the
National Science Foundation, and the Department of Energy's (DoE's)
general science programs. (Federal funding for research and development
related to agency missions or particular industries, such as defense,
health, or agriculture, is included in those respective budget
functions).

[Summary of Policy Assumptions]{.smallcaps}

  ----------------------------- ------------ -------- -------- -------- -------- -------- -------- -----------
  **RSC Recommendation**                                                                           

  **Function 250: General                                                                          
  Science, Space, and                                                                              
  Technology**                                                                                     

  \[In millions of dollars\]                                                                       

                                                                                                   

  Fiscal Year                                2006     2007     2008     2009     2010     2011     2007-2011

  General Science Function      BA           25,192   23,666   21,531   21,237   21,096   17,901   105,431
  Totals                                                                                           

                                OT           24,300   23,804   22,073   21,206   20,882   18,672   106,637

                                                                                                    

  **DISCRETIONARY**             **Changes                                                          
                                from RSC                                                           
                                Baseline**                                                         

  Eliminate NSF Element. &      BA           0        -86      -171     -171     -171     -171     -770
  Second. Edu.                                                                                     

                                OT           0        -10      -55      -113     -146     -158     -482

  Reduce NSF Bureaucracy to     BA           0        -33      -33      -33      -33      -33      -165
  FY04 Levels                                                                                      

                                OT           0        -29      -33      -33      -33      -33      -161

  Reduce NASA Vehicles System   BA           0        -103     -103     -103     -103     -103     -515
  Program                                                                                          

                                OT           0        -68      -96      -101     -102     -103     -470

  Eliminate the Moon/Mars       BA           0        -625     -2,295   -2,295   -2,295   -2,295   -9,805
  Initiative                                                                                       

                                OT           0        -413     -1,683   -2,162   -2,247   -2,275   -8,780

  Eliminate Space Shuttle after BA           0        -421     -690     -983     -1,126   -4,321   -7,541
  ISS Complete                                                                                     

                                OT           0        -278     -569     -854     -1,046   -3,213   -5,960

  Eliminate the NASA Education  BA           0        -45      -162     -162     -162     -162     -693
  Program                                                                                          

                                OT           0        -30      -119     -153     -159     -161     -622
  ----------------------------- ------------ -------- -------- -------- -------- -------- -------- -----------

[Discussion of Policy Assumptions]{.smallcaps}

[Discretionary Savings]{.smallcaps}

*Eliminate Elementary and Secondary Education at the National Science
Foundation (NSF).* The NSF's Elementary and Secondary Education program
promotes math and science education in elementary and secondary schools.
However, the program is duplicative of the existing *207* different
federal programs dedicated to promoting science, technology,
engineering, and mathematics education. This proposal would eliminate
this program at NSF. A similar proposal was included in the original
budget resolution (H.Con.Res. 67) passed by the House of Representatives
in 1995.

*Reduce NSF Bureaucracy*. This proposal would fund the salaries and
expenses account at the National Science Foundation at the FY 2004
level. A similar proposal was included in the original budget resolution
(H.Con.Res. 67) passed by the House of Representatives in 1995.

*Reduce the Vehicles Systems Program.* NASA's Vehicle Systems Program
conducts primarily long-term research for the purposes of developing
environmentally friendly air transportation systems. After reviewing
this program, the National Research Council recommended that the
Vehicles Systems Program reduce its number of research projects. In
addition, this type of research is currently being conducted in the
private sector. This proposal would reduce funding for the Vehicles
Systems Program at NASA to the President's request for FY 2006.

*Cancel NASA's Moon/Mars Exploration Initiative and Retire the Space
Shuttle After Completion of the International Space Station*. In 2004,
the President announced a new initiative to explore the Moon and Mars
with the goal of returning humans to the Moon by 2020. NASA currently
intends to use the savings from phasing out the space shuttle in 2012 to
fund this program. However, the proposed transition will take six more
years, costing taxpayers money on administrative and program expenses
associated with simultaneously operating both programs. This proposal
would cancel the new mission and would retire the space shuttle *after*
completion of the International Space Station. A similar proposal was
included in the original budget resolution (H.Con.Res. 67) passed by the
House of Representatives in 1995.

*Eliminate the Education Program at NASA*. NASA's education program is
designed to encourage students to study space-related disciplines
including science, technology, engineering, and mathematics so they
would eventually choose a career related to space exploration. However,
the federal government currently operates and provides funding for *207*
different education programs, and the education program at NASA is
duplicative of these efforts.

**FUNCTION 270: ENERGY**

This function funds energy research, production, conservation, and
regulation. It includes the Department of Energy's (DoE's) civilian
programs, such as energy-related research and development; operation of
the Strategic Petroleum Reserve; environmental cleanup of federal sites
used for civilian energy research and production; development of a
repository for nuclear waste at Yucca Mountain, Nevada; and grants to
states for energy conservation measures. In addition, Function 270
covers federal agencies that generate and sell electricity, such as the
Tennessee Valley Authority and the four power marketing administrations
that are managed by DoE.

[Summary of Policy Assumptions]{.smallcaps}

  ---------------------------- ------------ ------- ------ -------- -------- -------- -------- -----------
  **RSC Recommendation**                                                                       

  **Function 270: Energy**                                                                     

  \[In millions of dollars\]                                                                   

                                                                                               

  Fiscal Year                               2006    2007   2008     2009     2010     2011     2007-2011

  Energy Function Totals       BA           1,911   817    41       -169     -395     -509     -215

                               OT           625     247    -1,116   -1,398   -1,583   -1,693   -5,543

                                                                                                

  **DISCRETIONARY**            **Changes                                                       
                               from RSC                                                        
                               Baseline**                                                      

  Eliminate Fossil Energy R&D  BA           0       -478   -598     -598     -598     -598     -2,870

                               OT           0       -120   -317     -478     -532     -562     -2,009

  Eliminate Supply and         BA           0       -713   -891     -891     -891     -891     -4,277
  Conservation                                                                                 

                               OT           0       -321   -686     -829     -882     -891     -3,609

  Eliminate Adv. Approps. for  BA           0       -48    -48      -48      -48      -48      -240
  Elk Hills                                                                                    

                               OT           0       -48    -48      -48      -48      -48      -240

  Eliminate Energy             BA           0       -770   -928     -928     -928     -928     -4,482
  Conservation                                                                                 

                               OT           0       -385   -710     -890     -928     -928     -3,841

  Reduce Administration        BA           0       -79    -79      -79      -79      -79      -395
  Account                                                                                      

                               OT           0       -55    -71      -79      -79      -79      -363

  **DIRECT**                                                                                   

  Market Rates for             BA           0       0      -29      -29      -30      -30      -118
  Southwestern PMA                                                                             

                               OT           0       0      -29      -29      -30      -30      -118

  Market Rates for             BA           0       0      -74      -76      -77      -78      -305
  Southeastern PMA                                                                             

                               OT           0       0      -74      -76      -77      -78      -305

  Market Rates for Western PMA BA           0       0      -88      -89      -91      -92      -360

                               OT           0       0      -88      -89      -91      -92      -360
  ---------------------------- ------------ ------- ------ -------- -------- -------- -------- -----------

[Discussion of Policy Assumptions]{.smallcaps}

[Discretionary Savings]{.smallcaps}

*Eliminate the Applied Research for Fossil Fuels Energy*. Each year, the
Department of Energy (DoE) receives roughly \$500 million to fund
applied research on sources and uses of petroleum, coal and natural gas.
Although the federal government may have a role in basic research, it
should not be engaged in applied research---particularly when this type
of research is conducted by numerous private sector suppliers generating
extensive general revenues with which they fund private fossil fuel
research. Often times applied research funding is simply corporate
welfare for the oil, gas, and utility industries. The option would
eliminate funding for the DoE Applied Research for Fossil Fuels Energy.
A similar proposal was included in the original budget resolution
(H.Con.Res. 67) passed by the House of Representatives in 1995.

*Eliminate the Energy Supply and Conservation Program.* This program is
designed to develop new energy conserving technology, as well as improve
productivity of existing energy technology, using basic and applied
research. Businesses have incentives to market, and customers to buy,
conservation technologies that work well. DoE is left to fund the less
reliable and less promising technologies. This option would eliminate
funding for the Energy Supply and Conservation Program. A similar
proposal was included in the original budget resolution (H.Con.Res. 67)
passed by the House of Representatives in 1995.

*Eliminate Applied Research for Energy Conservation and Renewable Energy
Sources.* While energy conservation efforts in the private sector have
proven very successful, government spending on energy conservation has
been significantly less successful. In addition, much of private
research is already subsidized through the tax code, and the federal
government should not maintain a role in the development of applied
energy technology. This option would eliminate funding for applied
research for energy conservation and renewable energy at DoE. A similar
option was included in the original budget resolution (H.Con.Res. 67)
passed by the House of Representatives in 1995.

*Eliminate Advance Appropriations for Elk Hills* *School Lands Fund.*
Pursuant to an agreement with the state of California regarding the
disposition of land within Naval Petroleum Reserve Numbered 1 (Elk
Hills), the federal government agreed to provide a percentage of the
proceeds from selling Elk Hills, subject to appropriation. This proposal
would eliminate advance appropriations for Elk Hills school lands fund
beginning in FY 2008.

*Eliminate Bureaucracy in the Department of Energy.* This proposal would
fund the DoE administrative account at 65 percent of FY 2006 levels, and
freeze funding at the reduced level for all subsequent years. By
reducing administrative accounts, the DoE would be forced to
significantly streamline its operations. A similar option was included
in the original budget resolution (H.Con.Res. 67) passed by the House of
Representatives in 1995.

DIRECT SAVINGS

*Restructure the Power Marketing Administrations (PMAs) to Charge Higher
Rates*. Power Marketing Administrations (PMAs) sell the power generated
by the hydroelectric dams built by the federal government. By statute,
the PMAs are required to recover their costs, but according to GAO, this
does not always occur. For instance, PMAs pay back construction costs at
a lower interest rate than the rate at which Treasury borrowed the
funds. According to the Administration, the average price of PMA power
is roughly 50 percent of market rates (except for Bonneville Power in
the Pacific Northwest). Given that the PMAs were established when 25
percent of all households (and 70 percent of farms) lacked electricity,
the Clinton Administration had proposed privatizing the PMAs, stating
that "the purpose for the federal government developing and conducting
these activities has now been achieved." This proposal would allow PMAs
to recover all of their costs and charge their customers market rates.
Existing contracts would remain intact. A similar proposal was included
in the original budget resolution (H.Con.Res. 67) passed by the House of
Representatives in 1995.

**FUNCTION 300: NATURAL RESOURCES AND ENVIRONMENT**

This function covers programs administered by the Department of the
Interior, the Forest Service, and the Army Corps of Engineers, including
programs that handle land and water management, resource conservation,
recreation, wildlife management, and mineral development. This function
also includes funding for the National Oceanic and Atmospheric
Administration, which oversees ocean and fisheries programs, and the
Environmental Protection Agency, which administers the Superfund
program, makes grants to states, and issues and enforces environmental
regulations.

[Summary of Policy Assumptions]{.smallcaps}

  ------------------------------ ------------ -------- -------- -------- -------- -------- -------- -----------
  **RSC Recommendation**                                                                            

  **Function 300: Natural                                                                           
  Resources and Environment**                                                                       

  \[In millions of dollars\]                                                                        

                                                                                                    

  Fiscal Year                                 2006     2007     2008     2009     2010     2011     2007-2011

  Natural Resources Function     BA           33,701   28,230   27,649   27,419   27,340   26,629   137,267
  Totals                                                                                            

                                 OT           32,809   31,991   30,547   29,435   29,284   27,859   149,116

                                                                                                     

  **DISCRETIONARY**              **Changes                                                          
                                 from RSC                                                           
                                 Baseline**                                                         

  Eliminate Watershed Surveys &  BA           0        -6       -6       -6       -6       -6       -30
  Planning                                                                                          

                                 OT           0        -5       -6       -6       -6       -6       -29

  Eliminate Water & Flood        BA           0        -75      -75      -75      -75      -75      -375
  Prevention                                                                                        

                                 OT           0        -45      -60      -70      -75      -75      -325

  Eliminate Bureaucracy at       BA           0        -785     -785     -785     -785     -785     -3,925
  DoInt.                                                                                            

                                 OT           0        -613     -735     -777     -782     -783     -3,690

  Eliminate Resource & Conserv.  BA           0        -35      -45      -51      -51      -51      -233
  Develop.                                                                                          

                                 OT           0        -26      -42      -49      -51      -51      -219

  Reduce Forest Service Cap.     BA           0        -218     -218     -218     -218     -218     -1,090
  Improve.                                                                                          

                                 OT           0        -44      -120     -157     -183     -201     -705

  Moratorium on Federal Land     BA           0        -78      -87      -96      -98      -98      -457
  Purchases                                                                                         

                                 OT           0        -26      -55      -76      -88      -93      -338

  Reduce BLM Construction        BA           0        -6       -6       -6       -6       -6       -30

                                 OT           0        -1       -2       -4       -5       -6       -18

  Reduce Facility Const. at USDA BA           0        -182     -182     -182     -182     -182     -910
  and DoInt.                                                                                        

                                 OT           0        -40      -89      -135     -160     -174     -598

  Reduce Species Conservation    BA           0        -11      -11      -11      -11      -11      -55
  Fund                                                                                              

                                 OT           0        -7       -10      -11      -11      -11      -50

  Eliminate National Heritage    BA           0        -14      -14      -14      -14      -14      -70
  Area Grants                                                                                       

                                 OT           0        -9       -12      -13      -14      -14      -62

  Reduce Clean Water State       BA           0        -166     -166     -166     -166     -166     -830
  Revolv. Fund                                                                                      

                                 OT           0        -8       -33      -83      -133     -158     -415

  Reduce Targeted Wastewater     BA           0        -34      -51      -85      -85      -85      -340
  Grants                                                                                            

                                 OT           0        -2       -8       -22      -43      -63      -138

  Eliminate Wastewater Grants    BA           0        -338     -508     -846     -846     -846     -3,384

                                 OT           0        -17      -76      -220     -423     -626     -1,362

  Elim. Energy Star/Science to   BA           0        -117     -117     -117     -117     -117     -585
  Achieve Prog.                                                                                     

                                 OT           0        -47      -99      -117     -117     -117     -497

  **DIRECT**                                                                                        

  Scale Back CSP                 BA           0        -1,650   -1,498   -1610    -1,455   -1,565   -7,778

                                 OT           0        -727     -1,249   -1534    -1,377   -1,515   -6,402

  Limit Future Enrollment in CRP BA           0        0        -64      -275     -327     -466     -1,132

                                 OT           0        0        -64      -275     -327     -466     -1,132
  ------------------------------ ------------ -------- -------- -------- -------- -------- -------- -----------

[Discussion of Policy Assumptions]{.smallcaps}

[Discretionary Savings]{.smallcaps}

*Eliminate the Watershed Surveys and Planning Program (NRCS).* Enacted
in 1954, the purpose of this program is to assist federal, state, and
local agencies and tribal governments in protecting watersheds from
damage caused by erosion, floodwater, and sediment and to conserve and
develop water and land resources. Conservation programs are conducted
through a number of accounts within the Natural Resources Conservation
Service, and current conservation operations within the Department of
Agriculture could be combined and reprioritized. This budget would
eliminate the Watershed Surveys and Planning program. A similar proposal
was included in the original budget resolution (H.Con.Res. 67) passed by
the House of Representatives in 1995.

*Eliminate the Watershed and Flood Prevention Operations (NRCS)*. This
program provides technical and financial assistance to local communities
to plan, design, and construct flood prevention, water supply, and water
quality improvement projects. By agreement with the Army Corps of
Engineers, this program funds only operations in small, rural watersheds
and in communities with small populations. In the 2004 Budget, OMB
compared the cost effectiveness of the Corps of Engineers, Natural
Resources Conservation Service (NRCS), and Federal Emergency Management
Agency flood damage reduction programs. Evaluation of projects completed
over a five-year period demonstrated that NRCS's program provided the
fewest benefits per dollar. The Administration supports cancellation of
the program to help fund higher priority and more cost effective
programs. This budget would eliminate the Watershed and Flood Prevention
Operations program. A similar proposal was included in the original
budget resolution (H.Con.Res. 67) passed by the House of Representatives
in 1995.

*Eliminate Unneeded Bureaucracy at the Departments of Interior and
Agriculture*. This option would reduce the salaries and expenses
accounts at the Departments of Interior and Agriculture by 10 percent.
By reducing these administrative accounts, this proposal encourages
maximum efficiency and fiscal responsibility at the bureaucratic level
of both departments. A similar proposal was included in the original
budget resolution (H.Con.Res. 67) passed by the House of
Representatives.

*Eliminate the Resource Conservation and Development Program*. The
purpose of the NRCS' Resource Conservation and Development (RC&D)
program is to accelerate the conservation, development and utilization
of natural resources, improve the general level of economic activity,
and to enhance the environment and standard of living in designated RC&D
areas. RC&D areas are locally sponsored areas designated by the
Secretary of Agriculture for RC&D technical and financial assistance
program funds. Conservation programs are conducted through a number of
accounts within the Natural Resources Conservation Service, and current
conservation operations within the Department of Agriculture could be
better combined and reprioritized. In addition, the RC&D Program is
duplicative of other USDA and federal resource conservation and rural
development efforts. This budget would eliminate the RC&D program. This
proposal was included in the original budget resolution (H.Con.Res. 67)
passed by the House of Representatives in 1995.

*Reduce Funding for the Capital Improvement and Maintenance Fund at the
Forest Service.* The Capital Improvement and Maintenance fund provides
for improvement and maintenance of national forest facilities, roads,
and trails. This option would reduce this fund to the President's FY
2006 requested level. A similar proposal was included in the original
budget resolution (H.Con.Res. 67) passed by the House of Representatives
in 1995.

*Impose a Moratorium on Federal Land Purchases*. The Departments of
Agriculture and Interior currently purchases land each year that is
generally used to create or expand designated recreation and
conservation areas. Most federal lands are managed by the National Park
Service, the Forest Service, or the Bureau of Land Management. In many
instances, those agencies find it difficult to maintain and finance
operations on their existing landholding. Land management agencies
should improve their stewardship of lands already owned before facing
added management responsibilities. This budget would place a moratorium
on all federal land purchases. This proposal was included in the
original budget resolution (H.Con.Res. 67) passed by the House of
Representatives in 1995.

*Reduce Construction Funds at the Bureau of Land Management.*
Construction funds at BLM are primarily used for the construction of
buildings, recreation facilities, bridges, roads, and trails on federal
land. This proposal would reduce BLM Construction funds to the
President's FY 2006 requested level. A similar proposal was included in
the original budget resolution (H.Con.Res. 67) passed by the House of
Representatives in 1995.

[]{.mark}

*Reduce Facility Construction at the Departments of Agriculture and
Interior.* Construction funding has two budgetary effects. The first
involves the initial cost of the project; the second involves the
long-term maintenance of any new facility. Under this budget,
construction of facilities within the Departments of Interior and
Agriculture would be reduced by 50 percent, and the National Forest
Service would receive no new funding for the construction of trails.
This proposal was included in the original budget resolution (H.Con.Res.
67) passed by the House of Representatives in 1995.

[]{.mark}

*Eliminate Low-Priority Multinational Species Conservation Programs.*
This budget would eliminate several programs that promote projects
designed to perpetuate the healthy populations of various species. These
programs include: the African Elephant Conservation Program, the
Rhinoceros and Tiger Conservation Program, the Asian Elephant
Conservation, the Great Ape Conservation Program, the Neotropical
Migratory Bird Conservation Program, and the Marine Sea Turtle
Conservation Program. A similar proposal was included in the original
budget resolution (H.Con.Res. 67) passed by the House of Representatives
in 1995.

*Eliminate the National Heritage Area Grants*. Congress has established
27 National Heritage Areas (NHAs) to commemorate, conserve, and promote
areas that include natural, scenic, historic, cultural, and recreational
resources. The sizeable number of existing NHAs, together with the
number of measures proposed in recent Congresses to study and designate
new ones, has intensified interest by the Administration and some
Members of Congress in enacting criteria and standards for designating
NHAs and limits on federal funding support. NHA designations often lead
to restrictive federal zoning and land-use planning. That is,
residential and commercial private property owners are often prevented
from doing what they want on their own property because of federal
concerns that the historic landscape would be disrupted. The National
Park Service is facing a multi-billion dollar maintenance backlog and
thus will not practically be able to take on any new maintenance
requirements. This budget would eliminate the National Heritage Area
Grants.

*Reduce Funding for the Clean Water State Revolving Fund.* The
Environmental Protection Agency's state revolving funds (SRF) provide
low-interest loans to communities and Native Alaskans to develop
wastewater treatment infrastructure. This budget would reduce to the
President's FY 2006 requested level, the Clean Water SRF. A similar
proposal was included in the original budget resolution (H.Con.Res. 67)
passed by the House of Representatives in 1995.

*Reduce Funding for the Water and Wastewater Grants and Loan Programs.*
The Department of Agriculture distributes water and wastewater grants
and loans to various entities, such as local governments, to assist with
the development of water and waste disposal systems in rural areas with
a population fewer than 10,000 individuals. This program would be best
prioritized and funded at the local level. This budget would reduce this
program to the President's FY 2006 requested level. A similar option was
included in the original budget resolution (H.Con.Res. 67) passed by the
House of Representatives in 1995.

*Eliminate Federal Grants for Wastewater and Drinking Water
Infrastructure.* The federal government assists states in achieving
federally mandated water quality standards by providing wastewater
grants. Although congressional authorization for these grants has
expired, Congress continues to provide funding. Some contend that by
providing failing states with these grants, the federal government is
giving the states an incentive to retain poor wastewater treatment
infrastructure. This option would eliminate federal grants for
wastewater and drinking water infrastructure. A similar option was
included in the original budget resolution (H.Con.Res. 67) passed by the
House of Representatives in 1995.

[]{.mark}

*Eliminate the Energy Star Program*. Started in 1992, the EPA introduced
Energy Star as a voluntary labeling program designed to identify and
promote energy-efficient products to reduce greenhouse gas emissions.
Through 1995, EPA expanded the label to additional office equipment
products and residential heating and cooling equipment. In 1996, EPA
partnered with the U.S. Department of Energy for particular product
categories. The Energy Star label is now on major appliances, office
equipment, lighting, home electronics, and more. The EPA has also
extended the label to cover new homes and commercial and industrial
buildings. The private sector and competitive marketplace are better
equipped to provide this function to consumers. This budget would
eliminate the Energy Star Program.

*Eliminate the Science to Achieve Results Program*. Established in 1995,
STAR is a competitive, peer-reviewed, extramural research grants program
created to encourage interagency collaboration and to increase EPA's
access to the nation's scientists and engineers in academic and other
nonprofit research institutions. This budget would eliminate the Science
to Achieve Results Program.

[]{.mark}

[Direct Savings]{.smallcaps}

[]{.mark}

*Scale Back the Conservation Security Program*. CSP provides farmers
with financial and technical assistance to promote energy, soil, and
water and plant conservation. However, many of the farmers to whom
financial assistance is given have already adopted conservation
practices, and often times adoption of the practices costs less than the
assistance subsidy itself. This option would scale back the program by
simply eliminating *new* enrollments and by eliminating certain "bonus"
payments (for additional conservation efforts), leaving intact existing
contracts. This proposal was included in the RSC's "Operation Offset" in
2005.

[]{.mark}

*Limit Future Enrollment of Land in the Conservation Reserve Program*.
CRP pays farmers *not* to farm their land. This option, which would set
a cap on future enrollment (such as 36.4 million acres) and prohibit new
enrollees, would scale back the program's expenses while allowing
current enrollees to re-enroll. This proposal was included in the
original budget resolution (H.Con.Res. 67) passed by the House of
Representatives in 1995, and included in the RSC's "Operation Offset" in
2005.

**FUNCTION 350: AGRICULTURE**

This function includes programs that support farm income, promote
agricultural research, and enhance marketing opportunities for farmers.
Almost all of the activities in this function are administered by the
Department of Agriculture.

[Summary of Policy Assumptions]{.smallcaps}

  ------------------------------- ------------ -------- -------- -------- -------- -------- -------- -----------
  **RSC Recommendation**                                                                             

  **Function 350: Agriculture**                                                                      

  \[In millions of dollars\]                                                                         

                                                                                                     

  Fiscal Year                                  2006     2007     2008     2009     2010     2011     2007-2011

  Agriculture Function Totals     BA           28,915   26,006   20,430   18,742   18,392   18,534   102,104

                                  OT           27,310   25,581   19,739   18,006   17,506   17,767   98,599

                                                                                                      

  **DISCRETIONARY**               **Changes                                                          
                                  from RSC                                                           
                                  Baseline**                                                         

  Reform the Foreign Agriculture  BA           0        -23      -23      -23      -23      -23      -115
  Service                                                                                            

                                  OT           0        -16      -21      -23      -23      -23      -106

  Reduce ARS by 10 Percent        BA           0        -113     -113     -113     -113     -113     -565

                                  OT           0        -86      -103     -110     -110     -110     -519

  Terminate CSRS Special Research BA           0        -164     -167     -170     -173     -176     -850
  Grants                                                                                             

                                  OT           0        -84      -121     -151     -170     -173     -699

  Terminate P.L. 480, Food for    BA           0        -77      -77      -77      -77      -77      -385
  Peace                                                                                              

                                  OT           0        -76      -77      -77      -77      -77      -384

  Terminate Outreach for Socially BA           0        -6       -6       -6       -6       -7       -31
  Disad. Farmers                                                                                     

                                  OT           0        -5       -6       -6       -6       -7       -30

  Reduce Funds for Nat. Agri.     BA           0        -28      -28      -28      -28      -28      -140
  Statistics                                                                                         

                                  OT           0        -24      -28      -28      -28      -28      -136

  Eliminate Bureaucracy at USDA   BA           0        -3       -3       -3       -3       -3       -15

                                  OT           0        -3       -3       -3       -3       -3       -15

  **DIRECT**                                                                                         

  Reform Agriculture Production   BA           0        -1,295   -4,703   -5506    -4,728   -4,201   -20,433
  Programs                                                                                           

                                  OT           0        -1,295   -4,703   -5506    -4,728   -4,201   -20,433

  Eliminate Market Access Program BA           0        -10      -160     -200     -200     -200     -770

                                  OT           0        -10      -160     -200     -200     -200     -770

  Eliminate Export Enhancement    BA           0        0        0        0        0        0        0
  Program                                                                                            

                                  OT           0        0        0        0        0        0        0

  Eliminate Foreign Market        BA           0        -25      -32      -35      -35      -35      -162
  Develop. Plan                                                                                      

                                  OT           0        -25      -32      -35      -35      -35      -162

  Limit Export Credit Guarantees  BA           0        -48      -48      -48      -48      -48      -240

                                  OT           0        -26      -47      -48      -48      -48      -217
  ------------------------------- ------------ -------- -------- -------- -------- -------- -------- -----------

[Discussion of Policy Assumptions]{.smallcaps}

[Discretionary Savings]{.smallcaps}

*Reform the Foreign Agricultural Service*. This proposal would involve
changes to the Foreign Agricultural Service. The Foreign Agricultural
Service maintains attachés at 97 foreign posts to assist overseas
development of markets for U.S. farm commodities---largely through
collecting information regarding a foreign government's policies, market
conditions, etc. This function could be performed by the private sector
that benefits from such services. This proposal calls for a 30-percent
reduction in such attachés and a 10-percent reduction in all other
activities, except the general sales manager. It was included in the
original budget resolution (H.Con.Res. 67) passed by the House of
Representatives in 1995.

*Refocus Federal Support for Agricultural Research and Extension
Activities*. The Department of Agriculture conducts and supports
agricultural research and education. Such research and grants provided
by the Agricultural Research Service (ARS), the Cooperative State
Research, Education, and Extension Service (CSREES), and the Economic
Research Service (ERS) replace funding from the private sector.
Requiring the government to scale down this research would permit the
private sector to finance more of its own research. This proposal would
reduce funding by the ARS by 10 percent; it would eliminate all special
research grants within the CSREES, thereby requiring all grants to be
awarded competitively. This proposal was included in the original budget
resolution (H.Con.Res. 67) passed by the House of Representatives in
1995.

*Eliminate the Public Law 480, Title I Program.* The Public Law 480
program provides below-market loans to purchasers of U.S. agriculture
commodities in developing countries as a form of export promotion.
According to GAO, this subsidy's "importance in helping develop
long-term U.S. agricultural markets had not been demonstrated," which is
especially troubling since the program dates back to 1954. This proposal
was included in the original budget resolution (H.Con.Res. 67) passed by
the House of Representatives in 1995.

*Eliminate Payments to Socially Disadvantaged Farmers and Ranchers.* The
Socially Disadvantaged Farmers and Ranchers Competitive Grant Program
provides funds to land-grant, Hispanic-serving, and Native
American-serving institutions, to assist "socially disadvantaged
farmers" who own and operate farms. This program is duplicative since
these same farmers are eligible for all other farm programs. This
proposal was included in the original budget resolution (H.Con.Res. 67)
passed by the House of Representatives in 1995.

*Reduce Funding for the National Agricultural Statistics Service*. The
Service provides estimates of acreage, yield, and production of crops,
stocks, and value of farm commodities, and numbers of inventory values
of livestock items. Data on crops and livestock products are covered in
over 500 reports issued each year. This proposal would reduce funding
for the Service by 20 percent. It was included in the original budget
resolution (H.Con.Res. 67) passed by the House of Representatives in
1995.

*Eliminate Unnecessary Bureaucracy in the Department of Agriculture*.
This proposal reduces funding to administer the Department of
Agriculture. Specifically, funding is reduced for the Office of the
Secretary by 10 percent. A variation of this proposal was included in
the original budget resolution (H.Con.Res. 67) passed by the House of
Representatives in 1995.

[Direct Savings]{.smallcaps}

*Reform Agricultural Production Programs.* This proposal assumes that
direct agricultural spending will be reduced by \$20.4 billion relative
to currently anticipated levels from fiscal year 2007 through FY 2011,
with \$1.3 billion in reductions required in FY 2007. Farmers, however,
will benefit greatly from other provisions in this budget, including the
extension of the 2001 and 2003 tax cuts (with the elimination of the
estate tax scheduled in 2010 and increased domestic drilling to lower
energy costs). The original budget resolution (H.Con.Res. 67) passed by
the House of Representatives in 1995 generated significant savings from
reforms to commodity programs. **Note:** This proposal assumes that up
to 50 percent of these assumed commodity savings could be substituted
dollar-for-dollar with savings from reforms to the food stamp program
(Function 600).

As a result of the 2002 Farm Bill (P.L. 107-171), the farm sector is
currently enjoying historic levels of federal taxpayer support. At the
same time, the Department of Agriculture (USDA) continues to pronounce
that the financial state of the U.S. agriculture sector is sound. For
instance, according to USDA, "The 2-year rise from 2002 to 2004 of \$46
billion in farm sector net income is unmatched in the history of the
U.S. farm income accounts." USDA maintains that "farm business asset,
debt, and equity values are expected to rise through the end of 2005,
supported by continuing high levels of net cash income and profit
realized in 2004." For instance, the values of farm business assets are
projected to increase by 6.1 percent with the value of farm real estate
to increase by 7.3 percent over last year.

*Eliminate the Market Export Programs*. Both the Foreign Market
Development Program and the Market Access Program promote the export of
U.S. agricultural products in new markets, a function that could be
handled by the private sector businesses that directly benefit.
Similarly, the Export Enhancement Program provides cash to exporters as
bonuses, encouraging the exporters to sell U.S. products in certain
countries at prices below the exporter's costs of acquiring them. The
program provides unnecessary assistance to private corporations in their
attempt to offer the lowest price on commodities in other counties.
Finally, a number of export guarantee programs ensure U.S. companies
will not lose money if foreign companies, who buy U.S. goods, default on
loans. A Government Accountability Office report found little evidence
that this program actually provides measurable income and employment
benefits to the U.S. agricultural sector. This reform would limit the
repayment function for these programs (by eliminating the two with long
repayment periods, the Intermediate Export Credit Guarantee Program and
the Facilities Guarantee Program).

**FUNCTION 370: COMMERCE AND HOUSING CREDIT**

[Summary of Policy Assumptions]{.smallcaps}

  ----------------------------- ------------ -------- -------- -------- -------- ------- ------- -----------
  **RSC Recommendation**                                                                         

  **Function 370: Commerce and                                                                   
  Housing Credit**                                                                               

  \[In millions of dollars\]                                                                     

                                                                                                 

  Fiscal Year                                2006     2007     2008     2009     2010    2011    2007-2011

  Commerce and Housing Function BA           12,629   14,853   10,528   10,300   7,404   6,838   49,923
  Totals                                                                                         

                                OT           5,565    6,025    4,525    5,035    388     -575    15,398

                                                                                                  

  **DISCRETIONARY**             **Changes                                                        
                                from RSC                                                         
                                Baseline**                                                       

  Eliminate US Travel and       BA           0        -4       -4       -4       -4      -4      -20
  Tourism                                                                                        

                                OT           0        -3       -4       -4       -4      -4      -19

  Eliminate Minority Business   BA           0        -30      -30      -30      -30     -30     -150
  Development                                                                                    

                                OT           0        -22      -28      -29      -29     -29     -137

  Bureau of Industry and        BA           0        -19      -19      -19      -19     -19     -95
  Security O&A                                                                                   

                                OT           0        -16      -18      -19      -19     -19     -91

  Eliminate NIST Research and   BA           0        -7       -7       -7       -7      -7      -35
  Services                                                                                       

                                OT           0        -5       -7       -7       -7      -7      -33

  Eliminate Const. of Research  BA           0        -165     -161     -161     -161    -161    -809
  Facilities                                                                                     

                                OT           0        -20      -42      -68      -120    -146    -396

  Eliminate Industrial          BA           0        -128     -138     -163     -178    -178    -785
  Technology Services                                                                            

                                OT           0        -21      -74      -122     -152    -170    -539

  Eliminate Certain ITA         BA           0        -177     -203     -203     -203    -203    -989
  Operations                                                                                     

                                OT           0        -133     -181     -199     -201    -201    -915
  ----------------------------- ------------ -------- -------- -------- -------- ------- ------- -----------

[Discussion of Policy Assumptions]{.smallcaps}

[Discretionary Savings]{.smallcaps}

*Eliminate U.S. Travel and Tourism. The Department of Commerce* promotes
the United States as a tourist destination for foreign travelers through
the U.S. Travel and Tourism Program. This is not a priority of the
federal government. In addition, most states operate their own travel
and tourism offices. This proposal would eliminate funding for the
Travel and Tourism Program. A similar proposal was included in the
original budget resolution (H.Con.Res. 67) passed by the House of
Representatives in 1995.

*Eliminate the Department of Commerce's Minority Business Development
Agency.* This agency duplicates functions carried out by the Small
Business Administration. Accordingly, this budget proposes its
elimination. This proposal was included in the original budget
resolution (H.Con.Res. 67) passed by the House of Representatives in
1995.

*Reduce Funding for the Institute of Standards and Technology's
Construction of Research Facilities.* This budget account supports the
construction, maintenance, and repair of NIST facilities. This budget
proposes modest spending restraint below the baseline in order to
prioritize spending elsewhere in the budget on core federal
responsibilities.

*Reduce Funding for the National Oceanic and Atmospheric Administration
(NOAA).* NOAA's current mission is to provide sustained environmental
management of coastal and ocean environments and the atmosphere. In
addition, NOAA seeks to provide weather information and understand
climate variability and change. Most of these functions are duplicative
of efforts at other federal agencies, such as the Environmental
Protection Agency, the Departments of the Interior and Energy or are
provided by the private sector. This budget proposes to begin reducing
this duplication by restraining NOAA's budget, which has continued
growing in nominal dollars since 2001. A similar proposal was included
in the original budget resolution (H.Con.Res. 67) passed by the House of
Representatives in 1995.

*Eliminate the Advanced Technology Program (ATP).* The ATP was created
in 1988 to provide public funding in cooperation with the private sector
on projects by industry or academia seeking to research and develop
broad, generic pre-competitive commercial technologies and thereby
increase the competitiveness of the industry. However, the ATP has a
poor record of selecting promising projects that are not duplicative of
existing efforts and distorting the allocation of research dollars and
displacing private investment. It has also fostered industry dependency.
Companies subject to market forces select research projects in order to
sustain their competitiveness, ensure future growth and ultimately earn
a return on their investment. Government subsidies for projects that
companies either would not risk their own capital on or finance with
private debt or equity misallocates capital, tying up resources that can
be used more efficiently elsewhere. Therefore, this budget proposes to
eliminate funding for the ATP. This proposal was included in the
original budget resolution (H.Con.Res. 67) passed by the House of
Representatives in 1995.

*Eliminate the Baldrige National Quality Program.* Established by
Congress in 1987, the Baldrige program provides an award given by the
President to eligible businesses and organizations that apply and are
found to be outstanding in seven principal areas: leadership; strategic
planning; customer and market focus; measurement, analysis, and
knowledge management; human resource focus; process management; and
results. Awards are given in several categories, including
manufacturing, service, small business, education and health care. Given
the size and scope of commercially available quality management
assistance for firms, from self-help resources to consultants, there is
no justification for this federal subsidy. This budget would eliminate
funding for this program.

*Eliminate the Holling's Manufacturing Extension Program (MEP).* In 1989
at the National Institute of Standards and Technology (NIST), Congress
started a nationwide network of not-for-profit centers that eventually
evolved into the current program structure, with centers in all 50
states and Puerto Rico. According to recent data, MEP annually serves
only about seven percent of small manufacturers. MEP is a competitive
grant program designed to provide small and medium sized manufacturing
firms with managerial and technical assistance, marketing and financial
assistance, needs evaluations, knowledge and skills training as well as
improving their use of available technology to improve communications,
control costs or improve product quality. Nonfederal sources provide
two-thirds of the funding match for these centers. Federal funding for
MEP subsidizes and largely duplicates services for which a large
commercial private market already exists. MEP centers were also
originally intended to be self supporting---this has not happened. This
budget proposes to eliminate funding for MEP. This proposal was included
in the original budget resolution (H.Con.Res. 67) passed by the House of
Representatives in 1995.

*Eliminate Funding for the International Trade Administration's Trade
Promotion activities.* The International Trade Administration (ITA) of
the Department of Commerce runs a trade development program intended to
assess the competitiveness of U.S. industries and promote exports. The
ITA also operates the U.S. and foreign commercial services, which assist
U.S. businesses on exporting. This activity is better accomplished by
the firms and industries that stand to benefit from it than by a
government agency. When beneficiaries do not pay the full costs of
services, the government (i.e., the taxpayer) is effectively subsidizing
the industries involved. Those subsidies are an inefficient means of
helping the industries because they are partially passed on to
foreigners in the form of lower prices for U.S. exports. Moreover, they
tend to cause the industries' products to be sold abroad for less than
the cost of production and sales: thus, they lower U.S. economic
well-being. This budget proposes to eliminate funding for these
activities effective in FY 2007. This proposal was included in the
original budget resolution (H.Con.Res. 67) passed by the House of
Representatives in 1995.

**FUNCTION 400: TRANSPORTATION**

[Summary of Policy Assumptions]{.smallcaps}

  ---------------------------- ------------ -------- -------- -------- -------- --------- --------- -----------
  **RSC Recommendation**                                                                            

  **Function 400:                                                                                   
  Transportation**                                                                                  

  \[In millions of dollars\]                                                                        

                                                                                                    

  Fiscal Year                               2006     2007     2008     2009     2010      2011      2007-2011

  Transportation Function      BA           74,433   69,371   67,054   63,686   19,197    15,594    234,902
  Totals                                                                                            

                               OT           72,221   70,226   72,017   68,586   50,759    32,178    293,766

                                                                                                     

  **DISCRETIONARY**            **Changes                                                            
                               from RSC                                                             
                               Baseline**                                                           

  Eliminate FRA Safety and     BA           0        -116     -146     -146     -146      -146      -700
  Operations                                                                                        

                               OT           0        -95      -141     -146     -146      -146      -674

  Phase Out Amtrak Subsidies   BA           0        -131     -261     -654     -1,111    -1,307    -3,464

                               OT           0        -131     -261     -654     -1,111    -1,307    -3,464

  Eliminate FTA Research       BA           0        -75      -75      -75      -75       -75       -375
  Centers                                                                                           

                               OT           0        -8       -40      -65      -86       -110      -309

  Devolve Title I FAHP         BA           0        0        0        0        0         0         0

                               OT           0        0        0        0        -9,426    -24,088   -33,514

  Phase Out ITS Programs       BA           0        0        0        0        0         0         0

                               OT           0        -15      -48      -79      -65       -27       -234

  Rescind SAFETEA-LU Highway   BA           0        0        0        0        0         0         0
  Earmarks                                                                                          

                               OT           0        -1,225   -3,131   -3,817   -2,817    -1,172    -12,162

  FTA Formula Grants and       BA           0        0        0        0        0         0         0
  Research                                                                                          

                               OT           0        -314     -1,204   -2,460   -4,113    -5,706    -13,797

  Eliminate Essential Air      BA           0        -50      -60      -60      -60       -60       -290
  Service                                                                                           

                               OT           0        -40      -58      -60      -60       -60       -278

  Eliminate Maritime           BA           0        -15      -20      -20      -20       -20       -95
  Commission                                                                                        

                               OT           0        -14      -19      -20      -20       -20       -93

  Eliminate MARAD              BA           0        -105     -133     -133     -133      -133      -637

                               OT           0        -79      -119     -132     -133      -133      -596

  Reduce OST                   BA           0        -21      -29      -42      -42       -42       -176

                               OT           0        -18      -35      -56      -60       -60       -229

  Pipeline and Hazmat          BA           0        -15      -53      -68      -72       -72       -280
  Administration                                                                                    

                               OT           0        9        -33      -58      -69       -72       -223

  Privatize the FAA            BA           0        0        0        0        -10,000   -13,000   -23,000

                               OT           0        0        0        0        -6,100    -9,530    -15,630

  **DIRECT**                                                                                        

  FAHP CA Impact               BA           0        -6,773   -8,135   -564     -32,929   -32,929   -81,330

                               OT           0        0        0        0        0         0         0

  Phase Out ITS Programs       BA           0        -55      -94      -110     0         0         -259

                               OT           0        0        0        0        0         0         0

  FTA Formula Grant and        BA           0        -2,426   -4,764   -7325    -8,015    -8,361    -30,891
  Research                                                                                          

                               OT           0        0        0        0        0         0         0

  FTA Formula and Bus Grants   BA           0        0        0        0        -1,000    -1,000    -2,000

                               OT           0        0        0        0        0         0         0

  Eliminate Essential Air      BA           0        -55      -65      -50      -50       -50       -270
  Service                                                                                           

                               OT           0        -32      -48      -50      -50       -50       -230
  ---------------------------- ------------ -------- -------- -------- -------- --------- --------- -----------

[Discussion of Policy Assumptions]{.smallcaps}

[Discretionary Savings]{.smallcaps}

*Eliminate Funding for Certain Federal Railroad Administration
Programs*. The Federal Railroad Administration (FRA) was created by the
Department of Transportation Act of 1966. The purpose of FRA is to:
promulgate and enforce rail safety regulations; administer railroad
assistance programs; conduct research and development in support of
improved railroad safety and national rail transportation policy;
provide for the rehabilitation of Northeast Corridor rail passenger
service; and consolidate government support of rail transportation
activities. This budget proposes to eliminate funding for those FRA
functions that can be more effectively carried out by state governments.
A similar proposal was included in the original budget resolution
(H.Con.Res. 67) passed by the House of Representatives in 1995.

*Eliminate Federal Subsidies for Amtrak.* Amtrak's model for providing
intercity rail service has been a failure since it began service in
1971. Historically, it has carried less than 1% of the traveling public,
has required annual federal subsidies to cover operating losses and
capital costs every year of its existence---to date some \$29 billion in
taxpayer resources---lacks adequate cost controls, has deferred capital
repair projects and confronts increasing debt service costs. Despite
ridership increases---e.g., 11.6% from FY 2000 to FY 2004---Amtrak's
costs still continue to rise faster than its revenue. According to the
most recent data, on a fully allocated basis (including both interest
and depreciation) *every one of Amtrak's routes loses money,* with a
per-passenger subsidy ranging from \$3 to \$466. But the fundamental
obstacle faced is an economic one: Amtrak is not cost or time
competitive with other transportation modes. Simply put, if allowed to
choose, most of the traveling public prefers the car, bus or plane to
travel---only Congress' protection of the status quo has shielded Amtrak
from this basic market reality.

This budget proposes to reduce and eventually end over 30 years of
taxpayer subsidization of a failed government monopoly. Beginning in FY
2007, grants to Amtrak would gradually be reduced and eventually ended
by FY 2011 as operations are eliminated, privatized, or absorbed by
states who value its services. While some additional shutdown costs
would occur for several subsequent years, those costs are assumed to be
offset by additional spending reductions elsewhere in the federal
budget. This proposal was included in the original budget resolution
(H.Con.Res. 67) passed by the House of Representatives in 1995.

*Phase Out and Eliminate Federal Subsidies for Mass Transit.* Mass
transit includes buses, subways, light rail, commuter rail, monorail,
passenger ferry boats, trolleys, inclined railways, and people movers.
Federal financial assistance for mass transit began with passage of the
1964 Urban Mass Transportation Act. Congress has also provided it
dedicated funding. Since 1982, a portion of highway gas revenues have
been deposited into the Mass Transit Account within the Highway Trust
Fund. The most recent surface transportation bill, SAFETEA-LU, provides
\$45.3 billion in guaranteed funding through FY 2009.

There is little justification for the current federal subsidy of mass
transit---the benefits from these systems are local, not national.
Moreover research indicates that mass transit---particularly light
rail---has little or no impact on congestion in urban areas. It is also
inordinately expensive to build, maintain, and operate. Today every mass
transit system requires some form of federal subsidy. They are unable to
cover their own costs from fare box revenues, with many systems also
requiring some type of local taxpayer subsidy as well. In part, this
stems from the fact that less than 2% of all urban travel trips in
America are by transit---federal aid has not reversed this long-term
decline in market share so that the average subsidy cost per passenger
mile is far higher than for automobiles. Yet transit will receive some
16% of federal funding for transportation funding provided in
SAFETEA-LU. This budget proposes to phase out federal capital,
operating, and research subsidies for mass transit. A similar proposal
was included in the original budget resolution (H.Con.Res. 67) passed by
the House of Representatives in 1995.

*Devolve Title 1 Federal Aid Highway Programs (FAHP).* The federal aid
highway program provides grants to states for a variety of highway and
transportation-related projects, ranging from construction to
landscaping. It presently accounts for 21% of highway spending by all
levels of government and is funded by gas taxes dedicated to the Highway
Trust Fund, ostensibly user fee-based financing. Congress recently
enacted a multi-year surface transportation authorization bill,
SAFETEA-LU, which increased funding levels over its predecessor as well
as expanded the existing program structure.

The FAHP grew out of legislation in 1956 to construct the 42,000 mile
Interstate Highway system. That goal was largely completed by the early
1980's, ending the rationale behind a large federal role---to do
something that states lacked the planning, coordinating and technical
expertise as well as financing resources to implement. Today,
responsibility for determining needs, constructing and maintaining this
infrastructure is done by state and local transportation departments,
not the federal government. The contribution of the federal government
today is to re-distribute and allocate resources based on politically
derived formulae with costly federal requirements attached---it does not
match resources with need and increases project costs. Moreover, the
current financing structure, linking dedicated excise taxes and highway
users, has been broken. Once the federal government lost its original
purpose for financing highways, it expanded its role. This "mission
creep" has led to the diversion of supposedly user fee-based taxes to
non-highway purposes, from bike paths to funding mass transit.
Consequently, FAHP does not encourage the efficient use of its budgetary
resources on spending that provides the greatest transportation benefits
to the nation.

This budget proposes to return responsibility for highway programs back
to the states after the expiration of the current transportation
authorization bill SAFETEA-LU. Spending authority---both contract
authority and obligation limitations---would be held to baseline levels
through 2009 and discontinued thereafter as program responsibilities are
returned to the states. Savings associated with these policy proposals
will not be returned to the Highway Trust Fund or formula programs.

*Transportation Trust Funds*. Much federal transportation spending is
funded through taxes collected on users which are then deposited in
trust funds. This budget proposes realigning current federal
transportation programs and returning those responsibilities back to the
states. User fees collected to pay for those programs are assumed to
continue at current law levels through the end of the budget window to
ensure adequate funding to meet prior-year commitments as well as
contribute to deficit reduction. After 2011, federal collection of those
receipts is assumed to sunset in most cases.

*Eliminate Federal Support for Intelligent Transportation Systems
(ITS).* ITS is the use of various electronic, communication, and
computer technology platforms to increase the operational effectiveness
of existing transportation infrastructure. Beginning in 1991, Congress
has increased funding levels to support federal efforts to research,
develop, and operationally test ITS systems. However, the current
federal role can and should be fulfilled by states. Moreover, as a 2005
Government Accountability Office report noted, information concerning
the cost effectiveness and the actual impacts of ITS are unclear,
limited, or don't readily exist. Therefore, consistent with returning
responsibility back to the states for managing their transportation
spending priorities, this budget proposes eliminating funding for
federal ITS assistance. This proposal was included in the original
budget resolution (H.Con.Res. 67) passed by the House of Representatives
in 1995.

*Eliminate Earmarks in SAFETEA-LU.* The recently enacted \$286 billion
surface transportation reauthorization bill (SAFETEA-LU, PL 109-59)
included several project specific funding categories. Unfortunately, as
the rationale for a large federal role in surface transportation has
vanished, congressional earmarking has significantly increased.
SAFETEA-LU contains over 6,300 member earmarks, representing 8% of the
bill's overall funding and a massive increase over the preceding
transportation authorization bill's (TEA-21, 1998-2003) then-record
level of 1,850 earmarks.

Earmarking is a main driver contributing to the diversion of scarce
transportation dollars to lower priority projects--like bike paths,
museums, landscaping, parking garages, and so forth. The consequence of
this is reduced flexibility for state and local transportation planners,
delayed schedules for priority projects, reduced resource allocation,
and the evasion of any competitive review. Ultimately the traveling
public and the economy bear the cost of this inefficiency, in part
through reduced mobility and safety in the movement of goods and people.

This budget proposes to immediately rescind these earmarked SAFETEA-LU
categories beginning in FY 2007 while leaving the bill's equity
guarantees unchanged. For the 2007-2009 period, total authorized
contract authority and obligation limitations for these categories would
total some \$13.3 billion in funding. Because capital construction
programs spend over longer periods, the timing of outlay savings over
the budget window would be slower. This proposal was included in the
original budget resolution (H.Con.Res. 67) passed by the House of
Representatives in 1995.

*Eliminate Funding for the Essential Air Service (EAS).* The EAS was
created by the Airline Deregulation Act of 1978 to ensure that certain
communities that had been receiving mandated flights prior to
deregulation continued to receive a certain level of service. It
provides federal subsidies to air carriers serving some 150 communities
located more than 70 miles from the nearest medium or large hub airport
and if the per passenger subsidy is \$200 or less.

This program was originally intended to provide small communities
temporary assistance in order to adjust to airline deregulation.
Currently, the per-passenger subsidy has fluctuated from \$14 to \$385
even as the number of passengers served has declined since 2001. In FY
2006 EAS received \$110 million in total funding, including \$60 million
in discretionary budget authority and \$50 million in offsetting
receipts from the collection of overflight fees. If passengers and
communities want air service, they should pay the full market cost of
that decision or not, either way revealing the value they place on this
service. This budget proposes to eliminate all funding for EAS--both
discretionary and direct spending--beginning in FY 2007. This proposal
was included in the original budget resolution (H.Con.Res. 67) passed by
the House of Representatives in 1995.

*Eliminate the Federal Maritime Commission.* The Federal Maritime
Commission (FMC) is an independent regulatory agency responsible for the
regulation of oceanborne transportation in the foreign commerce of the
U.S. This budget proposes to deregulate federal maritime policy and
would eliminate funding for the Commission beginning in FY 2007.
Critical functions would be transferred to the U.S. Department of
Transportation.

*Eliminate Funding for the Maritime Administration (MARAD).* MARAD was
intended to support the development and maintenance of a U.S.--flag
merchant marine fleet to serve as an auxiliary during national
emergencies or war. The program provides direct payments to U.S.-flag
operators engaged in U.S.-foreign trade. In FY 2006, MARAD received a
total of \$309 million in discretionary budget authority. The effect of
MARAD's subsidy is to undermine competition, thereby increasing costs.
Critical sealift support functions will be transferred to the Department
of Defense. This proposal was included in the original budget resolution
(H.Con.Res. 67) passed by the House of Representatives in 1995.

*Reduce Funding for the Office of the Secretary of Transportation
(OST).* Because budgetary resources are constrained, this budget
proposes to streamline OST funding by 35% over the FY 2007-2009 period
before holding funding at that level over the budget window. Numerous
functions within the OST are either duplicative of those in the modal
agencies or no longer necessary assuming enactment of this budget's
policy proposals. Instead, this proposal will allow OST to focus on core
federal transportation responsibilities. This proposal was included in
the original budget resolution (H.Con.Res. 67) passed by the House of
Representatives in 1995.

*Eliminate Minority Business Programs at the U.S. Department of
Transportation.* These programs---the Minority Business Resource Program
and the Minority Business Outreach---duplicate functions carried out by
the Small Business Administration. This budget proposes to eliminate
funding for these programs effective in FY 2007. This proposal was
included in the original budget resolution (H.Con.Res. 67) passed by the
House of Representatives in 1995.

*Privatize the Federal Aviation Administration (FAA).* The FAA is
responsible for managing U.S. air transportation. Numerous Government
Accountability Office studies have outlined inefficiencies at FAA
including, impractical hiring practices, security weaknesses that
threatened the confidentiality of FAA systems, poor management controls
over enforcing safety regulations, and ineffective computer security. In
addition, the FAA's recent attempts to modernize operations have cost
billions of dollars and provided very little results. Several countries,
including Canada, have privatized air traffic control operations, which
produces significant government savings and a much more efficient
operation. This budget assumes that FAA programs will be privatized
beginning in FY 2010.

**FUNCTION 450: COMMUNITY AND REGIONAL DEVELOPMENT**

This function includes economic and rural development programs, and
other programs that assist in the nation's preparation for, and response
to, natural and man-made disasters. The function includes spending for
flood insurance, homeland security grants for state and local
governments' first responders, the Community Development Block Grant
program, disaster relief, credit assistance to help develop rural
communities, and federal support for certain programs to assist Native
Americans.

[Summary of Policy Assumptions]{.smallcaps}

  ----------------------------- ------------ -------- -------- -------- -------- -------- -------- -----------
  **RSC Recommendation**                                                                           

  **Function 450: Community and                                                                    
  Regional Development**                                                                           

  \[In millions of dollars\]                                                                       

                                                                                                   

  Fiscal Year                                2006     2007     2008     2009     2010     2011     2007-2011

  Community & Regional Develop. BA           19,354   9,080    7,963    7,963    7,965    7,967    40,938
  Totals                                                                                           

                                OT           54,630   26,942   21,875   12,974   9,423    8,466    79,680

                                                                                                    

  **DISCRETIONARY**             **Changes                                                          
                                from RSC                                                           
                                Baseline**                                                         

  Eliminate CDFI                BA           0        -51      -55      -55      -55      -55      -271

                                OT           0        -5       -34      -51      -55      -55      -200

  Eliminate NRC                 BA           0        -103     -118     -118     -118     -118     -575

                                OT           0        -103     -118     -118     -118     -118     -575

  Eliminate HUD Policy Develop. BA           0        -50      -56      -56      -56      -56      -274
  & Res.                                                                                           

                                OT           0        -23      -43      -52      -56      -56      -230

  Eliminate Community           BA           0        -4,220   -4,220   -4,220   -4,220   -4,220   -21,100
  Development Fund                                                                                 

                                OT           0        -84      -1,435   -3,207   -3,798   -4,009   -12,533

  Eliminate Office of Lead      BA           0        -137     -152     -152     -152     -152     -745
  Hazard Control                                                                                   

                                OT           0        -3       -33      -94      -126     -143     -399

  Eliminate Rural Development   BA           0        -370     -370     -370     -370     -370     -1,850
  Programs                                                                                         

                                OT           0        -19      -114     -225     -289     -331     -978

  Eliminate EDA                 BA           0        -268     -283     -283     -283     -283     -1,400

                                OT           0        -27      -97      -154     -225     -275     -778

  BIA Construction              BA           0        -35      -35      -35      -35      -35      -175

                                OT           0        -35      -35      -35      -35      -35      -175

  Eliminate Independent         BA           0        -121     -132     -132     -132     -132     -649
  Agencies                                                                                         

                                OT           0        -27      -62      -142     -114     -124     -469
  ----------------------------- ------------ -------- -------- -------- -------- -------- -------- -----------

[Discussion of Policy Assumptions]{.smallcaps}

[Discretionary Savings]{.smallcaps}

*Eliminate the Community Development Financial Institution (CDFI).* The
CDFI is a competitive grant program that was established in 1994 to
provide credit, capital and financial services to distressed communities
and underserved markets. The program is administered by the Department
of Treasury and has five major projects. The activities of CDFI should
be properly funded at the state or local level, not by the federal
government, since its benefits are not national in scope. Also, many of
its goals are duplicative of other federal programs and state efforts.
Currently, twelve states operate CDFI related programs. This budget
proposes to end funding for CDFI. This proposal was included in the
original budget resolution (H.Con.Res. 67) passed by the House of
Representatives in 1995.

*Eliminate the Neighborhood Reinvestment Corporation.* The Neighborhood
Reinvestment Corporation (NRC) is a public, nonprofit organization
charged with revitalizing distressed neighborhoods. The NRC oversees a
network of locally initiated and operated groups called NeighborWorks
organizations (NWOs), which engage in a variety of housing, neighborhood
revitalization, and community-building activities. The corporation
provides technical and financial aid to start new NWOs and also monitors
and assists current ones. The federal government should not fund
programs whose benefits are local rather than national. In addition, the
NeighborWorks approach duplicates the efforts of other federal
programs---particularly those of the Department of Housing and Urban
Development---that also rehabilitate low-income housing and promote home
ownership and community development. This budget proposes to eliminate
funding for this corporation.

*Eliminate HUD's Policy Development and Research Programs (PD&R).* The
PD&R develops policy ideas for planning and implementing changes in HUD
housing programs. It maintains information on U.S. housing needs,
conditions, and housing market conditions. PD&R has been ineffective;
its data is commercially available, while its research functions are
duplicated by other government and nonfederal organizations. This
proposal would eliminate funding for these programs. This proposal was
included in the original budget resolution (H.Con.Res. 67) passed by the
House of Representatives in 1995.

*Eliminate Funding for Various Community Development Programs.* The
federal government provides a broad array of duplicative federal grant
programs to support community development activities. These programs
include the Community Development Block Grant program, Economic
Development Initiative grants, Indian Economic Block grants, Youthbuild
and the Neighborhood Initiatives Program. In addition to being
duplicative, most are ineffective, are not well targeted, and are
subject to significant congressional earmarking. This budget proposes to
eliminate funding for these programs. A similar proposal was included in
the original budget resolution (H.Con.Res. 67) passed by the House of
Representatives in 1995.

*Eliminate the Office of Lead Hazard Control*. This office was
established by HUD to work with housing professionals in an effort to
eliminate lead-based paint hazards in privately owned and low-income
housing. This proposal would eliminate the Office of Lead Hazard
Control.

*Reduce Funding for Rural Development Programs at the Department of
Agriculture.* The Department of Agriculture funds a wide range of
programs designed to support community development in rural areas,
including the Rural Community Advancement Program, Rural Empowerment
Zones and Enterprise Community grants, and Rural Cooperative Development
grants. Consistent with this budget's assumption that the private sector
is more effective than government in wealth creation and economic
development, it proposes to reduce current federal spending below the
baseline for these lower-priority programs. A similar proposal was
included in the original budget resolution (H.Con.Res. 67) passed by the
House of Representatives in 1995.

*Eliminate Funding for the Economic Development Administration (EDA).*
The EDA was established under the Public Works and Economic Development
Act of 1965 as amended, to generate jobs, help retain existing jobs, and
stimulate industrial and commercial growth in economically distressed
areas of the United States by promoting private sector investment. EDA
competitive grant assistance is available to rural and urban areas for a
wide range of activities. A Government Accountability Office study
identified 73 federal programs that can be broadly used to support one
or more of this program's activities. In addition, many states and
localities provide similar programs. Wealth creation and private
investment is more effectively accomplished by the private sector than
by the federal government's allocation of capital to eligible program
"winners." This option would eliminate funding for the EDA. A similar
proposal was included in the original budget resolution (H.Con.Res. 67)
passed by the House of Representatives in 1995.

*Eliminate Funding for Bureau of Indian Affairs (BIA) Construction.* BIA
operates 184 schools in 23 states, and the President committed \$1
billion to help restore these schools over the last few years. The
Administration has called for decreased funds, stating the successful
completion of the project. This proposal would eliminate funding for BIA
construction.

*Eliminate Funding for Various Regional Commissions.* Under current law,
the federal government provides annual funding to three regional
development agencies---the Appalachian Regional Commission (ARC), the
Denali Commission, and the Delta Regional Authority---to promote
economic growth and development to communities in eligible counties and
parishes. The activities of these programs are duplicated by a number of
federal agencies, including the Departments of Agriculture, Commerce,
Health and Human Services, Housing and Urban Development, Labor and
Transportation. In a period when budgetary resources are constrained due
to rising expenditures from mandatory programs, the taxpayer cannot
afford to continue funding ineffective and duplicative programs. A
similar proposal was included in the original budget resolution
(H.Con.Res. 67) passed by the House of Representatives in 1995.

**FUNCTION 500: EDUCATION, TRAINING, EMPLOYMENT, AND SOCIAL SERVICES**

This function covers spending by the Departments of Education, Labor,
and Health and Human Services for programs that directly provide---or
assist states and localities in providing---services to individuals.
Activities in this function include making developmental services
available to children in low-income families, helping fund programs for
elementary and secondary school students, making grants and loans to
postsecondary students, and funding job-training and employment services
for people of all ages.

[Summary of Policy Assumptions]{.smallcaps}

  ----------------------------- ------------ --------- -------- -------- -------- -------- -------- -----------
  **RSC Recommendation**                                                                            

  **Function 500: Education,                                                                        
  Training, Employment, and                                                                         
  Social Services**                                                                                 

  \[In millions of dollars\]                                                                        

                                                                                                    

  Fiscal Year                                2006      2007     2008     2009     2010     2011     2007-2011

  Education and Training        BA           106,413   78,706   75,421   73,973   72,876   71,986   372,962
  Function Totals                                                                                   

                                OT           99,958    86,415   77,978   74,089   72,155   70,929   381,566

                                                                                                     

  **DISCRETIONARY**             **Changes                                                           
                                from RSC                                                            
                                Baseline**                                                          

  Reduce ESEA Funding           BA           0         -1482    -2890    -4298    -5749    -5749    -20,168

                                OT           0         -1264    -2706    -4128    -5495    -5721    -19,314

  Eliminate English Language    BA           0         -676     -676     -676     -676     -676     -3,380
  Acquisition                                                                                       

                                OT           0         -14      -581     -635     -649     -649     -2,528

  Revise the Impact Aid Formula BA           0         -129     -101     -73      -48      -23      -374

                                OT           0         -114     -94      -74      -53      -29      -364

  Eliminate Safe & Drug Free    BA           0         -350     -350     -350     -350     -350     -1,750
  Grants                                                                                            

                                OT           0         -7       -298     -340     -350     -350     -1,345

  Eliminate & Consolidate       BA           0         -457     -628     -628     -628     -628     -2,969
  Innovation Prog.                                                                                  

                                OT           0         -9       -391     -514     -611     -628     -2,153

  Eliminate & Consolidate       BA           0         -2175    -3198    -3198    -3198    -3198    -14,967
  School Improv.                                                                                    

                                OT           0         -259     -2087    -2715    -3132    -3198    -11,391

  Eliminate Native Haw. Vocat.  BA           0         -3       -3       -3       -3       -3       -15
  Education                                                                                         

                                OT           0         0        -3       -3       -3       -3       -12

  Eliminate Perkins Loan        BA           0         -66      -66      -66      -66      -66      -330
  Capital and LEAP                                                                                  

                                OT           0         -13      -66      -66      -66      -66      -277

  Eliminate Admin. Fees Paid to BA           0         -139     -139     -139     -139     -139     -695
  Schools                                                                                           

                                OT           0         -17      -135     -139     -139     -139     -569

  Eliminate Higher Ed.          BA           0         -1011    -1011    -1011    -1011    -1011    -5,055
  Duplication                                                                                       

                                OT           0         -51      -738     -920     -1011    -1011    -3,731

  Eliminate Howard Univ.        BA           0         -105     -105     -105     -105     -105     -525
  Subsidy                                                                                           

                                OT           0         -188     -129     -113     -105     -105     -640

  Eliminate Corp. for Public    BA           0         -65      -65      -465     -465     -465     -1,525
  Broadcasting                                                                                      

                                OT           0         -65      -65      -465     -465     -465     -1,525

  Eliminate National Endowment  BA           0         -63      -125     -125     -125     -125     -563
  for the Arts                                                                                      

                                OT           0         -20      -72      -110     -121     -125     -448

  Eliminate Nat. Endow. for the BA           0         -71      -142     -142     -142     -142     -639
  Humanities                                                                                        

                                OT           0         -31      -87      -124     -138     -142     -522

  Eliminate Museum & Library    BA           0         -125     -250     -250     -250     -250     -1,125
  Services                                                                                          

                                OT           0         -22      -123     -217     -236     -241     -839

  Reduce DoEd Bureaucracy by 30 BA           0         -125     -125     -125     -125     -125     -625
  Percent                                                                                           

                                OT           0         -100     -125     -125     -125     -125     -600

  WIA Reforms                   BA           0         -1117    -1864    -1864    -1864    -1864    -8,573

                                OT           0         -140     -1311    -1677    -1807    -1851    -6,786

  Eliminate Int. Bur. of Labor  BA           0         -42      -83      -83      -83      -83      -374
  & Women\'s Bur.                                                                                   

                                OT           0         -27      -62      -73      -77      -80      -319

  Eliminate Funds for NCSA      BA           0         -501     -545     -545     -545     -545     -2,681

                                OT           0         -124     -313     -396     -452     -477     -1,762

  Freeze Head Start at FY05     BA           0         -36      -36      -36      -36      -36      -180
  Level                                                                                             

                                OT           0         -24      -34      -36      -36      -36      -166

  **DIRECT**                                                                                        

  Eliminate Sub. Loans for      BA           0         -1,690   -1,785   -1825    -1,860   -1,890   -9,050
  Grad. Students                                                                                    

                                OT           0         -1,010   -1,555   -1605    -1,635   -1,665   -7,470

  Eliminate Trade Adjustment    BA           0         -258     -258     -258     -258     -258     -1,290
  Assistance                                                                                        

                                OT           0         -52      -129     -258     -258     -258     -955
  ----------------------------- ------------ --------- -------- -------- -------- -------- -------- -----------

[Discussion of Policy Assumptions]{.smallcaps}

[Discretionary Savings]{.smallcaps}

*Eliminate Title I Concentration Grants, Education Finance Incentive
Grants, and Targeted Grants over Four Years.* The Department of
Education provides four types of grants to states under Title I of the
Elementary and Secondary Education Act (ESEA)---Basic, Concentration,
Finance Incentive, and Targeted Grants. The Basic Grants to states
include the bulk of ESEA funding, with the other three receiving
significantly less annual funding. All Title I grants are designed to
target "disadvantaged" students, however, each grant program administers
funds to states based on a different formula designed to target
different types of localities (counties, local educational agencies,
etc.). This proposal would phase out over four years (with a 25 percent
reduction each year), the Concentration, Education Finance Incentive,
and Targeted Grants. States would continue to receive the larger, more
comprehensive basic grant, and would be given maximum flexibility in
order to choose how to allocate the funds within each state, according
to its specific needs. A similar proposal was included in the original
budget resolution (H.Con.Res. 67) passed by the House of Representatives
in 1995.

*Eliminate the 21^st^ Century Community Learning Centers.* 21^st^
Century Community Learning Centers is one of many duplicative education
research programs, which provides low-income school districts with
after-school programs and activities. OMB's 2006 PART Assessment stated,
"Recent evaluations suggest that the program is not on track to meet
most of its long-term goals regarding student achievement or student
behavior." This proposal was included in the original budget resolution
(H.Con.Res. 67) passed by the House of Representatives in 1995.

*Eliminate the Arts in Education Program.* This program provides
competitive and non-competitive grants for the purpose of integrating
arts into education. One non-competitive grant is given to the Kennedy
Center, a private entity in Washington D.C. that charges its patrons to
view events. This proposal was included in the original budget
resolution (H.Con.Res. 67) passed by the House of Representatives in
1995.

*Eliminate the Reading is Fundamental/Inexpensive Book Distribution
Program.* The program provides funding to nonprofit organizations and
public entities for reading motivation programs, including the
distribution of inexpensive books. This public-private partnership could
be funded through private donations. This proposal was included in the
original budget resolution (H.Con.Res. 67) passed by the House of
Representatives in 1995.

*Eliminate Magnet School Assistance.* Magnet Schools Assistance is given
to education agencies that are implementing court-ordered or federally
approved voluntary desegregation plans. According to the 2006 PART
Assessment, this program has no ambitious targets or timeframes and
federal managers and program partners are not held accountable for cost,
schedule or performance results. In addition, to date, the program has
shown no adequate progress in achieving its long-term performance goals.
This proposal was included in the original budget resolution (H.Con.Res.
67) passed by the House of Representatives in 1995.

*Eliminate the Education for Homeless Children and Youth Program.* This
duplicative program funds formula grants to states to provide
educational assistance for homeless children and youth to attend school.
These children are eligible for other education funding for needy
children. This proposal was included in the original budget resolution
(H.Con.Res. 67) passed by the House of Representatives in 1995.

*Eliminate the Women's Educational Equity Program.* Women's Education
Equity provides funding to promote the education equity of women, a
function which states and school districts could carry out without
federal assistance. There is no similar program for men, and the
President has repeatedly called for the termination of this program.
This proposal was included in the original budget resolution (H.Con.Res.
67) passed by the House of Representatives in 1995.

*Eliminate Training and Advisory Services.* This duplicative program,
which was intended to provide technical assistance to schools on issues
related to desegregation, received a "results not demonstrated" 2006
PART Assessment rating and has no regular accountability or reporting
requirements. This proposal was included in the original budget
resolution (H.Con.Res. 67) passed by the House of Representatives in
1995.

*Eliminate the Dropout Prevention Demonstration Program.* The program,
which provides financial assistance for dropout prevention programs in
schools with high dropout rates, repeatedly fails to actually deter
students from dropping out of high school. The President has called for
the elimination of these demonstration projects. This proposal was
included in the original budget resolution (H.Con.Res. 67) passed by the
House of Representatives in 1995.

*Eliminate Education Programs for Native Hawaiians.* Native Hawaiians
are a racial group, not a tribe, and dispensing benefits to them would
likely be subject to strict scrutiny in federal courts. Providing
additional financial assistance to this group is not only duplicative of
numerous current federal education programs, but is also likely
unconstitutional. This proposal was included in the original budget
resolution (H.Con.Res. 67) passed by the House of Representatives in
1995.

*Eliminate Alaska Native Education Equity.* Funding for the education of
Native Alaskans is duplicative of all other education funding received
by the state of Alaska. These students are eligible for all other
education assistance, including elementary, secondary and post-secondary
grants. This proposal was included in the original budget resolution
(H.Con.Res. 67) passed by the House of Representatives in 1995.

*Eliminate the Javits Gifted and Talented Education Program.* This
program was designed for provide funding for activities for gifted
students. However, two-thirds of the funds go to research and
development. Javits is duplicative of the Advanced Placement Program,
and the research and development funds are also duplicative of the
Department of Education's Institute of Education Sciences Research. The
program also rests on the questionable policy assumption that the
federal government should be subsidizing the education of students who
are *gifted and talented­*---with undoubtedly bright futures ahead of
them. This proposal was included in the original budget resolution
(H.Con.Res. 67) passed by the House of Representatives in 1995.

*Eliminate the Ready to Learn Television Program.* The Ready to Learn
Television (RTL) program is designed to develop television and digital
children's programming and provide resources to be distributed using
public television to parents and caregivers. The program received a 2006
PART Assessment rating of "results not demonstrated" and no method is in
place for measuring its long-term results or management accountability.
This proposal was included in the original budget resolution (H.Con.Res.
67) passed by the House of Representatives in 1995.

*Eliminate Exchanges with Historic Whaling and Trading Partners.* This
program provides funding to certain entities to provide Alaska Natives,
Native Hawaiians and Massachusetts families with educational activities.
This program has a narrow focus and should not be utilizing federal
funds. The State of Massachusetts can choose to fund the program with
state grants.

*Eliminate Close-Up Fellowships.* This non-competitive grant program
gives fellowships to low-income students to travel to Washington, D.C.
to learn about the federal government. According to the Administration,
this program is popular but has a very successful private fundraising
effort that would more than pay for the program without federal support.

*Eliminate Federal Support for the University of Hawaii School of Law's
Center of Excellence in Native Hawaiian Law.* Native Hawaiians are a
racial group, not a tribe, and dispensing benefits to them would likely
be subject to strict scrutiny in federal courts (and therefore
presumably unconstitutional). All to often, "native Hawaiian law" is
focused on either asserting or defending the premise that Native
Hawaiians should be treated as if they *were* an Indian tribe already
(or recognized as such through legislation) and therefore remain
eligible for federal subsidies.

*Eliminate the National Writing Project.* The National Writing Project
provides grants for training teachers to teach writing. This program,
which is duplicative of the Teacher Quality State Grants program, was
given a rating of "results not demonstrated" by the 2006 PART
assessment. This proposal was included in the original budget resolution
(H.Con.Res. 67) passed by the House of Representatives in 1995.

*Eliminate Star Schools Program.* The Star School Program is duplicative
as one of *207* federal education programs dedicated to improve math and
science skills in students. This proposal was included in the original
budget resolution (H.Con.Res. 67) passed by the House of Representatives
in 1995.

*Eliminate Foreign Language Assistance.* FLA provides funds for the
promotion of foreign language education. States can use other state
grants to accomplish this initiative if they so choose. This proposal
was included in the original budget resolution (H.Con.Res. 67) passed by
the House of Representatives in 1995.

*Eliminate the Excellence in Economic Education Program.* This program
is designed to encourage economic and financial literacy in students
from kindergarten to high school. The President has called for the
termination of this program, citing that it has "little impact" on
students.

*Eliminate the International Research and Studies Program.* This
duplicative program is one of nine programs in the Department of
Education's International Education and Foreign Language Studies
program. The program received a rating of "Results Not Demonstrated" by
the 2006 PART assessment, is duplicative of other research programs, and
has demonstrated no long-term impact on students.

*Eliminate the Native Hawaiian Higher Education Program.* Native
Hawaiians are a racial group, not a tribe, and dispensing benefits to
them would likely be subject to strict scrutiny in federal courts.
Providing additional higher education financial assistance to this group
is not only duplicative of numerous current federal student loan and
grant programs, but is also likely unconstitutional. This proposal was
included in the original budget resolution (H.Con.Res. 67) passed by the
House of Representatives in 1995.

*Eliminate Leveraging Educational Assistance Partnerships.* LEAP
provides funding to states for need-based grants and community service
work-study assistance for postsecondary students. The President has
called for the termination of this program on the grounds that it has
"accomplished its objective of stimulating all states to establish
need-based postsecondary student grants."

*Eliminate the Fund for the Improvement of Postsecondary Education.*
This program is one of many duplicative higher education grant programs.
It has loosely defined goals and other higher education grant programs
are used for the same purpose. This proposal was included in the
original budget resolution (H.Con.Res. 67) passed by the House of
Representatives in 1995.

*Eliminate International Education and Foreign Language Services.*
Several programs under this service are intended to strengthen student
education in foreign languages. According to the 2006 PART Assessment,
the program failed to demonstrate effective long-term results and
federal managers of the program are not held accountable for cost,
schedule and performance results. This proposal was included in the
original budget resolution (H.Con.Res. 67) passed by the House of
Representatives in 1995.

*Eliminate Stupak Olympic Scholarships.* These scholarships are given to
Olympic athletes attending college. Not only did the program receive a
2006 PART rating of "results not demonstrated," but the program is
duplicative of all other federal education assistance programs. Like
other students, athletes may apply for federal grants, loan assistance
and the federal work-study program. Also, Olympic athletes often receive
corporate sponsorships that could help them pay their education.

*Eliminate the Underground Railroad Program.* This program provides
grants to nonprofit educational entities to build and maintain
facilities that display artifacts relating to the history of the
Underground Railroad. The President has called for the termination of
this program stating the federal government has completed its funding
commitment to the project and private funding and endowment funding can
support ongoing operations.

*Eliminate Byrd Honors Scholarships.* This program, which awards
merit-based scholarships to high school seniors through formula grants
to state educational agencies, received a 2006 PART Assessment rating of
"results not demonstrated." The scholarship program is duplicative of
many other state, local, and federal scholarship programs. In addition,
many universities and private entities provide scholarships to high
school seniors entering college. This proposal was included in the
original budget resolution (H.Con.Res. 67) passed by the House of
Representatives in 1995.

*Eliminate the Thurgood Marshall Legal Educational Opportunity Program.*
This program provides minority college students financial aid when
applying to law school. The program is duplicative of other federal
higher education assistance programs, which provide students with
financial aid for college and law school.

*Eliminate the Graduate Assistance in Areas of National Need Program.*
The program gives three-year grants to higher education institutions for
the purpose of providing gifted students with limited financial means
with fellowships in the areas of science, math and technology. The
program received a rating of "results not demonstrated" by the 2006 PART
Assessment, as it was found to be inefficient, without measurable
long-term goals, and without budgetary and managerial accountability.

*Eliminate Federal TRIO Programs.* The purpose of the five TRIO programs
is to encourage individuals from disadvantaged backgrounds to enter and
complete college. However, the programs' effectiveness has been
questioned in a number of studies. According to the Administration, the
Upward Bound TRIO program is "ineffective" and has had no significant
effect on high-risk students. In addition, the program has been unable
to demonstrate any improved efficiencies, despite previous poor
evaluations. This proposal was included in the original budget
resolution (H.Con.Res. 67) passed by the House of Representatives in
1995.

*Eliminate Migrant and Seasonal Farm Worker Training Program.* The
program assists "economically-disadvantaged" seasonal farm workers by
providing grants to entities providing workers with training. The
program received a rating of "ineffective" by the 2006 PART Assessment.
It is duplicative of numerous other programs and has demonstrated no
measurable success.

*Eliminate the Reintegration of Youthful Offenders Program.* This
program is a demonstration project that provides ex-offenders under the
age of 25 with employment and training services. The President has
requested the termination of this program, citing its continued
inability to account for employment outcomes.

*Eliminate the Prisoner Re-entry Initiative.* This \$19 million program
supports activities to help individuals in prison transition into the
community. This effort is largely duplicative of other general workforce
training programs.

*Eliminate Job Corps.* Job Corps is designed to assist disadvantaged
youth to transition into the workforce. An Office of the Inspector
General audit reported that the program did not have effective controls
set in place to protect against budgetary loss in the program. In
addition, the program has failed to demonstrate overall efficiency or
cost effectiveness.

*Consolidate and Block Grant WIA Job Training Programs.* The Workforce
Investment Act (WIA) gives numerous formula-based grants to states for
job-training and other employment services for adults and
"disadvantaged" youth. The Administration has proposed a similar reform,
stating that "under current law, too few workers are trained,
duplicative programs produce excessive overhead costs and administrative
complexity, accountability is insufficient, governors have too little
control and flexibility, and programs do not train workers for jobs in
high-growth industries. This reform would consolidate the existing WIA
programs into one block grant, which would be given to states with
maximum flexibility to implement job training programs best suited for
their needs. Funding for the block grant would be frozen at the FY06
proposed level. A similar proposal was included in the original budget
resolution (H.Con.Res. 67) passed by the House of Representatives in
1995.

*Eliminate the English Language Acquisition Program.* ELA provides
formula grants to states to improve language services to immigrant
students. The program is duplicative of other federal-funded language
programs. In addition, states differ with regard to whether they have
heavy immigrant populations and may choose to fund this if necessary. A
similar proposal was included in the original budget resolution
(H.Con.Res. 67) passed by the House of Representatives in 1995.

*Revise Funding to School Districts for Impact Aid.* Under Title VIII of
ESEA, Impact Aid provides federal funding to school districts in areas
affected by activities of the federal government, such as large sections
of land owned by the federal government or land that has been removed
from local tax rolls, such as Indian lands. The formula for determining
the allocation of Impact Aid assistance to each school district counts
both students actually living on federal and/or Indian land with parents
serving in the military or in the federal government (Type A Students),
*as well as* those residing in federally-subsidized low-rent housing, or
those with parents serving in the armed services or for foreign
governments that do not live on federal property (Type B Students). This
proposal would eliminate Impact Aid assistance for Type B students and
would direct assistance to cover those students putting the greatest
burden on the school districts. This proposal was included in the
original budget resolution (H.Con.Res. 67) passed by the House of
Representatives in 1995.

*Eliminate State Grants for Safe and Drug-Free Schools and Communities.*
These grants to states are to discourage violence and the use of illegal
substances such as alcohol, cigarettes, and drugs. States receive
funding on the basis of their school-age population and number of poor
children, but statistics suggest the program is ineffective. In
addition, studies show that schools are among the safest places in the
country and relatively drug free. This proposal was included in the
RSC's "Operation Offset" in 2005.

*Consolidate and Block Grant School Innovation and Improvement Funding.*
Under Titles II, III, and IV of ESEA, the federal government provides
extensive support to states and operates numerous programs designed to
enhance teacher recruiting and training, support the immigrant
population, etc. While many of these programs provide important
services, states would be well served to receive this funding in the
form of a block grant, with increased flexibility to use these funds on
the programs most needed in that state. This proposal would consolidate
the existing School Improvement and Innovation programs (minus those
eliminated elsewhere in this budget) and would reduce funding by 50
percent over two years (with a 25 reduction each year) for these
combined programs. A similar proposal was included in the original
budget resolution (H.Con.Res. 67) passed by the House of Representatives
in 1995.

*Eliminate the Native Hawaiian Vocational Education Program.* Native
Hawaiians are a racial group, not a tribe, and dispensing benefits to
them would likely be subject to strict scrutiny in Federal courts.
Providing additional financial assistance to this group is not only
duplicative of numerous current federal education and vocational
programs, but is also likely unconstitutional. This proposal was
included in the original budget resolution (H.Con.Res. 67) passed by the
House of Representatives in 1995.

*Eliminate the Perkins Loan Program Capital Contributions Program.* The
Perkins Loan Program provides funding *to colleges* to make low-interest
loans to needy students. The 2004 PART Assessment rated this program as
"ineffective." In addition, Perkins loans are duplicative of other
federal loan assistance such as the direct and guaranteed student loan
programs. This proposal was included in the original budget resolution
(H.Con.Res. 67) passed by the House of Representatives in 1995.

*Eliminate the Howard University Academic Program and Divert Half the
Savings to the Historically Black and Hispanic Colleges Fund*. In 2005,
Howard University funded 52 percent of its education and general
expenses through its federal appropriation. At the same time, Howard
University trails its peers in fundraising---with an alumni response
rate of eight percent, far below that of other institutions. This
proposal was included in the original budget resolution (H.Con.Res. 67)
passed by the House of Representatives in 1995.

*Eliminate the Corporation for Public Broadcasting.* CPB, which receives
\$400 million annually from Congress, funds 15% of the Public
Broadcasting Service's annual budget. The other 85% of PBS' budget comes
from viewer donations, local government, and universities. CPB and PBS
continue to use federal funding to pay for questionable programming,
such as a documentary on sex education promoted and partially paid for
by the Playboy Foundation. In addition, much of the programming on PBS,
such as Sesame Street, could bring in enough annual revenues to cover
the loss of federal funding. This proposal was included in the original
budget resolution (H.Con.Res. 67) passed by the House of Representatives
in 1995.

*Eliminate the National Endowment for the Arts.* The NEA funds art
programs and initiatives through grants to various entities. In 2001,
America spent \$27 billion on non-profit arts funding: \$11.5 billion
from the private sector; \$14 billion in earned income (tickets sales,
etc.); and \$1.3 billion in combined federal, state, and local public
support (of which \$105 million was from the NEA---0.4% of total
non-profit arts funding). The funding could be funded completely through
private donations, and the federal role eliminated. This proposal was
included in the original budget resolution (H.Con.Res. 67) passed by the
House of Representatives in 1995.

*Eliminate the National Endowment for the Humanities.* The NEH funds
humanities programs and initiatives through grants to various entities.
As with the NEA, the general public benefits very little from NEA, and
it could be funded through private donations. This proposal was included
in the original budget resolution (H.Con.Res. 67) passed by the House of
Representatives in 1995.

*Eliminate the Institute of Museum and Library Services.* IMLS is an
independent federal agency that makes grants to museums and libraries.
This is a function that could be funded at the state and local level. In
addition, museums and libraries receive a significant amount of
charitable contributions from the private sector. This proposal was
included in the original budget resolution (H.Con.Res. 67) passed by the
House of Representatives in 1995.

*Reduce the Department of Education's Bureaucracy by 30 Percent*. As the
size and scope of the Department of Education is reduced over the coming
year, the costs of running the Department can be significantly
decreased. This proposal was included in the original budget resolution
(H.Con.Res. 67) passed by the House of Representatives in 1995.

*Eliminate the WIA Pilots and Demonstrations Program.* This program
provides for pilot and demonstration projects designed to develop and
implement effective methods of addressing employment needs. The
Administration has stated that numerous earmarks passed by Congress have
duplicated the efforts of this program and requested its termination.

*Eliminate Funding for the National and Community Service Act*. The
National and Community Service Act (NCSA) provides authorization of
funding for the National Civilian Community Corps (NCCC), AmeriCorps,
Learn and Serve America, and the Points of Light Foundation. AmeriCorps,
which receives the bulk of this funding, is an inefficient and expensive
way of assisting individuals to pay for college---and stretches the
notion of what constitutes a "volunteer." In addition, AmeriCorps is not
means-tested. As a result, children of wealthy people can edge out
low-income children for participation. This proposal was included in the
original budget resolution (H.Con.Res. 67) passed by the House of
Representatives in 1995.

*Eliminate the Literacy through School Libraries Programs.* The program
provides grants to local educational agencies to provide students with
increased access to up-to-date school library materials and certified
professional library media specialists. This limited program could be
funded through state and local funding. This proposal was included in
the original budget resolution (H.Con.Res. 67) passed by the House of
Representatives in 1995.

*Eliminate the Even Start Program.* Even Start provides family literacy
classes to low-income parents and children. According to the
Administration, participants in the program "do not make greater
literacy gains than non-participants." In addition, the program has been
rated "ineffective" by the PART Assessment.

*Eliminate Administrative Fees Paid to Schools in the Campus-Based
Student Aid and Pell Grant Programs.* Under current law, institutions of
higher education administering certain campus-based federal assistance
programs are allowed to use five percent of the program funds for
administrative purposes. This reform would eliminate the five percent
administrative funding for the universities. This proposal was included
in the RSC's "Operation Offset" in 2005.

*Eliminate the International Labor Affairs Bureau*. The Bureau was
originally responsible for the Department of Labor's overseas research
projects and international labor workers' rights; however, in recent
years the Bureau has taken on grant-making activities. This proposal was
included in the original budget resolution (H.Con.Res. 67) passed by the
House of Representatives in 1995.

*Eliminate the Women's Bureau (DOL).* According to the Administration,
this \$9 million bureau "promotes the interests of wage-earning women,
and seeks to improve their working conditions and advance their
opportunities for profitable employment." This proposal was included in
the original budget resolution (H.Con.Res. 67) passed by the House of
Representatives in 1995.

*Freeze Head Start at the FY 2005 Level.* Head Start provides early
childhood education programs for low-income children at a cost to
taxpayers of \$6.8 billion annually. Ten years ago, Head Start was able
to serve 750,000 children with \$3.3 billion (\$4,400 per student);
however, in 2005, the program assisted roughly 940,000 students, only a
190,000 student increase in 11 years, spending \$7,222 per student. In
only ten years, Head Start per-child funding has nearly doubled, yet the
program continues to receive a PART Assessment rating of "results not
demonstrated." Head Start evaluations have revealed the program has no
system in place for monitoring or measuring the true educational
progress of Head Start students or the effectiveness of individual Head
Start grantees. This option would freeze Head Start funding at \$6.8
billion. This proposal was included in the original budget resolution
(H.Con.Res. 67) passed by the House of Representatives in 1995.

[Direct Savings]{.smallcaps}

*Eliminate Subsidized Loans to Graduate Students.* The Federal Direct
Loan Program and the Federal Family Education Loan Program provide
federally subsidized loans to students attending institutions of higher
education for both undergraduate and graduate degrees. This proposal
would eliminate new federal loans to graduate students beginning in
2006. Most students attending graduate school have received an
undergraduate degree and many received a federally subsidized student
loan to pay for their undergraduate studies. In eliminating subsidized
loans to graduate students, it is assumed these students will continue
their graduate studies utilizing non-subsidized loans from private
entities. This proposal was included in the RSC's "Operation Offset" in
2005.

*Eliminate Trade Adjustment Assistance.* Trade Adjustment Assistance,
which was given a 2003 PART Assessment rating of "ineffective," provides
additional unemployment benefits and training assistance to workers who
lose their jobs as a result of foreign competition, including workers
affected by NAFTA. There is no justification, however, for providing
more assistance to an unemployed worker who lost a job because of
foreign competition than for a worker whose unemployment resulted from
domestic competition. This proposal was included in the original budget
resolution (H.Con.Res. 67) passed by the House of Representatives in
1995.

**FUNCTION 550: HEALTH**

This function includes spending for health care services, health-related
research and training, and consumer and occupational safety, including
Medicaid, the State Children's Health Insurance Program, the National
Institutes of Health, substance abuse prevention and treatment, and
women's health programs.

[Summary of Policy Assumptions]{.smallcaps}

  --------------------------- ------------ --------- --------- --------- --------- --------- --------- -----------
  **RSC Recommendation**                                                                               

  **Function 550: Health**                                                                             

  \[In millions of dollars\]                                                                           

                                                                                                       

  Fiscal Year                              2006      2007      2008      2009      2010      2011      2007-2011

  Health Function Totals      BA           268,932   269,698   279,170   291,222   300,435   312,928   1,453,453

                              OT           265,610   272,369   279,387   288,810   299,486   311,802   1,451,854

                                                                                                        

  **DISCRETIONARY**           **Changes                                                                
                              from RSC                                                                 
                              Baseline**                                                               

  Reduce Maternal & Child     BA           0         -172      -172      -172      -172      -172      -860
  Block Grant                                                                                          

                              OT           0         -88       -101      -105      -108      -110      -512

  Eliminate Title X Family    BA           0         -226      -283      -283      -283      -283      -1,358
  Planning                                                                                             

                              OT           0         -226      -283      -283      -283      -283      -1,358

  Eliminate Rural Health      BA           0         -8        -10       -10       -10       -10       -48
  Outreach Grants                                                                                      

                              OT           0         -8        -10       -10       -10       -10       -48

  Eliminate State Offices of  BA           0         -7        -8        -8        -8        -8        -39
  Rural Health                                                                                         

                              OT           0         -7        -8        -8        -8        -8        -39

  Eliminate Native Hawaiian   BA           0         -2        -2        -2        -2        -2        -10
  Healthcare                                                                                           

                              OT           0         -2        -2        -2        -2        -2        -10

  Eliminate Environmental     BA           0         -150      -150      -150      -150      -150      -750
  Health & Injury                                                                                      

                              OT           0         -49       -120      -139      -146      -148      -602

  Eliminate CDC\'s Occup.     BA           0         -168      -168      -168      -168      -168      -840
  Safety and Health                                                                                    

                              OT           0         -55       -135      -156      -163      -165      -674

  Streamline Administrative   BA           0         -130      -130      -131      -131      -131      -653
  Costs at HHS                                                                                         

                              OT           0         -72       -115      -125      -129      -130      -571

  Eliminate Health            BA           0         -211      -264      -264      -264      -264      -1,267
  Professions Grants                                                                                   

                              OT           0         -211      -264      -264      -264      -264      -1,267

  Reduce National Health      BA           0         -63       -63       -63       -63       -63       -315
  Services Corp.                                                                                       

                              OT           0         -22       -54       -59       -60       -62       -257

  Reduce NIH Spending by 10   BA           0         -2858     -2858     -2858     -2858     -2858     -14,290
  Percent                                                                                              

                              OT           0         -728      -2254     -2688     -2784     -2806     -11,260

  Eliminate the Ag. for       BA           0         -239      -319      -319      -319      -319      -1,515
  Health. Res. & Qual.                                                                                 

                              OT           0         -239      -319      -319      -319      -319      -1,515

  **DIRECT**                                                                                           

  Revise Fed. Ret. Health     BA           0         -140      -230      -320      -430      -550      -1,670
  Benefits Formula                                                                                     

                              OT           0         -140      -230      -320      -430      -550      -1,670

  Block Grant Medicaid and    BA           0         -1,125    -9,146    -17,862   -26,825   -36,739   -91,697
  SCHIP                                                                                                

                              OT           0         -1,125    -9,146    -17,862   -26,825   -36,739   -91,697
  --------------------------- ------------ --------- --------- --------- --------- --------- --------- -----------

[Discussion of Policy Assumptions]{.smallcaps}

[Discretionary Savings]{.smallcaps}

*Reduce the Maternal and Child Health Block Grant.* The Maternal and
Child Health Block Grant subsidizes programs providing services for
preventive health care and health services for mothers and children.
Since the federal commitment to other programs directed toward maternal
and child health and preventive health services has increased
substantially in recent years, funding these duplicative block grants
could be reduced. This proposal is consistent with the President's 2007
budget proposal to reduce funding for this program. Also, CBO states
that the activities conducted by this program can be absorbed by other
programs and funded by the states. This proposal was included in the
original budget resolution (H.Con.Res. 67) passed by the House of
Representatives in 1995.

*Eliminate Title X Family Planning*. Established in 1970, the program
was created to distribute contraception to the poor to help curb the
population. During the November 16, 1970 floor debate on the original
authorization, Rep. Carter, one of the bill's supporters, said the
program was greatly needed because, "Estimates have been made by
reliable authorities that by the year 2000 our population in the United
States will reach 300 million. It is entirely possible that productivity
in a nation even as wealthy as ours may not rise sufficiently to
properly feed, clothe, and care for this gigantic increase. The quality
of life could well be diminished." Despite approximately \$5 billion
spent on the Title X program since its inception, the U.S. population
did rise to approximately 300 million people in 2005 (up from 203
million in 1970), and the catastrophic predictions made to justify this
program have proven false. Despite the fact that the Title X program's
legal authorization to exist expired after fiscal year 1985, Congress
continues to appropriate money, \$283 million in FY 2006. Currently a
third of the program's clientele are teenagers, who are able to receive
contraception without parental consent, and without regard to their
family's income. According to the General Accountability Office, Planned
Parenthood Federation of America and its affiliates spent \$58.7 million
federal Title X dollars in FY 2001 (the last year for which these
numbers are available). A similar proposal was included in the RSC's
"Operation Offset" in 2005.

*Eliminate Rural Health Outreach Grants.* The Rural Outreach Grants
funded by the Health Resources and Services Administration fund local
consortia of rural health care providers to coordinate and enhance the
availability of health services. These services can be supported through
community health centers, the Maternal Child Health Block Grant,
Medicaid, and other programs. HHS administers hundreds of health and
social services programs that provide resources to rural areas. In
addition, the Medicare Modernization Act (MMA) contains several new
provisions to support rural health. This proposal was included in the
original budget resolution (H.Con.Res. 67) passed by the House of
Representatives in 1995.

*Eliminate State Offices of Rural Health.* Established in 1991, the
State Offices of Rural Health Program was created to help rural
communities build their health care services by supporting state
initiatives and partnerships in rural health development. Since the
program's inception, the number of state offices has grown from seven to
50. Funding for the program was intended to help states establish, *not*
maintain, offices. All 50 states have received grants, and therefore
states can continue these offices if they believe they are useful. This
proposal was included in the original budget resolution (H.Con.Res. 67)
passed by the House of Representatives in 1995.

*Eliminate the Native Hawaiian Healthcare Program.* The program was
created to provide primary care services and disease prevention services
for Native Hawaiians. Hawaii has a highly developed employer-based
health service system which provides coverage to residents not insured
through the employer mandate. In addition, Native Hawaiians are a racial
group, not an Indian tribe, and dispensing benefits to them would likely
be subject to strict scrutiny in federal courts (and thus presumably
unconstitutional). This proposal was included in the original budget
resolution (H.Con.Res. 67) passed by the House of Representatives in
1995.

*Eliminate the Occupational Safety and Health Program at the CDC.* The
National Institute of Occupational Safety and Health (NIOSH) is
responsible for "conducting research and making recommendations for the
prevention of work-related illnesses and injuries." It is questionable
whether this constitutes a "disease" and if the program should be housed
within the CDC. Also, the program duplicates functions of the
Occupational Safety and Health Administration (OSHA). This proposal was
included in the original budget resolution (H.Con.Res. 67) passed by the
House of Representatives in 1995.

*Eliminate the Environmental Health and Injury Program at the CDC.* This
program supports research to identify risk factors to prevent injuries,
deaths, and disabilities resulting from non-work related environments.
This activity is not central to CDC's mission, and as such, this budget
proposes to eliminate it. This proposal was included in the original
budget resolution (H.Con.Res. 67) passed by the House of Representatives
in 1995.

*Streamline the Administrative Costs at the Department of Health and
Human Services (HHS).* Salaries and expenses should be reduced by five
percent at the following HHS offices: Health Resources and Services
Administration, Substance Abuse and Mental Health Services
Administration, Centers for Disease Control, the Office of the Director
of the NIH, and the Office of the Assistant Secretary. This proposal was
included in the original budget resolution (H.Con.Res. 67) passed by the
House of Representatives in 1995.

*Eliminate Health Professions Grants*. The Health Professions training
grants at the Health Resources and Services Administration (HRSA)
finance academic institutions to help meet the costs of training and
educating students to become health professionals. These grants were
authorized 40 years ago, partially in response to an anticipated
national shortage of physicians that does not exist today. Between 1992
and 2003, the U.S. physician population increased by 31 percent, over
twice the rate of growth of the total population. Evaluations have not
linked these grants to changes in supply, distribution, and minority
representation of physicians and other health professionals: thus, the
program received an "ineffective" PART rating. CBO stated that,
"continuing these subsidies to persuade people to enter well-paid
medical careers is not the best use of federal funds, particularly when
there is no national shortage of physicians." Market forces provide
strong incentives for individuals to seek training and jobs in health
professions and incentives are continuing to rise per capita. Also,
subsidies are distributed mainly to institutions and not directly to
students. This proposal was included in the original budget resolution
(H.Con.Res. 67) passed by the House of Representatives in 1995.

*Reduce Funding for the National Health Services Corps.* The NHSC
attempts to alleviate any shortage of health care professionals by
recruiting physicians and other health care professionals to provide
primary care services in what are designated as "Health Professional
Shortage Areas." Congress continues to fund the program at levels double
the President's requests, even though the 2006 PART Assessment reports
that NHSC has failed to demonstrate adequate progress in achieving its
long-term goals. This budget would reduce funding for the program. This
proposal was included in the original budget resolution (H.Con.Res. 67)
passed by the House of Representatives in 1995.

*Encourage Privatization of NIH-Supported Research by Reducing Funding
by Ten Percent.* This proposal reduces NIH expenditures by ten percent.
Under this proposal, the NIH would receive almost \$26 billion, which
still is more than double the FY96 appropriation of \$11.9 billion. NIH
has funded numerous nonessential projects in recent years, including a
prostitute/masseuse study, reactions to pornography study, and an
American Indian transgender research study. This proposal was included
in the original budget resolution (H.Con.Res. 67) passed by the House of
Representatives in 1995.

*Eliminate the Agency for Healthcare Research and Quality*. AHRQ, a part
of HHS, supports research "designed to improve the quality of
healthcare, reduce its cost, improve patient safety, decrease medical
errors, and broaden access to essential services." This proposal was
included in the original budget resolution (H.Con.Res. 67) passed by the
House of Representatives in 1995.

[Direct Savings]{.smallcaps}

[]{.mark}

*Transform Medicaid and SCHIP to a Block Grant Program.* Medicaid is the
nation's health care financing system for the poor. The State Children's
Health Insurance Program (SCHIP) is a similar program for the nation's
uninsured children. They are both joint federal/state programs, with
states matching federal funds. This proposal would convert the current
Medicaid and SCHIP programs into a system of block grants to states.
States then would add their own funds to the federal contribution to
provide health care for low-income residents. Under the block grant,
states will have the flexibility to create innovative health care
programs for their low-income citizens. A Medicaid/SCHIP block grant
would allow the federal government to establish budgetary control over
its share of payments---which would be capped at an annual growth of
four percent. In contrast, currently Medicaid and SCHIP require the
federal government to pay its pre-established share of whatever is
spent. The more that is spent the more the federal government pays. A
block grant strategy would encourage states to establish efficient and
effective programs and discourage them from spending more to get more.
This approach recognizes that it is unknown which Medicaid program will
work best in all of the 50 states, the District of Columbia, and the
five territories---and builds on the landmark success of welfare reform.
This proposal was included in the original budget resolution (H.Con.Res.
67) passed by the House of Representatives in 1995.

*Base Federal Retirees' Health Benefits on Length of Service.* Federal
retirees are generally allowed to continue receiving benefits from the
Federal Employees Health Benefits (FEHB) program if they have
participated in the program during their last five years of service and
are eligible to receive an immediate annuity. More than 80 percent of
new retirees elect to continue health benefits. This proposal would
reduce health benefits for new retirees who had relatively short federal
careers, although it would preserve their right to participate in the
FEHB program. This could make the government's mix of compensation
fairer and more efficient by improving the link between length of
service and deferred compensation, and would also help bring federal
benefits closer to those of private companies. This proposal was
included in the RSC's "Operation Offset" in 2005.

**FUNCTION 570: MEDICARE**

[Summary of Policy Assumptions]{.smallcaps}

  ---------------------- ------------ --------- --------- --------- --------- --------- --------- -----------
  **RSC Recommendation**                                                                          

  **Function 570:                                                                                 
  Medicare**                                                                                      

  \[In millions of                                                                                
  dollars\]                                                                                       

                                                                                                  

  Fiscal Year                         2006      2007      2008      2009      2010      2011      2007-2011

  Medicare Function      BA           342,270   359,207   376,393   395,226   413,594   437,641   1,982,061
  Totals                                                                                          

                         OT           336,790   364,668   376,441   394,815   413,906   437,686   1,987,516

                                                                                                   

  **DIRECT**             **Changes                                                                
                         from RSC                                                                 
                         Baseline**                                                               

  Save Medicare from     BA           0         -27,300   -36,100   -42,000   -48,700   -63,800   -217,900
  Bankruptcy                                                                                      

                         OT           0         -27,300   -36,100   -42,000   -48,700   -63,800   -217,900
  ---------------------- ------------ --------- --------- --------- --------- --------- --------- -----------

[Discussion of Policy Assumptions]{.smallcaps}

[Direct Savings]{.smallcaps}

Medicare is facing bankruptcy. Last year, the Social Security and
Medicare Trustees reported that the Federal Hospital Insurance Trust
Fund or Medicare Part A---which pays for hospital and other
institutional care and is funded by the Medicare payroll tax, will run
out of money by 2020, in only 14 years. In addition, Medicare Parts B
and D---which pay for physician bills, outpatient services, and now
prescription drugs, will be increasingly subsidized through general fund
transfers paid by taxpayers, making the program less and less
self-financed through payroll taxes and premiums. The new Medicare
prescription drug benefit will cost roughly \$534 billion over ten
years, but this estimate is a mere ten-year snap shot and masks the true
magnitude of the program's *\$7.5 trillion* long-term unfunded promise.

Fortunately, current law is at least cognizant of the impending dangers
facing Medicare with the enactment of a small provision in the Medicare
Modernization Act of 2003 (MMA) known as "cost containment." The latest
Trustees' report must now include a projection of general revenue
spending as a percentage of total Medicare spending (i.e., how much are
taxpayers subsidizing Medicare), which compellingly demonstrates the
true long-term insolvency of the Medicare program. The projection
examines each of the next seven fiscal years in order to determine if
the general fund subsidy amounts to less than *45 percent* of the
program. If the subsidy exceeds 45 percent in any year *for two
consecutive annual reports*, a "Medicare funding warning" would
automatically be triggered. The warning is meant to reveal if Medicare
spending is putting the rest of federal budget under dire financial
strain. If the funding warning is made, some action is required---the
President must submit to Congress legislation to reform Medicare.
Unfortunately, the last Trustees' report projected that the general fund
subsidy will exceed 45 percent in 2012. If significant Medicare reforms
are not enacted *this year,* the 2006 report will likely convey a
similar message, warning Congress that the general fund is subsidizing
too large a portion of Medicare spending.

In light of these concerns, and consistent with this budget's commitment
to balance the federal budget, it is imperative the Congress act swiftly
in addressing the program's sustainability *and specifically the
unprecedented growth in Medicare spending*. This proposal would cap
overall Medicare spending growth at an average of 5.4 percent (down from
8.5 percent on average currently), as provided for in the original
budget resolution (H.Con.Res. 67) passed by the House of Representatives
in 1995. In order to align Medicare spending with the 5.4 percent cap,
Congress could choose from a number of reform options, which would
significantly restrain Medicare spending. Outlined in this proposal are
just a few of the numerous reform options available to a Congress
serious about controlling federal Medicare spending.

*Model Medicare after the Federal Employees Health Benefit Plan
(FEHBP).* One possible approach for achieving solvency would convert
Medicare into a premium-support system, modeled after the FEHBP, in
which every Medicare beneficiary would receive a contribution from
Medicare to purchase the health care plan of their choice. Choices would
include a broad range of plans with varying levels of coverage. Again,
beneficiaries would pay extra if the plan they chose was more costly
than the amount of the Medicare contribution, and would receive a rebate
if they chose a plan that cost less than the amount of the Medicare
contribution. Private plans available for purchase by Medicare
beneficiaries would include HMOs, preferred provider organizations,
medical savings accounts, as well as other innovative insurance
products. Any plan available in the market to be purchased with a
Medicare contribution would be required to include catastrophic coverage
for costs over a set level. In order to prevent marketing abuses, plans
also would be required to meet a minimal set of other eligibility
requirements, including quality review. Medicare could continue to offer
the traditional fee-for-service Medicare program by determining the
individual actuarial value of the program and allowing beneficiaries to
purchase it with their Medicare contribution. The value of the Medicare
contribution would be determined by pegging total Medicare expenditures
to the 5.4 percent cap. This proposal was included in the original
budget resolution (H.Con.Res. 67) passed by the House of Representatives
in 1995.

*Increase the Medicare Part B Premium from 25 percent to 50 percent and
Allow Part B Means-Testing to Take Effect Earlier*. Medicare Part B
provides beneficiaries with health insurance for physician and hospital
outpatient services. Beneficiaries pay premiums covering 25 percent of
total Part B costs, while the federal government subsidizes the
remaining 75 percent. Although initially beneficiaries were expected to
cover 50 percent of premium costs, their share was gradually decreased
and the 1997 Balanced Budget Act permanently set the 25 percent level.
This option would return the beneficiary's share of the premium to 50
percent. (The change would place no burden on the neediest
beneficiaries, as Medicaid pays Medicare premiums for individuals
earning below 120 percent of poverty.)

In addition, the Medicare Modernization Act (MMA) passed by Congress in
2003, introduced a means-test to the Part B premium, which set graduated
premiums for higher-income seniors. Originally, the means-test was to be
phased in over five years; however the Deficit Reduction Act of 2005
changed the phase-in from five to three years. This proposal calls for
full implementation of Part B means-testing in 2007, which will provide
for immediate budget savings and eliminate the administrative expenses
associated with a drawn-out transition period.

*Means-Test the Part D Prescription Drug Benefit.* Under current law,
the Medicare prescription drug program is open to any senior citizen,
including the very wealthy. As with Part B, enrollees pay an insurance
premium, typically ranging between \$30 and \$40 monthly. This
represents 25 percent of the full premium cost, as the government
subsidizes 75 percent of a Part D beneficiary's premium. This proposal
would relieve the federal government of paying a full share for those
enrollees with higher income (on a sliding scale aligned with the
current Part B means-test) in excess of \$80,000 (individual)/\$160,000
(couple).

*Restructure Medicare Cost-Sharing Requirements.* Medicare Parts A and B
are fee-for-service programs, which require beneficiaries to share in
the cost of various procedures and services rendered. Under current law,
the amount paid by the enrollee for deductibles, co-payments, and other
shared costs, varies depending on the type of service provided. In
addition, the program does not currently limit cost-sharing expenses
paid by beneficiaries; therefore, if an individual incurs a particularly
high medical bill, the enrollee's share may be a very large portion of
the total bill, which could be very difficult for the individual to pay.

Under this reform, the current complicated blend of cost-sharing
requirements would be eliminated. Instead, enrollees would pay a \$500
combined deductible for all services covered in Parts A and B of
Medicare. In addition, for amounts above the deductible, a standardized
20 percent coinsurance rate would apply to all beneficiaries. Total
individual cost-sharing obligations would be capped at \$2,500 annually,
protecting any individual from being encumbered with the exorbitant
medical costs associated with many catastrophic events.

In addition, Medigap reforms would be coupled with the cost-sharing
restructuring of Parts A and B. This proposal would modify Medigap
policies to prohibit coverage for any portion of the new \$500
deductible; however the program could cover 50 percent of the
coinsurance payments. A similar proposal was included in the RSC's
"Operation Offset" in 2005.

*Impose a Home Health Co-payment.* Under current law, Medicare
beneficiaries are not required to share in any costs related with
in-home visits. As more individuals begin to rely on this expensive
health care option, associated Medicare costs will also continue to
increase. In light of rising costs and new beneficiaries, this proposal
would impose a home health co-payment of 10 percent of the total cost of
each home health episode (60-day period of services) covered by
Medicare. By allowing enrollees to share in the cost of their home
health services, individuals would be encouraged to be cost-conscious
with regard to home health care, which will facilitate a decrease in
Medicare costs. This proposal was included in the RSC's "Operation
Offset" in 2005.

[]{.mark}

*Slow the Growth in Payments to Home Health Agencies, Skilled Nursing
Facilities, and Hospitals by One Percent.* Under current law, Medicare
payments are increased annually to reflect changes in medical inflation.
Typically, medical inflation ranges anywhere between two and five
percent above the Consumer Price Index. This proposal would slow the
payments to home health agencies, skilled nursing facilities, and
hospitals by one percent. As a result, payments to such Medicare
providers would continue to increase annually, but not as much as the
increase provided for with medical inflation.

**FUNCTION 600: INCOME SECURITY**

[Summary of Policy Assumptions]{.smallcaps}

  --------------------------- ------------ --------- --------- --------- --------- --------- --------- -----------
  **RSC Recommendation**                                                                               

  **Function 600: Income                                                                               
  Security**                                                                                           

  \[In millions of dollars\]                                                                           

                                                                                                       

  Fiscal Year                              2006      2007      2008      2009      2010      2011      2007-2011

  Income Security Function    BA           351,610   346,496   355,080   365,727   376,340   390,469   1,834,112
  Totals                                                                                               

                              OT           356,727   355,735   361,544   369,553   378,687   391,965   1,857,484

                                                                                                        

  **DISCRETIONARY**           **Changes                                                                
                              from RSC                                                                 
                              Baseline**                                                               

  Eliminate Rural Housing     BA           0         -80       -80       -80       -80       -80       -400
  Programs                                                                                             

                              OT           0         -14       -36       -54       -71       -80       -255

  Eliminate HUD Self-Help     BA           0         -61       -61       -61       -61       -61       -305
  Program                                                                                              

                              OT           0         -5        -29       -41       -54       -61       -190

  Eliminate Homeless          BA           0         -300      -300      -300      -300      -300      -1,500
  Assistance Grants                                                                                    

                              OT           0         -3        -51       -171      -225      -270      -720

  Eliminate Home Investment   BA           0         231       231       231       231       231       1,155
  Partnership                                                                                          

                              OT           0         2         30        95        152       210       489

  Eliminate Other Assisted    BA           0         -26       -26       -26       -26       -26       -130
  Housing Programs                                                                                     

                              OT           0         -16       -26       -26       -26       -26       -120

  Eliminate HOPE VI           BA           0         -100      -100      -100      -100      -100      -500

                              OT           0         0         -6        -19       -39       -59       -123

  Eliminate Native Hawaiian   BA           0         -9        -9        -9        -9        -9        -45
  Housing                                                                                              

                              OT           0         -1        -3        -5        -6        -8        -23

  Reduce Special Needs        BA           0         -239      -239      -239      -239      -239      -1,195
  Housing Assistance                                                                                   

                              OT           0         -5        -9        -42       -104      -149      -309

  Restrain Section 8 Vouchers BA           0         -7,048    -11,248   -11,248   -11,248   -11,248   -52,040

                              OT           0         -4,724    -9,988    -11,248   -11,248   -11,248   -48,456

  Reduce Housing Assistance   BA           0         -742      -742      -742      -742      -742      -3,710

                              OT           0         -14       -27       -129      -323      -463      -956

  Eliminate HUD Rural Housing BA           0         -17       -17       -17       -17       -17       -85

                              OT           0         -1        -4        -10       -15       -17       -47

  Eliminate LIHEAP            BA           0         -2,183    -2,183    -2,183    -2,183    -2,183    -10,915

                              OT           0         -1,637    -2,139    -2,183    -2,183    -2,183    -10,325

  **DIRECT**                                                                                           

  Eliminate TAA               BA           0         -215      -450      -647      -665      -683      -2,660

                              OT           0         -105      -335      -550      -663      -681      -2,334

  Eliminate LIHEAP            BA           0         0         0         0         0         0         0

                              OT           0         281       86        7         0         0         374
  --------------------------- ------------ --------- --------- --------- --------- --------- --------- -----------

[Discussion of Policy Assumptions]{.smallcaps}

[Discretionary Savings]{.smallcaps}

*Reduce Funding for Department of Agriculture (USDA) Housing Assistance
Programs.* USDA provides funding -- both grants and credit assistance
\-- for a range of housing related activities, including for
homeownership, housing preservation and repair, and rental assistance
through offices such the Rural Housing Service. The rural housing
environment is very different today than when these programs were
created in the 1930s, in part due to advances in technology, an
infrastructure build up and increased availability of credit assistance.
Moreover, there is considerable program overlap between these Department
of Agriculture programs and those offered by HUD. Finally, the
Government Accountability Office has identified numerous program
challenges with RHS. This budget assumes this program's overlapping
functions are transferred to HUD and reduces funding accordingly.

*Eliminate Funding for the Self-Help and Assisted Homeownership
Opportunity Program (SHOP).* SHOP provides funds for eligible national
and regional non-profit organizations and consortia to purchase home
sites and develop or improve the infrastructure needed to set the stage
for their own equity and volunteer-based homeownership programs for
low-income persons and families. In particular, SHOP funds are used for
eligible entities to develop non-luxury housing for low-income persons
and families who otherwise would not become homeowners. This program is
duplicative and funding would be eliminated.

*Reduce Funding for the Homeless Assistance Grants.* HUD's homeless
assistance programs were created by the McKinney-Vento Homeless
Assistance Act. These homeless assistance programs include HUD's
Supportive Housing Program, Shelter Plus Care Program, Single Room
Occupancy Program, and the Emergency Shelter Grant Program. Funding for
these programs is duplicative of other federal programs serving the same
population at the [Department of Health and Human
Services](http://www.hud.gov/utilities/intercept.cfm?http://aspe.os.dhhs.gov/progsys/homeless/Programs.htm),
the [Department of
Education](http://www.hud.gov/utilities/intercept.cfm?http://web99.ed.gov/GTEP/Program2.nsf/02cbabc638062ed2852563b6006ffeae/ca9f99d511ac6c36852563bc005404e5?OpenDocument),
the [Department of
Labor](http://www.hud.gov/utilities/intercept.cfm?http://www.doleta.gov/),
the [Department of Veterans
Affairs](http://www.hud.gov/utilities/intercept.cfm?http://www.va.gov/homeless/index.cfm),
the [Department of
Agriculture](http://www.hud.gov/utilities/intercept.cfm?http://www.fns.usda.gov/fsp/),
and the [Interagency Council on Homelessness](http://www.ich.gov/). In
addition, numerous nonprofit organizations, state and local agencies,
and [advocacy
groups](http://www.hud.gov/offices/cpd/homeless/library/advocacy.cfm)
provide homeless assistance. Given duplication with other federal
programs and private sector efforts, this budget proposes to reduce
funding below the baseline. A similar proposal was included in the
original budget resolution (H.Con.Res. 67) passed by the House of
Representatives in 1995.

*Block Grant Special Purpose Housing Programs.* HUD provides funding for
several special purpose programs, some targeting individuals with
special needs (Housing for the Elderly) or providing low interest loans
to developers (Home Investment Partnership program) to spur construction
and development of housing for low income families. These programs are
duplicative of other, existing HUD programs. This budget proposes to
create a new block grant program consisting of these various programs.
Beginning in FY 2007, funding would be provided at a reduced level
relative to the previous year's aggregate level due to administrative
savings and program streamlining and holding it at that level through
the budget window as the program's performance is evaluated.

*Eliminate Funding for the Section 236 Rental Housing Assistance
Payments.* HUD subsidizes the interest payments on mortgages for rental
or cooperative housing owned by certain private nonprofit or
limited-profit landlords and rented to low-income tenants. This proposal
eliminates funding for the program.

*Eliminate HUD's HOPE VI Program.* Originally known as the Urban
Revitalization Demonstration (URD), HOPE VI grew out of recommendations
by the National Commission on Severely Distressed Public Housing, which
was charged with proposing a National Action Plan to eradicate severely
distressed public housing. In response, Congress established the
Revitalization of Severely Distressed Public Housing (HOPE VI) program
in 1992 to address 100,000 of the most severely distressed public
housing units in the nation's urban neighborhoods by 2003. This HUD
program provides competitive grants to local housing authorities to
construct, rehabilitate and transform distressed public housing units
into mixed-income communities. However, the 2003 goal has been met and
exceeded according to HUD. In addition, in 2002 the Government
Accountability Office reported that HOPE VI has 27 percent higher
per-unit housing costs than vouchers that serve the same population and
47 percent higher when all costs are considered. It is also duplicative
of other federal programs providing similar assistance. Given that the
original goal of the program has been met, there is no further
justification for continued funding. This budget proposes to eliminate
funding for Hope VI. This proposal was included in the original budget
resolution (H.Con.Res. 67) passed by the House of Representatives in
1995.

*Eliminate Funding for the Native Hawaiian Housing Block Grant Program.*
This federal program provides Native Hawaiians federal housing block
grant funds for construction or reconstruction of affordable housing,
down payment and closing cost assistance, direct lending or interest
subsidies, housing counseling, tenant-based rental assistance and safety
activities. Native Hawaiians are a racial group, not a tribe, and
dispensing benefits to them would likely be subject to strict scrutiny
in Federal courts. Providing additional housing assistance to this group
is not only duplicative of numerous current federal housing programs
available to all individuals, but is also likely unconstitutional. This
budget proposes to eliminate funding for this program.

*Reduce HUD Funding for Tenant-Based Rental Assistance.* The HUD Section
8 program provides project-based (paid to the housing unit) and
voucher-based (tied to the family) federal subsidies to help low-income
households with housing costs in private markets. Funding for these
programs exceeded \$21 billion in new budget authority in FY 2006. This
budget proposes to begin restraining assistance levels. In addition, a
certain number of vouchers and certificates are turned in each year by
tenants who no longer need the assistance. This budget proposes to
reissue only half of these and achieve significant savings. A similar
proposal was included in the original budget resolution (H.Con.Res. 67)
passed by the House of Representatives in 1995.

*Eliminate Funding for the Rural Housing and Economic Development
Program.* The Rural Housing and Economic Development (RHED) Program at
HUD provides assistance to help nonprofits in rural communities build
capacity for rural housing and economic development, as well as support
innovative housing and economic development activities in rural areas.
This program is duplicative of numerous existing federal programs.
Within HUD, RHED activities are also eligible under the Non-entitlement
Community Development Block Grant Program, in which States pass funds to
rural areas for housing rehabilitation, public facility improvement,
economic development, and assistance to nonprofit entities for community
development activities. Funding for this program would be eliminated.

*Eliminate Funding for the Low Income Home Energy Assistance Program
(LIHEAP).* LIHEAP was created in 1981 as a temporary assistance program
to help low-income households meet higher home heating and air
conditioning costs resulting from higher energy prices. This "temporary"
program has become a permanent part of the federal budget. It is a
responsibility better met by state and local governments. This budget
proposes to eliminate funding for LIHEAP. A similar proposal was
included in the original budget resolution (H.Con.Res. 67) passed by the
House of Representatives in 1995.

**FUNCTION 650: SOCIAL SECURITY**

This function covers the Social Security Program.

SUMMARY OF POLICY ASSUMPTIONS

  ---------------------- ------------ --------- --------- --------- --------- --------- --------- -----------
  **RSC Recommendation**                                                                          

  **Function 650: Social                                                                          
  Security**                                                                                      

  \[In millions of                                                                                
  dollars\]                                                                                       

                                                                                                  

  Fiscal Year                         2006      2007      2008      2009      2010      2011      2007-2011

  Social Security        BA           556,897   585,379   613,241   645,216   680,429   717,599   3,241,864
  Function Totals                                                                                 

                         OT           554,483   583,164   610,724   642,276   677,389   714,069   3,227,622

                                                                                                   

                         **Changes                                                                
                         from RSC                                                                 
                         Baseline**                                                               

  **No Changes Assumed** BA           0         0         0         0         0         0         0

                         OT           0         0         0         0         0         0         0

                         OT           0         0         0         0         0         0         0
  ---------------------- ------------ --------- --------- --------- --------- --------- --------- -----------

DISCUSSION OF POLICY ASSUMPTIONS

This budget assumes no changes to Social Security. However, it does
recognize that Social Security is in trouble and needs to be reformed in
the near future.

Social Security is funded by the payroll taxes of current workers that
pay for the benefits of current retirees. At present, Social Security is
running a surplus, meaning that there is more money being paid into the
system than is needed to pay for current benefits. By now, the American
people are well aware and outraged that these Social Security surpluses
have bankrolled the rest of the federal government for years. In a
maneuver that the late Senator Daniel Patrick Moynihan referred to as
"embezzlement," Social Security surpluses are deposited in the Treasury
Department's general fund to subsidize other government functions, and
are replaced with I.O.U.s in the form of government bonds. This practice
must be stopped, and a first step in doing so (without incurring greater
deficits) is to balance the federal budget.

With the renewed attention brought to Social Security by President Bush
this past year, it is no secret that the system's long-term solvency is
in jeopardy. As the Baby Boom Generation retires, the ratio of workers
paying into the trust fund and retirees receiving benefits will shrink
considerably. By 2017, the surplus will have evaporated and Social
Security will begin to pay out more in benefits than it brings in
through payroll taxes. This will move the program into permanent and
growing deficits. By 2041, the Social Security Trust Fund will be
completely exhausted, leaving the program insolvent.

Congress must act now to protect Social Security and put the program on
a path toward permanent solvency before the fiscal situation
deteriorates even further. Such reform would protect the benefits of
seniors and those nearing retirement, maintain a strong safety net for
all workers, and close the door on any tax increases. In addition, it
would include the *option* of personal Social Security accounts within
the current system that will guard an individual's contributions for
their retirement, stopping the raid of the Social Security Trust Fund
once and for all and allowing what Albert Einstein called the most
powerful force in the universe---compound interest---to ensure a better
rate of return than the system currently provides.

**FUNCTION 700: VETERANS BENEFITS AND SERVICES**

This function covers programs that offer benefits to military veterans.
Those programs, most of which are administered by the Department of
Veterans Affairs, provide health care; disability compensation;
pensions; life insurance; housing loans; and education, training, and
rehabilitation benefits.

[Summary of Policy Assumptions]{.smallcaps}

  ------------------------- ------------ -------- -------- -------- -------- -------- -------- -----------
  **RSC Recommendation**                                                                       

  **Function 700: Veterans                                                                     
  Benefits and Services**                                                                      

  \[In millions of                                                                             
  dollars\]                                                                                    

                                                                                               

  Fiscal Year                            2006     2007     2008     2009     2010     2011     2007-2011

  Veterans Benefits         BA           71,956   73,806   75,996   76,885   77,271   81,471   385,429
  Function Totals                                                                              

                            OT           69,763   72,887   76,254   77,093   77,312   81,289   384,835

                                                                                                

  **DISCRETIONARY**         **Changes                                                          
                            from RSC                                                           
                            Baseline**                                                         

  Increase Veterans         BA           579      2,982    1,187    857      221      430      5,677
  Spending                                                                                     

                            OT           -514     2,559    1,659    1,278    545      541      6,582
  ------------------------- ------------ -------- -------- -------- -------- -------- -------- -----------

[Discussion of Policy Assumptions]{.smallcaps}

[Discretionary Savings]{.smallcaps}

*Increase Veterans Spending to the President's Request.* The level of
veterans spending in this function accommodates the President's
requested level. Excluding emergency spending in FY 2006, total veterans
spending in FY 2007 would increase by \$4.3 billion or *6.1%* over the
prior fiscal year. These spending increases are significant evidence of
this budget's commitment to meeting the needs of America's veterans.

However, any serious effort to balance the budget must not allow the
Department of Veterans Affairs (VA) to escape the scrutiny that other
departments of government will receive. While this budget does not
assume any savings from veterans programs, it requires the Committee on
Veterans Affairs to identify 1% in savings from total funding under its
jurisdiction that are determined to be wasteful, low-priority, or
unnecessary, and to submit its findings to the House Budget Committee.
These findings would also be inserted in the Congressional Record.

**FUNCTION 750: ADMINISTRATION OF JUSTICE**

This function is composed of the justice programs of the United States,
including federal law enforcement, federal courts, federal prisons, and
judicial branch activities.

[Summary of Policy Assumptions]{.smallcaps}

  ----------------------------- ------------ -------- -------- -------- -------- -------- -------- -----------
  **RSC Recommendation**                                                                           

  **Function 750:                                                                                  
  Administration of Justice**                                                                      

  \[In millions of dollars\]                                                                       

                                                                                                   

  Fiscal Year                                2006     2007     2008     2009     2010     2011     2007-2011

  Administration of Justice     BA           41,809   42,307   40,721   40,620   40,514   40,404   204,566
  Function Totals                                                                                  

                                OT           41,677   42,166   41,941   41,375   40,785   40,382   206,649

                                                                                                    

  **DISCRETIONARY**             **Changes                                                          
                                from RSC                                                           
                                Baseline**                                                         

  DOJ Administrative Savings    BA           0        -2       -2       -2       -2       -2       -10

                                OT           0        -2       -2       -2       -2       -2       -10

  Eliminate the Community       BA           0        -10      -10      -10      -10      -10      -50
  Relations Service                                                                                

                                OT           0        -9       -10      -10      -10      -10      -49

  Eliminate Legal Services      BA           0        -327     -330     -330     -330     -330     -1,647
  Corporation                                                                                      

                                OT           0        -288     -330     -330     -330     -330     -1,608

  Eliminate the State Justice   BA           0        -4       -4       -4       -4       -4       -20
  Institute                                                                                        

                                OT           0        -1       -3       -4       -4       -4       -16

  Eliminate Justice Assistance  BA           0        -247     -247     -247     -247     -247     -1,235
  Programs                                                                                         

                                OT           0        -40      -111     -168     -212     -247     -778
  ----------------------------- ------------ -------- -------- -------- -------- -------- -------- -----------

[Discussion of Policy Assumptions]{.smallcaps}

[Discretionary Savings]{.smallcaps}

*Eliminate the Community Relations Service (CRS).* Established in 1964
by Title X of the Civil Rights Act of 1964, the mission of CRS is to
provide mediation services cost-free to state and local public officials
to help resolve racial and ethnic disputes and conflicts, most often
involving schools and police agencies. It also provides pro-active
services to prevent such tensions. This program is the responsibility of
state and local governments, and is often duplicative of programs at
that level. This budget proposes to eliminate funding for CRS. This
proposal was included in the original budget resolution (H.Con.Res. 67)
passed by the House of Representatives in 1995.

*Eliminate the Legal Services Corporation (LSC).* The Legal Services
Corporation (LSC) was established by the Legal Services Corporation Act
of 1974 to provide free legal assistance to the poor in civil,
non-criminal matters. Its origins lie in President Lyndon Johnson\'s War
on Poverty, specifically with the Office of Economic Opportunity (OEO),
which in 1965 began making direct grants to local legal aid
organizations. Instead of focusing on this core mission, the LSC has
assisted lawyers and groups engaged in lobbying, advocacy of political
causes, and litigation against the federal government. The program has
not been authorized since 1980. Services currently provided by the LSC
are duplicated by state and local governments, bar associations, and
private organizations. This budget proposes to eliminate funding for the
LSC. A similar proposal was included in the original budget resolution
(H.Con.Res. 67) passed by the House of Representatives in 1995.

*Eliminate the State Justice Institute (SJI).* The SJI is a non-profit
corporation that was established in 1984 to provide grant awards to
assist state courts in the area of criminal justice. Categories of grant
assistance include judicial education, technical assistance, project
grants for children and families in court, as well as improving the
state-federal court relationship, and a scholarship program for state
judges. State courts clearly play an important role in the nation's
legal system. However, the funding and assistance is a state
responsibility, one that is also duplicated by other institutions. There
is no evidence it has actually improved the administration of justice.
This budget proposes to eliminate funding for SJI. This proposal was
included in the original budget resolution (H.Con.Res. 67) passed by the
House of Representatives in 1995.

*Block Grant and Reduce Funding for Several Department of Justice
Programs.* The Department of Justice currently funds a range of justice
assistance programs such as the Byrne discretionary grants, Byrne
Justice Assistance grants, COPS Hiring Grants, COPs Interoperable
Communications Technology Grants, COPs Law Enforcement Technology
Grants, Juvenile Accountability Block Grants, National Drug Intelligence
Center, and the State Criminal Alien Assistance Program, among others.
These programs address problems that are not federal responsibilities.
This option would consolidate and reform justice assistance programs and
reduce the amount spent on them, thereby yielding administrative
savings. Switching from categorical to block grants would allow grant
recipients to focus their efforts on areas of greatest need rather than
on problems that, though significant nationally, are less important
locally.

**FUNCTION 800: GENERAL GOVERNMENT**

[Summary of Policy Assumptions]{.smallcaps}

  ---------------------------- ------------ -------- -------- -------- -------- -------- -------- -----------
  **RSC Recommendation**                                                                          

  **Function 800: General                                                                         
  Government**                                                                                    

  \[In millions of dollars\]                                                                      

                                                                                                  

  Fiscal Year                               2006     2007     2008     2009     2010     2011     2007-2011

  General Government Function  BA           18,701   18,206   17,880   17,988   18,100   18,142   90,316
  Totals                                                                                          

                               OT           18,941   18,353   17,962   17,849   17,905   17,940   90,009

                                                                                                   

  **DISCRETIONARY**            **Changes                                                          
                               from RSC                                                           
                               Baseline**                                                         

  Eliminate Congressional      BA           0        -44      -44      -44      -44      -44      -220
  Printing                                                                                        

                               OT           0        -28      -39      -43      -43      -43      -196

  Reduce GSA Buildings Fund    BA           0        -218     -218     -218     -218     -218     -1,090

                               OT           0        -7       -24      -68      -133     -185     -417

  Eliminate Merit System       BA           0        -36      -36      -36      -36      -36      -180
  Protection Board                                                                                

                               OT           0        -33      -36      -36      -36      -36      -177

  Eliminate FLRA               BA           0        -25      -25      -25      -25      -25      -125

                               OT           0        -23      -25      -25      -25      -25      -123

  Eliminate the Office of      BA           0        -11      -11      -11      -11      -11      -55
  Govt. Ethics                                                                                    

                               OT           0        -10      -11      -11      -11      -11      -54

  Eliminate D.C. General       BA           0        -52      -52      -52      -52      -52      -260
  Assistance                                                                                      

                               OT           0        -52      -52      -52      -52      -52      -260

  Reduce GPO Funding           BA           0        -16      -16      -16      -16      -16      -80

                               OT           0        -11      -14      -16      -16      -16      -73

  Eliminate Leg. Branch        BA           0        -5       -5       -5       -5       -5       -25
  Commissions                                                                                     

                               OT           0        -5       -5       -5       -5       -5       -25

  Eliminate Navajo and Hopi    BA           0        -9       -9       -9       -9       -9       -45
  Relocation                                                                                      

                               OT           0        -7       -9       -9       -9       -9       -43

  Eliminate Council on         BA           0        -2       -2       -2       -2       -2       -10
  Homelessness                                                                                    

                               OT           0        -2       -2       -2       -2       -2       -10

  Eliminate US-China           BA           0        -3       -3       -3       -3       -3       -15
  Commission                                                                                      

                               OT           0        -3       -3       -3       -3       -3       -15

  Eliminate Assistance and     BA           0        -14      -14      -14      -14      -14      -70
  Reform                                                                                          

                               OT           0        -13      -14      -14      -14      -14      -69
  ---------------------------- ------------ -------- -------- -------- -------- -------- -------- -----------

[Discussion of Policy Assumptions]{.smallcaps}

[Discretionary Savings]{.smallcaps}

*Eliminate Funding for Congressional Printing*. The Congressional
Printing division of GPO prints approximately 6,000 copies of the
Congressional Record daily when Congress is in session, at a cost of
over \$6.5 million annually. Congressional Printing also prints several
other large documents on a regular basis, which are delivered to Member
offices daily. The Congressional Record, and all other documents
distributed by Congressional Printing can be found on the Internet and
are easily accessible to all congressional staff and Members. The
significant spending associated with printing, binding, and distributing
these documents is unnecessary considering the information is available
online. This proposal would eliminate funding for Congressional
Printing.

*Reduce Funding for New General Services Administration Construction*.
The General Services Administration (GSA) was established in 1946, to
provide goods and services across the government in the most effective
and cost-efficient manner. Functioning as the government's "landlord,"
GSA is tasked to meet office and other space requirements of the federal
workforce. At present, the GSA has 11 new construction projects proposed
in this year's budget. This budget assumes that private contracting for
federal construction could be used to reduce costs, and proposes to
reduce by 30 percent, new budget authority in FY 2007 for GSA new
construction. Funding levels would be frozen each year thereafter. A
similar proposal was included in the original budget resolution
(H.Con.Res. 67) passed by the House of Representatives in 1995.

*Eliminate the U.S. Merit Systems Protection Board*. The U.S. Merit
Systems Protection Board (MSPB) was established in 1978 as an
independent, quasi-judicial agency in the Executive Branch that oversees
federal merit systems. The Board's mission is to ensure that federal
employees are protected against abuses by agency management, to ensure
that Executive Branch agencies make employment decisions in accordance
with the merit systems principles, and to ensure that federal merit
systems are kept free of prohibited personnel practices. These functions
could easily be administered by the Office of Personnel Management or
the Department of Labor. This budget proposes the elimination of all
budget authority for the MSPB.

*Eliminate the Federal Labor Relations Authority*. The Federal Labor
Relations Authority (FLRA) was established in 1978 to provide leadership
in establishing policies and guidance relating to federal-sector
labor-management relations and with resolving disputes under and
ensuring compliance with the Federal Service Labor-Management Relations
Statute. Since these functions could be administered by the Office of
Personnel Management or the Department of Labor, there is no need for a
separate expenditure. This budget proposes the elimination of all budget
authority for the FLRA.

*Eliminate the Office of Government Ethics*. The Office of Government
Ethics was established in 1978 and exercises leadership in the Executive
Branch to prevent conflicts of interest on the part of government
employees, and to resolve those conflicts of interest that do occur.
These functions can be performed by the Department of Justice and do not
need a separate agency. This budget proposes the elimination of all
budget authority for the Office of Government Ethics.

*Eliminate Economic Development Funding for the District of Columbia*.
In previous years, funds have been allocated to the District of Columbia
for local development initiatives. In FY 2006, a portion of this money
was allocated for a pedestrian and bicycle trail system, the D.C. Water
and Sewer Authority, foster care improvements, and payments to the Chief
Financial Officer of D.C. for projects. All of these functions should be
handled as local initiatives. This budget would eliminate funding for
economic development and management reforms in the District of Columbia.

*Reduce Funding for the Government Printing Office*. The Government
Printing Office (GPO) is responsible for the production and distribution
of information products and services for all three branches of the
federal government. With Internet access now widespread and with
innovations in other electronic media, it is no longer necessary to
allocate significant sums to the GPO. This budget proposes reducing the
GPO's budget authority by 50 percent. A similar proposal was included in
the original budget resolution (H.Con.Res. 67) passed by the House of
Representatives in 1995.

*Eliminate Unnecessary Boards and Commissions*. History has shown that
boards and commissions are ineffective in achieving their goals. This
budget proposes the elimination of funding, starting in FY 2007, for the
Commission on Security and Cooperation in Europe, the
Congressional-Executive Commission on China, the Antitrust Modernization
Commission, the U.S. Interagency Council on Homelessness, the U.S.-China
Economic and Security Review Commission, the U.S. Election Assistance
Commission, and the Election Reform Program. These functions can all be
performed by other executive agencies. This option would eliminate these
commissions and boards. A similar proposal was included in the original
budget resolution (H.Con.Res. 67) passed by the House of Representatives
in 1995.

*Eliminate Funding for the Office of Navajo and Hopi Indian Relocation*.
The Office of Navajo and Hopi Indian Relocation (ONHIR) was created to
resolve a lengthy dispute between the Hopi and Navajo tribes involving
lands originally set aside by the federal government for a reservation
in 1882. ONHIR's chief activities consist of land acquisition, housing
acquisition or construction, infrastructure construction, and post-move
support, all for families being relocated, as well as certification of
families' eligibility for relocation benefits. This function should be
transferred to the Bureau of Indian Affairs. This budget proposes
elimination of ONHIR.

**FUNCTION 920: ALLOWANCES**

This function traditionally includes funding contingencies, initiatives,
and other proposals where the savings or costs cannot be distributed by
function because they cut across programs and agencies and affect
multiple budget functions.

[Summary of Policy Assumptions]{.smallcaps}

  -------------------------- ------------ ------ -------- -------- -------- -------- -------- -----------
  **RSC Recommendation**                                                                      

  **Function 920:                                                                             
  Allowances**                                                                                

  \[In millions of dollars\]                                                                  

                                                                                              

  Fiscal Year                             2006   2007     2008     2009     2010     2011     2007-2011

  Allowances Function Totals BA           0      -2,830   -2,830   -2,830   -2,830   -2,830   -14,150

                             OT           0      -1,685   -2,260   -2,545   -2,685   -2,770   -11,945

                                                                                               

  **DISCRETIONARY**          **Changes                                                        
                             from RSC                                                         
                             Baseline**                                                       

  Repeal the Davis-Bacon Act BA           0      -1,400   -1,400   -1,400   -1,400   -1,400   -7,000

                             OT           0      -330     -830     -1,115   -1,255   -1,340   -4,870

  Repeal the Service         BA           0      -1,430   -1,430   -1,430   -1,430   -1,430   -7,150
  Contract Act                                                                                

                             OT           0      -1,355   -1,430   -1,430   -1,430   -1,430   -7,075
  -------------------------- ------------ ------ -------- -------- -------- -------- -------- -----------

[Discussion of Policy Assumptions]{.smallcaps}

[Discretionary Savings]{.smallcaps}

*Repeal the Davis-Bacon Act.* The Davis-Bacon Act requires an inflated
"prevailing wage" be paid on all federally funded or federally assisted
construction projects. This government regulation represents a hidden
tax on construction jobs, inflates the costs of federal construction,
and destroys opportunities for employment for minorities, small firms,
and less-skilled workers. This proposal would repeal the Davis-Bacon
Act. This proposal was included in the original budget resolution
(H.Con.Res. 67) passed by the House of Representatives in 1995.

*Repeal the Service Contracts Act.* The McNamara-O'Hara Service Contract
Act of 1965 is a tax on jobs similar to Davis-Bacon, except that it
applies to service, rather than construction, contracts. The Act
requires covered contractors and their successors to provide inflated
wages and benefits at least equal to the locality's prevailing standards
or those in a collective bargaining agreement of the previous
contractor. This proposal would repeal the Service Contracts Act. This
proposal was included in the original budget resolution (H.Con.Res. 67)
passed by the House of Representatives in 1995.

**FUNCTION 950: OFFSETTING RECEIPTS**

[Summary of Policy Assumptions]{.smallcaps}

  ------------------------- ------------ --------- --------- --------- --------- --------- --------- -----------
  **RSC Recommendation**                                                                             

  **Function 950:                                                                                    
  Offsetting Receipts**                                                                              

  \[In millions of                                                                                   
  dollars\]                                                                                          

                                                                                                     

  Fiscal Year                            2006      2007      2008      2009      2010      2011      2007-2011

  Offsetting Receipts       BA           -68,894   -78,665   -81,883   -96,162   -81,743   -86,296   -424,749
  Function Totals                                                                                    

                            OT           -68,894   -79,115   -82,208   -95,912   -81,493   -86,096   -424,824

                                                                                                      

  **DIRECT**                **Changes                                                                
                            from RSC                                                                 
                            Baseline**                                                               

  Drilling in ANWR          BA           0         0         0         -5,000    -4        -1,006    -6,010
  (Royalties)                                                                                        

                            OT           0         0         0         -5,000    -4        -1,006    -6,010
  ------------------------- ------------ --------- --------- --------- --------- --------- --------- -----------

[Discussion of Policy Assumptions]{.smallcaps}

[Discretionary Savings]{.smallcaps}

*Open ANWR for Exploration.* This budget assumes that a small portion of
the Arctic National Wildlife Refuge (ANWR) in Alaska will be leased for
oil and gas exploration, development, and production. ANWR is the most
prospective oil and gas province in North America, and is adjacent to
the hugely successful Prudhoe Bay field. Leasing is overwhelmingly
supported by residents of the State of Alaska and the Native people who
live in the area proposed for leasing. Leasing could provide significant
revenues to the Treasury, jobs to the U.S. economy, and a valuable
domestic energy resource to offset the current transfer of U.S. wealth
to other nations.

**REVENUES**

[Summary of Policy Assumptions]{.smallcaps}

The key to continued economic growth and prosperity for this nation is
to allow American families and businesses to keep more of their own
wealth to spend, save and invest. Since 2001, tax relief proposed by
President Bush and passed by Congress has helped spur sustained GDP
growth and the creation of over 4.6 million new jobs. This budget
rejects the premise that deficit reduction and pro-growth tax policy
should be done with tax increases. Transferring wealth to Washington
only grows the size of government; it doesn't help grow the economy or
limit federal spending. This budget proposes to prevent any new tax
increases on Americans by assuming the permanent extension of current
tax law: the 2001 and 2003 tax relief provisions, AMT relief as well as
routine extension of several tax provisions such as the Research and
Experimentation tax credit.

**THE CONGRESSIONAL BUDGET PROCESS**

[BACKGROUND]{.smallcaps}

The challenge of balancing the budget without raising taxes is only
complicated by the current budget process. Written by Democratic
majorities in Congress seeking to confront a spending conscious
Republican President, the Congressional Budget Act of 1974 defines the
parameters of the current budget process. In short, the Act gave
lawmakers a process rigged to spend. The choice lawmakers are often
presented with when voting in regard to funding for a specific program,
is to spend more and be *for* a program or spend less and be against it.
Those with a competing vision---members of the Republican Study
Committee---who say that *states and families* should be spending more
for education, nutrition, housing, transportation, and other needs, are
often charged with being against something. This dynamic is the key
component of a spending process, developed and fine-tuned over the years
to produce more government, higher taxes, and less freedom.

The Family Budget Protection Act (H.R. 2290) is an effort to change that
dynamic, and this budget adopts many of its key provisions to both
reform the congressional budget process *and* enforce the commitment to
balance the budget made through adoption of this budget.

[PROCESS REFORM]{.smallcaps}

*Joint Budget Resolution*. Under current law, Congress considers a
*concurrent* budget resolution; the budget never reaches the President's
desk to become law. As a result, the budget amounts to a mere suggestion
to many lawmakers in Congress. Budgets should be signed by the President
and be legally binding as the law of the land.

*Rainy Day Fund*. Congress does not currently set aside funds in the
federal budget for emergency spending, such as the costs associated with
natural disasters. Although the exact nature of these events is unknown
from year to year, history demonstrates that *every year* Congress will
appropriate "emergency" spending for these "unforeseen" events. This
budget will account for federal spending by establishing a
deficit-neutral "rainy day fund" within the annual budget limits.
Emergency spending, such as the current pending request from the
Administration for additional Gulf Coast relief, would be both provided
for *and offset*, similar to how families must plan and account for
emergency expenses.

*Constitutional Line Item Veto/Enhanced Rescission.* Too often Congress
tucks special interest spending items in large bills without providing
the President an opportunity to address them except by temporary
deferral. This budget allows the President to propose permanently
canceling spending authority earmarked in legislation and determined to
be a low priority. It would apply to all categories of discretionary and
direct spending, as well as revenue measures. The proposal must be
transmitted to Congress and accompanied by legislative language for the
rescissions and any necessary reduction in the spending limits. Through
an expedited process, both the House of the Representatives and the
Senate would have an up-or-down vote on the President's proposal.

*Earmark Reform.* Earmarks included in appropriations and authorization
bills have soared over the past decade, often diverting taxpayer
resources to satisfy special interests. Often, these requests are only
identified in the accompanying committee report, rather than in the bill
text, so that Members are unable to directly challenge these earmarks on
the floor while debating a bill. This budget adopts the approach,
pioneered by Representative Jeff Flake, which would require all earmarks
to be listed in the actual bill text so that lawmakers can debate and
amend these items. Projects added in conference should be addressed as
well. In addition, additional transparency reforms should be enacted,
such as identifying the individual projects by Member in the
accompanying report language.

1.  *Sunset Commission.* The federal government currently funds
    countless duplicative and obsolete programs. This budget---in
    addition to eliminating many of these programs---would create a
    commission tasked with eliminating waste, fraud, and abuse within
    the federal government. This commission would assess *all* current
    federal programs and agencies (including defense and entitlement
    programs), and then submit to Congress its recommendations for the
    elimination of wasteful and inefficient spending. In addition, the
    commission would assign an expiration date to every federal agency
    not specifically created in the U.S. Constitution, and before the
    expiration date, would evaluate each program or agency on the basis
    of efficiency, cost-effectiveness, whether the agency has acted
    outside the scope of its original authority, and whether the agency
    or program duplicates the mission or function of another agency or
    program. The commission's evaluations would specify whether the
    program or agency in question should be abolished, streamlined,
    consolidated, or reorganized. In addition, every reestablished
    agency would receive a new sunset date to ensure continued
    accountability. In 2004, this reform received a majority of votes in
    the House (272-140), when offered as an amendment by Representative
    Kevin Brady.

    *Establish a Direct Spending Cap*. Beyond the savings contained
    within this budget, it would also address the impending financial
    crisis by placing a cap on all current, non-Social Security
    entitlement spending, forcing Congress and the President to slow the
    growth of spending that continues to chew up the federal budget on
    auto-pilot (outside the annual appropriations process) and to take a
    better account of long-term unfunded obligations. The direct
    spending cap would limit the total level of direct spending to
    inflation and the growth in a given program's beneficiary
    population.

*Restore Multi-Year Discretionary Spending Limits*. This budget purposes
to reinstate five-year sequester-enforced caps (that expired in 2002) on
discretionary budget authority and outlays, consistent with the spending
levels assumed in this budget. Unlike in previous years, the Budget and
Appropriations Committee would possess the necessary flexibility to
adjust budgetary resources among spending priorities.

*Modified Pay-As-You Go (PAYGO)*. The original PAYGO (that expired in
2002) sought to impose deficit neutrality on new direct spending or
revenue changes. It suffered from two flaws: first, it did not work,
though it may have had a deterrent effect---the legislative and
executive branches routinely circumvented its requirements to add
billions in new spending. Second, it treated spending and taxes as
equivalents, which they are not. Similar to the current Administration's
proposal, this modified PAYGO mechanism would apply only to new direct
spending, would not permit spending increases to be offset by tax
increases or user fees, and would be enforced by sequester.

*Eliminate the Use of Advance Appropriations*. This budget gimmick is
used to avoid spending controls and ties the budgetary hands of future
congresses by appropriating spending authority to a program one or more
years beyond the year for which an appropriations act is passed. Current
budget rules record budget authority in the year the spending becomes
available and not when it's provided. There is no programmatic reason
for this. Therefore, this budget eliminates the process and would
implement procedures to protect against its future use.

*Restore State Sovereignty in Accepting Federal Assistance*. The federal
government annually provides extensive financial assistance to state and
local governments. However, with the acceptance of federal funds, states
must adhere to federal regulations, restrictions, and directives. Often
times it is not state legislatures which approve the accepting of these
federal funds, but it is unelected state bureaucrats who retain the
power to accept federal dollars to fund state programs without the
approval of state legislatures. This budget adopts Representative John
Culberson's proposal to give state legislatures the opportunity to vote
on the programs enacted by Congress and the dollars that go with them.
If a state chose not to accept federal dollars to operate a certain
program, that state would not be bound to operate their program under
the strains of federal mandates, which often accompany federal
assistance.

*Establish Budget Protection Accounts*. The current spending process is
rigged against taxpayers and Members advocating on behalf of limited
government. For example, Members offering floor amendments that reduce
appropriations have no way of guaranteeing that the savings will
actually be saved because the reduction can be used to increase spending
for another program in either the same appropriations bill or another.
This proposal establishes both a direct and a discretionary Budget
Protection Account to which Members offering appropriations amendments
can redirect spending toward deficit reduction or tax relief. This
redirecting of funds would have the effect of lowering the Committee's
302(a) allocation, which establishes in the budget how much each
committee can spend.