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Over the previous four years, we have acted to restore economic growth, win the War on Terror,
protect the homeland, improve our schools, rally the armies of compassion, and promote ownership.
The 2006 Budget will help America continue to meet these goals. In order to sustain our economic
expansion, we must continue pro-growth policies and enforce even greater spending restraint across
the Federal Government. By holding Federal programs to a firm test of accountability and focusing
our resources on top priorities, we are taking the steps necessary to achieve our deficit reduction
goals.
Our Nation’s most critical challenge since September 11, 2001, has been to protect the American
people by fighting and winning the War on Terror. Overseas and at home, our troops and homeland
security officials are receiving the funding needed to protect our homeland, bring terrorists to justice,
eliminate terrorist safe havens and training camps, and shut down their financing.
In Afghanistan and Iraq, we are helping establish democratic institutions. Together with our coali-
tion partners, we are helping the Afghan and Iraqi people build schools, establish the rule of law,
create functioning economies, and protect basic human rights. And while the work is dangerous and
difficult, America’s efforts are helping promote societies that will serve as beacons of freedom in the
Middle East. Free nations are peaceful nations and are far less likely to produce the kind of terrorism
that reached our shores just over three years ago.
To ensure our security at home, the 2006 Budget increases funding for anti-terrorism investiga-
tions; border security; airport and seaport security; nuclear and radiological detection systems and
countermeasures; and improved security for our food supply and drinking water.
This Budget also promotes economic growth and opportunity. We must ensure that America
remains the best place in the world to do business by keeping taxes low, promoting new trade
agreements with other nations, and protecting American businesses from litigation abuse and
overregulation. To make sure the entrepreneurial spirit remains strong, the Budget includes
important initiatives to help American businesses and families cope with the rising cost of health
care. This Budget funds important reforms in our schools, and promotes homeownership in our
communities. In addition, the 2006 Budget supports the development of technology and innovation
throughout our economy.
The 2006 Budget also affirms the values of our caring society. It promotes programs that are effec-
tively providing assistance to the most vulnerable among us. We are launching innovative programs
such as Cover the Kids, which will expand health insurance coverage for needy children. We are
funding global initiatives with unprecedented resources to fight the HIV/AIDS pandemic, respond
to natural disasters, and provide humanitarian relief to those in need. The 2006 Budget continues
to support domestic programs and policies that fight drug addiction and homelessness and promote
strong families and lives of independence. And in all our efforts, we will continue to build working
relationships with community organizations, including faith-based organizations, which are doing so
much to bring hope to Americans.
1
2 THE BUDGET MESSAGE OF THE PRESIDENT
In every program, and in every agency, we are measuring success not by good intentions, or by
dollars spent, but rather by results achieved. This Budget takes a hard look at programs that have
not succeeded or shown progress despite multiple opportunities to do so. My Administration is press-
ing for reforms so that every program will achieve its intended results. And where circumstances
warrant, the 2006 Budget recommends significant spending reductions or outright elimination of
programs that are falling short.
This Budget builds on the spending restraint we have achieved, and will improve the process by
which the Congress and the Administration work together to produce a budget that remains within
sensible spending limits. In every year of my Administration, we have brought down the growth
in non-security related discretionary spending. This year, I propose to go further and reduce this
category of spending by about one percent, and to hold the growth in overall discretionary spending,
including defense and homeland security spending, to less than the rate of inflation. I look forward
to working closely with the Congress to achieve these reductions and reforms. By doing so, we will
remain on track to meet our goal to cut the deficit in half by 2009.
Our greatest fiscal challenges are created by the long-term unfunded promises of our entitlement
programs. I will be working with the Congress to develop a Social Security reform plan that strength-
ens Social Security for future generations, protects the benefits of today’s retirees and near-retirees,
and provides ownership, choice, and the opportunity for today’s young workers to build a nest egg for
their retirement.
In the past four years, America has faced many challenges, both overseas and at home. We have
overcome these challenges not simply with our financial resources, but with the qualities that have
always made America great: creativity, resolve, and a caring spirit. America has vast resources, but
no resource is as abundant as the strength of the American people. It is this strength that will help
us to continue to prosper and meet any challenge that lies before us.
GEORGE W. BUSH
February 7, 2005
OVERVIEW OF THE PRESIDENT’S 2006 BUDGET
The 2006 Budget builds on the progress the President and the Congress achieved in meeting the
priorities of the Nation during the first term. We are funding efforts to defend the homeland from
attack. We are transforming our military and supporting our troops as they fight and win the Global
War on Terror. We are helping to spread freedom throughout the world. We are promoting high
standards in our schools, so that our children gain the tools they need to succeed. We are promoting
the pro-growth policies that have helped to produce millions of new jobs and restore confidence in
our economy. And we are taking additional action to enforce spending discipline.
During his first term, the President worked with the Congress to respond to a stock market
collapse, recession, the terrorist attacks of September 11, 2001, and the revelation of corporate
scandals. To meet the economy’s significant challenges, in each year the President proposed and
signed into law major tax relief that fueled recovery, business investment, and job creation.
To rebuild and transform our Armed Forces, the President raised spending for our military by
more than a third, the largest increase in defense spending since the Reagan Administration. To
make our homeland safer, the President created the Department of Homeland Security and nearly
tripled funding for homeland security activities.
3
4 OVERVIEW OF THE PRESIDENT’S 2006 BUDGET
and limits the resources it takes from the private sector, the result is a stronger, more productive
economy.
When achieved through spending restraint rather than through tax increases, deficit reduction
bolsters confidence in America’s economy. This confidence of global capital markets in America brings
important advantages to our economy in the form of lower real interest rates and lower borrowing
costs, which in turn lead to more investment and more jobs. Keeping America’s fiscal house in order,
while holding taxes down, sustains growth and justifies investors’ confidence in the U.S. economy.
The Administration proposes to tighten spending further this year by limiting the growth in
overall discretionary spending, even after significant increases in defense and homeland security,
to 2.1 percent—less than the projected rate of inflation. In other words, under the President’s
2006 Budget, overall discretionary spending will see a reduction in real terms. In non-security
discretionary accounts, the President proposes to cut spending by nearly 1 percent—the tightest
such restraint proposed since the Reagan Administration.
The Budget also proposes more than 150 reductions and eliminations in non-defense discretionary
programs, saving about $20 billion in 2006, and an additional set of reforms in mandatory programs,
saving about $137 billion over the next 10 years.
In restraining spending in the 2006 Budget, the Administration was guided by three major criteria:
First: Does the program meet the Nation’s priorities? The Budget increases funding to strengthen
our Armed Forces, improve our homeland defenses, promote economic opportunity, and foster
compassion.
Second: Does the program meet the President’s principles for appropriate use of taxpayer
resources? If an appropriate Federal role could not be identified in a program’s mission, the Budget
proposes to reduce or eliminate its funding.
Third: Does the program produce the intended results? The President’s Management Agenda
(PMA) has been in existence for nearly four years. As a part of the PMA’s Budget and Performance
Integration Initiative, the Program Assessment Rating Tool (PART) measures the success of
programs in meeting goals and identifies which are achieving their intended results and which are
not. The PART can help determine when two programs that perform similar tasks produce starkly
different results—and helps the Administration to reward only those that succeed, thus reducing
redundancies in the Federal Government. For programs that have achieved their desired results,
and do not merit continued funding, the Administration has recommended eliminations.
A Declining Budget Deficit The Budget forecasts that the deficit will continue to
Percent of GDP decline as a percentage of GDP. In 2005, we project a
5
deficit of 3.5 percent of GDP, or $427 billion. And if we
February 2004
4
4.5
Projection maintain the policies of economic growth and spending
3.6
restraint reflected in this Budget, in 2006 and each of
3.5 40-year Historical
3 Average the next four years, the deficit is expected to decline.
3.0
By 2009, the deficit is projected to be cut by more than
2
2.3 half from its originally estimated 2004 peak—to just 1.5
1.7
1.5 percent of GDP, which is well below the 40-year histor-
1.3
1 ical average deficit, and lower than all but seven of the
last 25 years.
0
2004
Final
2005 2006 2007 While the Budget projects steady and solid
2008 2009 2010
--------------------------- Projections --------------------------
improvement over the five-year budget window, the
Nation faces substantial deficit challenges about
a decade from now. At that point, when the major effects of the retirement of the Baby Boom
generation begin to be felt, deficits are projected to rise indefinitely. That is why it is necessary to act
THE BUDGET FOR FISCAL YEAR 2006 5
this year to strengthen Social Security. While the program can deliver promised benefits to today’s
seniors, it has made promises to young workers that it cannot keep. Social Security’s unfunded
obligations total more than $10 trillion, and that figure grows by hundreds of billions of dollars
with every year of inaction. This year, the President will work with the Congress on Social Security
reform that includes personal accounts and fixes the problem permanently. Such reforms are
much-needed, both to provide young workers the opportunity to build a nest egg for retirement, and
to take a major step in confronting the long-term fiscal danger posed by the unfunded obligations of
our entitlement programs.
(All figures depicting increases are above the 2005 enacted levels.)
As of the fourth quarter of 2004 the Strong Sustained Real GDP Growth
economy had grown 13 straight quarters, and Percent change from year earlier
production and income had grown more than 5
4.5
10 percent. The economy generated over 2.6 4.4
--------------Projections---------------
million new jobs from August 2003 through 4 3.7 3.6 3.5
December 2004, the unemployment rate fell 3.3 3.2 3.1 3.1
by almost a full percentage point, and a wide 3
3.0
9
10 PROMOTING ECONOMIC OPPORTUNITY AND OWNERSHIP
Price stability is also an important factor Low Interest Rates and Low Inflation
for strong growth in the economy. Even with a Have Helped Restore Strong Growth
recent spike in energy prices, overall inflation Percent
20
remains subdued, helping to sustain business
30-Year Conventional Mortgage Rate
and consumer confidence in the economy.
Historically low interest rates, in part made 15
possible by low inflation, also create a positive 10-Year Treasury Note Yield
environment for growth by helping individuals
10
make large-scale purchases, such as homes,
or to refinance old loans at lower cost. Low
interest rates have also allowed businesses 5
to achieve substantial interest cost savings,
strengthen their balance sheets for the future, CPI-U (Percent Change)
0
and take better advantage of new investment
1980 1984 1988 1992 1996 2000 2004
opportunities.
Data released in the final days of 2004 and in early 2005 reinforce expectations for continued eco-
nomic strength. Industrial production, which started to slide in mid-2000, began to recover again by
the end of 2001 and reached a new high in December of 2004. Oil prices have fallen from their highs.
And business optimism, as measured by a periodic survey released by the National Federation of
Independent Business, reached a 20-year high in December, driven especially by business plans for
new hiring.
The recent economic performance is remarkable considering that the U.S. economy was in a
recession by early 2001, faced a major national emergency in September 2001, and endured the
revelation of major corporate scandals and two wars. Yet the recession of 2001 was relatively
short-lived and shallow, and it gave way to a robust expansion largely because the Congress
responded to the President’s call and enacted tax relief in 2001, 2002, and 2003.
Lower tax rates enacted in 2001 reduced ob- Contributions to Growth in Real Per Capita
stacles to growth by increasing the incentives Disposable Income
to work, save, invest, innovate, and start new Average annual percent change
6
businesses. In 2002, the President worked with Taxes
the Congress to improve investment incentives, 5 Gov't Transfers
Total: 2.8
which reversed a two-year downward trend in 4
Capital Income
Labor Income
business investment; as of the fourth quarter of
3
2004, business investment had increased seven Total: 1.7
consecutive quarters. 2
Total: 0.8
In 2003, the President worked with the Con- 1
The economy has rebounded from its period of weakness, and even with a recent spike in energy
prices and continued weak economic growth among our trading partners, it appears poised for con-
tinued strength. An extended economic expansion is far from assured; however, the Administration
will continue to advance policies that promote growth, opportunity, and ownership. These steps will
help America remain the world’s best place to do business and create jobs.
Tax Policy
As outlined above, tax relief was a primary reason for the economy’s rebound. In 2004, the
President signed into law the fourth tax cut in as many years to maintain that tax relief, including
12 PROMOTING ECONOMIC OPPORTUNITY AND OWNERSHIP
the new 10-percent tax bracket, the marriage penalty relief, the increase in the child tax credit,
dividend tax relief, and other provisions that will continue at their current levels in most cases
through 2010. The President has called on the Congress to make this tax relief permanent so that
families and businesses can invest and plan with confidence.
Even with all the positive changes the President has signed into law, the Federal income tax code
still discourages economic growth in many ways. For example, the income tax continues to discourage
saving for many taxpayers, and so the President has proposed Retirement Savings Accounts, which
would replace the complex array of retirement saving incentives currently in the tax code, such as
IRAs, Roth IRAs, and similar saving vehicles. The President has also proposed Employer Retirement
Savings Accounts to simplify the saving opportunities individuals have through their employers.
The President also proposed Lifetime Savings Accounts that would, for the first time, allow indi-
viduals to save on a tax-preferred basis for any purpose. While important to all Americans, Life-
time Savings Accounts are especially important to low-income individuals and families who need to
save, but cannot afford to lock up funds for retirement that may be needed for an emergency in the
near-term. The President also proposed Individual Development Accounts that would give extra fi-
nancial incentive to certain low-income families to set aside funds for major purchases, such as a first
home.
For generations, the tax code has encouraged Americans to spend first and save second. These
proposals would level the incentives to save and consume, thereby promoting a culture of saving in
America that is essential to future prosperity.
These saving proposals would help address one of the tax code’s many flaws, but they cannot ad-
dress all the problems the tax code presents for the economy. Therefore, the President has called for a
fundamental reform of the Federal income tax system to make it simpler, fairer, and more pro-growth.
The Federal income tax code is not just a complicated mess; it is also a maze of special-interest loop-
holes that cause America’s taxpayers to spend more than six billion hours every year on paperwork.
Work, entrepreneurship, investment, ownership, and even education are discouraged by our tax sys-
tem. Businesses routinely make decisions about the deployment of capital not on economic merits
alone, but also on the relevance of certain chapters of our tax code.
The President appointed a bipartisan Advisory Panel on Fundamental Tax Reform to report to the
Secretary of the Treasury by July 31, 2005, on options to reform the tax code. These options will form
the basis of efforts to enact reforms that meet the President’s objectives of simplification, fairness,
and a more pro-growth tax system, while recognizing the importance of homeownership and charity
to American society.
Litigation Reform
The costs of litigation per person in the United States are far higher than in any other major indus-
trialized nation in the world. Lawsuit costs have risen substantially over the past several decades,
and a significant part of the costs go to paying lawyers’ fees and transaction costs—not to compen-
sating the injured parties. The litigation explosion is clogging our civil courts and threatening jobs
across America. Businesses with $10 million or more in revenue bear an average annual cost of
$150,000 from litigation. Small businesses with less than $10 million in revenue bear 68 percent of
business tort liability costs, even though they only take in 25 percent of business revenue.
The President is pushing the Congress to pass legislation that reduces the burden of frivolous
lawsuits on our economy. The President supports enactment of medical liability reform, class ac-
tion lawsuit reforms, and asbestos litigation reform to expedite fair resolutions and curb the costs of
lawsuits for all Americans.
THE BUDGET FOR FISCAL YEAR 2006 13
Frivolous lawsuits and excessive jury awards are driving many health care providers out of commu-
nities and forcing doctors to practice defensive medicine. This reduces access to medically necessary
services and raises the costs of health care for all. The President has proposed proven reforms, such
as common-sense limits on non-economic damages, to make the medical liability system more fair,
predictable, and timely.
The President’s proposed class action reforms seek to limit the abuse of large, nationwide class
action cases and provide justice to the truly injured parties. Class actions are an important and
intrinsic part of the U.S. legal system. However, class actions are heavily abused, which in turn
harms affected parties and undermines the American judicial system. In particular, injured parties
often receive awards of little or no value while lawyers receive large fees. The proposed class action
reform legislation recognizes that large interstate class actions require Federal court jurisdiction
because they typically affect more citizens, involve more money, and raise more interstate commerce
issues than any other type of lawsuit. In addition, the President wants to end the practice of “judge
shopping,” where trial lawyers file cases only in jurisdictions likely to favor plaintiffs. These reforms
do not alter the right of a plaintiff to bring a legitimate claim, or change controlling substantive law,
but provide additional protection and information to class members.
Asbestos cases have generated the longest-running mass tort litigation in U.S. history and have led
to the bankruptcies of at least 74 companies and to more than 50,000 lost jobs. Within the past few
years, there have been sharp increases in the number of asbestos claims filed annually. The current
system is costly to administer, with total projected costs estimated at between $200 and $265 billion.
These costs have driven exposed defendants into bankruptcy and may leave little or no funds to pay
future asbestos victims. The President has stressed the need for reform and urged the Congress to
find a fair and permanent solution.
Regulatory Reform
Excessive regulations can prevent the creation and growth of new small businesses and the jobs
they create; in the first term, the Administration slowed the growth of new rules by 75 percent. The
President wants to streamline regulations further and reduce paperwork to alleviate the burdens
that unduly handicap America’s entrepreneurs and job creators. The Administration is taking action
in several areas to streamline Federal regulations, while still moving forward with crucial safeguards
for homeland security, human health, investor and environmental protection. Regulations should be
analyzed based not just on their benefits, but also on their costs. When regulations are proposed, the
scientific research supporting their enactment must be sound, and subject to careful scrutiny. And
when regulations are out of date, they must be reviewed for relevancy, and to make sure the benefits
they produce are at least equal to their costs.
The rapid pace of health care inflation slows job growth, reduces the growth rate of worker wages,
and makes health care less accessible and less affordable for consumers. When employers have to
pay more for health coverage for their workers, they can afford less for worker paychecks. Ultimately,
the increase in overall labor costs to U.S. employers, as a result of rising health care costs, damages
our economy’s global competitiveness.
Some employers, especially small businesses, struggle to provide even basic health insurance
for their employees. State and national rules often prevent small businesses from banding
together to purchase health coverage at the same rates paid by large companies. The President
proposes to address this problem through Association Health Plans, which would permit cross-State
health-purchasing alliances of small businesses and other organizations. In addition, the President
14 PROMOTING ECONOMIC OPPORTUNITY AND OWNERSHIP
would make health care more affordable by offering tax credits for employer contributions to Health
Savings Accounts. These accounts allow employees to save tax-free for their out-of-pocket health
costs, and are paired with high-deductible insurance policies that cover hospitalization and other
major health care costs.
Among the drivers for health care inflation are the out-of-control costs that come from unneces-
sary medical liability lawsuits. As mentioned previously, the President has an aggressive plan to
reform our medical liability system. These reforms are critical because frivolous lawsuits have al-
ready chased many doctors out of the practice of medicine and make health care less accessible for
millions of Americans. And for the doctors who remain, these lawsuits are an ever-present fear. Doc-
tors wary of getting sued practice defensive medicine, ordering more laboratory tests or examinations
than are medically necessary, which ultimately drives up health care costs for everyone. And because
of the number of lawsuits—even those that are dismissed—insurers for doctors and hospitals raise
premiums, and these higher costs of practicing medicine are passed on to consumers. Even if your
doctor has never been sued, and even if you rarely visit the doctor, your health care has become far
more expensive because of the abuse of our medical liability laws. Those States that have adopted
common-sense reforms, such as caps on punitive damages and limits on non-economic damages, have
seen smaller and more manageable increases in doctor’s liability insurance premiums. The President
intends to work with the Congress this year to adopt similar reforms nationally.
The President also supports investments in and accelerated deployment of health information tech-
nology that will further help to control rising health care costs. These technologies can reduce medi-
cal errors, improve patient care, and save doctors and nurses time, ultimately saving our health care
system dollars.
Another way to control rising health care costs is by closing loopholes that slow the movement
of more affordable generic drugs to the marketplace. The Administration has taken action to im-
prove access to generic drugs by: limiting the time a drug company can delay the marketing of a
generic competitor; instituting rule changes to prevent drug companies from blocking the marketing
of generic versions by using patents on minor features; and tightening the rules on patent applica-
tions so that false statements to get a patent result in criminal charges. These actions are bringing
generic drugs to the market more quickly, and will save American consumers $35 billion over 10
years—savings that go not only to the consumers, but also to Medicare and Medicaid programs ad-
ministered by the States.
Trade
President Bush’s top economic priority is the creation of more jobs for American workers. Free and
fair trade helps create more higher-paying jobs for American workers by opening new markets for
American products and services, expanding choices for American consumers, and attracting foreign
companies to invest and hire in the United States. America is economically stronger when we par-
ticipate fully in the worldwide economy because 95 percent of the potential customers for American
products live outside the United States.
Trade agreements like the North American Free Trade Agreement and the World Trade Organiza-
tion (WTO) have generated benefits—lower prices and more choices—totaling $1,300 to $2,000 an-
nually for the typical U.S. family. Lowering barriers to trade by even one-third will boost the world
economy by as much as $613 billion—and the U.S. economy by $144 billion a year. To the typical
family of four, that means an additional $2,000 or more a year in savings.
Exports have reached record levels during the Bush Presidency. President Bush, working closely
with the Congress, won Trade Promotion Authority to enable quicker passage of trade agreements.
This was the first time the Congress approved Trade Promotion Authority in eight years. Using this
THE BUDGET FOR FISCAL YEAR 2006 15
authority, the Bush Administration has completed free trade agreements with 12 countries, including
Australia, Morocco, Bahrain, Chile, Singapore, and Jordan, and is negotiating free trade agreements
with 10 others. In addition, the Administration is in the process of forming a Free Trade Area of the
Americas, which will become the world’s largest free trade area.
The Administration also played a critical leadership role in successfully launching a new round
of global trade negotiations at the WTO, and has developed an aggressive plan to open interna-
tional markets for U.S. farmers—which helped generate a 10-percent increase in agricultural exports
between 2000 and 2003.
The President recognizes that some communities and some industries face adjustments in the
global economy. That is why he signed a major expansion of assistance to help workers acquire new
skills and find new jobs. The Trade Act of 2002 nearly tripled the Trade Adjustment Assistance pro-
gram. In 2003 it provided some $1.3 billion in training and income support, with nearly 200,000
workers eligible for assistance. President Bush is ensuring that U.S. trading partners abide by their
international commitments by aggressively enforcing U.S. trade laws. For example, the Administra-
tion brought the first-ever WTO case against China for its discriminatory tax treatment against U.S.
semiconductor makers. In July 2004, China agreed to end this unfair practice.
Energy
a testament to the faith that Americans place in their homes as a long-term investment. The Pres-
ident has placed a high priority on promoting further gains in homeownership, particularly among
minorities. Already, minority homeownership is at a record high, and in 2002 the President set an
ambitious goal to add 5.5 million minority homeowners through 2010. Through downpayment assis-
tance programs, financial literacy efforts, tax incentives for building affordable homes, and Individ-
ual Development Accounts, the President is promoting the kinds of policies that will strengthen our
neighborhoods and communities and provide more Americans a chance to call something their own.
The same principle applies to other Presidential policies. Health Savings Accounts provide a bet-
ter way for Americans to control and spend their health care dollars. Lifetime Savings Accounts will
provide a better way for Americans to save for college tuition and other goals. Personal Retirement
Accounts under Social Security will provide a better way for Americans to save for their own retire-
ment, using a portion of their payroll taxes. In all these proposals, personal ownership is the common
feature, because it is the best way to achieve financial independence and prosperity.
During the past four years, this Nation experienced significant economic challenges that tested the
resolve of the American people. But as is now clear, that resolve was never in question. The economic
recovery has now become a strong expansion that is bringing prosperity to more communities across
America. Yet the on-going weakness in other nations’ economies serve as a reminder that the United
States cannot afford to take a strong economy for granted. Effective tax, monetary, labor, regulatory,
environmental, education, trade, and national security policies are all necessary for a strong and
growing economy.
At the same time, all these policies merely complement the effort, ingenuity, and strength of in-
dividual workers and companies that comprise our $12 trillion economy. Through the pursuit of
pro-growth policies, our economy is once again growing at a strong and sustainable pace. Through
a growing economy, Federal receipts are once again rising at a steady rate. Combined with spend-
ing restraint, rising revenues will reduce the near-term budget deficit. By addressing the near-term
deficit and the long-term imbalances in entitlement programs, America will further reinforce our
prospects for a strong economy in the years ahead.
THE NATION’S FISCAL OUTLOOK
Over the past four years, the Administration and the Congress have responded to the challenges
posed by recession, terrorist attacks, corporate scandals, and the War on Terror. The responses
included enacting tax relief, reducing regulatory burdens, promoting trade, supporting entrepreneur-
ship, and making a substantial investment in our homeland security and defense. Working with the
Congress, this Administration took steps to help generate and fuel the economic recovery.
Sustaining economic expansion now requires additional action, especially strong Federal
spending discipline. While the Administration and the Congress succeeded in slowing the growth
in non-security discretionary spending during the President’s first term, more needs to be done to
ensure Federal spending growth does not place unsustainable demands on our economy.
When the Federal Government focuses on its priorities and limits its claim on resources taken
from the private sector that helps sustain a stronger, more productive economy. When it is achieved
through spending restraint rather than through tax increases, deficit reduction bolsters confidence
in America’s economy. This confidence in global capital markets brings important advantages to
America’s economy in the form of lower interest rates and lower borrowing costs, which in turn lead
to more investment and more jobs. Keeping America’s fiscal house in order, while holding taxes down,
sustains growth and justifies investors’ confidence in the U.S. economy.
A strong economy and a strong fiscal condition are mutually reinforcing goals. Just one year ago,
the Nation’s economy was still emerging from the effects of multiple shocks. Last year’s Budget es-
timated a deficit of 4.5 percent of Gross Domestic Product (GDP) in 2004, or $521 billion. Private
and other forecasters had similar deficit expectations. Largely because economic growth generated
stronger revenues than originally estimated, and because the Congress adhered to the spending re-
straint called for in the President’s Budget, the 2004 deficit came in $109 billion lower than expected,
at $412 billion, or 3.6 percent of GDP.
The 2005 Budget, while providing needed increases for overall homeland security and defense
spending, still held overall discretionary spending growth to 4 percent for the second year in a row.
Non-security discretionary spending growth declined for the fourth year in a row, down from a high
of 15 percent in the final budget year of the prior Administration to about one percent in 2005.
The President’s 2006 Budget demonstrates even greater restraint: it is the first Budget to propose
a cut in non-security discretionary spending since the Reagan Administration. Even with significant
increases in security-related spending, the 2006 Budget holds overall discretionary spending to 2.1
percent growth, which is just below the projected rate of inflation. In other words, after providing
substantial increases for protecting America at home and abroad, overall discretionary spending will
still be reduced in real terms.
In the area of non-defense discretionary spending, this Budget proposes more than 150 program
reductions and eliminations, saving a total of about $20 billion dollars in 2006 alone. Discretionary
spending is subject to the annual appropriations process and is therefore easier to control because
legislation must generally be enacted each year for programs to continue.
Spending on mandatory programs is more difficult to restrain because these programs generally
operate based on formulas that are not subject to annual review. Consequently, when these programs
grow faster than originally envisioned, which is often the case, there is no automatic mechanism to
19
20 THE NATION’S FISCAL OUTLOOK
impose restraint. The only way to constrain the growth of mandatory spending is by enacting new
laws that change the rules governing spending. The 2006 Budget proposes significant reforms in
mandatory programs, saving a total of $137 billion over a 10-year period.
Among the many reforms the Budget proposes are changes to Federal high school funding pro-
grams, which have for years focused on narrow purposes that have not proven effective in improving
student academic achievement or job prospects. The Budget proposes to consolidate the funding for
these programs, and use that funding for more testing, intervention programs for struggling read-
ers, and other reforms. The Budget also creates a new economic development program that will
replace the current system of duplicative efforts that often do not show positive results. By focusing
resources on the creation of jobs and economic opportunity, and on private partnerships, this reform
will improve accountability and results. And the Budget proposes reforms in Medicaid to reduce in-
efficiencies and overpayments, while extending to States more flexibility in determining Medicaid
eligibility and how benefits are delivered.
When evaluating the Nation’s fiscal outlook, it is important to consider two different time frames:
what happens in the near-term, and what happens thereafter with the retirement of the Baby
Boom generation. With continued pro-growth policies and responsible spending restraint, the fiscal
condition of the Federal Government shows steady and solid improvement over the five-year budget
window. This period of relative success will end roughly a decade from now when the retirement
of Baby Boomers begins in earnest, and the costs of the Nation’s entitlement programs explode.
At that point, the Federal Government’s deficits are expected to begin a dramatic rise, and the
entitlement programs that are currently manageable will eventually overwhelm the rest of the
Federal budget—unless appropriate and effective reforms are enacted.
of 2005 supplemental appropriations to fund continuing operations in Afghanistan and Iraq. Since
that Budget was released, the Congress enacted $25 billion in additional appropriations to support
military operations. The Administration intends to submit a supplemental appropriations request
of approximately $81 billion primarily to support operations for the remainder of the fiscal year. The
2006 Budget’s spending and deficit projections fully reflect the outlay effects of these two supple-
mental requests. However, the Budget does not reflect the effect of undetermined but anticipated
supplemental requests for ongoing operations in Iraq and Afghanistan beyond 2005.
While the 2005 deficit rises in nominal dollar Declining Federal Debt
terms to $427 billion, it falls to 3.5 percent of Debt held by the public as a percent of GDP
GDP. And in 2006, the deficit is expected to 120
fall further still, to 3.0 percent of GDP, which 110
would be only the 15th largest in 25 years. All 100
these projections assume both the continued 90
economic growth we have seen, as well as the 80
spending restraint included in this Budget. If 70
we maintain these policies, we cut the deficit 60
by more than half from its originally estimated 50
2004 peak—to just 1.5 percent of GDP, which 40
is well below the 40-year historical average of 30
2.3 percent. 20
10
Financial markets look at deficits using 1940 1950 1960 1970 1980 1990 2000 2010
additional methods. One important measure
is the ratio of all publicly-held Federal debt to GDP. This ratio, which has varied between 34 percent
and nearly 50 percent over the past 20 years, is projected to be 40 percent at the end of 2007, and to
fall to 39 percent in 2010. This decline is expected to occur because projected deficits as a share of
GDP are modest, and because economic growth is projected to be strong over this period.
As discussed above, the Federal Government’s near-term fiscal outlook is expected to improve
steadily over the next several years. The same cannot be said of the long-term deficit picture as
a result of long-standing imbalances between what major entitlement programs currently promise
in benefits and the resources expected to be available to meet those promises. Due to a combination
of demographic and cost pressures, Social Security’s and Medicare’s unfunded obligations pose the
real fiscal danger to the Federal budget and to our economy in general.
Social Security
Social Security today operates on what is known as a “pay-as-you-go” basis, in which current worker
payroll taxes are used immediately to pay for the benefits of current retirees and other beneficiaries.
However, demographic trends indicate that the ratio of workers to beneficiaries will continue to de-
cline. In 1950, there were about 16 workers paying for every beneficiary. Today, there are slightly
more than three—and by the time today’s young workers retire, there will be only two workers to
support each person on Social Security. Despite multiple efforts in the past to patch the system with
cuts in benefits and increases in the payroll tax and the retirement age, the Social Security system
remains on a clear path to fiscal failure.
A snapshot of the Social Security system today gives no hint of the trouble to come because it shows
Social Security with a cash surplus estimated to be $76 billion in 2006. However, this surplus begins
22 THE NATION’S FISCAL OUTLOOK
to decline in 2008 as the first wave of Baby Boomers retire. In 2018, the Social Security system
will collect less in taxes than it pays in benefits and will shift into a permanent cash deficit. In
2042, Social Security will exhaust its Trust Fund assets and will be bankrupt. If Social Security’s
problems are left unresolved, today’s young workers will see their benefits sharply and suddenly cut,
their children’s payroll taxes raised, or both.
Another measure of Social Security’s long-term fiscal condition comes from the long-run net present
value of its future income and promised benefits. Looking out over the next 75 years, Social Security
is carrying a deficit of $3.7 trillion, a figure that includes its existing Trust Fund balances of $1.5
trillion.
The picture is actually worse, because the 75-year window takes credit for the payroll taxes paid
by the next generation of workers while failing to count benefit payments owed to them beyond
the 75-year timeframe. A more accurate way to describe Social Security’s financial jeopardy is by
calculating how much it would cost to fix the problem permanently. An analysis that captures the
net present value of all Social Security tax collections and promised benefits shows Social Security
facing a deficit of $10.4 trillion, allowing for the present value of Social Security’s Trust Fund bal-
ance. That figure is estimated to rise by around $600 billion in 2005, and by increasing amounts each
year thereafter, if no reforms are enacted.
The long-term fiscal imbalance in Social Security is well known to investors at home and abroad.
Failure to rectify Social Security’s finances could cause financial markets to question the Federal
Government’s commitment to sustainable fiscal policies. Such a conclusion would at some point find
its expression in steadily rising real borrowing costs to the Federal Government, a drop in confidence
in the American economy that would lead to less business investment, and slower overall economic
growth.
Only significant changes in policy can prevent Social Security from driving the Federal Govern-
ment to debt levels that are unsustainable. The sooner necessary policy changes are made, the less
disruptive they will have to be. The President’s Commission to Strengthen Social Security presented
three options as the basis for reform in its 2001 report. Many other proposals have been advanced in
the intervening period as well.
The President has made clear that in 2005, he will pursue legislation that permanently fixes Social
Security, building on recent reform efforts and following these guiding principles:
• Benefits for today’s retirees or those near retirement should not be changed. Americans who
have already put in an entire working career are counting on Social Security benefits. We must
continue to honor the commitments we have made to our seniors.
• Payroll taxes must not be increased. Past shortfalls in Social Security have been addressed by
repeatedly raising payroll taxes on current workers and employers. These efforts have never
corrected the problem. Moreover, higher taxes would hurt economic growth, which is vital to
both near-term and long-term deficit reduction.
• Social Security reform must also include the creation of voluntary personal accounts so that
younger workers can have greater control over and actual ownership of their payroll tax dollars.
These accounts will enable American workers to build a nest egg for retirement.
Voluntary personal accounts under Social Security involve financing the transition from today’s
unsustainable “pay-as-you-go” system. The creation of these accounts would therefore have impor-
tant consequences for Federal finances in both the near-term and in the long-run, but these effects
do not have the same impacts on the economy as traditional debt financing.
The effect of creating personal accounts would be to protect some portion of worker payroll taxes
from the reach of the Federal Treasury. The Federal Government might therefore have to increase its
borrowing in the private capital markets by an amount equal to the annual flow of payroll taxes into
THE BUDGET FOR FISCAL YEAR 2006 23
the personal accounts. While the creation of personal accounts would increase Federal borrowing,
they would also reduce the Federal Government’s future spending obligations by an equal amount.
Both effects must be shown and understood together—both the size of near-term investments in
personal accounts, under reasonable participation assumptions, and the corresponding amount by
which reform would reduce future unfunded obligations. It is misleading to measure only the near-
term impacts.
Under most circumstances in which the Federal Government borrows funds, it is because the
Government is spending more on goods, services, and transfer payments than it is taking in. In the
case of personal accounts, however, the reduction in national savings from the Federal Government’s
increased borrowing exactly matches the increase in private saving that occurs through the personal
accounts. There is no net reduction in national saving arising from this arrangement, nor is there
any reduction in the flow of saving available to the private sector. For this reason, the creation
of personal accounts is not expected to have any detrimental effect on financial markets or on the
overall economy.
Comprehensive reform that includes personal accounts would permanently eliminate the
unfunded obligations of the current system. Ultimately, that is the standard by which any legisla-
tion to strengthen the Social Security system must be held. To achieve this, the long-term growth in
annual Social Security outlays cannot be greater than the long-term growth in program-generated
receipts.
Projections regarding various proposals’ fiscal effects and their impact on beneficiaries will be
based on analyses provided by the non-partisan actuaries and other technical experts at the Social
Security Administration.
Medicare’s financial problems are in part driven by the same demographics we see in Social
Security, but Medicare’s problems are compounded by the rising cost of health care. This suggests
that effective solutions to Medicare’s long-term financial shortfall may differ significantly from the
solutions for Social Security. For example, policies that foster a strong economy will tend to reduce
Medicare’s shortfall because a strong economy produces additional receipts without generating
additional promised benefits. By comparison, an increase in Social Security payroll tax receipts
arising from a strong economy produces commensurate increases in promised benefits.
In 2003, the President signed into law the Medicare Modernization Act (MMA), which added a pre-
scription drug benefit to the program and created the Medicare Advantage program, in which private
health plans compete for seniors’ business by providing enhanced benefits. Seniors and other ben-
eficiaries will now have access to prescription drugs and more preventive services under Medicare.
And importantly, the legislation lays the foundation for addressing Medicare’s long-term financing
challenge by dramatically increasing beneficiary choices and introducing market-based competition,
which are the essential ingredients for greater efficiency and quality in our health care system.
Among its reforms, the MMA created new tax-favored Health Savings Accounts (HSAs). These
accounts allow workers to save tax-free for their out-of-pocket health costs, and are paired with low-
premium, high-deductible health plans that cover hospitalization and other major health care costs.
HSAs represent an innovation in health care coverage with improved incentives.
HSAs make basic health insurance more affordable, and promote health care decisions that are
more effective for both patients and the entire health care system. For example, people with HSAs
have a financial incentive to stay healthier, since fewer doctor visits mean more dollars left over in
the savings accounts. When consumers use their accounts to pay for out-of-pocket expenses, they are
more likely to seek out the best quality and the lowest price. This should drive health care providers
to become more efficient and more cost-conscious, to the benefit of all health care consumers.
Individuals and families with HSAs are less likely to be dependent on employment or the insurance
policies of a single employer for their health coverage. The President has proposed extending the
benefits of HSAs in two important ways: he has proposed giving small business owners a refundable
tax credit for contributions made to employees’ HSAs; and he has proposed increasing the availability
of HSAs for low-income families by providing a $1,000 direct contribution to their HSA in conjunction
THE BUDGET FOR FISCAL YEAR 2006 25
with a refundable tax credit of up to $2,000 toward the purchase of a low-premium, high-deductible
health care plan.
The President has also advanced policies to accelerate the integration of the latest information
technologies into health care. He has set a goal that most Americans have electronic health records
within the next 10 years. Electronic health records are already making a difference in our health
care system, making patient records available to doctors in emergency situations and routine visits,
promoting accurate medical notations and prescriptions, and helping to prevent avoidable medical
errors, all while protecting patient privacy. By improving efficiency and reducing errors, we will see
health care savings, making all health care in America more affordable and accessible.
The President is also proposing medical liability reforms. The costs of medical liability insurance
are driving doctors out of practice, or are being passed on to patients and their employers in higher
insurance rates. In addition, the pressure of medical liability lawsuits is causing more doctors to
practice medicine defensively and order more lab tests or exams than is necessary, which is driving
up health care costs even further. By enacting national medical liability reform we will be able to
address the problem of junk lawsuits against doctors, clear our court system of unnecessary litigation,
and help to control health care inflation.
These policies will increase competition and individual choice in the health care marketplace, drive
the industry toward much greater efficiency, and eliminate some of the pressures that are lifting
health care costs. Taken together, they will slow the rate of health care inflation, slow the rate of
increases in Medicare costs, and thereby diminish Medicare’s unfunded obligations.
Much can also be done within Medicare itself to bring down its unfunded obligations. For example,
to help address the program’s long-term fiscal challenges, the MMA requires the Medicare Trustees
in their annual report on the program’s financial soundness to analyze the combined fiscal status of
the two Medicare Trust Funds and warn the Congress and the President when Medicare’s reliance on
general revenue funding will exceed 45 percent. If the Trustees determine that general revenue fund-
ing will exceed 45 percent in two consecutive years, a Medicare Funding Warning is issued, which
makes available special legislative procedures to allow the President and the Congress to address
the shortfall in the Medicare Trust Funds. This new fiscal safeguard will alert the Congress and
the President should Medicare’s dedicated revenues fall below adequate levels. The Administration
supports efforts to integrate Medicare’s financing structure and monitor the program’s reliance on
general revenue funding, such as a unified Medicare Trust Fund.
Other entitlement programs pose similar challenges to the long-term fiscal condition of the Federal
Government. For example, the Medicaid program, which was created in 1965 to help States provide
health care benefits to low-income families with children, has evolved into an extremely complicated
program that emphasizes institutional settings, when home and community-based settings could be
more appropriate. And the program is growing rapidly. Counting the States’ share of costs, it is
now larger than Medicare. Total Medicaid expenditures will reach a projected $338 billion in 2006.
Medicaid has become the largest expenditure in many State budgets, surpassing even primary and
secondary education. Yet, because of the program’s cumbersome structure, there are many very low-
income Americans who are not helped by Medicaid.
Over the long term, Medicaid is not only a serious fiscal challenge for both Federal and State gov-
ernments, but its current structure is not the most efficient way to deliver modern medical care to
the poor. The Administration proposes to restore Medicaid’s original promise to protect and promote
the health of the least financially fortunate among us, while fostering a more balanced Federal-State
partnership that improves the program’s long-term financial stability. The program’s open-ended
finance structure encourages efforts by States to draw down Federal matching funds, sometimes in-
appropriately. These financing practices undermine the Federal-State partnership required by the
Medicaid statute and jeopardize the financial stability of the program. The 2006 Budget proposes
26 THE NATION’S FISCAL OUTLOOK
several program integrity measures to reduce inappropriate use of Federal commitments under Med-
icaid. Also, the Administration proposes to apply lessons learned from the successful State Children’s
Health Insurance Program by giving States more flexibility to provide needed care to larger num-
bers of the uninsured, while reducing needless overhead and waste. Together with his package of
proposals to help the uninsured, this reform will focus on increasing health insurance coverage for
low-income families while also promoting more efficient and rational ways of delivering care, such as
community-based care alternatives for persons with disabilities. (For a more complete description of
reforms in the Medicaid program, please see the Department of Health and Human Services chapter.)
To enforce spending discipline in the 2006 Budget, as well as maintain spending discipline over
the long-term, the Administration proposes several budget process reforms.
The Administration supports the establishment of overall discretionary spending caps and pay-as-
you-go (PAYGO) rules for mandatory spending. To further this goal, the Administration transmitted
in April of last year the Spending Control Act of 2004. The Administration plans to repropose that
legislation, including appropriate updates and revisions.
In addition, this Budget proposes that the Congress adopt the Administration’s discretionary cap,
PAYGO requirement, long-term unfunded obligations controls, and associated reforms as part of its
2006 Budget Resolution.
The Administration’s proposals are based largely on the lapsed Budget Enforcement Act (BEA).
From 1991 to 2002, the BEA set statutory budget authority and outlay limits on discretionary
spending and a PAYGO requirement for all other legislation that were enforced by across-the-board
spending reductions. Until budget surpluses surfaced in 1998, the BEA proved to be an effective
brake on the growth in spending.
Discretionary Spending Limits. The Administration proposes annual statutory limits on
discretionary spending through 2010 that would be adhered to throughout the budget process. The
President’s proposal would require a three-fifths vote of the Senate for an appropriations bill that
caused these limits to be exceeded. If an appropriations bill was enacted that caused these limits to
be exceeded, OMB would be required to make across-the-board cuts to eliminate the excess spending.
Currently, there are inadequate incentives in budget scoring rules to fund program integrity activ-
ities to ensure that taxes owed to the Government are collected, eliminate the estimated $40 billion
in improper payments, and combat other fraud and abuse in Government programs. For example,
if the Budget allocates $100 million for the collection of $500 million in delinquent tax payments,
the savings of $400 million are not counted as a form of savings. Thus, neither the Congress nor
the Administration has a budget scoring incentive to provide for such program integrity activities.
The Administration proposes an incentive for funding these activities by adjusting discretionary caps
upward to allow additional funding for continuing disability reviews, health care fraud detection, un-
employment insurance integrity, and Internal Revenue Service delinquent tax collections.
Mandatory Spending Controls. Mandatory spending constitutes spending that is not generally
under the discretion of the Congress in the annual appropriations process. When President Kennedy
was in office, mandatory spending represented one-third of the budget. Today, it amounts to nearly
two-thirds of the budget.
The Administration’s proposal would modify the PAYGO mechanism that was in existence from
1991-2002 to require legislative proposals that increase mandatory spending to be offset by reduc-
tions in other mandatory spending. Budget enforcement mechanisms should be focused on controlling
spending, not on raising taxes on America’s workers and families. Under the proposal, tax increases
THE BUDGET FOR FISCAL YEAR 2006 27
could not be used to offset mandatory spending increases; nor would tax relief legislation be subject
to PAYGO procedures. Like the discretionary spending enforcement mechanism, this proposal would
require a three-fifths vote of the Senate for legislation that violated this requirement. If legislation
was enacted that caused a net increase in mandatory spending, OMB would be required to make
across-the-board reductions in non-exempt programs.
Long-term Unfunded Obligations. The real fiscal danger is posed by the long-term unfunded obli-
gations of the Social Security, Medicare, and other entitlement programs. Spending decisions on enti-
tlements often have ramifications on the budget outlook far beyond the conventional 10-year window
used to score changes in policy. Enforcement mechanisms are needed to address the long-term impact
of entitlement spending expansions. The Budget proposes to establish a new measure to analyze the
long-term impact of legislation on unfunded obligations of major entitlement programs. If legislation
caused an increase in these obligations, it would require a three-fifths vote of the Senate.
Line-Item Veto Authority. A perennial criticism of the Federal Government is that spending and tax
legislation contain too many provisions, or earmarks, that would likely not become law if considered
as a stand-alone bill. The persistence of these items in the Budget diverts resources from higher
priority programs.
The President proposes that the Congress address this issue by providing him and future
Presidents with a line-item veto that would withstand constitutional challenge. From the Nation’s
founding, Presidents have exercised the authority not to spend appropriated sums. However, the
Congress sought to curtail this authority in 1974 through the Impoundment Control Act, which
restricted the President’s authority to decline to spend appropriated sums. The Line-Item Veto
Act of 1996 attempted to give the President the authority to cancel spending authority and special
interest tax breaks, but the U.S. Supreme Court found that law unconstitutional. The President’s
proposal would correct the constitutional flaw in the 1996 Act.
Specifically, the President proposes a line-item veto linked to deficit reduction. This proposal would
give the President the authority to defer new spending whenever the President determines it is not an
essential Government priority. All savings from the line-item veto would be used for deficit reduction,
and could not be applied to augment other spending.
The Budget proposes other budget process reforms, including proposals to give the budget resolu-
tion the force of law, move to a biennial budget and appropriations process, and prevent Government
shutdowns through an automatic continuing resolution.
In addition to these legislative proposals, the Administration plans on augmenting its own controls.
To contain the cost of administrative decisions that can increase the cost of mandatory spending, the
Office of Management and Budget plans to establish an internal review process that requires agen-
cies, when proposing substantial administrative decisions that increase mandatory spending, to also
propose other offsetting administrative decisions that reduce mandatory spending. This “administra-
tive PAYGO” approach would complement congressional adoption of PAYGO for legislated increases
in mandatory spending.
The reductions and reforms in the 2006 Budget will contribute to an even stronger near-term out-
look for the Federal budget. And they will help strengthen the Federal Government’s long-term fiscal
outlook. Federal programs that place a large and rising claim on current tax dollars represent a real
danger to our current and future fiscal health, and to our economy as a whole. It is critical that we
take steps to confront these rising costs, and promote responsible reforms that place our entitlement
programs on a path towards balance.
PROTECTING AMERICA
The 2006 Budget helps meet the primary responsibility of the Federal Government: To defend our
Nation from attack. The Budget meets this commitment by increased funding for the Department of
Defense, international diplomatic and security efforts, and homeland security functions.
The Budget raises defense spending by 4.8 percent and raises homeland security spending by 8
percent, including fee funded activities. Since 2001, the Administration will have raised defense
spending by more than 40 percent and more than tripled funding for homeland security. These funds
help protect America by supporting our all-volunteer forces with higher pay and better equipment
as they fight and win the Global War on Terror. These funds are helping our military transform to
meet the emerging threats of the 21st Century. And these funds are supporting our efforts to defend
against terror threats at home.
In the War on Terror, the Bush Administration’s primary strategy is to take the fight to the en-
emy. Our ability to do so depends on steady support for our troops and their mission in Iraq and
Afghanistan. Working with a broad coalition, our troops have liberated these nations from the rule
of tyrannical regimes that actively supported terrorist organizations. With the continued support of
the Congress, our troops will help these nations develop the capability to defend their own democrat-
ically elected governments, which will promote freedom and reform throughout the region. Fighting
terror is not just a matter of killing or capturing terrorists. Fighting terror requires a steady com-
mitment to spreading liberty and democracy, because free nations are peaceful nations.
While fighting this war, the Administration is also transforming our military so that it has the
training and weapons to meet the challenges of the 21st Century. By restructuring our overseas bases
to enhance access to potentially unstable areas of the world—rather than remaining in large far-away
bases built for the needs of the Cold War—we will enable our troops to surge quickly to deal with
unexpected threats. By taking advantage of 21st Century military technologies, America’s combat
power can be rapidly deployed with greater precision, stealth, and success. By building modular
Army brigades, we will create a more flexible fighting force able to match the needs of the mission.
These steps will help meet the threats of the 21st Century, including the war in which we are
currently engaged. They will strengthen our alliances around the world, while we build new part-
nerships to better preserve the peace and promote freedom. And they will reduce the stress on our
troops and our military families.
In addition to these steps, the Administration has reorganized the Nation’s military commands
to address the new challenges. These efforts include creating a new Northern Command to better
defend the homeland; the Joint Forces Command focused on transformation; and a new Strategic
Command responsible for early warning of, and defense against, missile attack. The Administration
is also negotiating new strategic relationships that would have been unimaginable just a decade ago
with nations in Central Asia, the Caucasus, and other critical areas of the world.
The 2006 Budget provides substantial resources to increase our ability to prevent terrorist at-
tacks, as have prior budgets since September 11, 2001, by increasing funding for the Federal Bureau
of Investigation’s counterterrorism efforts and focusing resources on the most vulnerable domestic
targets: airports and seaports; the food supply and water systems; major transportation systems;
information networks and critical infrastructure. With the creation of the Department of Homeland
29
30 PROTECTING AMERICA
Security, the Nation has a better coordinated, focused, and funded system to protect America from
terrorist attack.
of Afghanistan’s ethnic groups. DOD will accelerate training to help the Afghans develop their own
military capabilities.
Along with other nations, the United States is also making long-term investments in both Iraq
and Afghanistan. Key infrastructure projects in Iraq will create jobs and provide millions of Iraqis
with greater access to basic services, such as clean water, electricity, and reliable telecommunications
systems. In both Iraq and Afghanistan, U.S. aid coordinated by the State Department and the Agency
for International Development, will continue to build the local capacity to deliver healthcare and
other basic services, collect revenues, and develop the framework necessary for a modern and open
economy.
The Budget also devotes resources to protect Afghanistan’s democratic and economic development
from the drug trade by providing funding to eradicate poppy crops; develop alternative cash crops;
interdict the drug flow; prosecute drug traffickers; and build Afghanistan’s counter-narcotics capa-
bilities.
During 2005, the Administration expects to have more than 163,000 National Guard and Reservists
mobilized across all services supporting the Global War on Terror. In recognition of the burdens
placed on our mobilized Guardsmen and Reservists, the President proposed and signed into law in-
creases to their Montgomery GI Bill education benefits, if mobilized for 90 days or more. In addition,
Guardsmen and Reservists have benefited from enhanced compensation, including a new bonus for
conversion to a different military specialty; revised enlistment and reenlistment bonuses; and en-
hanced health benefits, including better pre- and post-mobilization coverage. Guardsmen and Re-
servists who have been deployed also benefited from active-duty compensation increases.
The United States continues to work with friends and allies to disrupt the financing of terrorism
by identifying and blocking the sources of funding, freezing the assets of terrorists and those who
support them, denying terrorists access to the international financial system, protecting legitimate
charities from being abused by terrorists, and preventing the movement of assets through alternative
financial networks.
32 PROTECTING AMERICA
Intelligence Reform
The recently enacted Intelligence Reform and Terrorism Prevention Act of 2004 builds on the
reforms implemented by these agencies and by executive orders on information sharing, intelligence
community management, and the National Counterterrorism Center (NCTC). The new Director of
National Intelligence (DNI) is empowered to set funding, collection, and analytic priorities across
the national intelligence program in consultation with appropriate Department and agency heads.
In addition, the DNI will spearhead efforts to improve information sharing within the intelligence
community.
The recently created NCTC has already become a critical player in the war on terror. The NCTC
expands on the analytic mission of the former Terrorist Threat Integration Center by serving as the
primary organization in the U.S. Government for analyzing and integrating intelligence pertaining
to terrorism and counterterrorism; serving as the central and shared knowledge bank on known and
suspected terrorists and international terror groups; and ensuring that agencies, as appropriate,
have access to and receive the all-source intelligence support needed to execute their counterterror-
ism plans or perform independent, alternative analysis. The NCTC will improve our ability to mount
coordinated, strategic operations against terrorism.
The best hope for achieving peace in our world is the expansion of freedom. The 2006 Budget
funds initiatives to promote democracy and reform, particularly in the Middle East, North Africa,
and other majority Muslim countries. For example, the Budget includes $80 million for the National
Endowment for Democracy to enhance its efforts to strengthen democratic institutions, the rule of
law, human rights, civic education, and independent media.
The Budget also includes $120 million for the Middle East Partnership Initiative, a cornerstone
of the State Department’s approach to supporting political and economic reform in the region. All
these activities promote long-term reforms by advancing democratic and economic freedom, which
diminishes terror organizations’ ability to recruit.
To promote better understanding of America and American ideals, the Budget includes $180 mil-
lion in 2006 for exchange programs in countries with significant Muslim populations, including the
Near East, South Asia, Indonesia, and parts of Africa and Europe. Public diplomacy in the region
will support the continuation of several priority programs, including American Corners—locations
THE BUDGET FOR FISCAL YEAR 2006 33
around the world that provide access to information about America through the Internet, guest speak-
ers, and other events for non-Americans in a neutral setting. The 2006 Budget for the Broadcasting
Board of Governors includes an increase to significantly expand television broadcasting to Iran, Pak-
istan, and Afghanistan in 2006, following the successful launch of its Arabic news satellite television
channel, al-Hurra, in 2004.
The successful presidential election held by the Palestinian Authority is an important step toward
the building of democratic institutions needed for realization of the President’s vision of two states,
Israel and Palestine, living side by side in peace and security. The United States will take a leading
role in helping Palestinians build a viable economy and democratic institutions, and the security
institutions they need to fight and defeat terror. The Budget contains $150 million for projects aiding
the Palestinians in infrastructure and democracy building.
Persistent poverty and oppression can lead to the kind of despair and failed states that become
havens for terror. The United States is the world’s leader in providing development and humani-
tarian assistance, opening up our markets for trade, and providing peacekeeping assistance to re-
gions where peace and stability are needed. In 2002, the President pledged that the United States
would lead by example and increase its core development assistance by 50 percent, or $5 billion, by
2006. The 2006 Budget exceeds this commitment—the request for core development assistance is
$8.2 billion above the amount appropriated in 2002. Moreover, President Bush has increased official
development assistance more than at any other time since the Marshall Plan, reversing decades of
decline in assistance as a percentage of GDP. This positive trend will continue in future years as two
of the President’s main foreign policy initiatives—the fight against HIV/AIDS and the Millennium
Challenge Account—disburse more funds to promote development and reform and fight suffering and
poverty.
Even as our men and women in uniform continue to wage the War on Terror in Iraq and
Afghanistan, DOD is adapting to face new and emerging threats. Much of the increase in defense
budgets has been devoted to transforming our Nation’s military capabilities and laying the founda-
tion for winning the War on Terror. This process is dynamic and requires an ongoing adjustment of
national security priorities. DOD has begun a strategic analysis that will form the basis of the 2005
Quadrennial Review. This review will further refine the Nation’s long-range security requirements
and assessment of needed capabilities.
To be better prepared to respond rapidly to the threats of the 21st Century, the Administration is
committed to transforming all aspects of the U.S. global defense posture, including our infrastruc-
ture, personnel, and equipment. In August 2004, the President announced the most comprehensive
restructuring of U.S. military forces overseas since the end of the Korean War. The Global Posture
Initiative entails working with more partners around the world to use our military capabilities more
effectively. As a first step, the initiative repositions U.S. forces from Cold War bases to areas of strate-
gic importance today. Such new basing strategies will provide the United States rapid access to areas
where contingency operations may arise but where a large permanent presence is not required. In
the next decade, 70,000 military personnel, and 100,000 family members and other civilians, are ex-
pected to return to the United States as part of this effort. The initiative will be implemented over
34 PROTECTING AMERICA
the next 10 years. To begin this effort, the Administration has added $416 million in the 2006 Bud-
get, and plans to request $3.5 billion more through 2011.
Tools of Transformation
The Department is working on a wide range of new technologies, especially those that can protect
military personnel while allowing them to perform their mission more effectively. The Department’s
research and development efforts in this area are broad in scope. They range, for example, from the
development of new materials for troop clothing to provide better camouflage and improved comfort
and health, to new ways of detecting and neutralizing improvised explosive devices, chemical and bi-
ological agents, and radioactive materials. Developments in advanced materials have dramatically
improved soldier body armor, providing unparalleled protection in combat. These and other technolo-
gies of the future are transforming how the United States will fight in future conflicts. Advances in
new sensors, hypervelocity missiles, low-observable materials, and smart weapons will enable U.S.
forces to fight smarter, more efficiently, and with greater precision than ever before.
DOD continues to make major investments in the development and procurement of unmanned ve-
hicles for ground, underwater, aerial, and combat use. Small unmanned aerial vehicles, for example,
can provide information during ground combat to reduce casualties. Underwater vehicles are being
developed for mine detection and avoidance operations. Ground vehicles are being used to identify
and explode improvised explosive devices remotely. The ground and air vehicles are a central part
of the Army’s Future Combat System and will provide a wide range of functions, including armed
reconnaissance, fire support, autonomous logistics, and mine detection. Some of the forerunners of
these new systems are being used today in Iraq and Afghanistan. The 2006 Budget provides $1.7
billion for these efforts.
The 2006 Budget supports the Navy’s Littoral Combat Ship (LCS) and its associated weapons sys-
tems by providing $613 million for continued development. The LCS, now in acquisition and testing,
is a fast, small, and low-cost surface warship capable of operating in littoral (near-shore) waters. The
primary missions of the LCS are anti-small-boat warfare, mine countermeasures, and anti-subma-
rine warfare. Secondary missions will include intelligence, surveillance and reconnaissance, home-
land defense, maritime interdiction, and support for Special Operations forces.
The President’s Budget supports substantial investments in advanced technology, particularly in
remote sensing and high performance computing, to give our military additional advantages over
our enemies. U.S. intelligence agencies and elements are employing advanced technology systems
to acquire, process, and produce information from enemy signals, imagery, and human and other
sources. Investments in communications will improve the effectiveness of troops in the field and
their commanders in carrying out their missions. These technological developments are improving
our ability to detect and counter the broad range of threats facing the United States.
Since the terrorist attacks of September 11, 2001, America has engaged in a broad and determined
effort to identify and pursue terrorists abroad and secure our citizens and interests at home. Working
with the Congress, the President signed legislation to: break down the walls between law enforce-
ment and terrorist investigations; reorganize the Federal Government by reforming and improving
intelligence gathering and analysis; acquiring biological weapons countermeasures; enhancing se-
curity at our borders, airports, and in our communities; and strengthening America’s preparedness
and response capabilities.
THE BUDGET FOR FISCAL YEAR 2006 35
This Administration’s commitment to securing the homeland is reflected in this and past budgets:
non-Defense homeland security spending has more than tripled since 2001. But homeland security
is not simply a Federal responsibility; rather it requires a national effort with cooperation among all
Government levels, the private sector, and individual citizens. The President’s 2006 Budget supports
these partnerships in areas as diverse as researching and deploying radiological and nuclear detec-
tion systems; developing detectors for chemical agents; augmenting mass casualty care capabilities;
and protecting our food supply and drinking water.
The 2006 Budget places special focus on programs that seek to detect suspicious individuals or
materials before they enter the country. Just as important are efforts to share information about
suspicious individuals and materials with multiple levels of law enforcement.
The FBI has transformed itself to make counterterrorism its top priority and has established a
comprehensive intelligence program to prevent terrorist attacks, an effort that has been accelerated
by the passage of the Intelligence Reform and Terrorism Prevention Act of 2004. The President’s
Budget supports the FBI’s counterterrorism priorities by providing $294 million for counterterror-
ism and counterintelligence initiatives and $117 million in new funding to bolster the intelligence
program. This Budget boosts FBI funding by 11 percent, or $555 million, resulting in an overall FBI
budget increase of 76 percent since 2001.
To enhance information sharing on international travelers and to screen for terrorists, the Pres-
ident also issued a directive that called on the Department of Homeland Security (DHS) and other
agencies to improve and better coordinate screening of people, cargo, and conveyances. The Bud-
get reflects a new coordination of offices to oversee screening efforts and set screening standards.
This office will consolidate several major initiatives within the Border and Transportation Security
Directorate, including: US-VISIT, the Secure Flight Program, and the Transportation Worker Iden-
tification Credential Program. The 2006 Budget also increases funding for these programs by $344
million, including $50 million to accelerate the deployment of US-VISIT and $49 million to imple-
ment Secure Flight, a program that will improve security checks of airline passengers names through
a more effective and efficient automated process.
The 2006 Budget provides $104 million for the multi-agency Terrorist Screening Center (TSC), a
$75 million increase over 2005, to enable TSC to meet its increasing responsibilities in developing
and managing a consolidated terror screening watch list, particularly in support of Secure Flight.
To date, TSC has received approximately 17,000 calls, of which 8,500 were a positive match with
the database. TSC staff currently fields nearly 100 calls per day from Federal, State, and local law
enforcement representatives.
The Budget also provides a $21 million increase for DHS’ IDENT fingerprint system and fund-
ing for increased interviews, screening, and information sharing between Federal agencies on visa
applicants; the development and production of new machine-readable biometric U.S. passports; and
for increased interoperability of border security and counterterrorism systems for various agencies.
The State Department is also leading a U.S. effort to collect biometric information on known and
suspected terrorists from foreign governments.
The Administration has made unprecedented investments to counter possible terrorist threats.
The 2006 Budget supports deployment of existing counterterrorism technology and focuses America’s
scientific and technical expertise on new solutions.
36 PROTECTING AMERICA
Threats to Food and Agriculture. The 2005 Budget contained significant funding to protect the
safety of the Nation’s food system from contamination by terrorists. The 2006 Budget continues this
commitment by including $596 million, an increase of $143 million, to improve our ability to detect
and contain contamination. The 2006 Budget also includes $58 million to support the establishment
and maintenance of laboratories to analyze samples of potentially contaminated food as quickly as
possible. For example, the Food Emergency Response Network (FERN) links strategically located
State and Federal laboratories that analyze food samples in the event of a biological, radiological, or
chemical terrorist attack in this country. FERN laboratories will be participating in the Electronic
Laboratory Exchange Network (eLEXNET), an integrated information network, which is designed to
allow health officials across the Nation to compare, share and coordinate laboratory analysis findings
and potentially identify contaminated foods. The Budget also includes funding for border inspections
of imported foods, research on new methods to prevent food contamination, and expansion of labora-
tories to rapidly identify human and animal disease pathogens of concern.
The DHS Biological Countermeasures Office budget request is $385 million in 2006, a $22 million
increase that will help develop vaccines to defend our food supply from intentional or accidental in-
troduction of animal diseases into the country. These vaccines will help protect the Nation from the
catastrophic economic consequences a major disease outbreak would cause to the agricultural sector.
The Budget also requests funding for a Next Generation Animal Disease Center that will be able to
analyze pathogens from large animals.
The 2006 Budget doubles the spending for chemical agent research and development conducted by
DHS, to $107 million, including $36 million in new spending on countermeasures to non-traditional
chemical agent threats. This funding level includes the creation of a state-of-the-art materials test-
ing facility that will be housed within DOD’s chemical countermeasures programs. The Budget also
provides NIH with $50 million to research medical countermeasures to chemical agents.
DOD has increased funding by $223 million to boost efforts in the areas of agent detection, early
warning, decontamination, and medical countermeasures for chemical and biological threats. The
Budget proposes funding to modernize and upgrade laboratories belonging to the U.S. Army Medical
Research Institute of Infectious Diseases and the U.S. Army Medical Research Institute of Chemical
Defense, which provide world-class scientific research and technical expertise on biological agents,
emerging infectious disease agents, and chemical agents. The funding will help these agencies inte-
grate into the interagency National Biodefense Campus, thereby improving our scientific efforts to
defend against biological warfare.
Launched in 2005, the National Biosurveillance Initiative directed Federal agencies to enhance
biosurveillance capabilities to reduce the detection time following an attack, confirm the size and
characteristics of the attack, and initiate a response. The initiative establishes a National Biosurveil-
lance Integration System at DHS to combine and analyze information collected from human, animal
and plant health, food and environmental monitoring systems. Such an analysis, combined with
evolving threat and intelligence information, will provide greater context for those making critical
homeland defense decisions.
Project BioWatch is designed to detect the release of dangerous biological or chemical agents into
the environment. The BioWatch program operates in more than 30 major metropolitan areas, and
is designed to provide early warning of a large-scale biological weapons attack and accelerate the
distribution of life saving treatment and preventative measures before the development of serious
and widespread illnesses.
Threats to Aviation. DHS is creating a new Explosives Office to identify the best way to protect
against explosives, especially at high-threat venues. The Department’s Science and Technology Di-
rectorate will spend more than $150 million on aviation explosives detection research, and will con-
tinue to deploy more advanced equipment and systems at airports. The Transportation Security
Administration will ensure improved explosives detection screening of airline passengers by spend-
ing a total of $100 million in 2005 and 2006 to deploy new technologies at airport checkpoints. The
Office of State and Local Government Coordination and Preparedness will designate explosives de-
tection and mitigation as a national initiative for 2006 grant awards.
In addition, the DHS Science and Technology Directorate proposes to spend $110 million in 2006
to continue research on the viability of countermeasures for commercial aircraft against the threat
of shoulder-fired missiles known as Man-Portable Air Defense Systems.
38 PROTECTING AMERICA
Decontamination Strategic Planning and Research. The Budget requests $31 million in new fund-
ing for EPA planning and research for decontamination events. Of this funding, $12 million would
be dedicated to the development of an Environmental Laboratory Preparedness Response (ELPR)
program, which will fund the initial planning and development of a nationwide laboratory network
for surveillance and surge purposes in the event of a terrorist attack. Led by the EPA, collaborative
research efforts are underway to produce risk assessment methods, models, and guidance documents
for first responders and decision makers responsible for containment, decontamination, and remedi-
ation in response to chemical, biological, or radiological attacks. EPA’s National Homeland Security
Research Center works closely with DHS to ensure that decontamination research supports DHS
priorities. As directed by the President, research continues in development and validation of envi-
ronmental sampling and analysis methods for known and emerging biological threat agents.
Catastrophic Response/Medical Surge Capacity. The 2006 Budget includes $20 million to continue
DHS’ catastrophic incident response planning initiative that coordinates with Federal, State, and
local government agencies. Building on past DHS efforts to integrate multiple response plans into
the National Incident Management system to support the National Response Plan, this initiative
encourages greater State and local involvement. Planning for mass casualty events will be a major
focus area for DHS homeland security grants.
In the event of a large-scale mass casualty attack in one or more cities, existing health care
providers could be overwhelmed. While DHS will remain responsible for immediate medical
response capabilities, Department of Health and Human Services will support additional mass
casualty capabilities, including the purchase and storage of deployable care units consisting of
beds and medical supplies in order to provide care for days or weeks, if necessary. The Budget also
supports pre-event licensure and credentialing of qualified health care providers to ensure that they
will be ready in the case of a mass casualty incident.
Conclusion
In protecting America, the Federal Government must defeat terrorism before it reaches our shores.
We are attacking terrorists where they train, and cutting off their resources throughout the world.
We are also promoting a forward strategy of freedom and reform, so that the terrorists’ message
increasingly loses its force and appeal. And because terrorists do not choose military targets, we
are preparing our homeland to detect and deter attacks on civilians, and to respond if necessary
to emergencies. The 2006 Budget significantly increases resources to the continuing challenge of
protecting America’s freedom and promoting the freedom of the world.
SUPPORTING A COMPASSIONATE SOCIETY
America’s great strength is found in the armies of compassion who comfort the sick, honor the aged,
welcome the immigrant, protect the weak, mentor the at-risk, and bring healing to those who suffer
from addiction. America is a prosperous country, and Americans are generous and caring. President
Bush has placed a special emphasis on proposals that build on these efforts, and on working with the
tens of thousands of Americans whose charitable and volunteer organizations, and community- and
faith-based groups make America a more compassionate and hopeful place.
41
42 SUPPORTING A COMPASSIONATE SOCIETY
and community organizations together with Federal agencies to help recently released prisoners
make a successful transition into society and long-term employment. Through the collaborative
efforts of the Departments of Labor, Housing and Urban Development, and Justice, this four-year
initiative will provide job training and placement, transitional housing assistance, and mentoring
to 50,000 non-violent ex-offenders. The first grants under this program will be awarded by August
2005.
One of the most pressing needs for those trying to build lives of dignity is escaping from the down-
ward spiral of drug addiction. The Administration focuses on increasing access to effective substance
abuse treatment through programs that allow those suffering from addiction to choose treatment
plans that best suit their needs. Under the Access to Recovery program, individuals with vouch-
ers may access treatment and support services from a range of providers, including faith- and com-
munity-based providers. The Access to Recovery initiative offers a flexible approach to a difficult
problem—and the 2006 Budget supports this effort by including $150 million, which will sustain the
existing 15 grants while expanding access to additional States or tribal organizations. States will
hold providers accountable for results and reward those providers most effective at helping individ-
uals to recover from addiction.
America’s health system provides high-quality, leading-edge care to those who need it. But rising
costs can put health care coverage out of reach for many Americans, imposing a burden on families
and businesses. That is why the President’s health care policies focus on making health care more
affordable and accessible, especially for low-income Americans.
Centers now provide care to nearly 14 million patients at 3,740 sites across the United States each
year. One in six of the Nation’s low-income individuals receive health care at these sites, which treat
anyone regardless of ability to pay. These centers keep patients from using more expensive care in
hospital emergency rooms, and provide care when illnesses and injuries can be treated quickly and
without long hospitalization.
The 2006 Budget completes the President’s commitment to create 1,200 new or expanded health
center sites to serve an additional 6.1 million people by 2006. Almost 2.4 million additional individu-
als will receive health care in 2006 through 570 new or expanded sites in rural areas and underserved
urban neighborhoods. The Budget builds on the success of the President’s Health Centers Initiative
by including $26 million to fund 40 health center sites in high-poverty counties that lack health cen-
ters and support more faith-based and community organizations in providing these services.
The Nation’s seniors and disabled with access to Medicare will continue to benefit from the intro-
duction of Medicare Drug Discount cards. These cards provide real savings to seniors of all income
levels, and added savings to low-income seniors. Roughly six million Medicare beneficiaries have
enrolled since June 2004, when the cards first became available. Independent studies have shown
savings of 20 percent or more off the retail price of most brand-name drugs and 30 to 60 percent off
generic drugs. In addition, over 1.7 million beneficiaries began receiving the $600 annual low-income
transitional assistance. These beneficiaries can save up to 90 percent off the average retail price of
brand-name drugs when they combine the drug card savings with the $600 transitional assistance.
Beginning January 1, 2005, Medicare beneficiaries became entitled to new preventive benefits in-
cluding screenings for diabetes and heart disease, as well as a Welcome to Medicare physical for new
beneficiaries.
Also beginning January 1, 2006, Medicare beneficiaries will be eligible for a voluntary prescrip-
tion drug benefit. They will have their choice of prescription-drug-only plans or Medicare Advantage
plans that offer a full array of physician, hospital, and prescription drug coverage. Medicare will take
steps to encourage employers to continue offering drug and other health care benefits to millions of
seniors. The new drug coverage will be particularly beneficial for low-income beneficiaries. Those
with incomes below 135 percent of poverty will pay no monthly premium, no deductible, and very
small co-payments per prescription.
The 2006 Budget includes several proposals that promote home- and community-based care op-
tions for people with disabilities. These proposals build on the President’s New Freedom Initiative,
which is part of a nationwide effort to integrate people with disabilities more fully into society. Under
a five-year demonstration project, the Budget would pay for Medicaid services for individuals moving
from institutions to the community. This would encourage home- and community-based care, which
is both less expensive and more effective than the care provided in institutions.
Providing Shelter
The Administration recognizes that the problem of homelessness is often tied to other major chal-
lenges: delivering mental health and substance abuse treatment to those who need it most, providing
opportunities for work, and giving hope and comfort to those who are escaping abuse or neglect. The
Bush Administration is working to end chronic homelessness by funding prevention and intervention
programs.
Research indicates that chronically homeless people may comprise less than 10 percent of the home-
less population but consume over half of emergency homeless services because their needs are not
comprehensively addressed. The Samaritan Initiative will provide up to $200 million in 2006 by pro-
viding housing and social services to treat the chronically homeless properly. Across the country, 46
THE BUDGET FOR FISCAL YEAR 2006 45
States and over 170 localities, along with the private sector, have joined the Federal effort to move
chronically homeless individuals from the streets into permanent supportive housing.
The Administration supports compassionate programs overseas as well. America leads the world
in providing hunger relief and medicine, as well as support and manpower to deliver aid to those af-
flicted by the ravages of war, persecution, natural disasters, and disease. President Bush has brought
international scrutiny to human trafficking networks. And he has led a global effort to treat those
with HIV/AIDS and prevent the spread of this disease, which claimed the lives of more than three
million people in 2003.
The effort against HIV/AIDS starts at home. Domestically, the President has requested record lev-
els of funding to combat HIV/AIDS. The 2006 Budget requests a total domestic HIV/AIDS budget of
$17.4 billion. He has also stated his support for the reauthorization of the Ryan White Comprehen-
sive AIDS Resources Emergency (CARE) Act based upon the principles of focusing Federal resources
on life-extending care; ensuring flexibility to target resources to address areas of greatest need; and
ensuring accountability and results.
Overseas, President Bush has launched an ambitious $15 billion, five-year Emergency Plan for
AIDS Relief. Since the President announced the Emergency Plan in his 2003 State of the Union
Address, the United States has provided $5.2 billion for the fight against global HIV/AIDS. The 2006
Budget requests an additional $3.2 billion for this effort. The U.S. Government has made remark-
able progress during the Emergency Plan’s first year of implementation. In the first eight months
of President Bush’s Emergency Plan for AIDS Relief, the United States supported training for more
than 312,000 service providers and supported more than 14,000 sites where prevention, treatment,
and care services are provided in 15 countries in Africa, Asia, and the Caribbean.
Under the Emergency Plan, the Administration is committed to preventing seven million new
HIV-infections; treating two million HIV-infected people; and caring for 10 million people affected by
HIV/AIDS, including orphans.
As part of these efforts, the United States is also working with international organizations like
UNAIDS, the World Health Organization, and the Global Fund to Fight AIDS, Tuberculosis, and
Malaria. The Bush Administration provided the founding contribution to the Global Fund, and the
United States remains the world’s largest donor.
46 SUPPORTING A COMPASSIONATE SOCIETY
offering permanent resettlement to the most vulnerable among these populations. Refugee admis-
sions rose by more than 80 percent in 2004. The United States is the world’s largest donor to the
United Nations High Commissioner for Refugees and the world’s leader for accepting them . The
2006 Budget provides a funding increase of $85 million to support the growing number of refugees
being resettled in the United States.
Conclusion
In all these areas—supporting the family, caring for the poor and sick, protecting the vulnerable,
and upholding our values—the 2006 Budget supports the efforts of millions of people who by their
actions are making a difference in the lives of their fellow Americans and others around the world.
In this Budget, we have focused our resources on programs that show promise and success and
have shifted away from efforts that have proven less effective. We support those programs that do
more than offer good intentions. They deliver results. The programs supported in the 2006 Budget
serve the purposes for which they were designed. They feed the hungry, heal the sick, and save
the addicted from despair. They promote caring and compassion and bring those they serve from
dependence to lives of dignity. They uphold the principle that taxpayer dollars must be spent where
they can do the most good for the greatest number, and that the Federal Government should welcome
the participation of faith-based and community organizations in the delivery of such services. All of
our efforts succeed not by the sheer size of budgets, but by the care and talent brought to help those
who once seemed beyond help.
MAKING GOVERNMENT MORE EFFECTIVE
The Federal Government has a responsibility to ensure that taxpayers’ money is spent wisely on
priority needs. The 2006 Budget emphasizes the goal of achieving the results the American people
expect at a reasonable cost. This effort is critical to implementing President Bush’s aggressive plan to
halve the deficit by 2009. Achieving this plan will require continued pro-growth economic policies and
sound spending restraint. Throughout the 2006 Budget, the Administration maintains that focus.
Spending restraint can take many forms. Rather than achieve fiscal discipline by cutting programs
across the board, this Administration has employed a strategic approach that emphasizes results and
efficiency.
To make the Federal Government more effective, the Administration is working to:
• Control spending and be a good steward of taxpayer dollars;
• Set clear goals and achieve them;
• Accomplish more with less;
• Focus Federal resources on programs that work; and
• Bring reform to entitlement programs.
Since taking office, the President has addressed these important aspects of a more effective Govern-
ment. His Budgets have dramatically reduced the growth in discretionary spending for non-security
programs. This year’s Budget calls for a reduction in that category of spending. With the Presi-
dent’s Management Agenda, the Administration has made good management a priority throughout
the Federal Government. The President initiated Medicare reforms, and will be proposing significant
reforms of our Social Security system this year. Through sustained and dedicated effort, the Federal
Government is showing that it can respond to the pressing needs of the Nation, while remaining
responsible with taxpayer dollars.
ACHIEVING RESULTS
The President is committed to disciplined spending and ensuring Federal funds achieve the best
results for the American people. Throughout the Budget, there are proposals to eliminate or reduce
spending for programs that are not producing results, to limit long-term spending growth, and to
reform programs to achieve better results.
Some examples of these budgetary proposals include:
Better high school intervention programs. To provide funding for States under a High School
Intervention Initiative, the Administration proposes to consolidate narrow-purpose programs, most
of which have not proven effective in improving our secondary students’ academic achievement or
ability to obtain a job. The President’s new High School Intervention Initiative will provide $1.2
billion to help States implement a high school accountability framework and a wide range of effective
interventions. In return for a commitment to improve academic achievement and graduation
rates for secondary school students, States will receive the flexibility to choose which intervention
strategies will be most effective in serving the needs of their at-risk high school students.
49
50 MAKING GOVERNMENT MORE EFFECTIVE
Better management of student loan programs to maximize Pell Grants. The Budget proposes a
comprehensive package of reforms to make the student loan programs more efficient and more cost
effective. These reforms will link subsidy payments to lenders and guaranty agencies more closely
to their costs and modify interest rates for borrowers who are no longer in school and who have
consolidated their loans. The Budget achieves $34 billion in savings over 10 years by reducing unnec-
essary subsidies and payments to lenders, guaranty agencies, and loan consolidators, and by placing
a larger share of the loan risks on lenders. A portion of these savings will be used to increase the Pell
Grant maximum award by $500 over a five-year period, pay off the current $4.3 billion Pell shortfall,
improve benefits to students in school by increasing loan limits for first-year students, and extend
the current favorable interest rate framework, while still reducing overall costs to the taxpayer.
Better programs to enhance community economic development. The Budget creates a new economic
development program within the Department of Commerce, called the Strengthening America’s Com-
munities Grant Program. The President’s proposal replaces the current duplicative set of Federal
community and economic development programs spread throughout multiple agencies with a more
consolidated approach that focuses resources on the creation of jobs and opportunities, encourages
private sector investment, and includes rigorous accountability measures and incentives. This Pro-
gram is a targeted, results-oriented approach that will encourage innovation and economic opportu-
nity. And by streamlining the delivery of Federal economic development programs, taxpayers will see
administrative savings. The President’s Budget includes $3.7 billion for the Strengthening America’s
Communities Grant Program to provide economically distressed communities with a source of fund-
ing for planning, infrastructure development, and business financing to achieve long-term economic
stability and growth.
Better job training programs. The Budget merges the Department of Labor’s four major Federal
job training and employment grant programs into a single $4 billion grant program and allows Gov-
ernors to supplement this consolidated grant with their State’s resources from a menu of several
other Federal job training and employment programs. This proposal would establish increasingly
rigorous performance standards each year, leading to a goal in the tenth year that States place in
employment 100 percent of the workers trained with grant resources. To ensure that individuals are
placed in high-quality jobs, States would also be required to show improvements in earnings and job
retention. States’ performance would be ranked and published each year. These reforms, along with
the President’s $250 million Community College job training initiative, will result in the training of
400,000 workers—twice as many as are trained under the current system.
Better research programs benefiting commerce. The Budget proposes termination of the Advanced
Technology Program (ATP) at the Department of Commerce. This proposal is consistent with the 2005
Consolidated Appropriations Act, which did not provide funding for new awards from ATP. Other ini-
tiatives, such as those at the National Institute of Standards and Technology and the extension of
the research and experimentation tax credit, are more effective in supporting needed research and
technological development for U.S.-based businesses, American workers, and the domestic economy.
Government should always strive to serve the people with the best programs while making the most
efficient use of public tax dollars. Launched in August 2001, the President’s Management Agenda
(PMA) set out to strengthen management practices and foster accountability so that Government
managers and their employees could better focus on and produce results. Federal managers now
routinely ask themselves if the programs they manage are achieving results at a reasonable cost. If
the answer is “no” or “we don’t know,” managers find out what the problem is and work to fix it. If the
answer is “yes,” they pursue ways to increase efficiency by replicating their success in new areas. The
THE BUDGET FOR FISCAL YEAR 2006 51
Administration’s efforts to improve Government effectiveness and efficiency will allow Departments
and agencies to serve the American people better and with fewer resources. In each area of the PMA,
the Administration has established markers of success and goals for future progress.
The Strategic Management of Human Capital Initiative of the PMA helps agencies ensure they
have high-performing employees with the right skills at the right time. Through this initiative,
agencies are identifying the critical skills their employees need to fulfill the agency’s mission. The
agencies then work to close any gaps through directed hiring and training. This effort is driving
agencies to improve performance appraisal systems to distinguish accurately among different levels
of performance. These updated appraisal systems also make clear how each employee’s contributions
affect the agency’s overall effectiveness. Managers are responsible for making performance expecta-
tions clear to each employee.
While the Human Capital Initiative is helping agencies establish strong management practices,
the Federal Government needs additional tools if it is to make the greatest use of its personnel. The
Departments of Homeland Security (DHS) and Defense (DOD) are currently developing and imple-
menting modern systems that provide flexibility to compensate personnel appropriately given the
nature of their contributions and performance, as well as quickly hire personnel with needed skills.
These flexibilities are critical for DHS and DOD because these agencies must anticipate and respond
quickly to the Nation’s changing needs. It is also important that these flexibilities be granted to all
agencies so that they can make the greatest use of their personnel to achieve their own important
missions. The Administration will be working this year to extend similar personnel reforms to other
Federal agencies.
To help taxpayers get their money’s worth, the Administration should reward employee
performance based on contributions to the accomplishment of agency missions and goals. The
improvements in the performance appraisal systems—better distinguishing among different levels
of performance, tying individual performance to organizational goals, and training managers to
make clear to employees their expectations and give constructive feedback—are establishing the
foundation for performance-based pay. The Administration is currently implementing a system in
which pay is more closely linked to performance for members of the Senior Executive Service, the
top executive cadre of the Federal Government. Tying pay to performance instead of longevity will
yield improved results.
Competitive Sourcing
Competitive sourcing through public-private competition is helping agencies become more results-
oriented and effective. Through competition with private providers, Federal employees who perform
commercial activities are given the opportunity to develop plans for restructuring their organizations
to optimize efficiency and eliminate waste. And private contractors have the chance to offer new and
innovative solutions to meet the pressing needs of the Federal Government. These efforts have ac-
celerated the implementation of long-overdue reengineering efforts and cost-savings measures, and
have produced impressive results.
Competitions completed in 2003 and 2004 will save taxpayers more than $2.5 billion over the next
five years. Most of the cost savings associated with competitive sourcing comes without the need for
large scale reductions in Federal employment.
DOD projects cost savings of more than $6 billion as a result of competitions completed between
2001 and 2006. These reductions are enabling the Department to focus its resources on core activi-
ties.
52 MAKING GOVERNMENT MORE EFFECTIVE
Competition at the Internal Revenue Service (IRS) has triggered transformational changes at
centers that process tax returns and those that inventory and warehouse forms and publications.
In-house personnel will continue to provide these services, but under restructured organizations
that are expected to save IRS more than $185 million over a five-year period.
These results confirm that competitive sourcing is a critical tool that can help agencies improve
performance while reducing costs by 10 to 40 percent. The Administration will continue to work with
the Congress to remove legislative restrictions on competitive sourcing so that all Federal agencies
have full use of this important management tool.
This past November, a record 22 Federal agencies prepared their Performance and Accountabil-
ity Reports within 45 days of the end of the fiscal year. When the Administration first set this new
goal, agencies typically took five months to prepare these financial reports. Of the 24 major Federal
agencies, 18 received unqualified audit opinions this past fiscal year. These important achievements
demonstrate that agencies were able to maintain the high levels of financial management of previ-
ous years while accelerating their financial reporting dramatically. These achievements were pos-
sible because of the year-round financial management disciplines that agencies established. They
implemented systematic and automated improvements to reconciliation and analysis processes, as
well as improved coordination and communication with the agencies’ Inspectors General, external
auditors, and operating partners. Demonstrating fiscal accountability and achieving unqualified fi-
nancial statements are good first steps. Ultimately, agency leadership must use this more accurate,
precise, and timely financial information in their day-to-day management.
Some agencies are now regularly using more timely financial information for decision-making
and working to expand their use of this information to make their organizations more effective.
For example, the Social Security Administration (SSA) uses detailed performance and cost data to
monitor workloads throughout its nationwide organization of field offices, hearing offices, and State
Disability Determination offices. Real-time access to work and workload information has enabled
SSA to achieve productivity gains of more than five percent in 2002, and more than two percent in
2003 and 2004.
Electronic Government
The E-Government initiative focuses on ensuring that the Federal Government’s $60 billion annual
investment in information technology (IT) is well spent. Agencies are working to ensure that all ma-
jor IT investments are justified with strong business cases that detail cost, schedule, and performance
goals, and explain how each investment fits into a larger IT investment strategy. Agencies are work-
ing to ensure that all projects are completed within 10 percent of cost, schedule, and performance
goals.
Federal agencies are also working to ensure that all IT systems are properly secured and data is
appropriately protected. Currently, 77 percent of Government systems have been certified as secure,
up from 26 percent three years ago.
The E-Government initiative emphasizes the customer—the general public. In 2001, the Admin-
istration proposed 24 solutions for providing E-Government services to the public. Federal agencies
work together to implement E-Government projects to improve and streamline services for citizens,
businesses, and Federal workers and reduce redundancy of investments. For instance, Federal job ap-
plicants can now access a central on-line source for all Federal job postings through www.usajobs.gov.
Citizens no longer need to submit multiple 20-page applications, but can instead submit a single three
to five page resume to apply for Federal jobs. Agencies are also working to place their rulemaking
THE BUDGET FOR FISCAL YEAR 2006 53
docket contents online, at www.regulations.gov, to facilitate effective public review and comment on
proposed rules.
Interagency cooperation is also a vehicle for increasing the efficiency of the Government’s
management practices. The consolidation of 26 Federal payroll systems into two—an initiative
this Administration launched in 2001—is expected to save $1.1 billion over 10 years. Building on
this experience, agencies are pursuing consolidation opportunities in other areas, such as financial
management, grants management, and human resources management. Federal agencies will
compete with one another and with private providers to be designated shared service providers
that will provide specific administrative services on a Government-wide basis, reducing the need
for individual agencies to invest in these administrative systems individually. The Administration
will continue to work with the Congress to remove legislative restrictions on E-Government so all
Federal agencies can fully implement this important management tool.
The overall goal of the Budget and Performance Integration Initiative is to have all programs
achieve their expected results and continue to improve performance, which is central to effective
Government.
The Administration is systematically assessing every program using the Program Assessment Rat-
ing Tool (PART). The PART requires us to ask whether a program has a clear definition of success,
uses strong management practices, and produces results. The PART drives improvements in the
quality of performance information and makes agencies accountable for the performance of their
programs.
A key principle of the PMA is that performance should significantly influence policy-making. The
PART provides valuable performance information that informs decisions about how to invest limited
budgetary resources. All programs receive close scrutiny. Low priority and low performing programs
are generally proposed for reduction or elimination, and the funding is redirected to higher per-
forming alternatives. Programs that are high priorities, but that need improvement are subjected
to reforms that will produce better results. For instance, as a result of PART analyses, the Budget
proposes to consolidate the Community Development Block Grant and the Economic Development
Assistance programs into a more targeted, unified program that sets accountability standards in ex-
change for flexible use of the funds to support communities’ economic development and community
revitalization efforts.
The PART is also being used to drive performance improvements so that taxpayers get more for
their money. Each assessment requires follow-up steps designed to ensure the agency improves its
programs. For instance, in response to an assessment completed two years ago, the Citizenship and
Immigration Services (USCIS) in DHS has begun implementing significant IT and process improve-
ments. Since May 2003, more than 182,000 immigration benefit applications have been filed online,
reducing processing time and errors. One USCIS field office is piloting a green card replacement
project. USCIS is accepting e-filed applications at this office and to date the pilot program has re-
duced the average renewal processing time from over eight months to approximately 10 business
days. E-filed applications have risen from an average of 650 per month prior to implementation of
the pilot program to about 1,650 per month.
The Budget and Performance Integration Initiative is changing the usual debates about budget
policy. Instead of asking agencies only “how much” they need, agencies are being asked “how well”
they are performing with the dollars they receive. To reinforce this shift in approach, the agencies
are preparing performance budgets that display clearly the level of performance expected with the
requested funding level.
54 MAKING GOVERNMENT MORE EFFECTIVE
The Administration has assessed 60 percent of Federal programs, and has plans to assess the
remaining 40 percent over the next two years. Because the potential for savings and productivity
are great, the Administration is proposing two mechanisms for realizing these opportunities in a
systematic and expedited fashion.
First, the Administration is proposing the establishment of a Sunset Commission to provide reg-
ular scrutiny of Federal programs. This bipartisan commission would review each Federal program
on a schedule established by the Congress to determine whether it is producing results and should
continue to exist. Programs would automatically terminate according to the schedule unless the Con-
gress took action to continue them.
The PMA also includes several program initiatives to improve the management of Federal agencies
in targeted areas. Some of these initiatives have begun to generate significant savings and efficiency.
Two are highlighted below.
Federal agencies make more than $2 trillion in payments to individuals and a variety of other en-
tities each year. An improper payment occurs when the funds go to the wrong recipient, the recipient
receives the incorrect amount of funds, or the recipient uses the funds in an improper manner. By
strengthening financial management controls so that Federal agencies can better detect and prevent
improper payments, the Federal Government can better ensure the taxpayer dollar is put to the use
the Congress intended.
In 2004, Federal agencies identified 60 percent of Federal outlays ($1.4 trillion) as at risk for sig-
nificant improper payments. In response, agencies now annually measure the extent of improper
payments in these outlay categories. They have established aggressive targets to reduce improper
payments and are implementing plans to meet those targets. The Eliminating Improper Payments
Initiative is holding agencies accountable for effectively carrying out these activities by regularly
reporting on improper payment rates.
Agencies that correctly gauge improper payments estimate a total of $45.1 billion in improper
payments in 2004. Approximately 92 percent of the improper payments in these programs were
overpayments—a number that reveals the full potential for reducing costs and saving taxpayer
dollars. Setting aside expected growth in outlays for these programs, agencies expect the 2004
improper payments total to decrease by approximately $5.1 billion in 2005, $8.3 billion in 2006, and
$12.8 billion in 2007.
The PMA is also helping agencies ensure that they efficiently manage the hundreds of billions
of dollars in real property that the Federal Government owns. The Federal Real Property Council
has developed standards for how Federal agencies should initiate improvements to property
management. Among the standards is: using timely and accurate inventory data and performance
measures in evaluating property acquisition, maintenance, and disposal decisions. To facilitate
these efforts, the Budget proposes to expand disposal authorities for the Department of Agriculture,
General Services Administration, and the National Aeronautics and Space Administration—three
of the largest property-holding agencies. The proposed authorities streamline the disposal process,
allowing these agencies to take a more timely and cost-effective approach to right-sizing their
property inventories.
The Scorecard
To ensure that Federal agencies are accountable for improving their management, the Adminis-
tration established a scorecard that rates agency efforts green, yellow, or red. Each PMA initiative
has specific long-term goals intended to establish management practices and disciplines that foster a
more effective and results-oriented Government. These goals are known as the Standards for Success
and can be found at www.whitehouse.gov/results/agenda/standards.pdf. Green status represents
full achievement of all of the goals for a particular initiative; yellow represents an intermediate level
of achievement; and red indicates that agency has at least one deficiency. Agencies have action plans
to achieve the goals of the PMA, and each quarter receive progress ratings of their adherence to their
implementation plans and the quality of their work. While the Federal Government has had man-
agement improvement goals in the past, the scorecard and detailed action plans give unprecedented
emphasis to holding the Government accountable for achieving its goals.
The agency chapters provide an update on each agency’s implementation of the PMA.
A scorecard reflecting status and progress scores as of December 31, 2004 follows. Each quarter
an updated scorecard is available at www.whitehouse.gov/results/agenda/scorecard.html.
56 MAKING GOVERNMENT MORE EFFECTIVE
Commerce
Defense
Education
Energy
EPA
HHS
DHS
HUD
Interior
Justice
Labor
State
DOT
Treasury
VA
AID
Corps
GSA
NASA
NSF
OMB
OPM
SBA
Smithsonian
SSA
Education .......................................................................
HHS .................................................................................
HUD .................................................................................
Justice .............................................................................
Labor ...............................................................................
AID ...................................................................................
Defense ..........................................................................
Energy ............................................................................
HHS .................................................................................
DHS .................................................................................
Interior.............................................................................
Justice .............................................................................
Labor ...............................................................................
State ................................................................................
DOT .................................................................................
VA .....................................................................................
Corps ..............................................................................
GSA .................................................................................
NASA ..............................................................................
58 MAKING GOVERNMENT MORE EFFECTIVE
Defense ..........................................................................
Education .......................................................................
HHS .................................................................................
HUD .................................................................................
DHS .................................................................................
Labor ...............................................................................
DOT .................................................................................
Treasury .........................................................................
VA .....................................................................................
EPA ..................................................................................
NSF ..................................................................................
OPM ................................................................................
SBA..................................................................................
SSA..................................................................................
AT A GLANCE:
2006 Discretionary Budget Authority: $19.4 billion
(Decrease from 2005: 10 percent)
Major Programs:
• Agriculture Commodities Support
• Conservation
• Food and Nutrition Service
• Forest Service
• Food Safety, Animal and Plant Health, and Marketing Programs
• Rural Development
• Ensuring an economically sound future for American agriculture by providing a financial safety
net for farmers and promoting free and fair trade, while promoting more efficient production
decisions and reducing agricultural subsidies.
• Supporting rural telecommunications with broadband loans.
Protecting America
• Protecting the food supply by ensuring enforcement of food safety and security standards at
meat, poultry, and egg products plants and protecting agriculture from pest infestations and
disease.
• Maintaining the commitment to protect the agriculture and food system against intentional or
unintentional contamination.
• Providing important nutrition programs, including the Food Stamp, School Lunch, School Break-
fast, and Child and Adult Care Food programs, and the Special Supplemental Nutrition Program
for Women, Infants, and Children.
• Helping tenants displaced from traditional rural multifamily housing units.
59
60 DEPARTMENT OF AGRICULTURE
• Improving the Crop Insurance program by proposing reforms to reduce the need for ad hoc
disaster assistance.
• Improving accountability through significant reform of the Forest Service including significantly
reducing its indirect costs, and addressing maintenance needs for our national forests by selling
unneeded facilities and establishing a working capital fund for facilities.
• Eliminating or phasing out conservation programs, such as the Resources Conservation and
Development Program and Watershed and Flood Prevention Operations Program, that do not
effectively target Federal resources on need or performance in order to refocus funding to high-
priority conservation programs.
• Initiating the process to close the public/private Rural Telephone Bank because of insufficient
demand for its privatization and because the Government is able to provide the Federal financial
assistance through other programs in a more cost-effective manner.
Agency-specific Goals
• Ensuring that eligible, low-income individuals have access to food stamps and improving
program accountability.
• Managing National Forests and Grasslands and assisting private landowners in managing lands
in a productive, sustainable way.
• Redirecting funding from lower priority conservation programs in order to fund national-level
resource priorities, such as helping animal feeding operations comply with environmental
regulations and helping ranchers fight and control invasive species.
THE BUDGET FOR FISCAL YEAR 2006 61
U.S. export revenues have accounted for 20 to 30 percent of U.S. farm income over the past 30 years
and also generate significant off-farm income. Trade also provides U.S. consumers access to a wider
variety of foods, and provides fresh produce at reasonable prices in the winter months. The Adminis-
tration is determined to work toward the elimination of trade barriers and trade distortions through
the World Trade Organization, as well as a number of regional and bilateral trade agreements, such
as the Central American Free Trade Agreement and the recently passed free trade agreements with
Australia and Singapore. As a result of U.S. negotiations with China on soybean and cotton trade,
U.S. exports of soybeans to China reached an all-time high in 2003 of $2.9 billion, and cotton exports
were $733 million, up 431 percent over 2002.
Following the discovery of a cow that tested positive for Bovine Spongiform Encephalopathy (BSE)
in Washington State in December 2003, many beef-importing nations refused to import U.S. beef.
The Administration has been working tirelessly to re-open markets to U.S. beef. Most significantly,
the Administration is working with the government of Japan to pave the way for a resumption of beef
trade. Exports are very important to our cattle and beef industry, accounting for 10 percent of total
production. Sales to Japan alone exceeded $1.7 billion in 2003, prior to trade being halted due to the
discovery of the BSE-positive cow in the United States.
Rural America is home to one-fifth of the Nation’s population. The needs of this population are
as diverse as those of the populations in large towns and cities. Communities in rural America rely
upon many of the same things as urban areas, including good paying jobs, access to critical services
like education, healthcare, and technology, and strong and safe communities. One specific utility that
many growing businesses are relying on for further growth is broadband, which allows high-speed
data transmission.
PROTECTING AMERICA
Because the agriculture and food systems are vulnerable to disease, pest, or poisonous agents that
occur naturally or are introduced externally, USDA works to detect potential plant and animal dis-
eases and pests, and carries out the inspection of meat, poultry, and egg products before they are sold
to consumers. The 2005 Budget requested funds to increase USDA’s ability to detect and respond
to potential contaminations of the agriculture and food system. The 2006 Budget maintains this
commitment by including approximately $376 million for food and agriculture defense activities, a
$78 million increase over the amount enacted by the Congress for 2005. Excluding funding for the
state-of-the-art animal research and diagnostic facility at Ames, Iowa, for which the Administration
requests full funding, the Budget proposes increases of $140 million above the 2005 enacted level.
From nutrition assistance to housing assistance to international food and education assistance,
USDA works to improve the lives of people across the Nation and throughout the world. USDA is
also bringing expertise to school feeding programs in 25 countries throughout the world. The McGov-
ern Dole International Food for Education and Child Nutrition program was permanently authorized
in the 2002 Farm Bill with the objective of using U.S. commodities and financial assistance to jump-
start school feeding programs in poor countries. Results from the program show improvement in
student enrollment, attendance, and performance. In 2005, over 2.2 million women and children will
receive meals under this program. The 2006 Budget expands the program to reach over 2.5 million
recipients.
The Special Supplemental Nutrition Program for Women, Infants, and Children, more commonly
known as the WIC program, serves the nutritional needs of low-income pregnant and post-partum
women, infants, and children up to their fifth birthday. The Budget provides $5.5 billion for WIC
services, full funding for all those estimated to be eligible and seeking services. On July 30, 2004,
President Bush signed the Child Nutrition and WIC Reauthorization Act of 2004. This law makes
many important improvements to the National School Lunch Program that affect the 29 million
children participating in the program on an average school day. The Administration is implement-
ing these changes to increase access to nutrition for vulnerable children, help States and schools
fight childhood obesity, improve the integrity of the school meals programs, and strengthen WIC cost
containment efforts.
Multifamily Housing
USDA is striving to improve its program delivery so that it can provide better, more efficient ser-
vices. Through Program Assessment Rating Tool (PART) analyses, audits, and other management
reviews, USDA has determined that there are many program and management gains that can be
made. What follows are several examples that are designed to show the breadth of changes USDA
is undertaking.
Crop Insurance
While the cost to assist just these farmers Farm Revenue as Crop Loss Increases
might not be large, the Congress does not want Thousands of dollars
farmers who bought adequate crop insurance 120
Disaster Payments Crop Insurance
to be put at a disadvantage or to discourage Sales Revenue
100
their purchasing insurance. Consequently,
disaster payments are structured to ignore 80
crop insurance payments in determining el-
igibility for assistance. As a result, the income 60
of farmers with crop insurance increases
40
with the size of crop loss, once the 35 percent
threshold for receiving disaster payments is 20
met. Ultimately, taxpayers pay the bill for
this system. The chart shows how a farmer’s 0
revenue varies as crop loss increases, when 0 20 40 60 80 100
the farmer is receiving disaster payments on Source: USDA. Percentage Crop Loss
In continuing the Administration’s efforts to more effectively budget and administer disaster in-
surance programs, the 2006 Budget includes a proposal to require a higher minimum coverage level
and compel farmers to purchase insurance by tying the receipt of Federal commodity payments to
the purchase of crop insurance. This change will ensure that the farmer’s revenue loss would not
be greater than 50 percent. Other changes include modifications to the fee for catastrophic coverage
to make the program more equitable in its treatment of both large and small farms, restructuring
premium rates to better reflect historical losses, and reductions in delivery costs. The combination of
changes being proposed is expected to save the Federal Government approximately $140 million per
year. In total, this change should ensure that farmers of major commodity crops have crop insurance
with a minimum coverage level that is sufficient to sustain most farmers in times of loss.
Research
USDA provides more than $2 billion in funding for research, including over 1,000 ongoing projects
by USDA scientists at over 100 locations, and more than $1 billion through grants and other support
to individuals, as well as to institutions such as land grant universities and State agricultural exten-
sion agencies. It is important that these funds be used as effectively as possible. For that reason, the
Administration supports research funding that is provided on a competitive, peer-reviewed basis,
to ensure that the Government funds only the highest quality research targeted primarily toward
national concerns.
The Budget proposes to expand the use of competitive research grants by increasing the National
Research Initiative by $70 million, to $250 million, and establishing a new $75 million program to
provide research grants targeted to regional, State, and local priorities. Funding for these programs
THE BUDGET FOR FISCAL YEAR 2006 67
would come from reductions in formula-based research programs, which are generally allocated to
institutions on a non-competitive basis rather than allocating based on performance.
Currently, the Resource Conservation and Development (RC&D) Program provides assistance to
local communities to develop strategic plans that address their locally identified natural resource
and economic development concerns. The program’s long-term goal is to improve the capability of
local communities to plan and deliver improvement projects.
A PART assessment of the program, however, found that it is duplicative of other USDA and Fed-
eral resource conservation and rural development programs. Also, the RC&D Program does not pri-
oritize and target funding based on need or performance. Accordingly, the 2006 Budget proposes a
new policy for the RC&D Program that phases out Federal support for the local planning areas after
20 years of support. At that point, these local communities should have the experience and capacity
to identify, plan, and address their priorities. This policy would cancel Federal support for 189 RC&D
areas in the 2006 Budget.
In addition, the Budget proposes to eliminate funding for watershed and flood prevention opera-
tions. The resulting savings would be redirected to other high-priority conservation activities within
the Natural Resources Conservation Service budget, most notably to accelerate technical assistance
to help agricultural producers meet regulatory challenges, particularly in the areas of managing live-
stock and poultry waste.
The Rural Telephone Bank (RTB) was designed to provide a commercial source of financing once
it was privatized after 1985. Though RTB has been moving towards privatization for 20 years, the
Bank is still controlled by the Federal Government. When RTB was created in 1972, there were
limited options for rural telecommunications providers to obtain financing outside the Government.
However, a recent analysis estimated that 50 percent of the rural telecommunications capital needs
each year are provided from internal funding, 10 percent from the Rural Utilities Service, seven
percent from RTB, and the remainder (33 percent) from other sources, including the Rural Telephone
Finance Cooperative (private) and the Government-run Universal Service Fund. In addition, funding
for RTB has significantly exceeded demand for financing of rural telecommunications investments.
Currently, there is over $1.3 billion in undisbursed loans.
The Administration proposes to establish the process and terms to implement a dissolution of the
Bank. Dissolution will allow RTB to close as the demand for private lenders has been fulfilled through
other sources. In addition, the stock holders will obtain a cash payout for their stock while removing
this cumbersome program from the Government. This proposal avoids the privatization of a bank
that will either fail or need continued Government support to remain in operation.
68 DEPARTMENT OF AGRICULTURE
The table below provides an update on USDA’s implementation of the President’s Management
Agenda as of December 31, 2004.
Budget and
Competitive Financial
Human Capital E-Government Performance
Sourcing Performance
Integration
Status
Progress
Over the past year USDA updated and refocused its Strategic Human Capital Plan. Under the Plan, USDA
implemented a new Performance Management System for 60 percent of its employees that ties individual
performance to accomplishment of USDA’s strategic goals and effectively differentiates among performers.
USDA has strengthened its workforce planning which will help avoid significant gaps in mission critical
occupations through aggressive recruiting for new employees and development of current employees. In
addition, the newly launched online learning system expands training opportunities for employees and provides
better human resource tools for managers. While USDA initially had difficulty with competitive sourcing, in 2004
USDA completed several studies estimated to yield $174 million in savings. USDA made significant progress
on financial management. This past year, USDA submitted its third clean audit opinion on November 15, two
months earlier than last year, and resolved six material weaknesses. USDA completed security certifications on
98 percent of its information technology systems up from zero last year. USDA continues to make progress in the
Budget and Performance Integration initiative by developing meaningful performance measures and reducing
the number of programs that are rated as Results Not Demonstrated.
Since 2004, USDA has raised its status for the Faith-based and Community Initiative from Red to Yellow. USDA
published Department-wide regulations affirming the ability, rights, and responsibilities of faith-based and
community-based organizations to participate in USDA programs, initiated pilot projects and related evaluations
to encourage greater involvement by such organizations, and enhanced outreach and technical assistance
capabilities. As part of the Real Property Asset Management Initiative, USDA is improving its management of its
vast resources (total asset value of $8 billion, consisting of 22,000 buildings and facilities and 3,600 leases)
by completing a draft framework asset management plan; development of an automated inventory database
system; and establishment of a department-wide council to oversee implementation of asset management
performance measures. USDA currently has nine programs, representing 68 percent of total outlays, that are
at risk of or susceptible to improper payments. Efforts include developing measurement plans and beginning
statistical sampling. (Because this is the first quarter that agency efforts in the Eliminating Improper Payments
Initiative were rated, progress scores were not given.)
THE BUDGET FOR FISCAL YEAR 2006 69
AGENCY-SPECIFIC GOALS
Food stamps alleviate hunger and malnutrition among low-income individuals. In 2006, the Food
Stamp Program will provide approximately $33.1 billion in benefits to 29.1 million people. The Bud-
get proposes to tighten overly broad waivers from the program’s eligibility criteria. Households which
receive Supplemental Security Income or Temporary Assistance for Needy Families cash assistance
would continue to be automatically eligible for food stamps, while all other individuals would apply
under regular program rules. Additionally, the Administration proposes to work with the Congress to
rename the Food Stamp Program to better represent the Program’s mission of providing nutritional
support to low-income families.
The Administration is committed to improving integrity in the Food Stamp program with the goal
of reducing the national average error rate from 6.64 percent for 2003, to 6.20 percent for 2006. This
improvement is projected to eliminate $146 million in over- and under-paid food stamp benefits in
2006. The Budget provides a new tool for program integrity by allowing States to use the National
Directory of New Hires to verify employment and wage information on food stamp applications and
reports.
Healthy Forests Initiative. The President’s Healthy Forests Initiative is reducing the risk of cata-
strophic wildfires by restoring forest and rangeland health. The Budget funds activities that advance
the goals of the Healthy Forests Initiative that will thin overcrowded forests, protect forests from
unnatural insect and disease infestation, and improve wildlife habitat and air and water quality.
The Budget provides $281 million for USDA’s Forest Service and $211 million for the Department
of the Interior for high-priority brush removal and other projects that provide the greatest reduc-
tion of risk posed by catastrophic wildfires. The Budget also includes $167 million to monitor the
environmental effects of these and other projects on our national forests. By supporting watershed
enhancements, vegetation management, and forest health research, the Budget improves forest and
rangeland health to protect communities, wildlife habitats, and municipal watersheds from cata-
strophic fires.
Focusing Conservation Dollars on High Priorities. To help meet scientific, regulatory, and finan-
cial challenges, the Department’s primary conservation agency, the Natural Resources Conservation
Service (NRCS), provides assistance to agricultural producers. The 2006 Budget targets funding
to national-level conservation priorities and provides new resources to enhance NRCS’s cooperative
efforts as envisioned in the President’s August 2004 Executive Order. Cooperative conservation en-
sures that Federal agencies collaborate with their State, local, tribal, and non-governmental partners
to enhance natural resources and protect the environment.
Specifically, the Budget includes an increase of $37 million to provide more conservation technical
assistance to livestock producers to comply with environmental regulations. With this additional
funding, NRCS will work with farmers to develop 3,800 comprehensive nutrient management plans
and apply nutrient management on over 470,000 acres of agricultural land.
70 DEPARTMENT OF AGRICULTURE
AGENCY-SPECIFIC GOALS—Continued
Department of Agriculture
(In millions of dollars)
2004 Estimate
Actual 2005 2006
Spending
Discretionary Budget Authority:
Commodities and International........................................................................ 3,060 2,858 2,837
Rural Development .............................................................................................. 2,449 2,407 2,454
Forest Service ........................................................................................................ 4,723 4,278 4,063
Conservation .......................................................................................................... 1,177 982 814
Food and Nutrition Service ............................................................................... 4,930 5,578 5,858
Research ................................................................................................................. 2,478 2,667 2,320
Marketing and Regulatory Programs ............................................................ 1,820 1,752 1,849
Central Administration ........................................................................................ 525 551 627
Subtotal, excluding items below ...................................................................... 21,162 21,073 20,822
Receipts ................................................................................................................... 49 55 62
Additional Wildland Fire Suppression ........................................................... — 394 —
Mandatory savings proposals .......................................................................... — — 1,394
Total, Discretionary budget authority ................................................................. 21,113 21,412 19,366
Department of Agriculture—Continued
(In millions of dollars)
2004 Estimate
Actual 2005 2006
Mandatory Outlays:
Food and Nutrition Service ............................................................................... 39,814 46,364 50,064
Commodity Credit Corporation ........................................................................ 10,668 24,074 19,288
Crop Insurance ...................................................................................................... 3,198 3,297 3,640
Natural Resources Conservation Service ................................................... 1,396 1,754 1,949
Agriculture Marketing Service .......................................................................... 1,013 1,285 985
Forest Service ........................................................................................................ 664 848 947
Loan liquidating accounts and reestimates ................................................. 5,049 3,620 3,131
Receipts and all other programs ..................................................................... 2,012 916 387
Total, Mandatory outlays ........................................................................................ 49,692 73,086 73,355
Credit activity
Direct Loan Disbursements:
Farm Loans ............................................................................................................. 899 962 937
Commodity Credit Corporation ........................................................................ 9,150 11,944 10,106
Rural Utilities Service .......................................................................................... 3,787 4,579 4,542
Rural Housing ........................................................................................................ 1,393 1,369 1,029
Rural Community and Economic Development ......................................... 274 431 496
P.L. 480 ..................................................................................................................... 411 100 42
All other programs ................................................................................................ 62 73 79
Total, Direct loan disbursements ......................................................................... 15,976 19,458 17,231
AT A GLANCE:
2006 Discretionary Budget Authority: $9.4 billion
(Increase from 2005: 49 percent)
Major Programs:
• Economic Development
• International Trade
• Patent and Trademark Office
• Scientific and Technological Standards
• Census Bureau
• Oceanic and Atmospheric Science and Management
Protecting America
• Efficiently protecting U.S. national security through programs that control the export of sensi-
tive goods by ensuring up-to-date export control lists and timely processing of export licenses.
• Improving fishery management and the accuracy of weather, climate, and ocean-conditions
forecasts through targeted investments and improved program design.
73
74 DEPARTMENT OF COMMERCE
The President’s 2006 Budget creates a new economic development program within the Department
of Commerce, the Strengthening America’s Communities Grant Program. The President’s proposal
replaces the current duplicative set of Federal community and economic development programs with
a more consolidated approach that focuses resources on the creation of jobs and opportunities, en-
courages private sector investment, and includes rigorous accountability measures and incentives.
The Strengthening America’s Communities Grant Program is a targeted, results-oriented approach
that will encourage innovation and economic opportunity. By streamlining the delivery of Federal
economic development programs, taxpayers will see administrative savings. The President’s Budget
includes $3.7 billion for this program to provide economically distressed communities with a source
of funding for planning, infrastructure development, and business financing to achieve long-term
economic stability and growth (see table below).
Our changing economy presents challenges for certain communities where traditional industries,
such as manufacturing, do not employ as many workers as they did a generation ago. The President
has proposed a new Opportunity Zone Initiative that will help these local economies adapt and diver-
sify by targeting Federal resources and encouraging new and existing businesses to invest in these
areas. The Commerce Department will have the lead role in managing this initiative. These efforts,
combined with the President’s tax relief packages and initiatives to increase homeownership and re-
duce regulatory burdens, will help more communities participate in our growing national prosperity.
The Minority Business Development Agency (MBDA) also strives to improve economic opportunity.
In 2004, MBDA programs provided assistance and improved access to financial and procurement
opportunities to over 25,000 clients nationwide. In the spring of 2004, the President, by Executive
Order, renewed the Advisory Commission on Asian Americans and Pacific Islanders. The 2006 Bud-
get supports increases for the Commission’s efforts to improve economic opportunities.
Enhancing the growth of export businesses and reducing barriers to trade help strengthen the
economy. The Budget provides a program level of $409 million for the International Trade Admin-
istration (ITA) for trade promotion and compliance activities. This level of funding will expand the
U.S. exporter base by increasing the number of U.S. exporters entering new markets and the number
of U.S. firms exporting for the first time, and by supporting efforts to ensure compliance with trade
agreements.
China is our third largest trading partner. Currently, there are almost 13,000 U.S. small- and
medium-sized enterprises that export to China. Nevertheless, trade with China continues to present
a number of challenges for U.S. companies. ITA, together with other Federal agencies, has worked
to help U.S. companies overcome these barriers. Recently, ITA has increased staff working on mar-
ket access problems in China, created a China Business Information Center to better advise small
and medium-sized companies on doing business with China, increased its staff at our Embassy and
Consulates in China, and created a China office in the Import Administration to better focus re-
sources on China anti-dumping cases. To help ensure that China honors its World Trade Organiza-
tion commitments, the United States continues to engage China on specific trade issues in a number
of forums, including the Joint Commission on Commerce and Trade (JCCT). The first meeting of the
ministerial-level JCCT, held in mid-2004, achieved progress on several important issues, including
technical standards and distribution services, and strengthened commitments to improve intellec-
tual property right protections.
The 2006 Budget includes increases for Commerce programs that support and enhance innovation
and technological advancement—creating the conditions for economic growth.
The Patent and Trademark Office (PTO) issues patents, registers trademarks and works to protect
U.S. intellectual property rights holders through international treaties and enforcement training pro-
grams. The 2006 Budget requests a program level of $1.7 billion for PTO, a 10-percent increase from
2005. This program level provides PTO full access to its fee collections in 2006. PTO developed an
aggressive strategic plan and proposed legislative changes to restructure patent and trademark fees
to modernize and improve its operation. This included initiatives to improve the quality and the pro-
cessing times of patents and trademarks, and initiatives to improve electronic filing and processing
of applications. The Congress enacted many aspects of the modernization bill in the 2005 Consoli-
dated Appropriations Act. The increase in the 2006 Budget should enable PTO to continue to make
progress in achieving its performance goals, increasing the percentage of patents and trademarks
processed electronically to 100 percent by 2006, and achieving complete review of patent applica-
tions in an average of 31 months and trademark applications in an average of 15 months by 2010.
76 DEPARTMENT OF COMMERCE
The National Institute of Standards and Technology (NIST) develops technical standards neces-
sary to support existing industries and to enable development of emerging technologies. The Budget
provides $485 million, a 7.5-percent increase over 2005, for measurement and standards research re-
lated to nanotechnology, biosciences, manufacturing, computing and networking systems, and public
safety, and for the renovation and repair of NIST labs. With these resources, NIST will be able to ad-
dress a broad array of national scientific and technical infrastructure needs by building intramural
capacity and leveraging complementary external research efforts through collaboration and partner-
ships.
Telecommunications and information-related industries are an increasingly important and grow-
ing part of the economy. The National Telecommunications and Information Administration (NTIA)
works to bring the benefits of advanced telecommunications technologies to millions of Americans
and promotes the efficient use of the Federal radio spectrum. In response to a Presidential directive,
NTIA has taken a lead role in the Government-wide effort to implement the Spectrum Policy for the
21st Century. The 2006 Budget supports this initiative to improve domestic and international spec-
trum management.
PROTECTING AMERICA
The Bureau of Industry and Security (BIS) helps protect against the export of goods and technolo-
gies sensitive to U.S. national security and economic interests. Export controls on sensitive dual-use
commodities are necessary to stem the proliferation of weapons of mass destruction, to halt the spread
of weapons to terrorists or countries of concern, and to further important U.S. foreign policy objec-
tives. BIS also assists other countries in developing and strengthening their national export control
systems. The Budget requests an additional $10 million for initiatives to improve BIS’ ability to
maintain an up-to-date export control list and enhance enforcement activities to ensure sensitive
goods and technologies do not fall into the wrong hands.
78 DEPARTMENT OF COMMERCE
Through targeted investments and improved program design, the 2006 Budget will provide
resources to enhance effective management of ocean and coastal resources, and observation
and prediction of changes in the earth’s environment by the National Oceanic and Atmospheric
Administration (NOAA). The release of the final report from the U.S. Commission on Ocean Policy
last fall highlighted the importance of sound management of ocean resources. In addition, the recent
hurricanes in the southeastern United States and tsunami in the Indian Ocean demonstrated the
value of accurate prediction and warning networks for atmospheric and oceanic systems.
The U.S. Commission on Ocean Policy, a council mandated to conduct a comprehensive review of
national ocean policy, released its final report in 2004, which called for changes to increase the effec-
tiveness of oceans programs. The Budget provides support for the U.S. Ocean Action Plan that was
developed in response to the Commission’s report. New investments and program improvements
within NOAA are aimed at strengthening our knowledge and management of ocean resources. For
example, funding for effective fisheries management, including a new fishery research vessel, will
enable NOAA to better assess the status of fish stocks and increase the number of stocks that are
harvested at sustainable levels. Funds are also provided to assist in adoption of individual fish-
ing quota (IFQ) systems, consistent with the Administration’s important proposed reforms to the
Magnuson-Stevens Fishery Conservation and Management Act. IFQ systems offer a market-based
approach that moves fisheries management away from more cumbersome and inefficient regulatory
policies.
Winter Flounder, Georges Bank Stock Atlantic Cod, Georges Bank Stock
Biomass in thousands of metric tons Biomass in thousands of metric tons
12 250
Rebuilt Level
Rebuilt Level
10
200
8
150
6 Overfished Level
Overfished Level
100
4
50
2
0 0
1990 1992 1994 1996 1998 2000 2002 2004 1990 1992 1994 1996 1998 2000 2002 2004
Source: NOAA. Source: NOAA.
Populations of New England groundfish species, including Georges Bank Winter Flounder and Atlantic Cod,
reached record lows in the 1990s due to overfishing. Management measures aimed at rebuilding these
stocks were introduced by NOAA and the New England Fishery Management Council in 1994. Some stocks,
such as Winter Flounder, have responded quickly. However, for other species, such as Atlantic Cod, man-
agement challenges remain.
THE BUDGET FOR FISCAL YEAR 2006 79
Management of marine resources will also be enhanced through funding to implement local ac-
tion plans to protect coral reefs based on strategies developed with State and local governments and
stakeholders.
The Budget also supports progress towards the goals of the U.S. Integrated Earth Observation
System, which will provide improved coordination, capability and data management for weather
prediction, natural disaster management, climate research, and ocean resources management. The
devastating impact of the recent tsunami in South Asia demonstrates the potential value of this
effort.
Consistent with the Administration’s emphasis on shifting resources to reflect changing needs, the
2006 Budget proposes to terminate the Advanced Technology Program. This proposal is consistent
with the 2005 Consolidated Appropriations Act which did not provide funding for new awards. The
Administration believes that other NIST programs are more effective and important in supporting
the fundamental scientific understanding and technological needs of U.S.-based businesses, Ameri-
can workers, and the domestic economy.
The 2006 Budget proposes to fund the Hollings Manufacturing Extension Partnership Program
at $47 million, a 50-percent reduction from the 2005 grant level. The Administration’s approach
will maintain a strong national network of centers while focusing funding based on centers’ perfor-
mance in providing information and consulting services to small manufacturers. The program has
also augmented funding through expanding partnerships with other agencies and institutions. Given
80 DEPARTMENT OF COMMERCE
this new operating environment, the Administration believes the program has evolved to a stage at
which less reliance on direct appropriations is required.
To reduce duplication within Government services, the Budget also proposes to terminate the Pub-
lic Telecommunications Facilities, Planning and Construction program. This program has recently
targeted funding toward the purchase of digital transmission equipment by public broadcasting sta-
tions; the 2006 Budget proposes that a portion of the Corporation for Public Broadcasting’s already
enacted 2006 funding be made available for this purpose.
To improve efficiency, the Budget also streamlines administrative layers within the Economics and
Statistics Administration and the Technology Administration.
The table below provides an update on the Department of Commerce’s implementation of the
President’s Management Agenda as of December 31, 2004.
Budget and
Competitive Financial
Human Capital E-Government Performance
Sourcing Performance
Integration
Status
Progress
Department of Commerce
(In millions of dollars)
2004 Estimate
Actual 2005 2006
Spending
Discretionary Budget Authority:
Departmental Management:
Salaries and Expenses .................................................................................. 49 47 54
Emergency Guaranteed Loan Program accounts................................ 52 — 50
Headquarters Renovation ............................................................................. — — 30
Office of the Inspector General ................................................................... 21 21 23
Subtotal, Departmental Management ........................................................... 122 68 57
Economic Development Administration ........................................................ 308 284 27
Economic Development Challenge ................................................................ — — 3,710
Bureau of the Census ......................................................................................... 609 745 877
Economic and Statistics Administration ....................................................... 73 79 85
International Trade Administration .................................................................. 336 398 396
Bureau of Industry and Security ..................................................................... 67 67 77
Minority Business Development Agency...................................................... 29 30 31
National Oceanic and Atmospheric Administration (NOAA):
Operations, Research and Facilities ......................................................... 2,697 2,852 2,608
Procurement, Acquisition and Construction ........................................... 961 1,038 965
Other accounts .................................................................................................. 11 18 11
Subtotal, NOAA ..................................................................................................... 3,669 3,908 3,584
Patent and Trademark Office (PTO):
Program Level ................................................................................................... 1,221 1,555 1,703
Offsetting Collections ...................................................................................... 1,321 1,563 1,703
Subtotal, PTO......................................................................................................... 100 8 —
Technology Administration ................................................................................ 6 6 4
National Institute of Standards and Technology (NIST):
Scientific and Technical Research and Services.................................. 336 379 426
Industrial Technology Services ................................................................... 208 244 47
Construction of Research Facilities ........................................................... 64 73 59
Subtotal, NIST ....................................................................................................... 608 696 532
National Telecommunications and Information Administration ............ 48 38 23
Total, Discretionary budget authority ................................................................. 5,775 6,311 9,403
Credit activity
Direct Loan Disbursements:
Fisheries Finance Direct Loan Financing account ................................... 98 14 12
Total, Direct loan disbursements ......................................................................... 98 14 12
DEPARTMENT OF DEFENSE
AT A GLANCE:
2006 Discretionary Budget Authority: $419.3 billion
(Increase from 2005: 5 percent)
Major Programs:
• Defense of the Nation and its interests
• Training and equipping of military personnel
• Operation and maintenance
Protecting America
• Leading the Global War on Terror by eliminating sanctuaries for terrorism, capturing or killing
al-Qaida’s most senior leaders and al-Qaida associated individuals.
• Supporting democratic elections in Afghanistan and Iraq.
• Enabling field commanders in Iraq to fund reconstruction projects quickly.
• Transforming the way wars are fought, with both new organizational strategies and weapons
systems and equipment:
— Executing new strategies to improve the way the Army and Navy deploy their forces;
— Moving troops from their Cold War footing to new strategic locations and approaches through
the Global Posture Initiative; and
— Pursuing an aggressive strategy of “spiral” development to ensure that new technologies are
deployed sooner.
• Supporting our troops and their families to enable accomplishment of the Department of
Defense’s mission and to recognize the sacrifice they make on a daily basis:
— Providing quality medical care to uniformed service members and their families; and
— Providing excellent educational opportunities to troops, particularly those serving in Iraq and
Afghanistan, and quality housing through a nearly complete privatization program.
83
84 DEPARTMENT OF DEFENSE
• Implementing a program that converts military positions to civilian positions to free up troops
for more high-priority warfighting missions.
• Transferring the background investigation section of the Defense Security Service to the Office
of Personnel Management, enabling the Department to focus on its core mission.
• Focusing resources and forces where they are most needed through the Base Realignment and
Closure initiative.
• Instituting new management practices in manufacturing and repair facilities to improve
efficiency and increase production.
THE BUDGET FOR FISCAL YEAR 2006 85
PROTECTING AMERICA
Under this Administration, the Department of Defense (DOD) has received the largest increases in
funding since the Reagan Administration, and this Budget builds upon that record. The 2006 request
represents a 41-percent increase over 2001, and a 4.8-percent increase over 2005. The Department
has used these resources to transform our Nation’s military capabilities to meet future threats, to
improve the quality of life for our troops and their families, and to fight the Global War on Terror.
To ensure the most cost-effective use of its resources, the Department has recently examined its
programs carefully. As a result, DOD has changed some of its spending priorities in this year’s Bud-
get and will continue to refine these in the 2005 Quadrennial Review, the Department’s strategic
review of defense requirements and spending priorities. This Budget continues the Administration’s
commitment to our troops by providing a 3.1 percent pay raise and additional bonuses to support
recruiting and retention. The Budget includes additional funding in the outyears for the Army to
change from a division-based structure to one based on new, more agile "modular" brigades better
tailored to both ongoing operations in Iraq and Afghanistan and future conflicts. It also improves
DOD’s capabilities against weapons of mass destruction, including new laboratory facilities, detec-
tion systems, and protective measures against advanced biological and chemical weapons. This Bud-
get moves funding for critical intelligence activities essential to success in the long-term Global War
on Terror, including language proficiency training, to the base intelligence budget. This move sig-
nificantly reduces the reliance of the Intelligence Community on supplemental funding, which has
been a source of insecurity in intelligence program planning and a source of criticism from the 9/11
Commission. In addition, the Budget increases by 1,400 the number of special operations personnel,
whose capabilities have contributed significantly to the War on Terror.
One of the key tenets of transformation is the ability to evolve rapidly and adjust future planning
to account for changes in the global environment. Because of the continuing need to reexamine pri-
orities, DOD has reviewed its management processes and weapons systems. As a result, this Budget
proposes management savings such as a reduction in Navy end-strength and overall defense contrac-
tor support. It also reduces major systems over the next few years based on their cost-effectiveness
and/or potential to counter future threats. Examples of these reductions include slower production
rates for the V-22, the Expeditionary Fighting Vehicle, the F/A-22, and several classes of large war-
ships (including retiring one aircraft carrier early). DOD has also terminated some programs whose
cost-effectiveness no longer warrants their continuation, such as the C-130J and the Joint Common
Missile. While proceeding with the above changes, DOD continues to support new transformational
capabilities, such as Unmanned Aerial, Underwater, and Land Vehicles; the Littoral Combat Ship,
the Army’s Future Combat System; and many other programs with a high potential to meet current
and future threats.
PROTECTING AMERICA—Continued
and 2005 supplemental funding request reinforce the United States’ unwavering commitment to en-
suring that our men and women in uniform have what they need to protect our homeland, defeat
terrorism around the world, and support new democracies in Iraq and Afghanistan.
Transforming the way the U.S. military is organized and equipped is one of the highest security
priorities for President Bush. To support the President’s goals, the 2006 Budget and 2005 supple-
mental fund:
• a wide variety of unmanned vehicles;
• the continued development of a reconfigurable warship that can be effective in multiple missions;
• the realignment of Army units to make them more flexible and more easily deployable;
• the Global Posture Initiative that optimizes the deployment of U.S. forces around the world; and
• the development of new communications and computer systems.
PROTECTING AMERICA—Continued
Budget provides $1.7 billion for unmanned vehicles. Unmanned vehicles will provide a significant
advantage for U.S. forces on the battlefield of the future by reducing the risks to our troops.
Organizational Transformation
of high-demand units and providing stability for soldiers and their families. The Administration
plans to request an additional $35 billion for the Army for modularity between 2005 and 2011.
Spiral Acquisition
One of DOD’s key initiatives for improving how it procures new weapon systems is the use of “spiral
acquisition,” in which new technologies and capabilities are tested and added to the inventory in
carefully planned and limited increments. In the past, many new weapon systems were designed
from a “clean sheet” to achieve a dramatic leap forward in capability. This often led to pushing the
use of very young technologies, coupled with very complex designs and system engineering. The
result was often large cost increases and schedule delays. This inevitably resulted in troops having
to continue using older equipment, which was not upgraded because the new weapons’ program cost
over-runs were absorbing funding. The Administration is committed to solve this problem.
A good example of spiral acquisition is the Army’s Future Combat System (FCS), which this Budget
supports with a $3.4 billion request, an increase of $200 million from 2005. FCS will provide 18 new
systems (ranging from UAVs, new sensors, unmanned ground systems, and new armored fighting
vehicles) to re-equip the Army for the highly mobile, network-centric warfare of the 21st Century.
90 DEPARTMENT OF DEFENSE
PROTECTING AMERICA—Continued
FCS had been structured as a classic large, complex acquisition where everything was planned to
come together (all 18 systems plus a network to link them) into the first, completely re-equipped
brigade in 2010. The acquisition risk and cost of this approach was formidable. Recognizing the
problem, the Army restructured FCS development and procurement into a spiral acquisition where
subsets of the new systems are delivered in four “spirals” beginning in 2008. This approach allows
the Army to deploy those elements of FCS that are ready first, while providing enough time to test
and develop the more challenging components for introduction in later spirals. The new strategy will
provide more capability to the troops sooner, while effectively managing cost and technical risk.
Strengthening Intelligence
Policymakers require timely, accurate, and insightful information on the capabilities and inten-
tions of foreign powers, including terrorist groups. Military commanders need such information and
real-time battlefield intelligence to wage war successfully. The agencies of the U.S. intelligence com-
munity have the responsibility to meet the full range of U.S. intelligence needs from the national level
to the tactical level. The 2006 Budget devotes substantial resources to U.S. intelligence capabilities
and continues a commitment to transform them to more effectively meet the challenges of the 21st
Century.
THE BUDGET FOR FISCAL YEAR 2006 91
Military Housing
Defense Health
Education Assistance
In keeping with his commitment to improve benefits and quality of life for the Nation’s citizen-
soldiers, President Bush proposed and recently signed into law a new education assistance program
for members of the Guard and Reserve who are mobilized in the War on Terror. Members of the
National Guard and Reserve mobilized for more than 90 consecutive days and less than one year
will receive, in addition to the current $288 benefit, an additional $114 per month, or 40 percent
increase, for a total of $402 per month in 2005 for education. Members mobilized between one and
two consecutive years will receive an additional $314 per month, or 109 percent more, for a total of
$602 per month in 2005. Members mobilized over two consecutive years will receive an additional
$515 per month, or 179 percent more, for a total of $803 per month in 2005. The 2006 Budget funds
this initiative with $203 million.
DOD also provides a full range of transition services to members leaving service. These services in-
clude information on education, training, employment assistance, Guard and Reserve opportunities,
medical benefits, financial assistance, and public and community service. DOD also offers a vari-
ety of tools to help departing service members write resumes and maintains databases of jobs from
many employers, including employers specifically seeking applicants with service members’ skills.
DOD works closely with the Department of Veterans’ Affairs and the Department of Labor to ensure
departing members receive all the benefits and assistance to which they are entitled.
THE BUDGET FOR FISCAL YEAR 2006 93
DOD and the Office of Personnel Management (OPM) signed a Memorandum of Agreement for the
permanent transfer of approximately 1,800 DOD employees to OPM, in early 2005. The employees
will augment OPM’s contractors to perform the personnel background investigations required for
Federal employment and granting security clearances for Federal civil servants, military personnel,
and contractor personnel. With these additional personnel, OPM will be able to aggressively move
to reduce the backlog in these investigations—a critical step to strengthen national and homeland
security. Moving this function to OPM allows DOD to focus its resources on warfighting, while allow-
ing OPM to use its expertise in personnel matters.
Beginning in 2004, DOD converted over 7,600 military positions to civilian positions, to relieve
strain on the military force and to free up our troops to meet high-priority military missions. The De-
partment plans to convert an additional 12,000 military positions in 2005, and over 5,800 additional
positions in 2006. This program is an essential part of the Department’s efforts to ensure all military
personnel are performing military essential activities in support of the Global War on Terror.
In November 2003, the Congress passed landmark legislation adapting an Administration proposal
to grant authority to DOD to establish a new civilian personnel management system, the National
Security Personnel System (NSPS). Since that time, the Department has worked with its employees,
OPM, and various union representatives to develop a personnel system that will provide the Depart-
ment the flexibility to hire, assign, pay, evaluate, advance, and remove DOD civilian employees based
on current national security requirements. The system will protect employees’ rights by continuing
the use of merit system principles, accommodation of veterans’ preference, and respect for bargain-
ing. DOD plans to roll out the first phases of NSPS at the end of 2005 and beginning of 2006. Once
fully implemented, NSPS will cover over 700,000 civilian DOD employees.
The maintenance of excess infrastructure diverts resources from where they can best be used to
support the military. The 2006 Budget will allow the Department to implement the recommendations
of the 2005 BRAC round that, in conjunction with the Global Posture Initiative, will allow it to match
its infrastructure spending to new national security imperatives. BRAC will start realizing over $7
billion in estimated annual savings by 2012. These savings will allow DOD to allocate funds to higher
priority requirements, such as efforts to modernize weapons, enhance quality of life and improve
readiness. However, the 2006 Budget does not prejudge any particular closures or realignments.
Decisions regarding closures or realignments are made through the BRAC process.
The table below provides an update on DOD’s implementation of the President’s Management
Agenda as of December 31, 2004.
Budget and
Competitive Financial
Human Capital E-Government Performance
Sourcing Performance
Integration
Status
Progress
Arrow indicates change in status rating since evaluation as of September 30, 2004.
Over the past year, the Department has worked to develop and begin implementing the new National Security
Personnel System that will give DOD the tools it needs to manage its workforce more strategically. In addition,
DOD has made solid progress identifying and strengthening management competencies. While DOD has
effectively used A-76 competitions to achieve general savings in the past, the pace of announcements has
slowed significantly causing DOD to fail to meet its goals. Competition announcements under the revised A-76
Circular have lagged. With new announcements coming, DOD expects the Competitive Sourcing Initiative to
reduce costs to the Military Services and Defense Agencies by more than $6 billion by 2006 and by almost
$16 billion by 2009. The Department is engaged in a major, long-term effort to modernize its financial and
business systems. This effort is helping DOD to better understand the root causes of its financial management
weaknesses, target improvement efforts, and identify best practices going forward. For E-Gov, DOD certified and
accredited 72 percent of all its systems to ensure they meet information technology security requirements, and it
is moving forward with architecture efforts to improve information flow to the battlefield. As part of the Budget
Performance and Integration Initiative, DOD continues to implement the new Program, Planning, Budgeting and
Execution System to emphasize the integration of performance metrics into the budget process.
THE BUDGET FOR FISCAL YEAR 2006 95
Department of Defense
(In millions of dollars)
2004 Estimate
Actual 2005 2006
Spending
Discretionary Budget Authority:
Military Personnel ................................................................................................. 97,048 104,022 108,943
Operation and Maintenance ............................................................................. 128,104 137,024 147,828
Procurement ........................................................................................................... 76,090 78,119 78,043
Research, Development, Test, and Evaluation .......................................... 64,309 68,797 69,355
Military Construction ............................................................................................ 5,634 5,950 7,809
Family Housing ...................................................................................................... 3,799 4,055 4,243
Revolving Funds and Other .............................................................................. 681 2,091 3,120
Subtotal................................................................................................................ 375,665 400,058 419,341
AT A GLANCE:
2006 Discretionary Budget Authority: $56.0 billion
(Decrease from 2005: 1 percent)
Major Programs:
• Title I grants to States and local school districts
• Special education
• Pell Grants
• Research and statistics
• Creating a new high school initiative to extend No Child Left Behind (NCLB) into the upper
grades through improved accountability and effective interventions to help at-risk youth
complete high school successfully, and through testing in grades 9–11.
• Providing grants to improve education in low-income communities and support NCLB reforms.
• Supporting reforms in special education to improve services for students with disabilities.
• Reforming the student loan programs by reducing unnecessary subsidies to lenders and other
financial intermediaries, and redirecting these funds to the Pell Grant program to help low-
income students pay for college.
97
98 DEPARTMENT OF EDUCATION
At the center of the President’s commitment to education is his promise to “leave no child behind.”
When President Bush launched his No Child Left Behind initiative, he said, “The Federal role in
education is not to serve the system. It is to serve the children.” No Child Left Behind (NCLB) is
making a difference for every child, in every public school. It is no longer acceptable for any child to
slip through the cracks or fail to receive the challenging education he or she deserves. Schools are
held accountable for ensuring that all children, including those who are disadvantaged or disabled,
become proficient in reading and math. Parents receive detailed information about the performance
of their schools. Students who attend low-performing schools have the option to attend a better public
school or, if their schools do not improve, to receive tutoring funded by the school district. And all
this is guided by a commitment to support practices that rigorous research shows to be effective.
It is far too soon to know the full impact of NCLB as school districts have set ambitious goals for
ensuring that all children are proficient in reading and math by 2014. Nonetheless, there are early
signs of success. An October 2004 report by the Education Trust analyzed student achievement data
from the 24 States that had three years of comparable test scores. It found that in 23 of them, overall
achievement had improved. States are making gains in closing the achievement gap between stu-
dents from disadvantaged backgrounds and their peers from more advantaged backgrounds, while
also improving achievement generally. The majority of the 24 States analyzed reported a narrowing
of the achievement gap between African Americans, Latinos, and Native Americans and their white
peers in both reading and math. Compared to a year ago, the percentage of schools meeting their
student performance targets on State assessments has increased significantly in several States.
Student Achievement Results for States That Have at Least Three Years of Data
Disaggregated by Race and Ethnicity
In Reading In Mathematics
The African American-white gap narrowed in 16 States The African American-white gap narrowed in 17
and grew wider in three. States, grew wider in two, and remained the same in
one.
The Latino-white gap narrowed in 14 States, grew The Latino-white gap narrowed in 16 States, grew
wider in three, and remained the same in two. wider in three, and remained the same in one.
The Native American-white gap narrowed in 13 States, The Native American-white gap narrowed in 14 States,
grew wider in two, and remained the same in two. grew wider in two, and remained the same in two.
The gap between poor and non-poor students The gap between poor and non-poor students
narrowed in nine States and grew wider in one.* narrowed in all 10 States examined.*
* Only 10 States provided data for both poor and non-poor students.
Source: Education Trust, "Measured Progress," October 2004
The 2006 Budget continues the President’s support for the major components of NCLB, on top of the
dramatic funding increases for key K–12 programs since 2001. While education remains principally
the responsibility of the States, the Federal Government will continue its aggressive leadership in
the education of America’s children.
THE BUDGET FOR FISCAL YEAR 2006 99
Title I Grants to Local Educational Agencies. Title I provides funds to schools in low-income com-
munities and is the foundation for the NCLB accountability, school improvement, and parental choice
reforms. The Budget requests $13.3 billion for Title I, a $603 million, or 4.7-percent increase over
the 2005 level, and a 52-percent increase since 2001, to help schools implement the No Child Left
Behind Act.
Reading First and Early Reading First. The Budget includes $1.1 billion for the President’s sig-
nature literacy programs to help students in preschool and elementary school improve their reading
skills. Reading First supports high-quality, scientifically proven reading practices in grades K–3 to
ensure that all children can read at grade level by third grade. The Budget proposes $1.0 billion,
fulfilling the President’s commitment to provide $5 billion for reading over five years. The Budget
includes $104 million for Early Reading First to develop model childhood literacy and pre-reading
programs for schools serving high-poverty communities.
State Assessments. The Budget provides $412 million to help States implement current NCLB
testing requirements. This includes $400 million for formula grants to States and $12 million for
competitive grants to help States tackle some of the most difficult testing issues including assess-
ments for special populations.
Teachers. Recognizing that well-trained, highly qualified teachers are critical to student learn-
ing, the Budget provides $500 million in funding for the President’s new Teacher Incentive Fund.
This program would reward teachers and schools making great progress in closing the achievement
gap between students of different socio-economic backgrounds, recruit the most effective teachers
to teach in high-need schools, and provide support for school districts to link teacher compensation
more closely to growth in student achievement. The Budget also provides $2.9 billion for the Teacher
Quality State Grants program to support teacher training and recruitment. In addition, $40 million
is requested for the Adjunct Teacher Corps initiative to create opportunities for professionals with
100 DEPARTMENT OF EDUCATION
The vast majority of NCLB reforms affect K–8 education, as only five percent of Title I funds go to
high schools. In the 2006 Budget, the Administration is building on NCLB with an aggressive, com-
prehensive high school initiative. The $1.5 billion high school initiative gives States the support they
need to upgrade the quality of secondary education and ensure that every student graduates from
high school prepared to enter college or the workforce with the skills to succeed. The need for this
initiative is great. For example, according to the latest results from the Program for International
Student Assessment, America’s 15-year-olds performed below the international average in mathe-
matics literacy and problem-solving, placing 28th out of 39 industrialized countries.
High School Intervention Initiative. This initiative provides $1.2 billion to help States implement
a high school accountability framework and a wide range of effective interventions. In return for a
commitment to improve academic achievement and graduation rates for secondary school students,
States will receive the flexibility to choose which intervention strategies will be most effective in serv-
ing the needs of their at-risk high school students. Allowable activities would include vocational ed-
ucation programs, mentoring programs, and partnerships between high schools and colleges, among
other approaches. A portion of the funding will be used for randomized trials and evaluations to iden-
tify the most effective intervention strategies to enable school administrators to make better choices
on what educational strategies to adopt.
To provide funding for States under the High School Intervention Initiative, the Administration
proposes to consolidate narrow-purpose programs that support a particular high school interven-
tion strategy. These include Vocational Education, Upward Bound, Talent Search, GEAR UP, and
Smaller Learning Communities. Most of these programs have not proven effective in improving our
secondary students’ academic achievement or ability to obtain a job. Under the Administration’s
Program Assessment Rating Tool (PART), Vocational Education was rated Ineffective because it has
produced little or no evidence of improved outcomes for students despite decades of increasing Fed-
eral investment.
The PART found that Upward Bound was not serving the high-risk students who were most likely
to benefit from the program. Under the new High School Intervention Initiative, States will have the
option of continuing activities funded under these programs if they will help States improve student
outcomes.
THE BUDGET FOR FISCAL YEAR 2006 101
On December 3, 2004, the President signed into law the Individuals with Disabilities Education
Improvement Act of 2004, reauthorizing the Individuals with Disabilities Education Act (IDEA). The
reauthorized IDEA makes several adjustments to align special education to NCLB’s accountability
systems. Together, these landmark laws provide the framework for high hopes and expectations that
all students, including the 6.9 million children with disabilities, can succeed in school. This law is
fully consistent with the Administration’s principles for IDEA reauthorization, and with the 2002
recommendations of the President’s Commission on Excellence in Special Education.
Over the next year, the Administration will provide guidance and technical assistance to States,
schools, and parents so that they can be partners with the Department in implementing the myriad
regulatory and paperwork changes required by the law, many of which will take effect in July 2005
(see box for the most significant provisions). The President’s 2006 Budget complements the law and
provides $12.2 billion for all IDEA programs, including $83 million for special education research,
studies, and evaluations funded under the Institute for Education Sciences, and $11.1 billion for
IDEA Grants to States, a 75-percent increase since 2001. These increases, along with the law’s local
102 DEPARTMENT OF EDUCATION
flexibility provisions, will improve the State and local special education systems, and produce real
benefits for students served by IDEA.
Accountability for Results. Aligns provisions on assessments and the contents of the individualized education
programs (IEPs) with NCLB.
Quality Teachers. Strengthens requirements for special education teachers to be highly qualified in their core
subjects, with some flexibility for States, school districts, and new teachers of multiple subjects.
Paperwork Reduction Pilots. Includes option of multiyear IEPs for 15 States and gives the Secretary authority
to waive paperwork requirements for up to 15 States for up to four years to reduce paperwork burden for
teachers and to increase their time for instruction.
Parental Choice. Lets parents choose early intervention services for their pre-school children.
Research-Based Practices. Places new emphasis on using evidence-based information for all aspects of special
education, creates the new Center for Special Education Research and places it in the Institute of Education
Sciences, which coordinates all education research and will help inform special and regular education practices.
Local Flexibility on Use of Funds. 1) Allows States to establish funds that help school districts pay for high-cost
services received by a small number of children with severe disabilities. 2) Allows local educational agencies
to use 15 percent of IDEA Grants to States to provide “early intervening services” to K–12 students who
have not been identified as children with disabilities. 3) Allows States to use IDEA Grants to States to provide
supplemental education services to children with disabilities in schools that are in need of improvement,
consistent with NCLB.
The 2006 Budget also continues the Administration’s focus on results for children with disabilities.
For example, based on the 2004 PART findings that IDEA’s early childhood programs do not have
annual or long-term performance measures to judge program effectiveness, the Department of Edu-
cation will continue to work with States to identify measures and to pilot-test State data systems.
The President’s commitment to “leave no child behind” is matched by his commitment to achieve
results. If Federal programs are not working or if they do not give State and local administrators
the flexibility they need to achieve results, they should be reformed. In the coming months, the Ad-
ministration will work with the Congress to achieve a number of program consolidations to create
streamlined, flexible, performance-based grants in the areas of improving reading and math instruc-
tion, safe schools, teacher training, education innovation, and school choice. This will allow States
and schools to better tailor Federal dollars to best meet the needs of students.
The Administration is committed to providing equal access to higher education and life-long
learning through such important programs as expanded loan options and increased grant awards.
College costs are rising significantly. As a result, student aid is increasingly important to ensure
that students have an opportunity to go to college.
THE BUDGET FOR FISCAL YEAR 2006 103
Increasing Pell Awards. This year, the Increases in Pell Grant Recipients Since 2001
Administration will be working with the Millions of recipients Billions of dollars
Congress to enhance opportunity for students 6 15
Federal Costs
by expanding the Pell Grant program. Pell 14
Recipients
Grants are the single largest source of grant 13
12
aid for postsecondary education, and help 5
11
nearly one-third of all undergraduates afford
10
the cost of college education. To help students
9
keep up with the rising cost of college, the
8
Budget proposes to increase the $4,050 4
7
maximum award by $100 in 2006, and $500 6
over five years, lifting the maximum award to 5
$4,550. The Budget also retires the $4.3 billion 3 4
Pell Grant shortfall, which has been a major 2001 2002 2003 2004 2005 2006
Source: Department of Education.
obstacle preventing increased awards for the
more than five million Pell-eligible students. In addition, the Budget proposes to make larger Pell
awards available both to students who accelerate their studies by attending school year-round and
to many active duty military personnel. The Budget’s Pell Grant proposal is part of a larger package
of reforms intended to modernize and improve the Federal student aid system.
Reforming Student Loans. The Administration is strongly committed to the lender-based guaran-
teed Federal Family Education Loan program and expects it to continue as the primary source of
loans to students in the years ahead. In addition, the Administration will continue to maintain a
strong Direct Loan program to ensure that no eligible student is denied access to student loans in
the event a student or school cannot find a suitable lender.
However, problems in the structures of the current student loan programs prevent them from meet-
ing all their policy and program objectives. Specifically, the Federal Government assumes almost
all of the risk for the loans, while Federal subsidies to intermediaries—lenders and guaranty agen-
cies—are set high enough to allow the less efficient ones to generate a profit. These problems lead to
unnecessary costs for taxpayers and prevent the program from achieving the efficiencies the market
is designed to provide.
The Budget proposes a comprehensive package of reforms to make the student loan programs more
efficient, cost-effective vehicles for helping students finance their postsecondary educations. These
reforms will link subsidy payments for lenders and guaranty agencies more closely to their costs
and modify interest rates for borrowers who are no longer in school and who have consolidated their
loans. The Budget achieves $34 billion in savings over 10 years by reducing unnecessary subsidies
and payments to lenders, guaranty agencies, and loan consolidators and by placing a larger share of
the loan risks on lenders. These savings will be used to increase the Pell Grant maximum award,
pay off the current $4.3 billion Pell shortfall, and improve benefits to students in school by increasing
loan limits for first year students and extending the current favorable interest rate framework. This
package will also include budget scoring rules to ensure that the Pell Grants program is fully funded
and shortfalls will not be created in future years. In addition, $10 billion in savings over ten years
will be set aside to reduce the Federal budget deficit.
104 DEPARTMENT OF EDUCATION
The Department of Education used the Program Assessment Rating Tool (PART) to analyze the
performance of 23 of its programs in the 2006 Budget; the Department has assessed 56 programs
since 2004. The PART reviewed each program’s purpose and design, management, and achieve-
ments; determined its level of effectiveness; and led to recommendations for program improvements.
Of the programs that have been analyzed using the PART, two are Effective, 14 are Adequate, 15
are Ineffective, and 35 do not have sufficient data to determine a rating. PART analyses contributed
to the development of the High School Intervention Initiative; helped determine which programs
should be funded, reduced, or terminated; and identified inefficiencies in the student loan programs
that will be addressed by the proposed legislative reforms described above.
At a time of constrained Federal discretionary spending, achieving the goals of academic excellence
and expanded access to higher education requires that every education dollar be spent wisely. Fund-
ing for programs that do not perform well, duplicate other programs at the Federal or State level, or
have completed their mission must be re-directed toward programs that have either been proven to
work or those that hold the promise of reaching the Department’s goals more effectively. The 2006
Budget proposes the termination of 48 programs, including many that the PART has shown to be
ineffective (Even Start, Safe and Drug-Free Schools State Grants, and Vocational Education) and
many that are unable to demonstrate results. In addition, funding for 16 programs will be reduced.
As a result, $4.7 billion will be redirected toward such programs as Title I, IDEA, the High School
Intervention Initiative, and improving teacher quality.
The table that follows provides an update on the Department of Education’s implementation of the
President’s Management Agenda as of December 31, 2004.
106 DEPARTMENT OF EDUCATION
Budget and
Competitive Financial
Human Capital E-Government Performance
Sourcing Performance
Integration
Status
Progress
The Department of Education’s management improvement efforts achieved significant results in the past year.
Not only has the Department achieved critical financial operational goals such as receiving an unqualified
opinion for the third year in a row and meeting early reporting deadlines, but the Department has also begun
implementing enhanced reporting capabilities to improve risk management, compliance with laws and
regulations, and overall organizational governance. Education also completed key competitions with anticipated
savings of $53 million over the next five years that will improve performance in payment processing and human
resources management. In addition, the Department is participating in critical E-Government initiatives that will
simplify and expand the public’s access to Education programs through Grants.gov and e-loans. Finally, the
Department continues to collect performance information and measure outcomes to focus budget, program,
grant making, and policy initiatives on improving the effectiveness of Education programs.
Department of Education
(In millions of dollars)
2004 Estimate
Actual 2005 2006
Spending
Discretionary Budget Authority:
Elementary and Secondary Education:
Title I Grants to LEAs 1 ................................................................................. 12,342 12,740 13,342
Reading First and Early Reading First ..................................................... 1,118 1,146 1,146
State Assessments .......................................................................................... 390 412 412
Teacher Incentive Fund.................................................................................. — — 500
Adjunct Teacher Corps................................................................................... — — 40
Teacher Quality State Grants ...................................................................... 2,930 2,917 2,917
Charter Schools programs............................................................................ 256 254 256
Choice Incentive Fund ................................................................................... 50
Impact Aid ........................................................................................................... 1,230 1,244 1,241
Safe and Drug Free Schools Programs 2 .............................................. 674 672 317
21st Century Community Learning Centers ........................................... 999 991 991
English Language Acquisition ..................................................................... 681 676 676
IDEA Part B State Grants 3 ......................................................................... 10,068 10,590 11,098
High School Programs:
High School Intervention ............................................................................... — — 1,240
High School Assessments ............................................................................ — — 250
Striving Readers ............................................................................................... — 25 200
Mathematics and Science Partnerships .................................................. 149 179 269
Advanced Placement ...................................................................................... 24 30 52
Vocational Education ...................................................................................... 1,195 1,194 —
TRIO Upward Bound ...................................................................................... 280 280 —
TRIO Talent Search ......................................................................................... 145 145 —
GEAR UP ............................................................................................................ 298 306 —
State Scholars Capacity Building ............................................................... — — 12
Higher Education:
Community College Access Grants .......................................................... — — 125
Pell Grants—Discretionary Funding (legislative proposal) ............... 12,007 12,365 13,232
Pell Grants—Mandatory Funding (non-add, legislative proposal) — — 4,721
Enhanced Pell Grants for State Scholars (non-add) .......................... — — 33
Historically Black Colleges and Graduate Institutions ........................ 276 297 299
Research and Statistics 4 ................................................................................. 335 338 338
All other .................................................................................................................... 10,265 9,776 7,046
Total, Discretionary budget authority 5 ............................................................. 55,662 56,577 56,049
Department of Education—Continued
(In millions of dollars)
2004 Estimate
Actual 2005 2006
Mandatory Outlays:
Federal Direct Student Loans (legislative proposal) ................................ 3,246 1,335 39
Federal Family Education Loans (legislative proposal) .......................... 4,800 10,193 5,346
All other .................................................................................................................... 2,228 2,524 1,993
Total, Mandatory outlays ........................................................................................ 10,274 14,052 7,378
Credit activity
Direct Loan Disbursements:
Federal Direct Student Loans (FDSL)........................................................... 12,506 13,598 14,681
FDSL Consolidations .......................................................................................... 7,649 9,064 7,615
Loans for Short-Term Training ......................................................................... — — 85
Subtotal, FDSL disbursements:
Other Direct Loans ............................................................................................... 54 31 46
Total, Direct loan disbursements ......................................................................... 20,209 22,693 22,427
AT A GLANCE:
2006 Discretionary Budget Authority: $67.2 billion
(Decrease from 2005: 1 percent)
Major Programs:
• Medicare
• Medicaid
• State Children’s Health Insurance Program
• Health Centers
• Marriage and Healthy Family Development
• Bioterrorism
• Health Care Information Technology
• Promoting national health care information technology, with the goal of most Americans having
an electronic health record with proper medical privacy protection by 2014.
• Proposing a comprehensive, consumer-driven plan to address the problems of rising health care
costs and the uninsured. This plan includes: Health Savings Accounts; Association Health
Plans; tax credits; and medical liability reform.
Protecting America
• Strengthening the Nation’s preparedness against bioterrorism, through biodefense research and
development, biosurveillance early warning systems, hospital and public health preparedness,
and defense against intentional contamination of the Nation’s food supply.
• Improving the ability to respond to bioterrorism through a new initiative to improve mass
casualty care after a catastrophic incident, and augmenting the Strategic National Stockpile
of pharmaceuticals and other medical supplies.
• Ensuring access through Health Centers to high-quality primary and preventative health care
for low-income individuals.
127
128 DEPARTMENT OF HEALTH AND HUMAN SERVICES
• Helping healthy families through initiatives that support marriage, provide assistance to par-
ents, and encourage the development of family-support programs run by community organiza-
tions.
• Strengthening and modernizing health care and offering drug coverage for approximately 42
million senior citizens and persons with disabilities through the Medicare program.
• Providing quality health care in a cost-efficient manner to over 46 million low-income individu-
als, elderly individuals, and individuals with disabilities through the Medicaid program.
• Providing health care coverage to a total of approximately 5.8 million low-income, uninsured
children through the State Children’s Health Insurance Program.
• Proposing a health insurance tax credit so that millions of Americans will have access to afford-
able health care.
• Enrolling as many uninsured, eligible children as possible into Medicaid and the State Chil-
dren’s Health Insurance Program through the President’s Cover the Kids proposal.
• Developing additional decision support tools at the National Institutes of Health to improve the
management of its large and complex scientific portfolio and to better integrate research across
its 27 Institutes and Centers.
• Strengthening Medicare program integrity by preventing overpayments, accelerating contractor
reform, and rationalizing payments for bad debt.
• Increasing efficiency and lowering costs for Medicaid prescription drugs.
• Proposing to build on past efforts to improve efficiencies and the fiscal integrity of Medicaid and
State Children’s Health Insurance Program.
THE BUDGET FOR FISCAL YEAR 2006 129
The Administration is strongly committed to advancing quality, consumer-driven health care and
encouraging collaboration and productivity in the medical services sector. The newly created Office of
the National Coordinator for Health Information Technology (HIT) at the Department of Health and
Human Services (HHS) coordinates Federal efforts across many initiatives and activities, including:
• Advancing the adoption of HIT by physicians, hospitals, and other providers;
• Implementing electronic prescriptions as mandated by the Medicare Prescription Drug,
Improvement, and Modernization Act of 2003;
• Developing models for the exchange of Electronic Health Records (EHRs) and other health data
nationally and with proper medical privacy protection; and
• Identifying standards and the mechanisms for broad adoption of EHRs.
The 2006 Budget includes $125 million to continue progress in this area, including $75 million in
the Office of the Secretary to foster collaboration and develop the conceptual framework and infra-
structure for a nationally interoperable HIT network that would interconnect clinicians, personalize
care, and improve public health surveillance.
Rising health costs are an impediment to job and wage growth. When health care costs rise, em-
ployers have less to spend on new employees, or on salaries for their existing employees. Rising
health care costs impose a burden on families and small businesses and put coverage out of the reach
of many Americans. Many businesses—particularly small firms—are struggling with these rising
costs. According to the Census Bureau, 45 million people lacked health insurance coverage in 2003,
including 8.4 million children.
The President has proposed a comprehensive, consumer-driven plan to address the problems of
rising health care costs and the uninsured. His plan includes: Health Savings Accounts (HSAs); As-
sociation Health Plans (AHPs) for small businesses, civic groups, and community organizations; tax
credits for low-income families; medical liability reform; and electronic health records for all Ameri-
cans within 10 years.
The President’s plan will help reduce the rising cost of health care while improving quality and
safety. It will provide new and affordable health coverage options for all Americans—targeted to
those who need it most: low-income children and families; employees of small businesses; and the
self-employed.
Health Insurance Tax Credit. The President proposes a tax credit that will help individuals pur-
chase health insurance and health care. The proposal provides greater choice of insurance products
and encourages saving for future health expenses. Individuals under age 65 who are not enrolled
in public or employer-sponsored health plans would be eligible. The credit would be refundable and
could be paid in advance directly to the health plan. The amount of the credit would depend on an
individual’s income level. The credit would phase out at incomes of $30,000 for an individual and
$60,000 for a family.
130 DEPARTMENT OF HEALTH AND HUMAN SERVICES
PROTECTING AMERICA
Armed with a single vial of a biological agent small groups of fanatics, or failing states, could gain the power
to threaten great nations, threaten the world peace. America, and the entire civilized world, will face this
threat for decades to come. We must confront the danger with open eyes, and unbending purpose.
President George W. Bush
February 11, 2004
The Budget continues to invest heavily in research and development that will lead to new coun-
termeasures against the most dangerous threat agents, including those that have been genetically
manipulated. Within the 2006 Budget’s nearly $29 billion for the National Institutes of Health
(NIH), the Administration will continue to fund biodefense research and development activities at
$1.8 billion. This includes $50 million for chemical countermeasure development and $47 million for
radiological and nuclear countermeasure development. NIH supports basic research, which leads to
breakthroughs in scientific knowledge, and applied research and development that converts knowl-
edge into products that can be manufactured in large quantities. Project BioShield can then be used
to acquire these countermeasures that will be safer and more effective in protecting Americans.
THE BUDGET FOR FISCAL YEAR 2006 133
In the event of a large-scale attack in one or more cities, existing medical capacity could be over-
whelmed quickly. The President designated HHS as the lead for coordinating Federal support of
State and local medical and public health response to mass casualty events. The Budget includes
$70 million to improve emergency health care by allowing the Federal Government to purchase and
store deployable medical care units, including medical supplies and equipment that can be delivered
to an affected area. This initiative will also enhance the Medical Reserve Corps and provide prior
training and verification of credentials to ensure the availability of health care providers during such
an emergency.
The Budget also proposes nearly $1.3 billion in investments to bolster hospital preparedness and
State and local biodefense preparedness. Included in the total for hospital preparedness is $25 mil-
lion for a targeted, competitive demonstration program to establish a state-of-the-art emergency care
capability in one or more metropolitan areas. These emergency care centers will be designed to meet
the demands of a terrorist attack or other incident requiring mass casualty care and containment of
infectious agents.
Unlike in conventional attacks, the use of biological weapons may not be immediately apparent.
Reducing the time it takes to detect an attack can save many lives. Last year, the President pro-
posed a new biosurveillance initiative to provide earlier indication that an attack has occurred, and
to better determine accurately its nature and scope by monitoring human, animal, and plant health,
the food supply, and the environment. The 2006 Budget will build on this progress with continued
investments in the gathering and analysis of this information.
Building upon significant investments in 2005, the President is committed to improving the safety
and security of the food and agriculture supply. In 2006, the Food and Drug Administration (FDA) will
continue to work with the U.S. Department of Agriculture (USDA) and the Department of Homeland
Security to improve protection of the Nation’s food supply from intentional or natural contamination.
The Budget requests a $30 million increase for the FDA to develop strategies to prevent and mitigate
food contamination, as well as testing methods to identify the presence of contamination quickly and
accurately. The Nation’s food laboratory network will work to analyze food samples more rapidly,
which will better help to identify outbreaks and be able to quickly process a surge of samples follow-
ing a terrorist incident. Each of these activities will be coordinated with USDA, which will receive
an increase of $145 million in 2006 to protect the food and agriculture supply from terrorist attacks.
134 DEPARTMENT OF HEALTH AND HUMAN SERVICES
PROTECTING AMERICA—Continued
Protecting the Nation from Influenza and the Threat of an Influenza Pandemic
HHS Influenza Vaccine and Every fall and winter, influenza poses a
Preparedness Funding threat to public health, especially for seniors
Millions of dollars and others vulnerable to complications from
450 CDC Vaccine Purchase 419 430 influenza. If a new influenza virus for which
400 CDC Surveillance and we have no immunity or vaccine takes a
Preparedness form that is easily spread, an influenza
350
FDA Research and Licensing
300
pandemic could develop and cause terrible
NIH Research and 255
250 Development damage to public health. The Administration
Pandemic is committed to improving influenza vaccine
200 Preparedness
supply, preventing another influenza vaccine
150
101 shortage, and helping prepare for a possible
100
41 53 pandemic. HHS is enhancing global influenza
50
surveillance to provide an earlier warning
0
2001 2002 2003 2004 2005 2006 of the viruses’ emergence; increasing the
Source: HHS. supply of influenza vaccine; stockpiling large
quantities of antiviral drugs; promoting the development of new technologies to produce vaccine
more quickly and securely; and investigating promising ways to safely and effectively extend the
supply of vaccine doses, especially in a pandemic.
The Budget builds on this progress, maintains a childhood influenza vaccine stockpile, includes a
$20 million increase for influenza vaccinations for children and other vulnerable populations, and
proposes $30 million to expand the Nation’s vaccine supply. The Budget also includes an increase
to enhance global disease surveillance and a $21 million increase to work with manufacturers to
increase the availability of additional U.S.-licensed vaccine to meet increased supply needs, especially
during an influenza pandemic.
FDA works to ensure the safety of medical products, including prescription and over-the-counter
drugs. Before being made available to consumers, medical products undergo a rigorous review by
FDA scientists for safety and effectiveness. After approved medical products are made available to
consumers, FDA staff review adverse events and respond to any concerns. This system has succeeded
in providing American consumers with safe and life-improving medical products for decades.
FDA continues to evaluate its systems and processes to refine its oversight and further improve
the safety of medical products. FDA is sponsoring a study by the Institute of Medicine on the effec-
tiveness of the U.S. drug safety system, with an emphasis on the continued safety of medical products
already approved for use by FDA. The Institute of Medicine study will examine FDA’s role within the
health care delivery system and recommend measures to enhance the confidence of Americans in the
safety and effectiveness of their drugs. In addition, the 2006 Budget proposes a 24-percent increase
for the FDA Office of Drug Safety to enable FDA to continue its track record of success in providing
safe and effective medical products to American consumers.
THE BUDGET FOR FISCAL YEAR 2006 135
Improving Medicare
Medicaid was created nearly 40 years ago to provide access to health care for individuals on wel-
fare, based on health care available at that time. Over that time span, Medicaid has grown far faster
than most Federal entitlement programs. The Budget calls for specific reforms to Medicaid that pro-
mote better care for low-income Americans, more local control for States, fair payments to providers,
and better accountability measures so that Medicaid’s fiscal condition will improve.
In 2006, funding for Medicaid is projected to be $338 billion, about $193 billion of which is paid by
the Federal Government. Since 1998, SCHIP has made available approximately $40 billion over 10
years for States to provide health care coverage to targeted low-income, uninsured children. Since
the beginning of the Administration, enrollment in SCHIP has grown by over one million children to
a total of approximately 5.8 million in 2003.
Even though Medicaid will serve more than 46 million Americans in 2006, it operates under out-
dated rules. Medicaid excludes millions of individuals who are well below the Federal poverty level
because program rules remain tied to welfare eligibility categories. While the President’s Health
Centers Initiative has provided access to health care for many uninsured individuals, many are still
left with the choice of seeking health care through hospital emergency rooms, contributing to the
growing burden of uncompensated care among hospitals.
Instead of helping these individuals get better coverage, States often reluctantly decline to expand
coverage because Medicaid rules do not easily support many up-to-date, efficient approaches to ex-
panding coverage. Moreover, millions of senior citizens and individuals with disabilities in need of
long-term care are provided only with the choice of leaving their homes for institutional care to get
the support they need. There is now widespread evidence that updating Medicaid to keep pace with
the people it serves, and better coordinating it with SCHIP, can lead to better coverage, better health
care, and a more sustainable cost structure for the States and the Federal Government.
Medicaid and SCHIP Modernization. In addition to proposing an increase in Federal resources
for covering the uninsured (the elements of which were outlined in the Promoting Economic Oppor-
tunity and Ownership section of this chapter), the Administration proposes to provide States with
additional flexibility in Medicaid to further increase coverage among low-income individuals and
families without creating additional costs for the Federal Government. This proposal would build
on the success of SCHIP to provide acute care for children and families, as well as current efforts to
reduce the number of uninsured individuals.
States generally regard the complex array of Medicaid laws, regulations, and administrative guid-
ance as overly burdensome, with the result being higher costs for covering fewer beneficiaries. In
response, the Administration has granted waivers that allow States to extend Medicaid coverage
to higher income and non-traditional populations, such as childless adults. For example, in 2001,
the Administration introduced the Health Insurance Flexibility and Accountability (HIFA) demon-
stration initiative. This initiative emphasizes the coordination of currently available Medicaid and
SCHIP funding with private insurance. Through these waiver programs and the HIFA initiative,
States have found that they can provide health care to more beneficiaries with the same amount of
funding by changing delivery systems and using mainstream coverage, including managed care and
coordination with employer plans.
SCHIP provides States with more flexibility than Medicaid, allowing States to cover targeted pop-
ulations, incorporate private sector insurance options, provide appropriate benefit packages, and
maximize public dollars.
A modernized Medicaid system will give States greater flexibility without the need for burden-
some waiver applications. Principles that are employed in SCHIP and emphasize innovation will be
expanded to Medicaid beneficiaries, while long-term care reforms will build on successful programs
138 DEPARTMENT OF HEALTH AND HUMAN SERVICES
that use consumer direction and home- and community-based care to improve satisfaction and lower
costs. A modernized Medicaid system will continue to grow at a robust rate to accommodate increases
in health care spending.
Apart from program modernization, the following proposals will enhance coverage under both Med-
icaid and SCHIP.
SCHIP Reauthorization. The authorization for the SCHIP program expires at the end of 2007.
Due to its success at enrolling millions of low-income uninsured children, the 2006 Budget proposes
to reauthorize this program early. The Administration will seek authority to better target SCHIP
funds in a more timely manner.
Transitional Medical Assistance (TMA). TMA provides Medicaid coverage for former welfare
recipients after they enter the workforce. The Budget proposes to extend TMA for one year with
certain statutory modifications, including a State option to eliminate TMA reporting requirements
and provide 12 months of continuous eligibility regardless of changes in families’ financial status.
In addition, the Budget proposes a waiver of the TMA requirement for States that currently provide
health benefits for families at 185 percent of the Federal poverty level, which is the statutorily
mandated income eligibility level. These changes will allow for consistent enrollment of TMA
beneficiaries while easing the administrative burden on States.
Medicare Premium Assistance. The Administration proposes to continue Medicare Part B premium
assistance for Medicare beneficiaries between 120 and 135 percent of the Federal poverty level for
one year. In 2005, these premiums will be $78.20 per month. States receive 100 percent Federal
funding for these benefits.
Vaccines for Children (VFC). VFC provides all recommended childhood vaccines, free of charge, to
four categories of eligible children: Medicaid beneficiaries, American Indians/Alaskan Natives, the
uninsured, and the underinsured (those without coverage for a particular vaccine). The Adminis-
tration proposes to improve vaccine access by allowing underinsured children to receive VFC-funded
vaccines at State and local health clinics, rather than only at Federally Qualified Health Centers and
Rural Health Centers.
Health Insurance Portability and Accountability Act (HIPAA). Since enacted in 1996, HIPAA has
increased the continuity, portability, and accessibility of health insurance. To ensure that Medic-
aid and SCHIP beneficiaries receive the benefits of HIPAA coverage, the Administration proposes
two legislative changes. Under this proposal, eligibility for a Medicaid/SCHIP Employer-Sponsored
Insurance (ESI) Program would be a qualifying event, which would allow families to enroll in ESI
immediately through special enrollment. This proposal also would require SCHIP programs to issue
certificates of creditable coverage, which promote portable health coverage by verifying the period of
time an individual was covered by a specific health insurance policy.
Improving Options for People with Disabilities. The Budget includes several policies that promote
home- and community-based care options for people with disabilities. These policies build on the
President’s New Freedom Initiative, which is part of a nationwide effort to integrate people with
disabilities more fully into society.
• Money Follows the Person Rebalancing Demonstration. This five-year demonstration would
finance Medicaid services for individuals who transition from institutions to the community.
Federal grant funds would pay the full cost of home and community-based waiver services for
THE BUDGET FOR FISCAL YEAR 2006 139
one year of a beneficiary’s care, after which the State would agree to continue this care at the
regular Medicaid matching rate.
to maintain existing commitments and expand access to effective treatment in additional States.
States will hold providers accountable for results and reward those providers most effective at help-
ing clients to achieve recovery from addiction.
The Administration’s initiatives to promote marriage and healthy family development are built
around four strategies:
teens make healthy choices. As part of this initiative, the President directed the Department as
follows:
• Develop research-based standards for abstinence education curricula;
• Conduct a review of the consistency of messages in all federal programming for youth addressing
teen pregnancy prevention, family planning, and STD and HIV/AIDs prevention;
• Develop a public education campaign designed to help parents communicate with their children
about the risks associated with early sexual activity; and
• Provide grants to communities and States to develop and implement abstinence-only programs
and for Federal evaluation of these programs.
In support of this initiative, by 2008 funding for these programs will increase to a total of $270
million.
Refugees come to the United States for protection from persecution and in search of freedom, peace,
and opportunity. The Office of Refugee Resettlement provides programs to help refugees, asylees,
trafficking victims, and other beneficiaries achieve economic self-sufficiency and social adjustment.
The Budget includes $552 million, or an increase of $68 million, to assist States and faith-based
and community organizations in resettling the growing number of refugees, and for the care and
placement of unaccompanied alien minors in safe and appropriate environments.
Carlos, a 15-year old Guatemalan who never knew his parents and was raised by relatives, journeyed to
the United States through Mexico with an older cousin in search of his mother and a better education. His
journey was mostly by foot and bus. While residing in shelter care in Phoenix, Carlos exhibited develop-
mental and physical delays. With the help of intensive services from the Unaccompanied Refugee Minor
(URM) program in the Office of Refugee Resettlement, the child’s mother and grandmother were advised
of the child’s exceptional needs and thus were more prepared to handle his serious medical issues. The
URM program completed a home suitability assessment, confirmed that the mother was prepared to care
for Carlos, prepared Carlos to join his mother, and worked aggressively to complete family reunification.
Reforming Welfare
Temporary Assistance for Needy Families (TANF). The Administration continues to pursue its plan
to reauthorize the TANF program, which provides grants to States for programs that assist needy
families with children. TANF grants also promote work and the formation of married-parent families
in order to reduce dependence on government benefits. The Administration’s plan maintains funding,
strengthens work requirements, supports healthy marriages and family formation, and increases
State flexibility.
Early Childhood (Good Start, Grow Smart). Because it is important for children to enter school
ready to learn, the Administration has worked to improve early childhood programs through the
Good Start, Grow Smart initiative. The goals of this initiative are:
• Strengthening Head Start;
142 DEPARTMENT OF HEALTH AND HUMAN SERVICES
Battling HIV/AIDS
Global AIDS. The President’s Emergency Plan for AIDS Relief is a bold strategy to combat the
global HIV/AIDS pandemic. Under the President’s five-year, $15 billion plan, the Administration
has moved quickly and efficiently to mobilize the scientific and programmatic expertise, leadership,
and resources of HHS and other Federal government agencies and their partners. The goals of the
plan are to prevent seven million new HIV infections, treat two million HIV-infected people, and pro-
vide care for 10 million people affected by HIV/AIDS by 2008. The 2006 Budget will continue progress
toward meeting these goals by preventing 3.8 million infections, treating 860,000 HIV-infected peo-
ple, and providing care for 4.3 million people affected by HIV/AIDS.
Domestic AIDS. The Budget invests over $17 billion for domestic AIDS treatment, prevention, and
research, including almost $2.1 billion for the Ryan White program and its comprehensive approach
to address the health needs of persons living with HIV/AIDS. Through this program, low-income
individuals living with HIV/AIDS receive medical care, counseling and testing, and other support
services. The Budget provides for a continued investment in the AIDS Drug Assistance Program
that helps provide life-saving antiretroviral drug treatments to those who otherwise could not afford
them.
The Budget proposes a $3 billion program within the Department of Commerce to support com-
munities’ efforts to meet the goals of improving their economies and quality of life. This initiative
will consolidate programs across the Federal Government into a more targeted, unified program that
sets accountability standards in exchange for flexible use of the funds. HHS programs consolidated
into this initiative are the Community Services Block Grant, Community Economic Development,
and Rural Community Facilities. (See the Department of Commerce chapter for more details.)
THE BUDGET FOR FISCAL YEAR 2006 143
The National Institutes of Health (NIH) will receive nearly $29 billion. Overall, NIH’s research
program has rated well in its Program Assessment Rating Tool (PART) performance assessments
and is an effective mechanism for promoting biomedical breakthroughs. To better integrate research
across its 27 Institutes and Centers, NIH is developing additional decision support tools to improve
the management of its large and complex scientific portfolio. This will allow NIH to more efficiently
address important areas of emerging scientific opportunities and public health challenges. The Ad-
ministration is committed to this new effort, which will stimulate accelerated investments in research
involving multiple Institutes and Centers, thereby helping improve the Nation’s health.
require that managed care organizations be treated the same as other classes of health care
providers with respect to provider tax requirements.
• Strengthening Reimbursement Policies for Selected Medicaid Services. The 2006 Budget pro-
poses: 1) clarifying allowable services that can be claimed under targeted case management
(TCM), and rehabilitation services; 2) aligning Federal reimbursement for TCM services with
administrative matching rate of 50 percent; and 3) codifying in regulation CMS reimbursement
policies for services provided free of charge to the public.
• Strengthening Medicaid Requirements for Questionable Asset Transfers. To qualify for Medicaid
long term care services, an individual may only retain nominal assets. Applicants who transfer
assets at less than fair market value are subject to delays in Medicaid eligibility. With estate
planning, however, Medicaid applicants can retain their assets and qualify for Medicaid without
any delays. In conjunction with the long-term care partnership proposal, the Budget proposes to
strengthen existing requirements for questionable asset transfers as part of an effort to promote
personal responsibility and planning for long-term care expenses.
• Medicaid Administrative Claims. The Administration proposes establishing individual State
allotments for Medicaid administrative claims. Medicaid administrative claims operate under
an open-ended financing framework, which does not encourage States to administer the pro-
gram as efficiently as possible. In some instances, there is evidence that States have attempted
to shift administrative costs associated with other social service programs to Medicaid. For
these reasons, the Administration proposes to create new incentives for program administra-
tion by establishing administrative claim allotments that will encourage cost-effective methods
for operating the program.
• Medicaid and SCHIP Financial Management. In 2006, HHS will continue to devote more re-
sources to Medicaid and SCHIP financial management. This effort will include increasing the
number of audits and evaluations of State Medicaid programs, and elevating the importance of
financial management oversight at HHS. The Budget proposes to allocate $25 million from the
Health Care Fraud and Abuse Account to finance this initiative.
Medicaid Prescription Drugs. The Budget makes several proposals to increase efficiency and lower
costs in Medicaid prescription drugs, one of the fastest growing segments of the Medicaid budget.
• Amend Medicaid Drug Rebate Formula. All drug manufacturers must pay a rebate to States in
order to have their drugs covered by Medicaid. Part of the rebate formula is the lowest private
market price, also called best price. Best price effectively acts as a price floor, preventing man-
ufacturers from negotiating deep discounts with large purchasers such as hospitals and HMOs.
The Administration proposes to replace best price with a budget neutral flat rebate, allowing
private purchasers to negotiate lower drug prices.
• Restructure Pharmacy Reimbursement. The House Energy and Commerce Committee recently
held a hearing that documented substantial and rising Government overpayment for prescrip-
tion drugs in Medicaid. The Administration proposes moving to a system that more closely aligns
pharmacy reimbursement with pharmacy acquisition cost, while providing adequate payment
for dispensing prescriptions.
• Pharmacy Plus Demonstrations. Pharmacy Plus Medicaid demonstrations provide a drugs-only
Medicaid benefit to certain aged and disabled beneficiaries not otherwise eligible for Medic-
aid. Pharmacy Plus was intended as a placeholder program in the absence of a universal drug
benefit under Medicare. With the introduction of the Medicare drug benefit, Pharmacy Plus
has achieved its goal. CMS will continue to work closely with States that have Pharmacy Plus
THE BUDGET FOR FISCAL YEAR 2006 145
programs to enable them to provide comparable coverage to their beneficiaries under the new
Medicare drug benefit at the same or lower cost to the States.
MMA Implementation
CMS Operations and Efficiencies. HHS has initiated an extensive effort to implement the many
provisions of the MMA. In 2004, CMS reorganized to improve the oversight and administration of
Medicare Advantage and the prescription drug benefit and provide more support for improving qual-
ity and efficiency in Medicare. HHS has begun outreach efforts to ensure that beneficiaries can get
the most out of their new choices, and develop new procedures to enroll beneficiaries and employers
in the new benefit. In 2005 and 2006, HHS will also implement other provisions of the MMA, such
as contractor reform for Medicare’s administrative contractors and changes to payments for Part B
Covered Drugs.
The following table provides an update on HHS’ implementation of the President’s Management
Agenda as of December 31, 2004.
THE BUDGET FOR FISCAL YEAR 2006 147
Budget and
Competitive Financial
Human Capital E-Government Performance
Sourcing Performance
Integration
Status
Progress
HHS successfully consolidated its human resources personnel into four centers and achieved greater
accountability through its employee appraisals and its Strategic Management System. Additionally, it has
implemented a number of initiatives to improve the skills and abilities of its workforce including HHS University
and its Emerging Leaders Program.
HHS’ strategic approach to competitive sourcing is facilitated by the use of evaluation factors such as mission,
outcomes, and commercial market-place composition to identify commercial activities available for competition.
In 2004, HHS completed a total of 33 streamlined studies of 365 FTEs and five standard studies of 351 FTEs.
The average time for completion was 69 days for streamlined studies and 285 days for standard competitions.
As a result, HHS estimates gross savings of over $250 million for completed 2003 studies and $55 million for
completed 2004 studies, as they are fully implemented over a five-year period.
In E-Gov, HHS is implementing Earned Value Management to track and manage information technology
investments. More than 95 percent of HHS’ information systems have certified and accredited security plans.
To improve the overall management of its real property assets, HHS has a three-part strategy: 1) develop an
asset management plan; 2) maintain a real-time inventory of owned, leased, and otherwise managed properties;
and 3) track performance measures, which are consistent with the Federal Real Property Council’s guidance.
HHS plans to complete these activities by December 2005.
HHS’ annual Performance and Accountability Report (PAR) includes an annual estimated improper payments
error rate and amount for Medicare, which accounts for nearly 50 percent of improper payments that have been
measured. For 2004, the Medicare error rate was 10.1 percent, or $21.7 billion. For the first time, HHS reported
improper payments for Head Start in the 2004 PAR, with an estimated error rate of 3.9 percent, or $255 million.
HHS is working to reduce improper payments, expand the number of programs reporting estimated improper
payment estimates, and improve the accuracy of these estimates. (Because this is the first quarter that agency
efforts in the Eliminating Improper Payments Initiative were rated, progress scores were not given.)
The Administration has developed several model Medicaid demonstrations to foster State innovation in reducing
the number of uninsured. To date, the Administration has approved 23 demonstrations and the Urban Institute
is conducting a study to assess the impact of Health Insurance Flexibility and Accountability demonstrations
on rates of uninsurance.
148 DEPARTMENT OF HEALTH AND HUMAN SERVICES
2004 Estimate
Actual 2005 2006
Spending
Discretionary Budget Authority:
Food and Drug Administration ......................................................................... 1,362 1,433 1,487
Program level (non-add) ............................................................................... 1,695 1,801 1,881
Health Resources and Services Administration ........................................ 6,677 6,806 5,982
Program level (non-add) ............................................................................... 7,323 7,373 6,541
Indian Health Service .......................................................................................... 2,921 2,984 3,048
Program level (non-add) ............................................................................... 3,639 3,774 3,846
Centers for Disease Control and Prevention 1 ......................................... 4,440 4,584 4,017
Program level (non-add) ............................................................................... 6,062 6,312 5,901
National Institutes of Health.............................................................................. 27,733 28,444 28,590
Program level (non-add) ............................................................................... 27,896 28,650 28,845
Substance Abuse and Mental Health Services Administration ........... 3,234 3,268 3,215
Program level (non-add) ............................................................................... 3,351 3,392 3,336
Agency for Healthcare Research and Quality ............................................ — 3 —
Program level (non-add) ............................................................................... 304 321 319
Centers for Medicare and Medicaid Services 2 ........................................ 2,579 2,666 3,178
Program level (non-add) ............................................................................... 2,358 3,445 3,999
MedPAC/OCR/GDM/AHRQ Administration ................................................ 19 19 19
Discretionary HCFAC .......................................................................................... — — 80
Administration for Children and Families ..................................................... 13,288 13,537 13,127
Program level (non-add) ............................................................................... 13,292 13,599 13,187
Administration on Aging ..................................................................................... 1,374 1,393 1,369
Office of the Secretary ........................................................................................ 393 405 385
Program level (non-add) ............................................................................... 497 508 517
Health Information Technology ........................................................................ — — 75
Office of Medicare Appeals 3 .......................................................................... 58 58 80
Program Support Center: Medicare eligible retiree accrual ................. 27 33 34
Office of the Inspector General ....................................................................... 39 40 40
Public Health and Social Services Emergency Fund .............................. 2,164 2,269 2,428
2004 Estimate
Actual 2005 2006
Mandatory Outlays:
Medicare:
Existing law ........................................................................................................ 264,890 290,310 340,217
Legislative proposal 4 .................................................................................... — — 195
Medicaid/SCHIP:
Existing law ........................................................................................................ 180,838 193,615 197,996
Legislative proposal ........................................................................................ — 225 955
All other programs:
Existing law ........................................................................................................ 32,255 33,144 33,561
Legislative proposal ........................................................................................ — 38 565
Total, Mandatory outlays ........................................................................................ 477,983 517,332 573,489
AT A GLANCE:
2006 Discretionary Budget Authority (gross): $34.2 billion
(Increase from 2005: 7 percent)
Major Programs:
• Border and Transportation Security
• Coast Guard
• Emergency Preparedness and Response
• Information Analysis and Infrastructure Protection
• United States Citizenship and Immigration Services
• United States Secret Service
• Science and Technology
Protecting America
• Protecting and enforcing our borders, including expansion of the America’s Shield program and
the continuation of the Arizona Border Control Initiative.
• Supporting port security activities, including Coast Guard port security programs and Customs
and Border Protection container security programs.
• Creating a new Screening Coordination and Operations Office to enhance security screening of
people, cargo, and conveyances.
• Concentrating Federal funds for State and local homeland security assistance programs on the
highest threats, vulnerabilities, and needs.
• Improving the Nation’s ability to detect and rapidly characterize a potential bioterrorist attack
by collecting and analyzing disease surveillance data from people, animals, and plants.
• Improving detection of, and countermeasures for, the threat posed by nuclear and radiological
weapons.
• Enhancing detection of, and countermeasures for, the threat posed by chemical agents.
• Strengthening aviation security by upgrading explosives detection technology, deploying new
baggage-screening systems, and improving the monitoring of performance by airport screeners
and screening systems.
151
152 DEPARTMENT OF HOMELAND SECURITY
Agency-specific Goals
• Providing continued support for the United States Secret Service’s protection and investigation
programs.
• Supporting all Coast Guard missions including security of ports, waterways and coastlines, drug
and migrant interdiction, and fisheries enforcement.
THE BUDGET FOR FISCAL YEAR 2006 153
PROTECTING AMERICA
The President’s 2006 Budget will continue to ensure the security of the Nation’s borders, ports,
and transportation systems with enhanced screening of goods and people through programs such as
the new Screening Coordination and Operations Office; increases to the United States Visitor and
Immigrant Status Indicator Technology (US-VISIT) system; additional radiological and nuclear in-
spection equipment; and expansion of the Container Security Initiative. The President’s 2006 Budget
will strengthen enforcement, border, and port security with increases to the Border Patrol; continued
execution of the Arizona Border Control Initiative (ABCi); improvements to the Coast Guard; and
new, threat-focused State and local assistance grants.
PROTECTING AMERICA—Continued
Detaining and removing illegal aliens is critical to effective enforcement of our immigration laws.
The 2006 Budget continues the Administration’s commitment to enforcing our Nation’s immigration
laws and increases funding by $176 million for the detention and removal of illegal aliens. It pro-
vides $90 million for increased detention beds and additional detention and removal officers. It also
provides $39 million for the detention and repatriation costs of the ABCi, which aims to deter illegal
crossings of the desert. The Budget also includes $8 million to apprehend alien fugitives and $5.4
million to ensure that aliens convicted of crimes in the United States are deported directly from cor-
rectional institutions after their time is served, preventing their release into the community. The
Budget also includes $3.5 million for additional Department of Homeland Security (DHS) attorneys
to prosecute immigration cases.
Alternatives to conventional detention methods are essential to improving performance. In the
case of non-criminal aliens, particularly asylum seekers, officials are using alternative custody
arrangements to ensure their appearance at immigration proceedings. These pilot programs have
been successful and the Budget requests $5.4 million in additional funding to expand them. This
will allow DHS to focus resources on the most serious alien criminals.
PROTECTING AMERICA—Continued
its efforts to remove bureaucratic obstacles to the participation of large fire departments in this
program.
In the event of a national emergency, it is crucial that first responders, State and local govern-
ments, and the Federal Government are able to communicate with each other. The 2006 Budget
recognizes the importance of this goal and includes initiatives to strengthen such communications
capabilities. The Administration is dedicated to ensuring that adequate radio frequency spectrum
exists for public safety. It also has supported a number of steps to expand public safety access to
spectrum, including proposing an analog spectrum fee on broadcasters to encourage faster return of
analog television spectrum, so that a portion of it may be allocated for public safety use.
The Science and Technology Directorate has
established a new Office of Interoperability and
Compatibility (OIC), which includes the Safe
Communications program that was created
to coordinate public safety communications to
achieve national wireless interoperability. This
office is charged with creating standards, in
partnership with the public safety community,
for communications, equipment, and training, to
enable first responders from different jurisdictions
to share information.
During 2004, OIC helped first responders in 10
First responders practice extricating a victim during a weapons of
urban areas to communicate with each other in the mass destruction training exercise at the DHS Center for Domestic
event of a large emergency incident, including a ter- Preparedness in Anniston, Alabama.
rorist attack. In 2004 alone, over $830 million was
allocated to State, regional and local interoperability efforts through State and local grant programs.
During 2005 and 2006, these efforts will be expanded to other cities participating in the Urban Area
Security Initiative. Interoperability will continue to be a major focus of State and local homeland
security grants in the 2006 Budget.
Citizen Involvement
Citizen Corps, a component of the USA Freedom Corps, brings together local leaders, citizen vol-
unteers, and a network of first-responder organizations in local preparation and response efforts.
Federal funding has led to the establishment of more than 1,400 local Citizen Corps Councils across
the United States. The 2006 Budget request includes $50 million in grants to State Citizen Corps
activities.
PROTECTING AMERICA—Continued
as partners, this type of collaboration ensures the analysis done between IAIP or the NCTC comple-
ments each other in the best interest of the Nation’s security.
Increased information sharing has also resulted in an improved capability to detect and rapidly
characterize a potential bioterrorist attack. For example, the Department has established the Na-
tional Bio-Surveillance Integration System (NBIS) within IAIP. NBIS will collect and analyze disease
surveillance information from people, animals, plants, food, and the environment. This information
will be monitored continuously, in the context of intelligence information, to rapidly identify and char-
acterize suspicious patterns of illness, and to support response activities by providing improved “sit-
uational awareness.” The surveillance information to support this activity will come from expanded
and enhanced systems across the Federal Government and international sources.
Emergency Preparedness
An effective response to a major terrorist incident or natural disaster depends on adequate prepa-
ration. The Federal response to the hurricanes of 2004 demonstrated the value of proactive and
aggressive response measures. The Budget continues to build on these capabilities and supports
critical preparedness, response, and recovery efforts at all levels of Government.
In 2004, the Federal Government developed the National Response Plan (NRP), a comprehensive
approach to domestic management of emergencies. DHS also led the development of a National Inci-
dent Management System (NIMS). Released in July 2004, NIMS establishes a standard framework
for Federal, State, tribal, and local governments to respond to incidents and emergencies. The Bud-
get provides $15 million to support the implementation of NIMS through the DHS NIMS Integration
Center.
The Budget provides an additional $20 million to augment our response capabilities for the most
catastrophic terrorist attacks. DHS will continue an initiative to plan and build emergency response
capability, working closely with State and local venues as well as other Federal agencies. Additionally,
the Budget includes $10 million for DHS to continue to develop and maintain mobile medical treat-
ment facilities that could be deployed to a community after a large-scale event that would otherwise
overwhelm a community’s medical system.
New technologies to detect and counter terrorist threats are critical to preventing and minimizing
the damage from terrorist attacks. The 2006 Budget includes several major initiatives to achieve
this important goal.
Unifying Federal Nuclear Detection Efforts. A new Domestic Nuclear Detection Office (DNDO) is
being created that will develop and deploy a comprehensive domestic system to detect and report
any attempt to import, assemble, or transport a nuclear explosive device, fissile material, or radio-
logical material intended for illicit use. The DNDO will be responsible for interagency coordination
of a comprehensive national nuclear detection architecture. One major DNDO responsibility will be
oversight of all transformational research and development for detection, identification, and report-
ing of radiological and nuclear materials.
Nuclear and Chemical Detection Architecture Transformational Research and Development. Under
the 2006 Budget, the Science and Technology Directorate will devote $262 million for advanced de-
tection devices to minimize the likelihood of a radiological or nuclear device entering into the United
States, more than double the amount spent in 2005. This research is part of a broader effort to focus
the Nation’s resources toward countering the threat of nuclear or radiological materials being used
against the American people. This research and development (R&D) program will be integrated
160 DEPARTMENT OF HOMELAND SECURITY
PROTECTING AMERICA—Continued
with our overseas non-proliferation efforts to create a seamless strategy for preventing terrorists
from acquiring radiological and nuclear devices and detecting one on our shores. This program will
also be integrated with U.S. Customs and Border Protection, which will work with the Science and
Technology Directorate on a pilot program to deploy next-generation radiation detectors to ensure
that these materials do not cross the borders into the United States. The Budget also doubles the
amount of spending on chemical agent R&D to $107 million, including $36 million in new spending
on non-traditional chemical agent threats.
BioWatch Program for Environmental Monitoring and Detection. The 2006 Budget will enhance
and expand the BioWatch environmental monitoring program, which samples and analyzes air in
over 30 metropolitan areas to check for dangerous biological agents. The program is designed to
provide early warning of a large-scale biological weapon attack, thereby allowing the distribution of
life-saving preventive treatment.
Countering the Threat of Shoulder-fired Missiles Against Commercial Aircraft. The Science and
Technology Directorate will continue to research the viability of technical countermeasures for com-
mercial aircraft against the threat of shoulder-fired missiles. The Directorate will invest $110 million
to test these systems on air-cargo Civilian Reserve Aircraft Fleet planes for safety and reliability.
THE BUDGET FOR FISCAL YEAR 2006 161
The Administration is committed to making sure America continues to welcome the contributions
of immigrants. Within DHS, the United States Citizenship and Immigration Services (USCIS) con-
tinues to improve systems to provide immigrants information and services in a timely, accurate,
consistent, courteous and professional manner, while also guaranteeing national security.
Backlog Reduction. The 2006 Budget continues funding for the President’s multi-year $540 million
initiative enabling USCIS to reduce the backlog of applications, and ensure a six-month processing
standard for all applications by the end of 2006. In 2004, USCIS has continued the focus on quality
improvements and expanded national security checks, such as performing background name checks
on all applications before approval. Although the checks have initially meant longer processing times,
enhanced security will ensure that only eligible applicants are given the right to enter the United
States. In addition, USCIS began implementing significant information technology improvements
including electronic filing (e-filing) for certain immigration applications.
Over the coming year, the Department will focus on transforming the application process with
a greater focus on customers. DHS will establish clear performance milestones, actively monitor
progress towards these milestones, and ensure integrity by establishing comprehensive quality
assurance measures.
162 DEPARTMENT OF HOMELAND SECURITY
The Program Assessment Rating Tool (PART) assessment of the Coast Guard Polar Icebreaking
Program yielded an outcome of Results Not Demonstrated, due to a combination of poor alignment
of the program with the user community and inadequate performance measures. By contrast, the
National Science Foundation’s Polar Tools, Facilities, and Logistics program received an Effective
PART score.
The Budget proposes to transfer funding for the Polar Icebreaking Program to the National Science
Foundation to better align resources with those who benefit from the program. While the Coast
Guard will continue to operate the polar icebreaking fleet on a reimbursable basis, the National Sci-
ence Foundation will ultimately be responsible for the long-range planning required to refurbish or
replace the ships, as necessary, which are nearing the end of their serviceable lives.
The Department will also work to expand airport contract screening opportunities at those airports
wishing to opt out of Federal screening operations. Preliminary analysis of five contract screening
airports in place after the September 11th attacks found there was no detrimental effect on security
by having contract screeners, and that many functions could be undertaken more efficiently and ef-
fectively through contractor-led operations. Given the importance of effective screening operations
on airlines, airports, and passengers, finding the best way to undertake airport screening is our high-
est aviation security priority. The Department will be working to ensure its contracting program is
an attractive, beneficial screening system option for airports while maintaining or improving secu-
rity outcomes. Ultimately, efficient and effective screening operations can only be achieved through
a strong partnership with local airports. The contracting program will provide options for strength-
ening this partnership.
Aviation security is a shared responsibility of the Federal Government, airports, airlines, and the
traveling public. Airport screening, one element of aviation security, benefits passengers and air
carriers by protecting them from threats. These costs should be borne by the beneficiaries of these
services. In 2004, aviation security fees covered less than half the cost of core Federal airport screen-
ing operations. The Budget proposes to increase passenger fees by $3.00 starting in 2006, raising the
fee on a typical one-leg ticket from $2.50 one way to $5.50. For passengers traveling multiple legs
on a one-way trip, that fee would rise from the current maximum of $5.00 to $8.00. Total security
fees will rise from an estimated $2.6 billion this year, to $4.1 billion in 2006, allowing near full cost
recovery of spending on Federal aviation screening operations.
In creating DHS, the Homeland Security Act provided an historic opportunity to design a mod-
ern human resources management system that is mission-centered, fair, effective, and flexible. DHS
launched an ambitious, collaborative effort in 2003 that may be used as a model for future Gov-
ernment reform. The collaboration involved input from managerial and non-managerial employees
at all levels, employee unions, academia, and Government service reform experts. This endeavor
will culminate with the publication of final regulations establishing the system. The 2006 Budget
specifically provides resources that will be used for training supervisory personnel to administer a
164 DEPARTMENT OF HOMELAND SECURITY
performance-based pay system and to create the information technology framework for the new sys-
tem. There will be a phased rollout of the new system scheduled to begin later this year.
The table below provides an update on the DHS’ implementation of the President’s Management
Agenda as of December 31, 2004.
Budget and
Competitive Financial
Human Capital E-Government Performance
Sourcing Performance
Integration
Status
Progress
For the Real Property Asset Management initiative, DHS has developed an Operating Entity Data Elements
Matrix. The structure of this real property database incorporates Federal Real Property Council standards for
data elements and performance metrics. The next critical step in this initiative is to draft and implement an
Asset Management Plan. With respect to improper payments, DHS is undertaking a comprehensive statistical
sampling program early this year to identify any potential problem areas along with focused assessments by
a recovery audit contractor in select major agencies such as U.S. Immigration and Customs Enforcement.
(Because this is the first quarter agency efforts in the Eliminating Improper Payments Initiative were rated,
progress scores were not given.)
THE BUDGET FOR FISCAL YEAR 2006 165
AGENCY-SPECIFIC GOALS
The United States Secret Service is organized into two major components, one focused on protec-
tion and the other focused on investigation. PART assessments of two protective programs found
that both are highly effective, receiving some of the highest evaluations across Government. The
Protective Intelligence program provides Secret Service law enforcement personnel with the infor-
mation needed to carry out their protective operations. The Foreign Protectees and Foreign Missions
program exercises the Service’s unique authority and capability to coordinate logistics, advanced se-
curity surveys, intelligence analysis and dissemination, and other planning activities preceding visits
from foreign heads of state and other dignitaries. The Budget includes $1.2 billion for the Secret Ser-
vice to provide continued support for its protection and investigation programs, $28 million higher
than the 2005 enacted level.
The Coast Guard is responsible for minimizing the loss of life and property on the seas, and its
Search and Rescue (SAR) program is one of its oldest missions. Coast Guard employees spend hun-
dreds of hours annually training for and executing SAR missions, and Coast Guard rescue swimmers
are recognized as some of the best in the world. To help improve the Coast Guard’s SAR program, the
Budget continues implementation of the Rescue 21 system (a state-of-the-art maritime distress and
response communications system) and includes funds to start recapitalization of the Coast Guard’s
High-Frequency distress-call monitoring system.
166 DEPARTMENT OF HOMELAND SECURITY
2004 Estimate
Actual 2005 2006
Spending
Gross Discretionary Budget Authority:
Border and Transportation Security ............................................................... 13,508 14,642 16,099
U.S. Coast Guard ................................................................................................. 5,668 6,321 6,947
Emergency Preparedness and Response .................................................. 2,886 3,082 3,257
Science and Technology .................................................................................... 913 1,116 1,368
Information Analysis and Infrastructure Protection .................................. 834 894 873
Office of State and Local Government Coordination ............................... 4,193 3,985 3,565
Other Department of Homeland Security .................................................... 1,888 1,950 2,043
Total, (gross) ............................................................................................................... 29,890 31,990 34,152
Less Fee-Funded Activities .......................................................................... 1,994 2,994 4,810
Total, Discretionary budget authority (net) ....................................................... 27,896 28,996 29,342
Project Bioshield ............................................................................................. 885 2,508 —
Credit activity
Direct Loan Disbursements:
Disaster Assistance ............................................................................................. — 25 25
Total, Direct loan disbursements ......................................................................... — 25 25
DEPARTMENT OF HOUSING AND URBAN
DEVELOPMENT
AT A GLANCE:
2006 Discretionary Budget Authority: $28.5 billion
(Decrease from 2005: 11 percent)
Major Programs:
• Section 8 Rental Assistance
• Federal Housing Administration
• Public Housing
• HOME Improvement Partnerships Program
• Homeless Assistance Programs
• Housing for the Elderly and Disabled
• Supporting the President’s ambitious agenda for expanded homeownership by assisting approx-
imately 40,000 low-income families with the downpayment on their first home.
• Preparing families for homeownership, identifying predatory lending practices, and helping
current homeowners avoid default.
• Proposing two new mortgage programs that would help more than 250,000 families achieve
homeownership.
• Supplying tax credits to increase the supply of single family affordable homes.
• Working to end chronic homelessness through innovative local strategies to move chronically
homeless individuals from the street to permanent supportive housing.
• Helping ex-offenders get a second chance at employment.
• Reforming Housing Vouchers to improve results and better serve two million low-income house-
holds.
167
168 DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
• Expanding outreach to faith-based and community organizations to level the playing field for
the Department of Housing and Urban Development’s formula and competitive grants.
• Reducing improper payments in rental assistance programs.
THE BUDGET FOR FISCAL YEAR 2006 169
More Americans have achieved the dream of homeownership than at any time in our Nation’s his-
tory: Sixty-nine percent of households own their homes. For the first time ever in 2004, a majority
of minority households own their own homes. The 2006 Budget supports ambitious goals to:
• Add 5.5 million new minority homeowners by 2010 (goal set in 2002)—1.9 million new minority
homeowners were added by 2004; and
• Increase the supply of affordable homeownership units by seven million over the next 10 years
(goal set in 2004).
Saving enough cash for the downpayment and closing costs is the greatest obstacle to homeowner-
ship for many. To help overcome this obstacle, the President proposed new Department of Housing
and Urban Development (HUD) funding to help low-income families purchase their first homes. On
December 16, 2003, President Bush signed the American Dream Downpayment Act. Six months
later, HUD distributed $161.5 million in downpayment funds to over 400 State and local Govern-
ments. These funds have already helped over 4,000 families purchase their first homes; 50 percent
of those families are minorities. The 2006 Budget provides $200 million to continue this initiative.
On December 16, 2003, President Bush signed the American Dream Downpayment Act. As a result of this
initiative, on October 29, 2004, Taryn Ramos was able to purchase her first home with the downpayment
assistance grants administered by Fresno, California.
Housing Counseling
The Budget proposes $40 million for Housing Counseling to prepare families for homeownership,
identify predatory lending practices, and help current homeowners avoid default. In 2006, HUD will
assist approximately 800,000 families to become homeowners or avoid foreclosure, using faith-based
and community organizations in this effort.
170 DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
To remove two large barriers to homeownership—the down payment and impaired credit—the
Budget proposes two mortgage programs. The Zero Down Payment mortgage allows first-time buy-
ers with a strong credit record to finance 100 percent of the home purchase price and closing costs.
For borrowers with limited or weak credit histories, a second program, Payment Incentives, initially
charges a higher insurance premium and reduces premiums after a period of on-time payments. In
2006, these new mortgage programs would assist more than 250,000 families achieve homeowner-
ship.
The President proposes a new Single Family Homeownership Tax Credit that will increase the
supply of single family affordable homes by up to an additional 50,000 homes annually. Under the
President’s plan, builders of affordable homes for middle-income purchasers will receive a tax credit.
State housing finance agencies will award tax credits to single family developments located in a
census tract with median income equal to 80 percent or less of area median income and will be lim-
ited to homebuyers in the same income range. The credits may not exceed 50 percent of the cost of
constructing a new home or rehabilitating an existing property. Each State would have a homeown-
ership credit ceiling adjusted for inflation each year and equal to the greater of $1.75 times the State
population or $2 million. In total, the tax credit will provide $2.5 billion over five years.
Homeownership Vouchers
The Homeownership Voucher program, while still new, has successfully paved a path for low-in-
come Americans to become homeowners. Strong and committed collaboration among public housing
THE BUDGET FOR FISCAL YEAR 2006 171
agencies, local non-profits, and lenders, as well as pre- and post-homeownership counseling for fam-
ilies has proven essential in making the program work. The greatest challenge to the success of the
program is finding lenders who are willing to participate.
Although the Homeownership Voucher program is voluntary, a Program Assessment Rating Tool
analysis completed on the program shows that it has over-achieved its annual goals consistently since
the program began. In its first four years, the program helped over 2,000 low-income families that
were renting through the Section 8 program to become homeowners. In 2006, the program plans to
assist 5,000 families achieve homeownership.
The Budget increases funding for the Neighborhood Reinvestment Corporation to $118 million.
The Corporation, a public nonprofit organization chartered by the Congress in 1978 and independent
of HUD, is also working to expand minority homeownership. The Corporation is pledging to provide
direct assistance to over 170,000 families in 2006 through affordable mortgage and rehabilitation
lending, comprehensive homebuyer education, and counseling services.
172 DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
The Administration remains committed to the goal of ending chronic homelessness. Chronically
homeless individuals who have disabling conditions and live on the streets and in shelters for long
periods comprise less than 10 percent of the homeless population, yet they consume over half of
emergency homeless services. Housing this population will free Federal, State, and local emergency
resources for families and individuals who need shorter-term assistance.
In 2004, the Federal Collaborative Initiative to End Chronic Homelessness, through HUD, and the
Departments of Health and Human Services (HHS) and Veterans Affairs (VA), funded 11 grantees
across the country. Building on the success of this initiative, in 2006, the Samaritan Housing Ini-
tiative will provide up to $200 million through HUD in new housing subsidies paired with case
management specifically targeted to this population.
Across the country, 46 States and 170 localities, along with the private sector, have joined the
Federal effort to move chronically homeless individuals from the streets to permanent supportive
housing, and to prevent additional individuals from becoming chronically homeless.
The Budget provides more resources than ever for permanent supportive housing for homeless in-
dividuals who have been on the streets or in shelters for long periods. The 2006 Budget includes
$1.4 billion for Homeless Assistance Grants, $0.2 billion more than in 2005. Altogether, the Admin-
istration requests $4 billion in 2006 for Federal housing and social programs for the homeless, an
8.5-percent increase.
Chattanooga, Tennessee:
The Chattanooga Blueprint for Ending Chronic
Homelessness
Goal: • To develop 1,400 additional targeted housing subsidies to end chronic
homelessness.
Direct Federal • $2.6 million in 2003 from HUD Homeless Assistance and Emergency
Investments: Shelter grants.
• $2.2 million from the HUD/HHS/VA Collaborative Initiative to End Chronic
Homelessness that will house and provide services for 50 individuals for
five years.
State Investments: • State earmarks 10 percent of its Low-Income Housing Tax Credit
allocation to support housing for persons with special needs.
Local Investments: • 2005 City budget sets aside first-time funds of $400,000 for supportive
housing.
• Chattanooga Housing Authority’s bonding authority.
• $681,500 in city and county funds in 2003 for homeless services.
Private Investments: • 43 percent of the annual $7.3 million spent on homelessness is secured
from private sector sources (philanthropy, faith-based organizations,
foundations, United Way).
• Portion of $20 million in Home Loan Bank funds.
Progress to Date: • 49 chronically homeless individuals are now living in supportive housing
through the Collaborative Initiative.
• New Regional Interagency Council on Homelessness created. Comprised
of Federal, State, county, and city governments, plus faith-based
organizations, and formerly homeless persons.
Housing Opportunities for Persons with AIDS (HOPWA) provides formula grants to States and
localities to provide housing to ensure persons with AIDS can continue to receive health care and
other needed support. The program also provides competitive grants to nonprofit organizations.
HOPWA funding will assist over 67,000 households with housing assistance across 124 jurisdictions
and through 25 competitive grants.
174 DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
More than 600,000 offenders are released from prisons each year and face multiple barriers upon
their return to society, including inadequate job skills and housing. Approximately two-thirds of pris-
oners are re-arrested within three years of their release, and half return to prison during that same
period. To confront this problem, the President announced in the 2004 State of the Union Address
a four-year $300 million Prisoner Re-entry Initiative to help individuals leaving prison make a suc-
cessful transition to community life and long-term employment. Drawing on the collaborative efforts
of the Departments of Labor, HUD, and Justice, and harnessing the experience of faith-based and
community organizations, the program will offer a range of job training, housing, and mentoring ser-
vices, that will help reduce recidivism and ensure that former prisoners are reintegrated into society.
The President’s Budget provides $75 million for this initiative in 2006, including $25 million within
HUD.
THE BUDGET FOR FISCAL YEAR 2006 175
The Housing Choice Voucher program provides two million low-income families with subsidies to
help them afford a decent place to live. Participants contribute 30 percent of their income toward
rent; the Government pays the rest. In the past, funds have been appropriated for a specific number
of units each year. These funds were then given to public housing agencies (PHAs) based on the
number of vouchers they were awarded. HUD is concerned that voucher costs have increased at a
rate of more than double the average increase in the private rental market for the past several years.
This rate of increase, combined with an extremely complex set of laws and rules that govern the
program, has limited its effectiveness.
The Administration proposes to simplify the program and give more flexibility to PHAs to admin-
ister the program to better address local needs. Building on changes in the 2005 Consolidated Ap-
propriations Act, the Administration proposes expanding the “dollar-based” approach. PHAs would
continue to receive a set dollar amount as in 2005, but they would have the freedom to adjust the
program to the unique and changing needs of their community, including the ability to set their own
subsidy levels based on local market conditions. These changes would provide a more efficient and
effective program to help low-income families more easily obtain decent, safe, and affordable housing.
The Housing for the Elderly (Section 202) program provides capital grants and operating subsidies
to non-profit sponsors to construct new apartment units for very low-income elderly people. The
2004 PART found lengthy and delayed construction, unexpected cost increases, and an inability to
demonstrate program performance results.
The Administration will investigate ways that Housing for the Elderly can be reformed to address
these performance shortcomings. In doing so, it will be guided by successful models of housing assis-
tance vouchers and the HOME block grant, both of which provide housing efficiently and quickly. The
following table compares and contrasts the approach of the existing Housing for the Elderly capital
grant program with that of the HOME program.
Section 202 Elderly Housing has Higher Federal Costs and is Slower to Complete than
HOME Assistance
HUD allocates annual subsidies to local PHAs to support their operations and maintain 1.2 mil-
lion units of locally owned low-income housing. The current operating subsidy allocation formula,
which dates from the 1970s, has been almost universally criticized as obsolete and inaccurate in esti-
mating local needs. In 2000, the Congress directed HUD to commission a cost study by the Harvard
Graduate School of Design to establish the basis for a new, fairer allocation. HUD has negotiated
with representatives of the PHAs and others on the terms of a possible new formula based on the
Harvard study’s findings. The right formula would help ensure that funds are distributed equitably.
Accompanied by other rules changes, including project-by-project cost accounting, it would reward
PHAs that manage their housing assets more effectively and thereby encourage them to do so. A
rule drafted with the advice of the negotiating group is now under review. A revised version will be
published later this year for public comment and could be the basis for operating funds allocation
beginning in 2007.
The Budget proposes a new program within the Department of Commerce to support communities’
own efforts to meet the goals of improving their economies and their quality of life. This initiative
will consolidate programs such as Community Development Block Grants into a more targeted, uni-
fied program that sets accountability standards in exchange for flexible use of the funds. (See the
Department of Commerce chapter for more details.)
The program was rated Adequate because it meets its statutory objective to serve predominantly
first-time and minority homeowners and maintain an adequate capital reserve. However, the
program lacks quantifiable annual and long-term performance goals; its credit model does not
accurately predict losses to the insurance fund; and it cannot demonstrate its ability to reduce fraud
in the program. FHA will establish quantifiable annual and long-term performance goals for the
percentage of FHA Single Family insured loans for first-time and minority homeowners. FHA will
continue current efforts to develop a credit model that more accurately and reliably predicts defaults.
THE BUDGET FOR FISCAL YEAR 2006 177
The table below provides an update on HUD’s implementation of the President’s Management
Agenda as of December 31, 2004.
Budget and
Competitive Financial
Human Capital E-Government Performance
Sourcing Performance
Integration
Status
Progress
HUD has begun to overcome chronic weaknesses in its human capital as cited by the Government Accountability
Office. HUD has revamped its hiring practices to fill jobs in an average of 38 days instead of 96 days; is
developing a new managerial cadre through recent hiring and executive training programs; and synchronized
managers’ goals and performance plans with the overall aims of the agency. HUD’s year-long effort to develop
a workforce plan sets the stage for more improvement in closing skill gaps over the next year. HUD’s first
competition is now in progress and HUD is working to expand competitive sourcing to generate savings in
commercial activities. While still suffering from internal control weaknesses, HUD met the accelerated timetables
for producing its performance and accountability report, and improved the reliability, accuracy, and timeliness
of financial systems. HUD is continuing efforts to reduce its internal control weaknesses from 10 to 7 by next
year. HUD completed security reviews for all of its information systems in calendar year 2004, and plans are
in place to eliminate security defects by next year. HUD set achievable long-term goals on reducing chronic
homelessness and increasing minority homeownership. HUD will expand this strategic approach to other budget
areas and use them to focus its resources and programs on achieving those goals.
HUD expanded its outreach to community organizations, including faith-based organizations, attempting to
level the playing field for its formula and competitive grants. HUD has removed all discriminatory barriers to
participation by such organizations. HUD’s technical assistance has helped these organizations understand the
application process as well as the responsibilities for implementation. These organizations are beginning to
compete more widely and effectively as shown in their success in increasing the number of grants from 659
to 765 (increase of 16 percent) from 2002 to 2003.
178 DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
At the beginning of the President’s first term, HUD committed to working with its stakeholders to reduce the
improper payment in rental subsidies by one-half by 2005. At that time, over 60 percent of rental subsidies were
computed incorrectly because of administrative processing errors. Other errors resulted from inadequate
verification of tenants’ self-reported incomes. Four years later, HUD has achieved exactly what it committed to
do. Processing errors are down to 30 percent and improper payments are lower by half, a reduction of $1.6
billion in payment errors (see accompanying chart). HUD does not plan to stop there. Beginning in 2005,
HUD will expand the verification of tenant self-reported incomes to include recent wage data. This has the
dual benefit of both improving accuracy and providing more privacy because income data will be matched
electronically whereas current procedures require a paper verification letter to the tenant’s employer. These
stewardship efforts improve confidence that the right person is getting the right benefit in a timely, dignified, and
private manner as intended under law. (Because this is the first quarter that agency efforts in this initiative were
rated, progress scores were not given.)
Today, public and assisted housing residents reside in better quality housing with fewer safety violations than four
years ago. HUD increased the percentage of projects meeting its physical condition standards in public housing
by nine percentage points (from 83 percent in 2002 to 92 percent in 2004) and in subsidized private housing by
eight percentage points (from 87 percent in 2002 to 95 percent in 2004). HUD now turns around at least 45
percent of public housing authorities classified as “troubled” within 12 months rather than the two years allowed
by regulation. New rules and procedures have virtually eliminated property flipping fraud from the FHA insurance
programs, and close monitoring will continue to prevent such abuses. New rules and procedures have forced out
bad appraisers from the FHA program and an effort called Credit Watch will continue to bar other individuals
who improperly raise the risk of loss in these programs. Since 2001, HUD has worked with stakeholders to
streamline their Consolidated Planning process into an easy-to-use and helpful tool for communities.
2004 Estimate
Actual 2005 2006
Spending
Discretionary Budget Authority:
Community Development Fund ........................................................................... 4,933 4,703 —
HOME Investment Partnerships .......................................................................... 2,006 1,900 1,941
American Dream Downpayment Initiative (non-add) ............................. 87 50 200
Homeless Assistance Grants ............................................................................... 1,260 1,241 1,440
Housing Opportunities for Persons with AIDS................................................ 295 282 268
Tenant-based Rental Assistance ......................................................................... — 14,766 15,845
Project-based Rental Assistance ........................................................................ — 5,298 5,072
Housing Certificate Fund ....................................................................................... 16,413 1,557 2,500
Public Housing ........................................................................................................... 6,275 5,017 5,734
Native American Housing Block Grant .............................................................. 650 601 583
Revitalization of Severely Distressed Public Housing (HOPE VI) ........... 149 143 143
Housing for the Elderly ............................................................................................ 773 741 741
Housing for Persons with Disabilities ................................................................. 249 238 120
Federal Housing Administration (FHA) ............................................................. 2,941 2,311 2,224
Lead Hazard Reduction .......................................................................................... 174 167 119
All other HUD programs ......................................................................................... 1,798 979 1,514
Total, Discretionary budget authority ...................................................................... 32,034 32,208 28,510
Credit activity
Direct Loan Disbursements:
FHA............................................................................................................................ — 53 54
Total, Direct loan disbursements ......................................................................... 53 54
AT A GLANCE:
2006 Discretionary Budget Authority: $10.6 billion
(Decrease from 2005: 1 percent)
Major Programs:
• Bureau of Indian Affairs
• Bureau of Land Management
• Bureau of Reclamation
• Fish and Wildlife Service
• National Park Service
• U.S. Geological Survey
• Developing the Nation’s energy resources efficiently and responsibly to reduce the Nation’s
reliance on energy imports.
• Supporting local economies through recreation on Federal lands.
• Helping local economies find self-sustaining ways to manage historical properties and promote
heritage tourism through the Preserve America Initiative.
• Including local communities in stewardship and decision-making on Federal lands through the
Cooperative Conservation Initiative.
• Supporting the replacement and renovation of Indian schools to create a safe learning environ-
ment for Indian schoolchildren.
• Assessing the condition of National Park Service facilities and setting performance goals to
prioritize repair and replacement projects.
• Expediting the removal of existing Abandoned Mine Land dangers within 25 years.
• Enabling the sale of public lands in Nevada while ensuring taxpayers are compensated fairly.
• Shifting certain costs of the Pick-Sloan Missouri Basin Program to power customers.
181
182 DEPARTMENT OF THE INTERIOR
• Proposing or modifying fees related to land and mineral use to shift $27 million in costs to those
directly benefiting from the resources.
• Terminating $90 million in State recreation grants that support activities that are not Federal
responsibilities.
Agency-specific Goals
• Reforming and reorganizing tribal trust programs and activities to provide greater accountabil-
ity to the beneficiaries.
• Promoting outcome-based performance by setting goals of establishing healthy, sustainable fish
and wildlife populations.
• Improving water management and restoring ecosystems in California’s Central Valley through
the collaborative California Bay-Delta program.
• Preventing water crises and reducing conflict over water in the West through the Water 2025
program.
THE BUDGET FOR FISCAL YEAR 2006 183
Reducing the Nation’s dependence on foreign Oil and Gas Development Area in ANWR
energy sources is a top Administration priority. Millions of acres
20
The United States imports approximately half Entire Arctic National Wildlife Refuge
of its daily oil consumption of 20 million barrels. Dedicated Wilderness
Although the United States produces almost all 15
1002 Area
Development Area
of the natural gas it uses, it will have to import
more natural gas in the future because of grow-
ing demand and restrictions on developing en- 10
ergy resources on public lands.
The Administration supports authorizing
the limited exploration of the region with 5
the most promising oil reserves—commonly
referred to as the “1002 Area”—within ANWR,
using the strictest environmental standards. 0
Source: Department of the Interior.
The Department of the Interior (DOI) esti- Note: For presentation purposes, the Development Area is shown
mates that the 1002 Area holds between 5.7 oversized so that it is visable on the chart.
billion and 16 billion barrels of recoverable
reserves, or, at peak production, up to one million barrels per day of new domestic oil supply. In
addition, the development footprint from production would only cover about one-tenth of one percent
of the 1002 Area. (See accompanying chart.)
Millions of people each year visit our national parks, forests, refuges, and public lands. These areas
offer unparalleled outdoor recreational opportunities, ranging from exploring mangrove thickets at
Ten Thousand Islands National Wildlife Refuge in Florida to hiking on the Appalachian National
Scenic Trail. DOI manages an array of natural and cultural wonders, including 388 national parks
or park units, 546 national wildlife refuges, and 261 million acres of public land administered by the
Bureau of Land Management (BLM).
The American Recreation Coalition estimates that outdoor recreation generates $250 billion of
economic activity annually. Americans pursuing recreation opportunities on Federal lands support
Preserve America
American history comes alive in historic buildings, cultural sites, and communities that celebrate their his-
toric settings. Thousands of historic and cultural sites are the pride of local communities everywhere. Many
of these communities have the opportunity to use historical sites to promote heritage tourism and economic
development. The President’s Preserve America initiative provides $12.5 million in 2006 for upfront planning
and associated assistance to communities looking for ways to preserve their local heritage in a self-sustain-
ing manner. For example, Virginia City, Montana, attracts visitors with one of the best-preserved gold mining
towns in the West. As Americans travel, they seek to reconnect with our Nation’s rich history and diverse
culture; the Preserve America initiative will help communities meet this growing demand for heritage tourism.
184 DEPARTMENT OF THE INTERIOR
Quality education is critical for the future of tribal governments and individual Indians. The Bu-
reau of Indian Affairs (BIA) serves approximately 48,000 students and resident-only boarders (about
seven percent of all Native American children) in 184 elementary and secondary schools and dormi-
tories located in 23 States. In April 2004, the President signed Executive Order 13336, which estab-
lishes an Interagency Working Group, including representatives from the Departments of Education
and the Interior, to assist American Indian and Alaska Native students in meeting the challenging
academic standards of the No Child Left Behind Act of 2001 in a manner that is consistent with tribal
traditions, languages, and cultures. In 2006, BIA will continue aggressively implementing this law
through its partnership with the Department of Education, and through its efforts to establish lead-
ership programs and rehabilitate additional reservation schools.
The Congress passed the 1977 Surface Mining Control and Reclamation Act (SMCRA) to reclaim
abandoned coal mine lands. The AML program pays for the reclamation through coal fees, which
expire in June 2005. More than $3 billion in unfinished health and safety work remains, potentially
affecting more than 3.5 million Americans who live less than one mile from abandoned coal mines.
A 2004 Program Assessment Rating Tool (PART) assessment found the Office of Surface Mining
effectively manages the program and coordinates with coal-mining States, although the program’s de-
sign hinders the timely cleanup of abandoned coal mine lands. SMCRA’s funding allocation formula
distributes grants to eligible States and Tribes even if they have no high priority sites remaining.
Current Budget
Program Proposal
Acres Reclaimed Annually ................................................. 6,900 8,200
Years to Eliminate Health and Safety Problems ........ 47 25
Corrects SMCRA Allocation Problem ............................ No Yes
THE BUDGET FOR FISCAL YEAR 2006 187
This delays clean-up in some areas and contributes to poor water quality and other health and safety
problems.
The Administration proposes to extend the coal fee and to modify SMCRA in a way that both cor-
rects the diversion of dollars away from the most serious problems and pays the certified States and
Tribes only their share of AML fund balances over 10 years.
The Administration proposes to redistribute costs of this multi-State project to power customers
who are using the dams and power plants, originally built during the 1950s and 1960s, in part to
support irrigation. Much of the planned irrigation is technically impractical or economically unjusti-
fied, and will never be developed. Approximately $500 million of unpaid construction and operation
costs could be recovered from power customers who benefit from the finished facilities.
188 DEPARTMENT OF THE INTERIOR
To ensure the Government receives fair compensation for the use of the Nation’s land and minerals,
the Budget proposes and modifies several fees related to mineral development, including expanded
permit processing fees for onshore minerals and a new permitting fee for Outer Continental Shelf
(OCS) leases. In addition, OCS rental rates, which have not increased in 10 years, will rise with the
rate of inflation. These fees support the Administration’s efforts to charge for Government services
where the direct beneficiary can be identified. This will shift the costs from taxpayers and allow DOI
to better process lease or permit applications as demand increases. The proposed fees are expected
to generate approximately $27 million in 2006, thereby reducing the cost to taxpayers for operating
these programs.
The 2006 Budget terminates funding for Land and Water Conservation Fund State recreation
grants. These grants support improvements to State and local parks that are more appropriately
funded through State funding or bonds than Federal resources. A PART review found the current
program could not measure performance or demonstrate results.
THE BUDGET FOR FISCAL YEAR 2006 189
The table below provides an update on DOI’s implementation of the President’s Management
Agenda as of December 31, 2004.
Budget and
Competitive Financial
Human Capital E-Government Performance
Sourcing Performance
Integration
Status
Progress
DOI has made progress in many areas. The Department developed and received provisional certification for a
new five-level Senior Executive Service performance management system, incorporated diversity strategies into
bureau workforce plans, and began to incorporate goals into performance plans of all employees. Competitive
sourcing reviews project savings of $3 million annually for at least five years, and, to date, only one permanent
Interior employee of the 5,032 reviewed has been involuntarily separated. In financial performance, however,
DOI continues to face challenges in Indian trust reform. DOI also must continue efforts to implement the new
Financial and Business Management System. In addition, Interior certified and accredited over 80 percent of
its information technology systems (up from 10 percent in 2003); received the E-Gov Institute’s Excellence in
Enterprise Architecture Award for leadership in government transformation; and matured its Investment Review
Board. Finally, the Department expanded implementation of Activity Based Costing and continued tracking the
costs of achieving performance goals.
Interior has completed comprehensive condition assessments for most assets and is on schedule to finish them
all by the end of 2006. DOI now uses a Facility Condition Index to monitor asset conditions and determine
funding priorities.
190 DEPARTMENT OF THE INTERIOR
AGENCY-SPECIFIC GOALS
DOI has responsibility for the investment of, and disbursement and reporting to individual Indi-
ans and Tribes on, financial assets generated from leasing and other commercial activities on Indian
lands. DOI developed a Comprehensive Trust Management Plan to guide trust reform, undertook
a reengineering effort, and adopted a targeted strategic plan as part of its efforts to improve perfor-
mance and provide greater accountability to its beneficiaries.
A key step to reform is the American Indian Probate Reform Act of 2004, which the President signed
into law in October 2004. The Act provides a clearer method to pass down individual Indian land
ownership from one generation to the next; creates a uniform Federal Indian probate code; and facil-
itates the consolidation of Indian land ownership to restore economic viability to the land. The 2006
Budget includes funding to help eliminate a backlog of 23,000 probate cases, as well as to process the
projected 4,500 new probate cases that will occur each year. This will help to make sure that no new
cases are added to the current backlog. The Administration continues to support the Indian Land
Consolidation Program as an additional way to help address the fractionation of individual Indian
land interests. The 2006 Budget proposes $34.5 million for the program. In addition, the Budget
includes $135 million for the Office of Historical Trust Accounting to continue an accounting in ac-
cordance with the five-year plan filed with the U.S. District Court. This amount may be revised as
legal issues pending before the Courts are resolved.
Tribal Priority Allocation (TPA) funds provide basic tribal services, such as Tribal Courts, social
services, adult vocational training, child welfare, and natural resources management. TPA gives
Tribes the opportunity to further Indian self-determination by establishing their own priorities and
moving Federal funds among programs.
Indian Tribes are becoming more business-oriented and are seeking more control over their lands
and economic and cultural decisions. In addition, BIA is helping to expedite key energy and mineral
resource development opportunities through the timely processing of joint-venture development and
lease agreements.
The Administration believes TPA could be improved by targeting funding to the areas of greatest
need. The funding process used today is a formula allocation based on historical funding levels estab-
lished in the early 1970s, and has remained essentially unchanged. To improve program accountabil-
ity, DOI will consult with Tribes on how best to focus program funds on areas of need, considering the
incentive effects of any such reallocation. The Administration will continue to support Tribes that
continue to strive for self-determination with funding and technical support.
Water 2025
Water is the scarcest resource in some of the fastest growing areas of the country. Water 2025
proactively addresses potential future water conflicts in areas of the West where such conflicts are
likely to occur. The program focuses resources on high-risk areas, emphasizing improvements in
water efficiency, conservation, and water markets. It promotes collaboration, improves technology,
and removes institutional barriers. The 2006 Budget requests $30 million for Water 2025, allocating
competitive grant funds equally among the Bureau of Reclamation’s five regions.
192 DEPARTMENT OF THE INTERIOR
2004 Estimate
Actual 2005 2006
Spending
Discretionary Budget Authority:
Bureau of Land Management .......................................................................... 1,776 1,699 1,737
Minerals Management Service ........................................................................ 171 174 167
Office of Surface Mining ..................................................................................... 296 297 299
Legislative proposal ........................................................................................ — — 58
Bureau of Reclamation/CUPCA ...................................................................... 954 966 907
US Geological Survey ......................................................................................... 938 935 934
Fish and Wildlife Service ................................................................................... 1,303 1,292 1,323
National Park Service ......................................................................................... 2,259 2,315 2,249
Bureau of Indian Affairs ...................................................................................... 2,306 2,296 2,187
Office of the Special Trustee ............................................................................ 209 228 304
All other .................................................................................................................... 485 465 478
Subtotal, excluding item below ........................................................................ 10,696 10,667 10,643
Additional Wildland Fire Suppression ........................................................... — 99 —
Total, Discretionary budget authority ................................................................. 10,696 10,766 10,643
Mandatory Outlays:
Existing law ........................................................................................................ 2,599 2,569 1,703
Legislative proposal ........................................................................................ — 6 417
Total, Mandatory outlays ........................................................................................ 2,599 2,563 2,120
Credit activity
Guaranteed Loan Commitments:
Indian guaranteed loan program ..................................................................... 88 67 67
Total, Guaranteed loan commitments ................................................................ 88 67 67
DEPARTMENT OF JUSTICE
AT A GLANCE:
2006 Discretionary Budget Authority: $20.3 billion
(Increase from 2005: 1 percent)
Major Programs:
• Combating terrorism
• Drug enforcement
• Firearms and explosives enforcement
• Federal detention programs
• Prosecuting corporate fraud, and other criminal and civil legal
activities
Protecting America
• Fighting child exploitation and maintaining support for missing children’s initiatives.
• Supporting local law enforcement efforts to combat violence against women, provide victims’
services, and expand the use of DNA to fight crime and to protect the innocent.
• Assisting communities by helping ex-offenders re-enter and reintegrate into society.
• Fighting human trafficking.
• Achieving $2 billion of savings from reduction and elimination of programs that fail to demon-
strate results.
193
194 DEPARTMENT OF JUSTICE
PROTECTING AMERICA
Combating Terrorism
The President’s highest priority for the Department of Justice (DOJ) continues to be the detection,
prevention, investigation, and prosecution of terrorist attacks against U.S. citizens and interests.
In the past year, the Department made 1,428 counterterrorism-related arrests, and prosecuted and
obtained convictions in 497 terrorism-related and anti-terrorism cases. The 2006 Budget further
strengthens these counterterrorism efforts, and proposes significant funding increases for the Federal
Bureau of Investigation (FBI), the lead agency within DOJ for combating terrorism, to hire additional
agents and intelligence analysts, as well as provide increased support to its counterterrorism mis-
sion.
The FBI has received significant resource increases in recent years, with funding rising from $3.3
billion in 2001 to $5.1 billion in 2005. The Budget proposes $5.7 billion for the FBI in 2006, an
increase of 11 percent over 2005. This level would support 2,945 counterterrorism agents and 2,746
intelligence analysts at the Bureau.
The Department’s Drug Enforcement Administration (DEA) is responsible for investigating drug
trafficking organizations in tandem with the other Federal agencies participating in the Organized
Crime and Drug Enforcement Task Force (OCDETF) program. During 2004, DEA and OCDETF suc-
cessfully dismantled 36 organizations linked to those on the CPOT List, and significantly disrupted
the activities of 159 others. The 2006 Budget provides $38 million for enhancements in intelligence
sharing and priority targeting, $14 million for the operation and maintenance of the Drug Intelligence
Fusion Center, and $58 million for additional OCDETF agents, attorneys, and deputy marshals. In
addition, a total of $22 million has been provided in support of the Administration’s Afghanistan
PROTECTING AMERICA—Continued
counter-narcotics initiative, which is needed to help promote the long-term stability of the country,
as well as stem the supply of heroin to the global narcotics market.
The 2006 Budget also proposes transferring the High-Intensity Drug Trafficking Area (HIDTA)
Program, operated by the Office of National Drug Control Policy, to DOJ in order for this drug control
program to be better coordinated with OCDETF. The program has grown well beyond its intended
scope from when it was first funded at $25 million in 1990 for only five regions experiencing high
levels of drug trafficking. It now spends $227 million on 28 areas that include much of the populated
United States. Efforts to focus the HIDTAs on the President’s National Drug Control Strategy prior-
ity of targeting high-level organizations such as the CPOT List have failed and have been hindered by
the practice of funding individual HIDTAs at the same level year after year. As a result, the Budget
proposes reducing HIDTA funding to create a better-focused, more effective $100 million program
that gives Justice greater leeway to determine how funds will be targeted.
The Bureau of Prisons (BOP) and the Office of the Federal Detention Trustee (OFDT) ensure
that Federal criminals are appropriately detained and incarcerated to assure public safety. Taken
together, the cost of Federal incarceration and detention activities now accounts for over a third
of DOJ’s annual budget. At present, there are over 182,000 inmates in Federal custody, of which
approximately 25 percent represent immigration-related arrests. In addition, the number of Federal
detainees has experienced record growth, up almost 200 percent over the past decade with the largest
increases occurring along the U.S. Southwest border due to Department of Homeland Security (DHS)
and DOJ border enforcement and protection initiatives.
inmate designation functions, relocating human resource and employee development functions, and
transferring inmates with the most critical medical needs to dedicated BOP medical centers. For
2006, $1.2 billion is provided to OFDT to support an average daily detainee population in excess
of 60,000.
The aggressive enforcement of the Administration’s law enforcement initiatives, and the result-
ing detainee population increase, has continued to challenge detention planning and forecasting.
The Department is committed to enhancing its forecasting models, which requires balanced coor-
dination among DOJ and DHS components. OFDT will improve forecasting by considering DOJ
and DHS policy decisions, along with information received from the Administrative Office of the
United States Courts. DOJ law enforcement policies—for example, those relating to gun and drug
initiatives—affect the number of Federal arrests and criminal prosecutions. The size and scope of
DHS border control and protection initiatives—including putting more border patrol agents on the
borders—influences the Federal prisoner and detainee populations and affects detention costs.
The United States Attorneys prosecute violators of Federal law including corporate criminals.
Criminal penalties assessed by the Federal courts, mostly for U.S. Attorney criminal fraud prose-
cution efforts, increased by 30 percent in 2004. The 2006 Budget supports these ongoing activities
with $1.6 billion. In addition, the Department’s litigating divisions are combating corporate fraud
and other cases. And, in the past four years, this Administration has increased Federal prosecutions
of the criminal misuse of firearms by 76 percent. In 2004, the Justice Department filed 11,067
Federal firearms cases, the highest number of such cases on record for a single year.
The 2006 Budget includes $2.4 billion for State and local assistance programs, including Project
Safe Neighborhoods, the DNA Initiative, USA Freedom Corps, State and Local Anti-Terrorism Train-
ing, and the Regional Information Sharing System. These and other programs funded within DOJ
enhance the capability of State and local governments to reduce crime in our communities, as well
as our vulnerability to terrorism.
Today crime, including violent crime, is at a 30-year low. The Project Safe Neighborhoods (PSN)
initiative, announced by the President and the Attorney General in 2001, is a comprehensive strategy
that brings together Federal, State, and local agencies to continue the record reduction in the violent
crime in our communities. Working with the Department, each community tailors the program to tar-
get problems associated with the criminal misuse of firearms and to build on local capacities. Since
2001, the Administration has dedicated $1.3 billion in Federal resources to PSN, including grants to
State and local task forces through the Office of Justice Programs (OJP), increased Federal prosecu-
tors within U.S. Attorneys Offices, and additional agent and training resources within the Bureau
of Alcohol, Tobacco, Firearms and Explosives (ATF). For 2006, the Budget requests $363 million for
PSN, an increase of $138 million, or 61 percent, over the 2005 enacted level. The program increase
will:
• Provide $74 million in grant assistance for State and local prosecution of criminal misuse of
firearms;
• Increase funding for States to update criminal history records, which are needed to deter illegal
firearms purchases, by $34 million, which is more than double the 2005 enacted level; and
• Augment Project ChildSafe, which distributes gun locks to prevent misuse of guns by children
and youth, by $29 million over the 2005 enacted level.
198 DEPARTMENT OF JUSTICE
PROTECTING AMERICA—Continued
The 2006 Budget continues funding for the President’s DNA initiative, Advancing Justice Through
DNA Technology, a plan to devote more than $1 billion over five years to help realize the full potential
of DNA technology in the criminal justice system. The initiative advances the use of DNA to solve
crimes and exonerate the innocent. The initiative will help clear the backlog of unanalyzed DNA
samples from the most serious violent offenders, invest in DNA analysis technology for crime labs,
train criminal justice professionals to make better use of DNA evidence, and promote the use of DNA
to identify missing persons. The Administration proposes $236 million in 2006 for the initiative, an
increase of over $68 million over the 2005 enacted level.
Through the efforts of the FBI, DEA, ATF, U.S. Marshals, and State and local assistance, the Ad-
ministration is committed to further reducing the violent crime rate in the Nation. In June 2004, the
Attorney General announced a targeted effort to deploy teams of Federal law enforcement agents and
prosecutors to 15 cities to work with local law enforcement to curb the rate of violent crime in some
of the communities not sufficiently benefiting from the overall reduction in the crime rate. DOJ will
continue to support the deployment of these Violent Crime Impact Teams as part of this initiative in
2006.
THE BUDGET FOR FISCAL YEAR 2006 199
DOJ is committed to fighting child pornography and obscenity, and to protecting children from traf-
ficking and other forms of exploitation. The Department works with other law enforcement agencies
to target, dismantle, and prosecute predatory child molesters and those who traffic in child pornogra-
phy. The Criminal Division’s High-Tech Investigative Unit (HTIU) is staffed with computer forensic
experts, who work with Federal agents and prosecutors and use their technological expertise against
Internet-based child pornographers and adult obscenity offenders. The HTIU receives and reviews
more than 100 tips per month from the Federal Trade Commission and organizations such as the
National Center for Missing and Exploited Children. The Budget increases funding by $13 million
for the Justice Department’s efforts to fight child pornography and obscenity, including the Criminal
Division programs, the FBI’s Innocent Images Initiative, which investigates sexual predators who
use the Internet to prey on children, and the Internet Crimes Against Children Task Forces, which
links Federal, State, and local law enforcement efforts.
More than 600,000 offenders are released from prisons each year and face multiple barriers upon
their return to society, including inadequate job skills and housing. Approximately two-thirds of pris-
oners are re-arrested within three years of their release, and half return to prison during that same
period. To confront this problem, the President announced in his 2004 State of the Union Address
a four-year $300 million Prisoner Re-entry Initiative to help individuals leaving prison make a suc-
cessful transition to community life and long-term employment. Drawing on the collaborative efforts
of the Departments of Labor, Housing and Urban Development, and Justice, and harnessing the ex-
perience of faith-based and community organizations, the program will offer a range of job training,
housing, and mentoring services that will help reduce recidivism and ensure that former prisoners
are reintegrated into society. The President’s Budget provides $75 million for this initiative in 2006,
including $15 million within DOJ.
Many in America’s prisons are struggling with substance abuse problems that hinder their suc-
cessful reintegration into society. The President’s Budget provides $44.1 million for the Residential
Substance Abuse Treatment (RSAT) Program. RSAT helps States and local governments implement
drug treatment programs in correctional facilities so that offenders can reenter society free of addic-
tion.
The Administration is committed to ending trafficking in human beings, which is a modern day
form of slavery and an affront to human dignity. According to some estimates, each year at least
700,000, and as many as four million people, primarily women and children, are trafficked around
the world and exploited for sexual purposes or for labor without compensation. Of these, 14,500
to 17,500 people are trafficked annually into the United States. In 2002, President Bush signed
Executive Order 13257 to establish a Cabinet-level Interagency Task Force to Monitor and Combat
Trafficking in Persons, in which the Department actively participates. The FBI and the Criminal
Section of the Civil Rights Division investigate cases of human trafficking in conjunction with DHS
immigration and customs enforcement agents. From 2001 to 2003, the Department opened 210 new
human trafficking investigations, more than double the number opened in the previous three years,
and the Civil Rights Division and the U.S. Attorneys initiated 111 trafficking prosecutions. In 2004,
alone, the Department opened 130 trafficking investigations and undertook 51 prosecutions.
THE BUDGET FOR FISCAL YEAR 2006 201
The President’s Budget reduces or eliminates a number of programs that do not have a record of
demonstrating results, including:
• General purpose State and local law enforcement programs, such as the Community Oriented
Policing Services (COPS) Hiring Grants and the Byrne Justice Assistance Grants that are not
able to effectively demonstrate an impact on reducing crime. A 2004 Program Assessment Rat-
ing Tool (PART) assessment rated the COPS Hiring Grants as Results Not Demonstrated with
respect to reducing crime, notwithstanding the program’s funding of over 100,000 police offi-
cers, exceeding the program’s original commitment. Elimination of these programs will save
$635 million a year.
• State Criminal Alien Assistance Program (SCAAP) grants, which serve as a form of revenue
sharing rather than assistance targeted to a particular need. A 2005 PART assessment rated
SCAAP as Results Not Demonstrated. Ending this program will save $301 million a year.
• Juvenile Accountability Block Grants (JABG), which provide a variety of non-focused juvenile
justice grants to States and localities. A 2004 PART assessment rated JABG as Ineffective.
Terminating this program will save $54 million a year.
• Programs like the Byrne Discretionary Grants and the COPS Law Enforcement Technology
Grants, which are earmarked in their entirety by the Congress, prevent targeting of assistance
based on need or priority. Eliminating these programs will save $305 million a year.
The table that follows provides an update on DOJ’s implementation of the President’s Management
Agenda as of December 31, 2004.
202 DEPARTMENT OF JUSTICE
Budget and
Competitive Financial
Human Capital E-Government Performance
Sourcing Performance
Integration
Status
Progress
Over the past year, the DOJ has made strong progress in implementing most areas of the President’s
Management Agenda. DOJ developed a human capital plan that is guiding its implementation of individual
performance plans that tie to strategic goals, and has assessed management competencies for skills gaps.
DOJ completed one standard competition of FBI vehicle maintenance that will yield $10.5 million in net savings
over the next five years. By 2008, DOJ will have competed 55 percent of suitable commercial positions. DOJ
continues to address weaknesses in its financial systems with a goal of achieving substantial Federal Financial
Management Improvement Act compliance during 2005. The Department is also addressing the weaknesses in
OJP’s grant accounting that caused DOJ to receive a disclaimer on its 2004 financial statements. DOJ continues
IT improvements in support of the 24 E-Government initiatives (including reviewing all planned IT investments for
duplication of E-Gov initiatives and submitting plans for implementing E-Gov initiatives for human resources and
financial and grant management). DOJ also has addressed security issues for most systems, although serious
inadequacies remain in protecting critical cyber infrastructure. The Department also has made improvements in
budget and performance integration by incorporating performance information into managers’ appraisals and
using PART reviews to justify budget requests and direct program improvements.
DOJ has strengthened its outreach to community organizations, including faith-based organizations, as well as
implementation and planning for new pilot initiatives. In the coming year DOJ will be giving special attention
to improving the quality of data collection in support of the initiative, as well as improving planning and goal
achievement. In support of the Real Property Initiative, the Department developed a draft asset management
plan and updated policy guidance for DOJ components.
THE BUDGET FOR FISCAL YEAR 2006 203
Department of Justice
(In millions of dollars)
2004 Estimate
Actual 2005 2006
Spending
Discretionary Budget Authority:
Federal Bureau of Investigation ...................................................................... 4,569 5,145 5,701
Drug Enforcement Administration .................................................................. 1,648 1,631 1,694
Federal Prison System 1 .................................................................................... 4,768 4,754 4,755
United States Marshals Service ...................................................................... 727 748 790
Bureau of Alcohol, Tobacco, Firearms, and Explosives:
Existing law ........................................................................................................ 826 878 804
Legislative proposal (fee-funded activity) ................................................ — — 120
Detention Trustee ................................................................................................. 841 874 1,222
United States Attorneys ..................................................................................... 1,527 1,542 1,626
General Legal Activities ..................................................................................... 614 626 680
Office of Justice Programs, COPS, Office on Violence Against
Women ................................................................................................................. 3,024 2,796 1,504
Organized Crime and Drug Enforcement Task Force ............................. 548 554 662
All other .................................................................................................................... 449 633 780
Subtotal, Discretionary budget authority .......................................................... 19,541 20,181 20,338
Less Crime Victims’ Fund Rescission........................................................... — — 1,267
Total, Discretionary budget authority ................................................................. 19,541 20,181 19,071
Mandatory Outlays:
Bureau of Alcohol, Tobacco, Firearms, and Explosives:
Legislative proposal ........................................................................................ — — 120
All other 2 ................................................................................................................. 7,921 1,448 2,293
Total, Mandatory outlays ........................................................................................ 7,921 1,448 2,173
AT A GLANCE:
2006 Discretionary Budget Authority: $11.5 billion
(Decrease from 2005: 4 percent)
Major Programs:
• Job training and employment
• Unemployment insurance
• Pension protection
• Labor law enforcement
• Employment statistics
• Training more workers by giving Governors and individuals more flexibility and setting higher
performance standards for job training and employment programs.
• Improving workers’ access to health benefits by allowing small businesses to band together to
offer health insurance for their workers and their families.
• Giving working families more flexibility by offering them the options of compensatory time off
and flex-time.
• Safeguarding workers’ pensions by restoring the solvency of the Pension Benefit Guaranty
Corporation.
• Protecting workers’ safety, health, pay, and benefits through strong enforcement of our Nation’s
labor laws and compliance assistance for employers.
• Helping veterans to return to civilian life by enforcing their re-employment rights.
• Matching employers to willing workers through an electronic search engine and more efficient
foreign labor certification process that protects American jobs.
205
206 DEPARTMENT OF LABOR
In April 2004 the President proposed significant reforms to the Department of Labor’s (DOL’s) job
training programs to double the number of workers trained and to give workers more choice about
their training and career paths. The 2006 Budget builds on that proposal by:
• Giving Governors more flexibility. The President’s proposal would merge the four major DOL
Federal job training and employment grant programs into a single $4 billion grant program.
In addition, Governors would be able to supplement this consolidated grant with their State’s
resources from a “menu” of several other Federal job training and employment programs.
• Eliminating unnecessary overhead. In exchange for more flexibility, the proposal would place
strict limits on overhead costs. This would free resources to allow more workers to be trained.
• Giving workers more choice. The President’s proposal would give workers greater control over
their training through the use of personal Innovation Training Accounts.
• Demanding greater accountability. The proposal would establish increasingly rigorous perfor-
mance standards each year, leading to a goal in the tenth year that States place in employment
100 percent of the workers trained with grant resources. To ensure that individuals are placed
in high-quality jobs, States would also be required to show improvements in earnings and job
retention. States’ performance would be ranked and published each year.
These reforms, together with the President’s $250 million Community College job training initia-
tive, will train 400,000 workers annually—twice as many as are trained under the current system.
The Nation’s eight million small business employers are only half as likely as large employers to of-
fer health benefits. More than half of the Nation’s uninsured are small business employees and their
families. To help these small businesses and give more working families access to health coverage,
the President wants to allow small businesses to join together through industry and professional as-
sociations to purchase affordable health benefits for their workers. These Association Health Plans
(AHPs), which would also be available to a broad range of civic, faith-based, and community organi-
zations, would give small businesses and groups the same kind of purchasing power and options that
large firms and unions provide, expanding health coverage and saving participants as much as 25
percent on their health insurance premiums. DOL would be charged with oversight and regulation
of AHPs, and would ensure that they meet strict solvency and other requirements.
208 DEPARTMENT OF LABOR
The Pension Benefit Guaranty Corporation PBGC Has Gone from Accounting
(PBGC) insures the defined-benefit pensions Surplus to Deficit
of 44 million Americans against employer Billions of dollars
bankruptcy or other plan failures. Nearly 1 10
million individuals now receive, or are owed, 9.7
7.7
5
benefits under plans that have been taken
over by the PBGC. At the end of 2004, PBGC’s 0
-3.6
liabilities exceeded its assets by more than $23 -5
billion—more than double the $11.2 billion
-10 -11.2
deficit recorded a year earlier—due to the Assets minus Liabilities
termination and anticipated termination by -15
U.S. businesses of a number of large pension -20
plans. -23.3
-25
2000 2001 2002 2003 2004
The Administration is committed to address- Source: PBGC.
contribute funding above their current liabilities and would reduce volatility in plans’ required
contributions.
• Estimate plan liability more accurately and simply. Under current law a variety of statutory
provisions determine a company’s pension plan liability. This makes it difficult to know whether
a company is funding its plan adequately, thereby allowing companies to minimize their pension
contributions and understating PBGC’s exposure. The Administration’s proposals would pro-
vide a better measure of liabilities and establish appropriate funding targets based on a plan’s
risk of termination.
• Set insurance premiums based on cost and risk. Defined-benefit plans pay premiums to PBGC
in return for coverage. Current premiums do not properly reflect the plan’s risk of insolvency
and are inadequate to cover losses to PBGC. The President’s proposals would reform the current
premium structure to restore PBGC to a sound financial state by increasing the share of pre-
mium income tied to the plan’s risk of termination. The risk-based premium would reflect the
new funding targets and be re-examined on a periodic basis to ensure PBGC’s solvency. Flat-rate
premiums would be adjusted to reflect wage growth. These reforms would provide PBGC with
the assets needed to pay future benefits and would strengthen companies’ incentives to ensure
adequate funding.
• Prevent companies from making empty promises to workers. Currently companies may promise
future benefits to their workers (in lieu of immediate compensation) that they fail to provide for
and in many cases can neither keep nor pay insurance premiums to cover. This places the burden
of these increased benefits on PBGC and the financially healthy companies that fund it. The
Administration’s proposals would require companies to pay for additional benefits immediately
if they are financially weak or have a significantly underfunded pension plan.
• Make pension plans more transparent. Current law does not require adequate disclosure to
workers, retirees, investors, and policymakers about a plan’s funding status. As a result, work-
ers are surprised when promised benefits are lost, and investors and policymakers are unable
to make informed decisions. The Administration’s proposals would require plans to provide
workers with timely information on the true financial health of pension plans and make such
information publicly available.
For further information on these proposals, please see www.dol.gov/ebsa.
Protecting Workers
The 2006 Budget includes the resources DOL needs to fulfill its responsibilities under more than
180 worker protection laws, providing $1.4 billion for labor law enforcement. DOL will continue
to meet its responsibilities to workers through a combination of enforcement and compliance assis-
tance and will continue to update its regulations so they make sense, protect workers, and minimize
unnecessary burdens on employers. The 2006 Budget will:
• Ensure safe and healthy workplaces. The Occupational Safety and Health Administration
(OSHA) and Mine Safety and Health Administration (MSHA) are responsible for assuring the
safety and health of the Nation’s workers. From 2002 to 2003, the occupational injury and
illness rate declined from 5.3 to 5 cases per 100 full-time workers and the number of injuries
and illnesses fell by 7.1 percent. The 2003 workplace fatality rate of 4 per 100,000 workers was
also a record-low level. The 2006 Budget provides $747 million for OSHA and MSHA to allow
these agencies to maintain a strong enforcement presence and work with employers to ensure
the physical well-being of their workers. Included in this amount is $1 million to improve
OSHA’s ability to get timely data on worker injuries and illnesses, based on a recommendation
in OSHA’s Performance Assessment Rating Tool (PART) review.
210 DEPARTMENT OF LABOR
The Administration is taking steps to help safeguard the employment rights and benefits of the
Nation’s servicemembers as they return to civilian life. For the first time since the passage of the Uni-
formed Services Employment and Reemployment Rights Act of 1994, DOL has proposed regulations
that spell out the rights and responsibilities of employers to honor veterans’ service. Under the Pres-
ident’s leadership, DOL will back up these regulations with aggressive outreach and enforcement
to ensure the job security of returning veterans. The 2006 Budget includes $224 million to support
the Veterans Employment and Training Service by expanding its transition assistance efforts to help
service men and women reintegrate into the workforce, raising awareness in the employer commu-
nity of the skills that veterans can provide, and ensuring that our military members are secure in
the knowledge that their jobs will be protected when they return from their service to our Nation.
To help employers who, despite their best efforts, cannot find willing Americans to meet their
needs, the 2006 Budget supports a new Temporary Worker Program. On January 7, 2004, the Presi-
dent outlined this proposal and significant reforms to the current immigration system. As part of this
initiative, DOL will develop a quick and simple way for employers to search for American workers,
building on America’s Job Bank, DOL’s Internet-based labor exchange system.
The Administration also has improved the process for employers to permanently hire foreign work-
ers when U.S. workers are not available. Employers wishing to hire foreign workers on a permanent
basis must receive from DOL a certification that qualified U.S. workers are not available for the job
being offered to the foreign worker and that such hiring would not hurt the wages and working con-
ditions of similarly employed U.S. workers. As of the end of 2004 there was a backlog of more than
300,000 applications, and employers waited up to six years for a certification. DOL recently finalized
major reforms to this process that will drastically reduce application processing time, prevent future
backlogs, and strengthen anti-fraud protections. To help implement the new program and purge the
backlog remaining from the old program, the Administration is proposing a cost-based employer fee
for new permanent program applications (including applications re-filed by those waiting in the old
program’s queue).
212 DEPARTMENT OF LABOR
Each year more than 600,000 inmates leave State and Federal detention facilities and return to
their communities and families, many without the skills or support necessary to enter and compete
in the workforce. Without help, a majority of these individuals probably will return to criminal ac-
tivity. A 1994 Department of Justice study following almost 300,000 former State prisoners found
that approximately two-thirds were re-arrested within three years of their release, and more than
half had been re-incarcerated.
The 2006 Budget includes a total of $75 million for the second year of funding for the President’s
four-year Prisoner Re-entry Initiative, which teams Federal agencies with faith-based and
community organizations to help recently released prisoners make a successful transition back to
society and long-term employment. Given their close connection to the communities they serve,
faith-based and community organizations are well situated to help returning prisoners. Many
are already serving this population with promising results. Through the collaborative efforts of
the Departments of Labor, Justice, and Housing and Urban Development, the Prisoner Re-entry
Initiative will provide job training, transitional housing assistance, and mentoring to tens of
thousands of non-violent ex-offenders.
THE BUDGET FOR FISCAL YEAR 2006 213
The Unemployment Insurance (UI) program provides monetary benefits to eligible workers who
are unemployed through no fault of their own. UI is a Federal-State partnership, in which the Federal
Government pays for administrative expenses and States levy taxes to pay UI benefits and determine
eligibility and benefits. Despite States’ efforts to reduce improper UI payments, in 2003 improper
payments accounted for $3.8 billion, or more than nine percent of the nearly $41 billion in State UI
payments. The 2006 Budget proposes a package of legislative changes that would reduce improper
payments, saving an estimated $4.7 billion over 10 years. The legislation would:
• Boost States’ incentives to go after benefit overpayments by permitting them to use a portion of
recovered funds on fraud and error reduction. Currently, all recoveries of overpayments must
be used to pay UI benefits. Allowing States to retain a small percentage of recovered funds
to further reduce improper payments would reward them for taking aggressive steps to reduce
fraudulent and erroneous payments, give them the resources they need to continue their efforts,
and save $229 million over 10 years.
• Impose a penalty for UI fraud. The proposal would require States to impose a minimum 15-per-
cent penalty on fraudulent overpayments, and require the proceeds to be used only for improper
payment reduction. The State of Washington has imposed such a penalty, and has seen a dra-
matic increase in overpayment collections as a result. This proposal would save an estimated
$798 million over 10 years.
• Enlist private collection agencies in the recovery of overpayments and delinquent employer taxes.
Several States have explored using private collection agencies, but balked at paying excessive
fees, which can be as much as 25 percent of collections, from UI administrative funds. The Ad-
ministration would permit States to allow collection agencies to retain a limited portion of the
amounts they recover, resulting in recoveries totaling $369 million over a 10-year period. To
guard against collectors’ use of abusive or unfair tactics to recover funds, the proposal would
require that any contract entered into by the State explicitly follow the Fair Debt Collection
Practices Act.
• Charge employers when their actions lead to overpayments. Employers sometimes fail to respond
to State queries about worker separations (like whether claimants were fired), which can lead to
improper UI payments. Despite the costs associated with these mistakes, States do not always
penalize employers when their actions contribute to overpayments. The Administration would
require States to charge employers for any UI benefits improperly paid in such cases, thereby
encouraging employers to respond promptly to State requests for information about their former
workers’ UI eligibility and generating 10-year savings of $227 million.
• Collect delinquent UI overpayments through garnishment of tax refunds. Each year an estimated
$500 million in UI overpayments go unrecovered. Under current law, individuals’ Federal tax
refunds are used to offset delinquent child support obligations, debts owed to Federal agencies,
and State income tax debts. The Administration reproposes to add delinquent UI debts to the
list of debts that can be offset by tax refunds. This proposal would recover overpayments of $3.1
billion over 10 years.
214 DEPARTMENT OF LABOR
As noted by the PART assessment, the Bureau of International Labor Affairs (ILAB) has a broad
and ill-defined mission. ILAB had historically played a research, analysis, and advocacy role, but has
evolved to include a large and duplicative grantmaking function. Between 1996 and 2003, ILAB’s
funding rose by 1,500 percent, and now covers a host of activities that are already addressed by
larger international grants programs run by the State Department and the Agency for International
Development. The 2006 Budget provides $12 million for ILAB and returns the agency to its original
mission of research, analysis, and advocacy.
DOL administers a number of Federal workers’ compensation programs designed to provide eco-
nomic stability to families that have been affected by occupational injury, illness, or death. The 2006
Budget proposes critical reforms to improve the operation and stability of two of these programs.
• The Federal Employees’ Compensation Act (FECA). FECA, which pays workers’ compensation
to Federal civilian employees, has not been substantially updated since 1974. The Budget re-
proposes reforms that would adopt “best practices” of State workers’ compensation programs,
encourage individuals to return to work as early as possible, streamline claims processing, and
update benefit levels. These proposals would save the Federal Government more than $720 mil-
lion over 10 years.
• The Black Lung Benefits program. The Black Lung Benefits Act provides benefits to coal min-
ers who have been totally disabled by occupational black lung disease. Benefits in some cases
are paid from the Black Lung Disability Trust Fund, which is financed through an excise tax on
coal. Although excise tax revenues have been sufficient to finance the program’s benefit and ad-
ministrative costs for the past decade, they have not been enough to cover ever-growing interest
costs on the Trust Fund’s debt. As a result, DOL has had to borrow more just to pay interest on a
debt that now approaches $9 billion. DOL’s Inspector General has repeatedly identified the debt
as a threat to the Black Lung program’s financial stability and integrity. To fix this problem,
the Administration will repropose legislation to refinance the Trust Fund’s debt and eventually
retire it.
The 2006 Budget reproposes ending the Migrant and Seasonal Farmworkers training program,
which was rated ineffective in a PART assessment. The assessment found that the services provided
under this program duplicate Federal efforts in other programs administered by DOL and other agen-
cies (such as the Departments of Health and Human Services, Agriculture, and Housing and Urban
Development) and primarily consist of supportive services like emergency cash assistance, rather
than job training and employment services to help participants secure more stable and permanent
employment. The PART also noted the program’s poor performance accountability and limited use
of competition to award funding. These workers can be served better through the Nation’s system of
One-Stop Career Centers.
THE BUDGET FOR FISCAL YEAR 2006 215
The table below provides an update on DOL’s implementation of the President’s Management
Agenda as of December 31, 2004.
Budget and
Competitive Financial
Human Capital E-Government Performance
Sourcing Performance
Integration
Status
Progress
In the past year, DOL has earned status upgrades on each of the five initiatives and attained green status
in four of the Government-wide initiatives. In Human Capital, DOL adopted: competency models to assess
and improve employee skills; multi-faceted, well-targeted staff development and mentoring programs; and
well-planned systems to evaluate rank-and-file performance and strengthen managerial accountability. In 2004
DOL completed six streamlined competitions and one standard competition that will yield savings of more than
$3 million. DOL showed that program managers use financial information to improve operations and that
it has a plan to expand the use of financial data to increase efficiency. In E-Government, DOL established a
new management system to ensure the efficient and effective management of all its E-Government and IT
projects. DOL also uses performance information to make operational decisions, evaluate employees, and
establish long-term and annual goals. DOL is able to provide full and marginal costs for key program areas and
continues to improve program efficiency measures.
DOL has made significant progress in providing outreach and technical assistance to enhance opportunities
for faith-based and community organizations (FBCOs) to compete for Federal funding. In 2004, DOL awarded
170 grants totaling $71 million to FBCOs. To support the Real Property initiative, DOL is developing an asset
management plan. The Department has assessed its programs to determine which are susceptible to significant
improper payments and has plans to measure and reduce improper payments. (Because this is the first quarter
that agency efforts in the Eliminating Improper Payments Initiative were rated, progress scores were not given.)
216 DEPARTMENT OF LABOR
Department of Labor
(In millions of dollars)
2004 Estimate
Actual 2005 2006
Spending
Discretionary Budget Authority:
Training and Employment Services ............................................................... 5,129 5,319 5,844
Unemployment Insurance Administration .................................................... 2,619 2,674 2,633
Employment Service/One-Stop Career Centers 1 .................................. 964 963 84
Community Service Employment for Older Americans .......................... 438 436 437
Bureau of Labor Statistics ................................................................................. 518 529 543
Occupational Safety and Health Administration ........................................ 458 464 467
Mine Safety and Health Administration ........................................................ 269 279 280
Employment Standards Administration ........................................................ 392 401 416
Employee Benefits Security Administration ................................................ 124 131 137
Veterans’ Employment and Training .............................................................. 219 223 224
Bureau of International Labor Affairs ............................................................ 110 93 12
Office of Disability Employment Policy ......................................................... 47 47 28
All other .................................................................................................................... 500 475 396
Total, Discretionary budget authority 2 ............................................................. 11,786 12,034 11,501
Memorandum: Budget authority from enacted supplementals ............... 1 — —
Mandatory Outlays:
Unemployment Insurance Benefits:
Existing law ........................................................................................................ 42,525 35,461 36,891
Legislative proposal ........................................................................................ — — 281
Trade Adjustment Assistance ........................................................................... 699 880 966
Black Lung Benefits Program: 3
Existing law ........................................................................................................ 1,433 1,428 1,405
Legislative proposal ........................................................................................ — — 3,343
Federal Employees’ Compensation Act:
Existing law ........................................................................................................ 127 230 234
Legislative proposal ........................................................................................ — — 6
Energy Employees Occupational Illness Compensation Program ..... 380 1,209 931
Pension Benefit Guaranty Corporation: 4
Existing law ........................................................................................................ 247 543 315
Legislative proposal ........................................................................................ — — 2,195
All other 4 ................................................................................................................ 401 447 408
AT A GLANCE:
2006 Discretionary Budget Authority (State): $13.3 billion
(Increase from 2005: 18 percent)
2006 Discretionary Budget Authority (International Assistance
Programs): $18.5 billion
(Increase from 2005: 14 percent)
Major Programs:
• Diplomatic activities and operations of embassies
• International assistance, including economic
development, child health, and military financing
• U.S. contributions to international organizations
Protecting America
• Supporting Iraq and Afghanistan as they continue their transition to democracy and rule of law.
These activities will contribute to the long-term security of America and the world.
• Assisting key partners in the War on Terror, including Turkey, Jordan, Pakistan, Indonesia, and
the Philippines.
• Improving peacekeeping capabilities through the Global Peacekeeping Operations Initiative and
strengthening reconstruction and stabilization capabilities.
• Stemming the flow of illegal drugs around the world through counternarcotics activities in the
Andean region of South America and in Afghanistan.
• Fostering democracy and freedom throughout the world through bilateral programs as well as
through the activities of the National Endowment for Democracy and the Broadcasting Board
of Governors.
• Stimulating economic growth and development in countries which honor basic human rights,
invest in the education and health of their citizens, and promote free markets, through the
Millennium Challenge Account.
217
218 DEPARTMENT OF STATE AND INTERNATIONAL ASSISTANCE PROGRAMS
• Working with the Multilateral Development Banks to pool the contributions of many donors to
assist developing countries with positive growth policies.
• Providing keys to economic growth and lasting democracy in the developing world through
education initiatives.
• Bringing developing countries out of poverty while creating job opportunities for Americans by
reducing barriers to free trade. The Budget anticipates implementation in 2006 of free trade
agreements with five countries of Central America and the Dominican Republic, Bahrain, and
Panama, as well as continued progress on free trade agreements with countries in Asia, Africa,
and the Americas.
• Continuing to expand the President’s Emergency Plan for AIDS Relief with an unprecedented
effort to prevent the spread of AIDS, treat infected individuals, and care for those affected by
HIV/AIDS, including orphans.
• Providing for vulnerable populations around the world, through food aid and other humanitar-
ian assistance such as shelter, health care, water, sanitation, and disaster and reconstruction
assistance.
• Maintaining a generous refugee resettlement program while providing needed humanitarian
assistance to those awaiting return to their homeland.
• Ensuring that the composition of U.S. Government agencies and personnel overseas is
appropriately aligned with our foreign policy priorities, security concerns, and overall resource
constraints, through the President’s initiative to “rightsize” the U.S. Government’s presence
overseas.
THE BUDGET FOR FISCAL YEAR 2006 219
PROTECTING AMERICA
PROTECTING AMERICA—Continued
The Budget also includes $80 million for the National Endowment for Democracy (NED), an
increase of $20 million over 2005 levels. NED provides grants to private groups and organizations
that build and strengthen democratic institutions, and promote the rule of law, human rights, civic
education, and a free press.
A wide range of public outreach, diplomacy, and broadcasting initiatives are being pursued at the
State Department and at the Broadcasting Board of Governors (BBG) in the 2006 Budget. Fund-
ing in 2006 will support the development of libraries and information centers in the Muslim world
called American Corners; support the TV Co-Op program, which brings foreign journalists to the
United States and facilitates their professional development and assists in the production of their
own programming related to American culture; encourage an expansion of Foreign Journalist Tours;
translate more Western books into Arabic; increase scholarships and visiting fellowships; upgrade
the American government Internet presence; and train more Arab speakers, public relations spe-
cialists, and experts in Arab matters. The Voice of America will increase the number of hours it
broadcasts to countries in the broader Middle East, with significantly increased television program-
ming in languages such as Persian, Dari, Pashto, and Urdu.
PROTECTING AMERICA—Continued
Support for Our Coalition Partners. The United States and our allies have shown great resolve
in the War on Terror. The Budget supports the front-line states that have joined us in the cam-
paign against global terror. The President’s request includes over $640 million for Pakistan to help
advance security and economic opportunity for Pakistan’s citizens; over $450 million for Jordan to
accelerate economic growth opportunity and strengthen border controls; and over $550 million to
support Colombia’s unified campaign against drugs and terrorism.
Building Peace Support Capabilities. Global peacekeeping capabilities, with a particular focus on
Africa, are critical to bringing security and stability to troubled regions. The 2006 Budget includes
$114 million for the second year of the Global Peace Operations Initiative. This Initiative, being
implemented in cooperation with the G-8, pledges to:
• Train and equip 75,000 troops by 2010 to increase global capacity to conduct peace support
operations with a focus on Africa;
• Create a “clearinghouse” function to exchange information and coordinate G-8 efforts to enhance
peace operations training and exercises in Africa;
• Develop a transportation and logistics support arrangement to help provide transportation for
deploying peacekeepers and logistics support to sustain units in the field; and
• Establish a Gendarme (Constabulary) Center of Excellence in Italy to increase capabilities and
interoperability of military police forces for peace support operations, and to support other
existing centers dedicated to that purpose.
THE BUDGET FOR FISCAL YEAR 2006 223
In 2002, President Bush called for “a new U.S. Core Development Assistance*
compact for global development, defined by President Exceeds Commitments with the 2006 Request
new accountability for both rich and poor Budget authority, billions of dollars
20
nations alike. Greater contributions from 19.8
developed nations must be linked to greater
responsibility from developing nations.” The 17.0
15
15.2
President pledged that the United States
13.3
would lead by example and increase its core 12.1 11.6
10 11.0
development assistance by 50 percent over
the next three years, resulting in an annual
increase of $5 billion by 2006. The President’s 5
original 2002 pledge called for these new
funds to go into a new Millennium Challenge
Account (MCA). The Administration did not 0
2000 2001 2002 2003 2004 2005 2006
receive its full requests for MCA in 2004 and * Does not include Iraq Relief and Reconstruction Fund.
MCA is an innovative program that focuses only on those countries, among the poorest in the world,
that have met independent criteria with respect to ruling justly, investing in their people, and pro-
moting economic freedom. This common-sense approach uses measurable indicators to select coun-
tries best able to effectively use assistance. Once selected, countries develop their own proposals and
enter into partnership agreements—called Compacts—with the Millennium Challenge Corporation
(MCC). MCC will fund only those proposals with clear objectives, a sound plan for implementation
and financial accountability, and specific indicators demonstrating results. This innovative process
is beneficial because it gives countries the responsibility for their own development, in some cases
for the first time. However, it is also time intensive. MCC has identified 17 eligible countries in 2004
and 2005. In recent months, 15 of those countries have submitted Compact proposals.
By providing incentives for countries to reform, MCA has strengthened the resolve of some states
to break down the barriers to economic growth and a better quality of life for their citizens. The
impact of these reforms extends even to those countries that are not currently eligible, as they adopt
policy reform agendas in an attempt to become eligible.
The Congress appropriated $1.5 billion for MCA in 2005, $1 billion short of the President’s request.
The 2006 Budget request of $3 billion for MCC’s third year will help countries help themselves be-
come more prosperous, democratic states. In 2006, MCC will expand its list of potentially eligible
countries to some 110 states with per capita incomes of up to about $3,000 per year, an increase from
the current number of roughly 80 states with a per capita level of up to about $1,500 per year. The
2006 funding request will support those countries deemed eligible for funding in 2006 by the MCC
Board of Directors, as well as the 17 countries currently eligible.
THE BUDGET FOR FISCAL YEAR 2006 225
Given that MCC was established in 2004, has only recently selected MCA eligible countries, and the
time required for countries to develop their own proposals that meet MCC requirements for demon-
strating results, the funding request for 2006, combined with the amounts appropriated in 2004 and
2005, provides enough resources for those countries ready to proceed with Compacts in 2006.
The United States has led efforts to help the poorest countries to make more productive invest-
ments without incurring greater debt by pressing the World Bank and other MDBs to increase the
share of assistance provided as grants rather than loans. The United States recently concluded
replenishment negotiations for the World Bank’s International Development Association and the
African Development Fund, which will increase the share of new funding disbursed to the poorest
countries through grants, rather than loans, to about 45 percent from approximately 25 percent and
20 percent, respectively. The United States also recently completed replenishment negotiations for
the Asian Development Fund, which established, for the first time, a grant window where 21 percent
of total assistance will be in the form of grants. The 2006 Budget will support these agreed-upon
reforms through its request of $1.34 billion for U.S. contributions to these institutions and the other
Multilateral Development Banks.
The United States continues to support 100 percent debt reduction under the Enhanced Heavily
Indebted Poor Countries (HIPC) Initiative. Coupled with prudent economic policies, debt reduction
allows these countries to channel resources they would have used to pay interest and other debt
service costs into critical programs, such as health and education. The 2006 Budget requests $100
million to continue to support HIPC and other debt reduction programs.
A strong worldwide economy is critical for creating job opportunities for Americans, and liberaliz-
ing trade is the single most effective tool in strengthening the global economy. Free and fair trade
creates high-paying jobs for American workers, businesses, farmers, and ranchers, while increasing
the living standards of Americans through lower prices and more choices.
226 DEPARTMENT OF STATE AND INTERNATIONAL ASSISTANCE PROGRAMS
In 2004, free trade agreements with Chile and Singapore were signed and implemented, and the
President concluded free trade agreements with Australia, Bahrain, and Morocco, in addition to the
agreement with five Central American Countries (CAFTA) and the Dominican Republic. The Pres-
ident also initiated free trade negotiations in 2004 with Panama, Thailand, and three countries of
the Andean region (Colombia, Peru, and Ecuador) and notified the Congress of his intention to begin
free trade negotiations with Oman and the United Arab Emirates.
These agreements achieve strong intellectual property and investment protections for U.S. com-
panies, as well as enforcement of domestic environmental and labor rules. The President will build
on this success with completion in 2005 of the Andean Free Trade Agreement and with continued
progress towards a Free Trade Area of the Americas agreement, as well as an agreement with the
Southern African Customs Union. The President has also called for a Middle East Free Trade Area
by 2013 to spur economic growth and expand opportunity in this critical region of the world. The
2006 Budget provides for the implementation of free trade agreements with Bahrain, Panama, the
Dominican Republic, and CAFTA. The Office of the U.S. Trade Representative will continue to pur-
sue aggressive trade agreements with other nations.
Education enables people to be more productive, improve their standard of living, and contribute
to the growth of their nations. Unfortunately in much of the world, access to basic education is still
extremely limited, and illiteracy, especially among women, is very common.
The Administration has launched several education initiatives since 2002 to focus more resources
on improving educational quality across the globe. The Africa Education Initiative is providing schol-
arships for girls, distributing 4.5 million textbooks and training over 400,000 teachers. The innova-
tive Centers for Excellence in Teacher Training in Latin America and the Caribbean are focused
on improving the quality of schools and their curricula. Significant new resources for education
in the Muslim world, in countries such as Pakistan, Indonesia, Morocco, Yemen, Jordan, Iraq, and
Afghanistan, have expanded opportunities for millions of girls and boys. Under the G-8’s Broader
Middle East and North Africa Initiative, the United States and its allies are seeking to train 100,000
teachers in the region by 2009. Worldwide, President Bush has more than doubled funding for State
Department-funded basic education programs, from $126 million in 2001 to $322 million in this Bud-
get. In addition to funding for basic education, the Budget includes $167 million for higher education
and training worldwide.
THE BUDGET FOR FISCAL YEAR 2006 227
America’s compassion for the world’s most vulnerable citizens is manifested in the international
programs that provide humanitarian and other assistance. The President’s Budget reflects this
continued commitment.
Emergency Plan for AIDS Relief—Caring for the World’s Most Vulnerable Citizens
The President’s Emergency Plan for AIDS Relief continues in its third year to fight the global
HIV/AIDS epidemic, which resulted in almost 3.1 million deaths in calendar year 2004 alone.
The Administration is committed to prevent seven million new HIV infections by 2008; treat two
million HIV-infected people; and care for 10 million individuals affected by HIV/AIDS, including
orphans. The Emergency Plan uses prevention funds for methodologies that are effective in helping
people avoid behaviors that place them at risk of contracting HIV. One such program is called
“ABC”—Abstinence, Be faithful, and, as appropriate, correct and consistent use of Condoms—and
was proven successful in Uganda, Zambia, Senegal, and elsewhere. The Emergency Plan maintains
bilateral, regional, and volunteer HIV/AIDS programs in over 100 countries around the world with
a focus on some of the hardest hit nations: Botswana, Cote d’Ivoire, Ethiopia, Guyana, Haiti, Kenya,
Mozambique, Namibia, Nigeria, Rwanda, South Africa, Tanzania, Uganda, Zambia, and Vietnam.
Since the President announced the Emergency Plan for AIDS Relief Reaching the
Emergency Plan—a five-year, $15 billion Target impact,
2008 2-7-10 Goal
Global AIDS funding,
commitment—in his 2003 State of the Union millions of people billions of dollars
5 3.5
Address, the United States has provided Global AIDS Funding
$5.2 billion for the fight against global AIDS, Treatment 3.0
4 Prevention
and the 2006 Budget requests an additional
Care 2.5
$3.2 billion for this effort. Starting with $2.4
3
billion in 2004, the U.S. Government has made 2.0
remarkable progress during the Emergency 1.5
2
Plan’s first year of implementation and has
already made a significant impact on the 1.0
lives of those living with AIDS. For example, 1
0.5
with $350,000 in Emergency Plan funding
for Botswana, UNICEF has been able to 0 0
2003 Baseline 2004 2005 2006
improve service delivery in care and support of Source: Department of State.
orphans and vulnerable children; strengthen
faith-based organizations’ institutional capacities; and ensure orphans and vulnerable children
have access to essential services and protection from abuse and exploitation.
228 DEPARTMENT OF STATE AND INTERNATIONAL ASSISTANCE PROGRAMS
The United States, through its support of international and non-government organizations, will
continue to be the world’s most generous provider of food aid and non-food humanitarian assistance,
including shelter, health care, water, and sanitation. The 2006 Budget also reinforces the Admin-
istration’s commitment to finding durable solutions for refugees around the world, and provides an
increase in funding to support assistance abroad and resettlement in the United States.
The United States also supports refugee re- Sudanese refugee women mixing the corn soy blend provided by the
United States.
settlement and assistance in this country. In
2004, the United States admitted more than
50,000 of the world’s refugees for resettlement, nearly doubling the previous year’s total. President
Bush continues to advocate for a generous resettlement program, and the 2006 Budget provides a
significant increase in funds to support the growing number of refugees being resettled in the United
THE BUDGET FOR FISCAL YEAR 2006 229
States. Millions more will be assisted through humanitarian assistance programs in countries where
they first seek asylum as they await repatriation opportunities.
Human rights and the rule of law are core values of the American people and a key element of U.S.
foreign policy. The United States will continue to challenge governments to meet their obligations
under international treaties and work to reform and strengthen the Office of the United Nations
High Commissioner for Human Rights and United Nations Commission on Human Rights. The 2006
Budget includes over $115 million in funding for support, training, and assistance programs to aid
people and strengthen institutions that promote freedom and human rights and help establish the
rule of law. In 2004, the United States provided approximately $38.5 million in FREEDOM Support
Act funds to strengthen democracy, human rights, and the rule of law in Central Asia, including
assistance with legislative drafting; training judges, prosecutors, and public defenders; and providing
advisors for judicial and prison reform.
The United States is committed to abolishing the trafficking of human beings, which is a modern
day form of slavery and an affront to human dignity. According to some estimates, each year at least
700,000 and possibly as many as four million people, primarily women and children, are trafficked
around the world and exploited for sexual purposes or for labor without compensation.
In 2002 President Bush established a Cabinet-level task force to monitor and combat this
trafficking. The following year he announced a $50 million U.S. Government initiative to combat
this growing problem. Agencies are using these funds to prevent human trafficking, protect and
reintegrate victims, and build the capacity to investigate, prosecute, and convict traffickers in
Brazil, Cambodia, India, Indonesia, Mexico, Moldova, Sierra Leone, and Tanzania. The 2006 Budget
continues support for the anti-trafficking program. In addition, the Administration has established
a Human Smuggling and Trafficking Center to coordinate interagency efforts to share information
and prevent trafficking in persons, migrant smuggling, and terrorist travel, and is working to
identify and assist trafficking victims domestically.
230 DEPARTMENT OF STATE AND INTERNATIONAL ASSISTANCE PROGRAMS
Service
President Bush is committed to increasing American service overseas and, accordingly, has asked
for increases in the Peace Corps’ budget every year since taking office. The number of Peace Corps
volunteers—7,733 in 2004—is at its highest level in 29 years. These dedicated individuals reflect
the best of American values and compassion by working in such diverse fields as education, health,
HIV/AIDS education and prevention, information technology, business development, the environ-
ment, and agriculture. The Budget requests $345 million for the program, allowing it to open at
least two new posts and maintain the existing number of volunteers.
In addition, in 2003, President Bush announced a new initiative coordinated by USA Freedom
Corps and USAID called Volunteers for Prosperity that provides America’s professionals new oppor-
tunities to serve abroad on specific development initiatives in countries of their choice. Organizations
that become Volunteers for Prosperity participants and deploy volunteers are given priority for Fed-
eral funding in select Federal development assistance programs. Since its inception, Volunteers for
Prosperity has recruited nearly 200 non-profit and for-profit organizations, representing a pool of
34,000 skilled American professionals. These organizations have deployed nearly 7,000 volunteers
to help reduce poverty and promote economic growth.
THE BUDGET FOR FISCAL YEAR 2006 231
Protection of U.S. Government personnel assigned abroad is a top priority. In response to the 1998
bombings of two U.S. embassies in East Africa, the State Department embarked on several ambitious
initiatives to improve physical security overseas. Many posts require additional work to withstand
terrorist attacks and other dangers. In 1999, the State Department launched a security upgrade and
construction program to begin to address requirements in more than 260 embassies and consulates.
In 2003 and 2004, the State Department completed construction of several new embassy com-
pounds, including compounds in: Tunis, Tunisia; Zagreb, Croatia; Abu Dhabi, United Arab Emirates;
Istanbul, Turkey; and Sofia, Bulgaria. In addition, the State Department has 22 projects under con-
struction and has awarded contracts for 12 new projects.
In 2005, the Administration initiated a
plan to dramatically expedite construction of
secure facilities worldwide, called the Capital
Security Cost-Sharing Program. Under this
program, each agency with staff overseas
contributes annually towards construction
of the new facilities based on the number of
authorized positions and the type of space
they occupy. In 2006, non-State agencies
A view of the new embassy compound in Istanbul, Turkey.
will contribute approximately $203 million to
the program and State will contribute $810 million. This cost-sharing plan will enable the State
Department to replace 150 embassies and consulates over 14 years for a total cost of $17.5 billion.
Capital security cost sharing is a major component of the President’s Management Agenda initia-
tive on “rightsizing” that stresses that agencies should consider all implications—including mission,
cost, and security—when they choose to place or retain staff overseas. Cost-sharing among agencies
for U.S. diplomatic facilities abroad reflects the recognition that the facilities represent the entire
Nation, and not just facilities of the Department of State.
The President emphasizes the importance of safety, efficiency, and accountability in U.S. Govern-
ment staffing overseas by making sure that the composition of Government agencies is consistent
with our foreign policy goals, security needs, and overall fiscal condition. There are more than 57,000
permanent American and local staff overseas under the authority of Chiefs of Mission. The average
cost of putting an American direct hire position overseas in 2006 will be approximately $430,000.
With our foreign policy priorities demanding increased support to meet new homeland security, coun-
terterrorism, and global AIDS requirements, it is important that we use overseas staff resources
carefully.
In 2004, the Department of State established the Office of Rightsizing the U.S. Government
Overseas Presence. It also started an initiative called MOMS (Model for Overseas Management
Support), which provides support activities for the new Embassy in Baghdad and will be expanded
to assist other embassies in 2005 and 2006. In 2005, the Department of State plans to open the
new Frankfurt Regional Center, and implement a shared-services model at its Florida Regional
Center. These centers will take on certain work now being done at overseas posts. Beginning in
2005, formal rightsizing reviews are required for all new embassy construction projects and every
U.S. mission worldwide on a five-year basis. And in 2006, the Administration will continue to build
on the achievements that support the Rightsizing Initiative through expanded shared-services and
regionalization models, rigorous post level reviews, and an accurate accounting of overseas staffing
and costs that produce rightsizing results.
The table below provides an update on the State Department’s implementation of the President’s
Management Agenda as of December 31, 2004.
Budget and
Competitive Financial
Human Capital E-Government Performance
Sourcing Performance
Integration
Status
Progress
In support of the Real Property Initiative, the Department of State is working to integrate its domestic and
overseas real property operations into a unified asset management plan.
As noted earlier in the narrative on rightsizing, this PMA initiative seeks to ensure that our overseas presence
is aligned with overall mission priorities, security, and costs. The Office of Management and Budget, working
closely with the Department of State and other interagency rightsizing partners, has made progress in putting
in place mechanisms that support accountability, transparency, and new alternatives for overseas staffing. In
the coming year, efforts will focus not only on strengthening these new processes, but on demonstrating real
results of positions being moved in response to regionalization efforts following formal rightsizing reviews, and
on streamlining and consolidation of support services.
The table below provides an update on the U.S. Agency for International Development’s (USAID’s)
implementation of the President’s Management Agenda as of December 31, 2004.
Budget and
Competitive Financial
Human Capital E-Government Performance
Sourcing Performance
Integration
Status
Progress
USAID has successfully implemented a new financial management system in Washington, D.C., and is in the
process of rolling that system out to missions around the world. The Agency has received its second clean
audit opinion and reduced auditor material weaknesses from three to one. The Agency has developed a
comprehensive human capital strategy and accountability system, and is in the process of implementing that
system. The Agency is also undertaking an ambitious review of its current business model, and is considering
moving to regional or Washington-based provision of certain assistance functions to improve efficiency and
effectiveness. Together with the State Department, the Agency is developing a comprehensive Enterprise
Architecture, which will help to more effectively target information technology investments and business process
improvements. In the last year, USAID created, and used to inform certain budget decisions, a new strategic
budgeting model, and developed a set of agency-wide and regional performance measures that will be used
across regional bureaus and programs.
The Faith-Based and Community Initiative just completed its first year at USAID and is actively engaged in
removing barriers to participation by community organizations, including faith-based organizations, as well as
intensifying outreach and information dissemination to make USAID competitive grant opportunities more
accessible to a broader population of potential grantees.
234 DEPARTMENT OF STATE AND INTERNATIONAL ASSISTANCE PROGRAMS
2004 Estimate
Actual 2005 2006
Spending
Discretionary Budget Authority:
Department of State:
Diplomatic and Consular Programs .......................................................... 4,185 4,172 4,473
Embassy Security, Construction, and Maintenance ............................ 1,376 1,504 1,526
International Organizations and Conferences ....................................... 1,449 1,649 2,332
Global HIV/AIDS Initiative ............................................................................. 488 1,374 1,970
All other programs ........................................................................................... 2,455 2,561 3,012
Subtotal, Department of State ......................................................................... 9,953 11,260 13,313
Discretionary Outlays:
Department of State ............................................................................................ 9,953 11,260 13,414
International Assistance Programs ................................................................ 16,837 16,724 17,778
Other International Affairs Activities .............................................................. 1,167 1,233 1,086
From Supplementals ........................................................................................... 380 112 104
Total, Discretionary outlays ................................................................................... 28,337 29,329 32,382
2004 Estimate
Actual 2005 2006
Credit activity
Direct Loan Disbursements:
Department of State ............................................................................................ — 1 1
International Assistance Programs ................................................................ 511 791 551
Export-Import Bank.............................................................................................. 928 277 144
Total, Direct loan disbursements ......................................................................... 1,439 1,069 696
AT A GLANCE: TRAN
NT OF SP
2006 Discretionary Budgetary Resources: $57.5 billion E
OR
TM
(Decrease from 2005: 1 percent)
TAT
DEPAR
Major Programs:
ION
• Aviation system
• Interstate highway system
IC A
UN
• Rail system
IT
ER
• Highway safety programs D
E
ST M
A T ES O F A
Agency-specific Goals
• Implementing recently released Federal Aviation Administration air traffic controller workforce
plan to ensure appropriate staffing.
• Developing Federal highway grant management techniques to reduce cost and schedule over-
runs.
• Improving oversight of all Department of Transportation loan programs.
• Improving research coordination and oversight of pipeline and hazardous materials safety
programs.
237
238 DEPARTMENT OF TRANSPORTATION
AGENCY-SPECIFIC GOALS
Aviation Safety
The United States has the largest, most Severe Runway Incursions are Decreasing
complex aviation system in the world. The
70
Nation’s airspace system includes 14,934 air
traffic controllers, 3,364 airports, and 315 60
air traffic control facilities. Yet despite this
complexity and size, commercial aviation 50
continues to be the safest form of trans-
40
portation—the United States has seen only
one commercial accident since 2002. The 30
Federal Aviation Administration (FAA) has
established strategic goals to reduce the rates 20
of commercial and general aviation fatal
10
accidents, reduce the risk of potential runway
collisions, and reduce cabin injuries caused by 0
turbulence. 1999 2000 2001 2002 2003 2004
Source: Department of Transportation.
airworthiness of older aircraft. FAA will also develop and implement airport design standards and
surface movement procedures to lower the risk of runway collisions.
The 2006 Budget supports FAA’s continuing safety efforts. The Budget request for FAA is nearly
$11 billion, excluding grants for airport development. The Budget provides $8.2 billion in operational
and personnel costs, $2.4 billion in information technology investments, and $130 million for aviation
research. In 2006, FAA plans to hire approximately 600 new air traffic controllers and 97 safety
inspectors to ensure that FAA maintains high standards of aviation safety and efficiency.
In calendar year 2003, the vehicle fatality rate Highway Fatalities Remain Constant in
reached a record low—1.48 deaths per 100 mil- Fatalities in thousands Recent Years Per 100 million miles
lion vehicle miles traveled, while the number of 70 3.5
Total Annual Fatalities
vehicle miles traveled increased by 24 million 60 Fatality Rate Per 100 million 3.0
miles. Despite this improvement, the total num- Vehicle Miles Traveled
ber of surface fatalities has remained essentially 50 2.5
AGENCY-SPECIFIC GOALS—Continued
Relieving congestion continues to be a major challenge. To address this problem, and to enhance
infrastructure conditions, the Department proposes investing in system improvements and smart
technology. Initiatives supported in this Budget include expanding “intelligent” highway system tech-
nology and modernizing the airspace control system. DOT’s total requested spending for improving
mobility is approximately $38 billion for 2006.
THE BUDGET FOR FISCAL YEAR 2006 241
AGENCY-SPECIFIC GOALS—Continued
Just as our highways are becoming increas- Highway Pavement Quality has Improved
ingly crowded, so are our ports and freight
Percent of vehicle miles traveled on acceptable quality pavement
facilities. In response, SAFETEA would 95
dedicate a portion of National Highway System Actual Target
Amtrak's Debt Payments Have More The current model for providing intercity
Millions of dollars
Than Doubled... passenger rail service—Amtrak—can and
400 must be significantly improved. Amtrak is
350
almost 35 years old, and the cost to taxpayers
Debt Payments
since its inception has been approximately
300
$29 billion. It requires hundreds of millions
250 of dollars in operating subsidies annually,
200 particularly for its long distance trains, to
remain solvent. Amtrak’s World War II-era
150
route system goes through nearly every State,
100 but in terms of intercity passenger miles the
50 commercial bus industry is seven times larger;
0
the air carrier industry is larger by a factor of
1997 1999 2001 2003 2005 2007 2009 92.
Source: Department of Transportation.
Amtrak is currently saddled with a growing
stream of debt service payments. The railroad also has several billion dollars of deferred capital
projects that continues to grow. Along the Northeast Corridor, which Amtrak owns, major bridges
and tunnels date to the 1860s. As Amtrak’s infrastructure ages and as it continues to defer capital
investment, service has deteriorated and safety is at risk. From 2003 to 2004, Amtrak’s on-time
performance dropped from 74.1 percent to 70.7 percent. Looking ahead, Amtrak faces increasing
risks of a major infrastructure failure because it has spread its capital funds thinly between the
heavily-used Northeast Corridor and long-distance passenger trains that run on its nationwide route
network.
THE BUDGET FOR FISCAL YEAR 2006 243
This has occurred at the same time as Federal funding for Amtrak has increased substantially. For
2001, Amtrak received $520 million in Federal funding. For 2005, Amtrak received $1.2 billion.
In 2003, the Administration proposed the Passenger Rail Investment Reform Act, which built
on the successful State-Federal partnerships that are hallmarks of other transportation programs.
Ultimately, States and localities would have the freedom to develop custom rail services demanded
by their citizens. The Federal Government’s role would be to assist in funding capital investments.
Until such reforms are enacted, the Admin- ...While Amtrak's Losses Continue to Grow
istration will not propose continued Federal Millions of dollars
subsidies for Amtrak. On its current course, 1,500
Operating Loss
Amtrak’s performance will decline and its
Cash Loss
infrastructure will deteriorate even with well
over $1 billion in annual Federal appropri-
1,000
ations. With no subsidies, Amtrak would
quickly enter bankruptcy, which would likely
lead to the elimination of inefficient operations
and the reorganization of the railroad through 500
bankruptcy procedures. Ultimately, a more
rational passenger rail system would emerge,
with service on routes where there is real
0
ridership demand and support from local 1997 1998 1999 2000 2001 2002 2003 2004
governments—such as the Northeast Corridor. Source: Department of Transportation.
Aviation Transportation
The FAA’s newly created Air Traffic Organ- FAA Projects Dramatic Increase in Retiring
ization (ATO) has improved the management Air Traffic Controllers
of the FAA through several initiatives. The 1,400
Surface Transportation
For 2005, grants for highway construction, public transit, and highway safety programs—the De-
partment’s largest program—must be reauthorized by the Congress. The reauthorization will define
federal highway policy, and also set funding levels for upcoming projects. The Budget updates the
Administration’s proposed reauthorization legislation—Safe, Accountable, Flexible, and Efficient,
Transportation Equity Act (SAFETEA)—by supporting reauthorization at a level of $283.9 billion
through 2009.
The Budget supports improved organizational performance and productivity for all DOT surface
transportation programs. For example, through its oversight program, the Federal Transit Admin-
istration (FTA) helps transit agencies develop disciplined cost estimates, focusing on best practices
and better metrics, emphasizing risk assessment practices, and evaluating procurement practices.
Currently, all of FTA’s major capital projects are within 10 percent of baseline cost estimates and
most of the projects are within 5 percent. Likewise, the Federal Highway Administration (FHWA) is
more closely monitoring progress of large construction projects over $1 billion.
Nevertheless, DOT needs to improve its oversight of the tens of billions of dollars in highway and
transit grants made to States and localities each year. DOT field staffers are focusing on making
sure grant recipients control project costs and schedules. To help meet this goal, DOT is implement-
ing an action plan to ensure that Federal grant dollars are properly accounted for by grantees and
sub-grantees. For example, the Budget includes funds for additional personnel to provide oversight of
large highway construction projects, such as the “mixing bowl” project in Springfield, Virginia. Addi-
tionally, SAFETEA would strengthen FHWA’s stewardship while respecting States prerogatives by:
THE BUDGET FOR FISCAL YEAR 2006 245
• Having States submit project management plans for all Federal aid projects costing $1 billion
or more.
• Requesting States to prepare annual financial plans for all projects receiving $100 million or
more in Federal aid funds.
• Establishing cost-estimate standards to provide more reliable and consistent project cost expec-
tations.
• Strengthening the Department’s suspension and debarment policies to prevent contractors from
continuing to defraud the Government.
• Allowing States to share in monetary recoveries from Federal fraud cases.
SAFETEA would also establish a new highway pilot program where States could manage as a
block grant funds from the following programs: Interstate Maintenance, National Highway System,
Surface Transportation (except for the Transportation Enhancement funds), Highway Safety Im-
provement, Highway Bridge, and Minimum Guarantee. Under the pilot program, States would work
with the Department to develop and meet specific system performance measures.
Credit Programs
DOT operates loan programs that provide substantial financing for rail, highway, maritime, and
multimodal projects that improve mobility and safety, and enhance the environment. Over the past
year, DOT has established a process to better manage its loan portfolio and limit its credit risk. DOT
uses a standardized process for reviewing loan applications, regardless of the loan program, and top
agency management make final recommendations. DOT also employs independent financial advisors
to assess the financial viability of applicants. The result is consistent standards and better decision-
making. On a related issue, the 2006 Budget proposes to de-authorize the Railroad Rehabilitation
and Improvement Financing loan program because recent tax law changes will better advance rail
infrastructure investment.
The recent enactment of the Research and Special Programs Improvement Act will permit the
Administration to improve coordination and strengthen oversight by realigning the Department’s
research, pipeline safety, and hazardous materials safety programs. The restructuring will create
two new operating administrations in place of the existing Research and Special Programs Admin-
istration. The new Research and Innovative Technology Administration will focus on research and
development activities, transportation analysis, and statistics. Inspection and policy responsibilities
for pipeline and hazardous materials transportation safety programs will be placed within the other
newly established operating administration: the Pipeline and Hazardous Materials Safety Adminis-
tration.
The Administration continues to assess the management and performance of DOT programs using
the Program Assessment Rating Tool (PART). Last year, nine programs were assessed using PART,
which reviews each program’s design and purpose, strategic planning, internal management, and
whether they are generating positive results for taxpayers. For example, the PART review of FAA’s
Facilities and Equipment program found that, despite appropriate long-term goals, projects consis-
tently experience large cost and schedule overruns. In response to the PART recommendations, FAA
will focus on increasing the use of performance-based contracts as a means of controlling costs. Eval-
uations of the Maritime Administration’s Maritime Security Program found a need for a new measure
246 DEPARTMENT OF TRANSPORTATION
of the program’s contribution to the total commercial sealift capacity requirement. This new mea-
sure will help DOT, which is working with the Department of Defense, evaluate whether the current
mix of vessel types in the Maritime Security Program fleet are appropriate to meet the needs of the
Department of Defense.
The table below provides an update on DOT’s implementation of the President’s Management
Agenda as of December 31, 2004.
Budget and
Competitive Financial
Human Capital E-Government Performance
Sourcing Performance
Integration
Status
Progress
Through the Human Capital initiative, DOT has established a new strategic plan for managing its human
capital and is progressing toward implementing multi-tier employee evaluation systems for each of its operating
administrations. DOT completed its first two standard competitions in August 2003, with expected savings
of $9 million over 10 years. DOT has implemented a Department-wide integrated financial system to make
the Department’s accounting practices more streamlined and accurate. The Department still faces several
challenges relating to financial management, including a need to improve the oversight of highway and transit
grants. DOT has created an Enterprise Architecture that focuses on information technology (IT) investments and
plans to address “at risk” programs in the Department. Over the next year, DOT will work towards achieving the
challenging goal of securing all of its IT systems. DOT’s 2006 Budget submissions incorporated PART findings
and are structured to show full costs by strategic goal.
FAA holds over 98 percent of the DOT property and leads the Department’s Real Property Initiative. There are
many challenges ahead, including a gap analysis between the FAA asset management plan, inventory system,
and performance measures and the Federal Real Property Council standards. FAA will use this assessment to
determine an aggressive strategy for addressing deficiencies. For its Improper Payment Initiative, DOT’s major
challenge is to gain insight into how grantees and subgrantees spend DOT funds. Currently, DOT has limited
information for its major grant programs. (Because this is the first quarter that agency efforts in the Eliminating
Improper Payments Initiative were rated, progress scores were not given.)
THE BUDGET FOR FISCAL YEAR 2006 247
Department of Transportation
(In millions of dollars)
2004 Estimate
Actual 2005 2006
Spending
Discretionary Budgetary Resources:
St. Lawrence Seaway Development Corporation
Existing law ........................................................................................................ 13 15 7
Legislative proposal to collect user fees .................................................. — — 8
Federal Aviation Administration ........................................................................... 13,841 13,834 13,779
FAA Obligation Limitation (non-add) ................................................................. 3,379 3,472 3,000
Rescission of 2005 and 2006 unused contract authority ...................... — — 1,069
Federal Highway Administration .......................................................................... 33,919 33,734 34,700
Federal-Aid Highway Obligation Limitation (non-add) ........................... 33,949 34,263 34,700
Federal Motor Carrier Safety Administration (Obligation limitation) ....... 364 443 465
National Highway Traffic Safety Administration (Obligation limitation) .. 298 452 696
Federal Transit Administration .............................................................................. 7,264 7,647 7,781
FTA Obligation Limitation (non-add) ............................................................. 5,813 6,691 6,825
Federal Railroad Administration .......................................................................... 1,450 1,425 552
Amtrak (non-add) ................................................................................................ 1,218 1,207 360
Maritime Administration .......................................................................................... 220 304 295
Rescission of unused balances .......................................................................... — — 74
Pipeline and Hazardous Materials Safety Administration 1 ....................... 112 112 116
Research and Innovative Technology Administration 2 ............................. — 4 6
Surface Transportation Board ............................................................................... 18 20 23
All other programs (includes offsetting collections) ...................................... 163 1 216
Total, Discretionary budgetary resources 3 .................................................... 57,662 57,991 57,501
Mandatory Outlays:
St. Lawrence Seaway Development Corporation:
Legislative proposal to collect user fees .................................................. — — 8
Federal Highway Administration...................................................................... 946 1,296 1,330
Office of the Secretary ........................................................................................ 8 117 51
All other (including offsetting receipts) .......................................................... 206 433 176
Total, Mandatory outlays ........................................................................................ 1,160 980 1,197
Department of Transportation—Continued
(In millions of dollars)
2004 Estimate
Actual 2005 2006
Credit activity
Direct Loan Disbursements:
Transportation Infrastructure Finance and Innovation Program .......... 65 396 818
Railroad Rehabilitation and Improvement Program ................................. 227 250 —
Total, Direct loan disbursements ......................................................................... 292 646 818
AT A GLANCE:
2006 Discretionary Budget Authority: $11.6 billion
(Increase from 2005: 4 percent)
Major Programs:
• Collecting taxes
• Managing and accounting for the public debt
• Administering Federal finances
• Combating financial crime and terrorist financing
• Regulating and supervising financial institutions
• Producing coins and currency
• Reforming the tax code to make it simpler and fairer for average taxpayers.
• Ensuring a safe and sound banking system through regulation and supervision of banks and
thrifts.
• Promoting and coordinating efforts of Federal agencies and the private sector to increase finan-
cial literacy for all Americans.
Protecting America
• Combating terrorist financing and financial crime, especially through efforts of the new Office
of Terrorism and Financial Intelligence, which will provide a comprehensive approach to
Treasury’s contribution to the War on Terror.
Agency-specific Goals
• Producing the world’s most accepted coins and currency and ensuring the integrity of the U.S.
dollar.
• Providing new tax enforcement initiatives to promote fair and equitable tax enforcement and
increase revenue.
249
250 DEPARTMENT OF THE TREASURY
• Reducing paper processing as more people file electronically with the Internal Revenue Service.
• Consolidating the Community Development Financial Institutions Fund with other community
and economic development programs.
• Focusing Internal Revenue Service customer service on telephone and Internet and away from
walk-in service centers.
THE BUDGET FOR FISCAL YEAR 2006 251
President Bush has brought tax relief to Americans in each year since 2001 and is working on mak-
ing this tax relief permanent while reforming the complex tax system. The President has appointed
a bipartisan panel to advise the Secretary of the Treasury on options to reform the tax code. The re-
port that the panel will present this year should help move the Nation toward a simpler, fairer, more
pro-growth system, which recognizes the importance of home ownership and charity to American
society. Meanwhile, the Internal Revenue Service (IRS) is working to make it easier for taxpayers
to comply with Federal income tax rules. Taxpayers used the IRS.gov website 739 million times in
2004 to download forms and publications, up 32 percent from 2003. Electronic filing, which is faster,
easier, and far less prone to error than paper filing, increased by 16 percent in 2004 to more than 61
million individual tax returns. IRS estimates that 68 million, or half of all individual returns will be
electronically filed in 2005.
A healthy banking system is fundamental to a strong national economy. Treasury maintains the
health of the national banking and thrift system through the Office of the Comptroller of the Cur-
rency (OCC) and the Office of Thrift Supervision (OTS). OCC and OTS conduct on-site examinations
and regulate financial institutions to ensure that institutions are properly capitalized and soundly
managed. In addition, OCC and OTS ensure that bank and thrift customers have fair access to
financial services by examining banks and thrifts for compliance with consumer banking laws. Fi-
nally, OCC and OTS act in conjunction with the Financial Crimes Enforcement Network (FinCEN)
to enforce laws and regulations that prevent banks and thrifts from allowing criminals to launder
252 DEPARTMENT OF THE TREASURY
money through their institutions. In the next few years, the banking regulators will work on updat-
ing international uniform safety and soundness standards for banking institutions.
The Administration will again propose broad reform of the supervisory system for Government-
sponsored enterprises (GSEs) in the mortgage market: Fannie Mae, Freddie Mac, and the Federal
Home Loan Bank System. Part of this reform includes establishing a new safety and soundness
regulator for the housing GSEs with powers comparable to other world-class financial regulators,
and with the stature and resources necessary to carry out its responsibilities. The Budget places this
new regulator in the Department of the Treasury. The Administration’s proposal promotes a strong,
resilient financial system and increased opportunities for affordable homeownership. (See the Credit
and Insurance chapter in the Analytical Perspectives volume for a background discussion.)
Treasury’s Office of Financial Education contributes to the Administration’s pro-growth agenda
by equipping Americans with the knowledge needed to improve management of their finances. The
2006 Budget continues its commitment to the Office of Financial Education, which facilitates private
sector efforts to raise the level of financial literacy of Americans. Treasury coordinates the financial
education efforts of 20 Federal agencies.
THE BUDGET FOR FISCAL YEAR 2006 253
PROTECTING AMERICA
The President’s Budget commits over $100 million to Treasury’s efforts to protect America through
detecting and stopping financial crimes, money laundering, and terrorist financing. The Office of
Terrorism and Financial Intelligence (TFI) fully integrates the operations and assets of the Office
of Terrorist Financing and Financial Crime (TF/FC), the Office of Foreign Assets Control (OFAC),
the Financial Crimes Enforcement Network (FinCEN), the Office of Intelligence and Analysis (OIA),
and the Treasury Executive Office for Asset Forfeiture (TEOAF). The aims of the consolidated TFI
organization are safeguarding the financial system against illicit use and wielding Treasury’s array
of economic tools against rogue nations, terrorist facilitators, money launderers, drug kingpins, and
other national security threats. TFI is divided into two functional areas: intelligence and enforce-
ment. OIA provides focused and operable intelligence in support of the Department’s mission and
policies. TFI’s enforcement responsibilities—executed by the TF/FC, OFAC, and FinCEN—include
designating and freezing the accounts of terrorists, drug kingpins, and their support networks; im-
plementing U.S. sanctions policy; administering and enforcing the Bank Secrecy Act (BSA); linking
law enforcement agencies with financial institutions to uncover illegal activities and schemes; and
helping strengthen U.S. and international standards to prevent money laundering and terrorist fi-
nancing. Finally, TFI provides policy guidance for IRS’ Criminal Investigation’s expert investigators
in their anti-money laundering, terrorist financing, and financial crimes cases.
254 DEPARTMENT OF THE TREASURY
PROTECTING AMERICA—Continued
AGENCY-SPECIFIC GOALS
The U.S. Mint (Mint) and the Bureau of Engraving and Printing
(BEP) are responsible for ensuring that our Nation continues to pro-
duce the world’s most accepted coin and currency. At the end of 2005,
the Mint will end its highly successful production of nickels in com-
memoration of the bicentennials of the Louisiana Purchase and the
Lewis and Clark expedition. All nickels issued in 2006 will bear the
likeness of Thomas Jefferson on one side, and an image of Monticello
on the other side. During 2006, the Mint will also roll out the next
installment of the popular 50 State quarters program, with quarters
for Nevada, Nebraska, Colorado, North Dakota, and South Dakota.
During 2006, BEP will continue to focus its resources on produc-
In 2005, there will be a new face on the
ing the most secure currency for the Nation. BEP will pursue the
Nation’s nickel. It will still be President
redesign of the $100 note as part of its current multi-year initiative
Thomas Jefferson, but unlike we have
ever seen him before.
to implement the most ambitious currency redesign in U.S. history.
The planned redesign of the $100 note follows successful redesigns of the $20 and $50 notes with
subtle background colors and other counterfeit deterrence features. A redesigned $10 note will be in
production and introduced into circulation in 2005.
256 DEPARTMENT OF THE TREASURY
Treasury is working to reduce duplicative programs and maximize the efficiency of all its bureaus.
For example, IRS officials are working to increase the effectiveness of their programs by helping to
bring about fairer and more efficient tax compliance at a lower cost. The Budget invests $265 mil-
lion in new initiatives for these programs. This investment will provide additional audits, collection
efforts, and tax fraud enforcement to increase revenue and promote compliance.
The high-tech laser printers (shown above) FMS uses at its Regional
Financial Centers to print benefit and tax refund checks are capable of
producing more than 60,000 checks per hour. Still, there’s no comparison
to the efficient, safe, and secure transfer of funds capable with the push
of a button, as shown in the photo on the right. The Federal Government
saves 62 cents for every check converted from paper to electronic format.
258 DEPARTMENT OF THE TREASURY
The Budget provides funding for FMS’ electronic initiatives, such as: Pay.gov, which is a Govern-
ment-wide web portal to collect non-tax revenue electronically; Paper Check Conversion, which con-
verts checks into electronic debits thereby moving funds more quickly; and Stored Value Cards, which
directly support military operations overseas. FMS also collects the Government’s non-tax delinquent
debt such as: loans owed to the Government, fines or penalties assessed by an agency, and overpay-
ments made by Federal agencies. FMS collected $3 billion in non-tax delinquent debt in 2004.
In 2006, The Bureau of Public Debt (BPD) will continue its efforts to improve the efficiency of the
securities services it offers to retail investors. The cornerstone of this effort is BPD’s new Treasury-
Direct system, which, when fully implemented, will enable investors to purchase and manage all of
their Treasury securities holdings online through a single portfolio account. The system currently
offers both Series I and EE savings bonds in electronic form and holds more than $1.3 billion in more
than 250,000 accounts.
The Alcohol and Tobacco Tax and Trade Bureau (TTB) is responsible for the regulation of the al-
cohol and tobacco industries, and the collection of approximately $15 billion annually in alcohol,
tobacco, firearms, and ammunition excise taxes. TTB protects the consumer by ensuring that alcohol
beverages are labeled, advertised, and marketed in accordance with the law, facilitates the import
and export trade in beverage and industrial alcohols, promotes voluntary tax compliance, and en-
forces the provisions of the Federal Alcohol Administration Act. In 2006, TTB anticipates receiving
and screening more than 100,000 label applications, more than 400,000 tax returns and operational
reports, and more than 4,000 applications for permits to enter the alcohol and tobacco industries. In
2006, TTB will process an estimated 16 percent of its label applications electronically, up from just
three percent in 2003. The Budget proposes to establish user fees to cover the costs of TTB’s regula-
tory functions under its Protect the Public line-of-business. The new user fees include filing fees for
Certificate of Label Approvals, proposed formulas, and permit applications. The industry should pay
for the benefits it receives from TTB’s regulatory efforts.
The 2006 Budget proposes to consolidate the Community Development Financial Institutions Fund
into a new economic and community development program to be administered by the Department of
Commerce. The new program would be designed to achieve greater results and focus on communities
most in need of assistance. Treasury will continue to oversee the New Markets Tax Credit program.
THE BUDGET FOR FISCAL YEAR 2006 259
The table below provides an update on the Department of the Treasury’s implementation of the
President’s Management Agenda as of December 31, 2004.
Budget and
Competitive Financial
Human Capital E-Government Performance
Sourcing Performance
Integration
Status
Progress
2004 Estimate
Actual 2005 2006
Spending
Discretionary Budget Authority:
Internal Revenue Service .................................................................................. 10,185 10,236 10,679
Financial Management Service ....................................................................... 228 229 236
Departmental Offices .......................................................................................... 240 220 232
Bureau of Public Debt ......................................................................................... 174 174 177
Inspectors General ............................................................................................... 140 144 150
Tax and Trade Bureau:
Existing law ........................................................................................................ 80 82 62
Legislative proposal ........................................................................................ — — 29
Financial Crimes Enforcement Network ....................................................... 58 72 74
Community Development Financial Institutions Fund ............................. 63 56 8
All other .................................................................................................................... 497 6 5
Total, Discretionary budget authority ................................................................. 10,671 11,207 11,642
Mandatory Outlays:
Payment where earned income exceeds liability for tax:
Existing law ........................................................................................................ 33,134 33,790 34,132
Legislative proposal ........................................................................................ — — 81
Payment where child credit exceeds liability for tax:
Existing law ........................................................................................................ 8,857 13,516 13,180
Legislative proposal ........................................................................................ — — 34
Payment where health care credit exceeds liability for tax:
Existing law ........................................................................................................ 82 91 103
Legislative proposal ........................................................................................ — — 99
Interest payments on advances to the black lung disability fund
trust fund:
Existing law ........................................................................................................ 651 675 696
Legislative proposal ........................................................................................ — — 3,343
User fees Tax and Trade Bureau:
Legislative proposal ........................................................................................ — — 29
Continued Dumping and Subsidy Offset Act:
Existing law ........................................................................................................ 214 293 1,608
Legislative proposal ........................................................................................ — — 1,608
Internal revenue collections for Puerto Rico:
Existing law ........................................................................................................ 336 404 303
Legislative proposal ........................................................................................ — — 56
All other .................................................................................................................... 2,672 2,160 2,354
Total, Mandatory outlays ........................................................................................ 44,644 45,259 41,336
Credit activity
THE BUDGET FOR FISCAL YEAR 2006 261
2004 Estimate
Actual 2005 2006
Direct Loan Disbursements:
Community Development Revolving Loan Fund ....................................... 7 7 —
Total, Direct loan disbursements ......................................................................... 7 7 —
AT A GLANCE:
2006 Discretionary Budget Authority (with collections):
$33.4 billion (Increase from 2005: 3 percent)
Major Programs:
• Health care for veterans
• Disability compensation
• Pensions for low-income veterans
• Vocational rehabilitation training and employment services
• National cemeteries
• Providing health care services in more convenient locations, using information technology to
serve patients more quickly and more accurately.
• Working with the Department of Defense to help service members gain access to veteran services
and benefits.
263
264 DEPARTMENT OF VETERANS AFFAIRS
Veterans’ disability compensation is a monthly benefit payment to veterans who are disabled as a
result of their military service. It is the workers’ compensation program for military members, which
complements retired pay and disability annuities provided by the Department of Defense (DOD). In
2006, 2.7 million veterans will receive $26 billion of these tax-free benefits from the Department of
Veterans Affairs (VA), 57 percent more than when the President came to office.
When President Bush took office, the number of claims waiting to be processed had risen to more
than 600,000. As a result, many veterans were waiting an average of over 230 days for a claim to
be processed. One of the President’s top priorities was to significantly reduce this processing time.
VA trained nearly 1,800 employees in proper claims processing procedures and created specialized
teams to process claims for those veterans who had been waiting the longest. Uniform measurement
tools were established to evaluate quality and timeliness, and employee evaluations were re-designed
to hold VA personnel accountable for meeting the President’s goal. Further, VA worked with both
DOD and the National Records Center in St. Louis to expedite the exchange of information needed
to process claims. As a result, the number of days to process a claim will drop from 230 when the
President took office to an average of 145 days in 2006—an improvement that the Department is
committed to continuing in the years ahead.
The Veterans Housing Benefit Program provides guaranteed home loans to veterans, active-duty
service members, and reservists. In addition to the loan guarantee program, the Veterans Housing
Benefits Program also includes assistance to veterans living on Indian Reservations and veterans
needing wheelchair accessible homes that are specially adapted to their needs.
There is no limit to the number of loans issued in a year. In 2006, VA expects to issue 300,000
guaranteed loans for nearly $46.2 billion, including 183,000 no down payment loans. The program
also offers options with 5-percent and 10-percent down payments.
266 DEPARTMENT OF VETERANS AFFAIRS
Treating veterans with military disabilities, low incomes, and special needs (such as substance
abuse or spinal cord injury) has historically been VA’s core medical care mission and its highest pri-
ority. The President is fulfilling his promise to deliver high-quality, accessible health care to these
veterans. As shown in the accompanying chart, the President’s 2006 VA medical care budget is more
than 47 percent greater than when he took office, and VA will treat about 950,000 more patients in
2006 than it did in 2001. The Budget assumes that most new veterans enrolling in the VA medical
care system will fall under VA’s core medical care mission, and that all other veterans will pay an
annual enrollment fee and increased prescription drug co-payments that are still low but more in
line with other public and private health care programs.
Medical Care Budget Increasing The best way to guarantee that veterans un-
Billions of dollars derstand the benefits to which they are entitled
35 is with outreach and education. VA instituted
Collections
a program to provide information on all veter-
30 Appropriations
ans’ benefits—not just medical care—to service
25 members as they leave military service, espe-
cially those with service-related special needs.
20
This outreach effort includes a special empha-
15 sis on Reserve and National Guard personnel
called to active duty.
10
To date, about 32,000 returning service
5
members from Iraq and Afghanistan have re-
0 ceived medical care from VA, and all returning
2001 2002 2003 2004 2005 2006 service members receive a day of orientation
Source: Department of Veterans Affairs.
on VA benefits and programs. At the major
DOD hospitals, injured service members are assigned a VA case worker (stationed at the hospital),
who assists them in accessing their VA benefits and easing their transition to VA hospitals if needed.
Case workers also assist the families of injured service members. VA and DOD now electronical-
ly share medical information, thus providing these patients with better, more timely care.
VA has been a leader in implementing health information technology to improve patient care. Pa-
tients have benefited from innovative safety and quality systems implemented by VA. For example,
VA has developed a bar-code drug dispensing system—similar to that used in most stores today.
This system assures that patients receive the correct drugs at the right times, and prevents them
from receiving potentially dangerous drug combinations. In addition, VA has implemented a patient
safety program that encourages physicians, nurses, and other providers to report problems or errors
in care. As a result of the many innovative programs that were introduced in recent years, in 2003
the Institute of Medicine recognized VA as a leader in assuring patient safety and providing quality
and cited VA as one of the best Government programs based on a 2004 national survey of customer
satisfaction.
To assist and complement the work of VA staff, the Department coordinates a large volunteer
program. Last year, 133,000 Americans donated about 14 million hours of their time to volunteer at
VA facilities, providing transportation to and from VA hospitals, delivering mail and medical records,
and visiting patients.
THE BUDGET FOR FISCAL YEAR 2006 267
VA estimates that there are more than VA prepares patient for independent living.
250,000 homeless veterans in the Nation, or
one-third of the adult homeless population. VA’s homeless assistance programs now constitute
the largest integrated network of services in the United States and serve approximately 40,000
homeless veterans annually. The Budget provides $231 million to directly support VA’s homeless
network and an additional $1.5 billion for medical care to homeless veterans.
Almost three-fourths of homeless veterans suffer from a mental illness and/or substance abuse
problem, making it difficult for them to keep a job and live independently. VA’s programs provide a
continuum of services including mental health care, substance abuse counseling, and employment
training. These comprehensive programs often require VA cooperation with Federal, State, and local
governments, and the private sector.
VA has expanded community grants to all 50 States and the District of Columbia to improve access
to housing and health care for homeless veterans. In addition, VA has created partnerships with the
Departments of Health and Human Services and Housing and Urban Development to support new
initiatives that provide permanent housing, a full range of medical care, and support services for
chronically homeless veterans. VA, in partnership with States, continues to support transitional,
community-based housing in a program that emphasizes stronger collaboration with community
organizations, including faith-based organizations.
National Cemeteries
In 2006, approximately 100,000 veterans and eligible family members will be buried in the national
cemetery system. From 2001 to 2006, there is estimated to be a 21-percent increase in the number of
burials due to the advancing age of our World War II, Korean War, and Vietnam War veterans. In the
next 20 years, one-third of our veterans will pass away. To make sure these veterans are accorded
a proper burial, VA continues to evaluate the national cemetery system to make sure we have the
appropriate number and location of national and State cemeteries. The 2006 Budget provides over
35 percent more funding for burial services and national cemeteries than five years ago. The 2006
Budget provides funding to acquire land to build six new cemeteries, including one each in Alabama,
Pennsylvania, California, South Carolina, and two in Florida. VA has also expanded its partnership
with States over the last four years to give veterans more burial options. Grants for construction and
equipment are provided to establish or improve State cemeteries in areas where national cemeteries
do not exist. In return, these States agree to adhere to VA standards of eligibility and maintenance.
The Department takes pride in the service provided to the families of our veterans; a recent survey
of family members and funeral directors showed 95 percent rated the service they received from our
national cemeteries as excellent.
268 DEPARTMENT OF VETERANS AFFAIRS
Many veterans have moved to the South and Southwest, yet VA maintains underused hospitals
throughout the northern and eastern regions of the country where fewer veterans live. VA com-
pleted a nationwide study of its facilities in 2004 to better align resources with patient needs by
increasing services where veterans live, and converting large underused hospitals to more efficient
clinics. Construction decisions were completed, and VA will spend $1.5 billion in 2004 and 2005 on
this effort. The 2006 Budget includes an additional $750 million for this purpose.
When President Bush took office, waiting lists for new patients were six months or longer. At one
point, the number of patients waiting for care peaked at 300,000. There was no system in place
to ensure that veterans with military disabilities, low incomes, and special needs received prompt
treatment unless they were facing a medical emergency. VA moved to prioritize those waiting for
appointments and implemented a temporary program to fill non-VA prescriptions for the first time.
This year, the list of veterans waiting more than six months for an appointment for basic medical
care has been essentially eliminated.
VA is a leader in developing electronic medical records to ensure that critical patient information
is not stored in a paper file somewhere but is accessible easily to all providers that may see a vet-
eran, while appropriately protecting medical privacy. When a veteran receives care at VA, the doctor
or nurse quickly enters all important information into a computer system and reads information on
the patient’s test results, drugs, and other vital information. As a result of these and other improve-
ments, in most situations veterans can go to any facility for care and know that the medical staff
can immediately access their records. They also receive drugs more quickly, safely, and easily. For
example, after having an exam, a patient can go directly to the pharmacy and pick up any needed
drugs that were electronically ordered by the physician.
disability benefits, home loans, life insurance, burial benefits, vocational rehabilitation, and educa-
tion benefits.
The Departments are aggressively moving towards electronic patient medical records so both DOD
and VA doctors and nurses have rapid access to patients’ records. Since all veterans start out in the
military system and almost 700,000 use both systems annually, this coordinated effort is critical. The
first phase was implemented in June 2002 with an electronic exchange of former military members’
patient health information available at VA. The next step, expected in 2005, is the two-way sharing
of this information.
DOD and VA are working together to solve mutual problems in the Greater Chicago area, where
five VA hospitals and one DOD hospital are located. DOD originally planned to build a new hospital
within walking distance of an underutilized VA hospital. DOD now plans to share VA’s hospital—en-
suring military members, their families, and veterans will have access to quality care in a fiscally
responsible way. In addition, the two Departments have made progress in sharing personnel. In
some locations, such as Albuquerque, New Mexico and Chicago, Illinois, they share many personnel.
In other smaller areas, one or two shared staff may be key to maintaining critical capacity. For exam-
ple, the Air Force Base in Grandforks, North Dakota needed a doctor for its family practice clinic. An
agreement was reached for a VA doctor to provide care to service members at the military hospital.
This lowered overall cost to taxpayers and improved access to care at the military hospital.
DOD and VA are working together to ensure that all separating service members who file a VA
disability claim at discharge sites receive a discharge physical that meets requirements of both the
VA and the Services, prior to separation. This allows one physical examination that saves time later.
The table below provides an update on VA’s implementation of the President’s Management Agenda
as of December 31, 2004.
Budget and
Competitive Financial
Human Capital E-Government Performance
Sourcing Performance
Integration
Status
Progress
2004 Estimate
Actual 2005 2006
Spending
Discretionary Budget Authority:
Medical Programs ................................................................................................ 27,365 28,784 28,903
Medical Services .............................................................................................. 18,468 19,764 19,789
Medical Services Collections (non-add)
Existing law ................................................................................................... 1,708 1,953 2,164
Legislative proposal ................................................................................... — — 424
Medical Administration ................................................................................... 4,027 4,377 4,439
Medical Facilities .............................................................................................. 4,004 3,858 3,888
Medical Research ............................................................................................ 866 784 786
Benefit Programs .................................................................................................. 1,429 1,453 1,548
Disability Compensation ................................................................................ 659 652 701
Pension ................................................................................................................ 143 138 148
Education ............................................................................................................ 76 90 100
Vocational Rehabilitation and Employment ............................................ 124 139 147
Housing ................................................................................................................ 157 156 157
Insurance ............................................................................................................ 4 4 5
Burial Benefits ................................................................................................... 265 272 290
Departmental Administration ............................................................................ 343 371 401
General Administration .................................................................................. 280 301 330
Inspector General ............................................................................................ 62 70 71
Total, Discretionary budget authority (no collections) .................................. 29,137 30,607 30,852
Total, Discretionary budget authority (with new collections) ..................... 29,137 30,607 31,274
Total, including all collections .............................................................................. 30,845 32,560 33,440
Mandatory Outlays:
Medical Programs:
Existing law .................................................................................................... 29 33 35
Legislative proposal .................................................................................... — — 424
Benefit Programs and Receipts:
Disability Compensation ................................................................................ 26,297 31,153 30,643
Pension ................................................................................................................ 3,334 3,674 3,470
Education ............................................................................................................ 2,137 2,454 2,579
Vocational Rehabilitation and Employment ............................................ 551 604 632
Housing ................................................................................................................ 218 1,904 65
Insurance ............................................................................................................ 1,260 1,298 1,330
Burial Benefits ................................................................................................... 153 168 171
Other Receipts and Transactions ............................................................... 2,771 1,650 648
Departmental Administration ............................................................................ 151 — —
Total, Mandatory outlays ........................................................................................ 31,057 39,638 37,853
2004 Estimate
Actual 2005 2006
Credit activity
Direct Loan Disbursements:
Vocational Rehabilitation Loans ...................................................................... 3 4 4
Native American and Transitional Housing Loans .................................... 6 9 26
Vendee and Acquired Loans ............................................................................ 123 915 1,675
Total, Direct loan disbursements ......................................................................... 132 928 1,705
AT A GLANCE:
2006 Discretionary Budget Authority: $4.3 billion
(Decrease from 2005: 7 percent)
Major Programs:
• Commercial navigation
• Flood and storm damage reduction
• Aquatic ecosystem restoration
Agency-specific Goals
• Prioritizing construction funding for projects with the highest net economic and environmental
return.
• Reducing the large backlog of construction work, by providing $114 million in the Budget to
complete 20 projects by the end of 2006, yielding an average return of $6.64 per dollar invested.
• Using innovative means to strengthen partnerships with local stakeholders to improve the
quality of Corps recreation services through a Recreation Modernization Initiative.
• Restoring aquatic ecosystems, with an emphasis on the Florida Everglades, the Louisiana
coastal area, and the Upper Mississippi River; and assisting recovery efforts for endangered
and threatened fish and wildlife on the Columbia and Missouri Rivers.
• Protecting the Nation’s waters and wetlands.
273
274 CORPS OF ENGINEERS—CIVIL WORKS
The 2006 Budget proposes an initiative that improves the performance of the Corps construc-
tion program. The initiative establishes objective, performance-based guidelines for developing the
Corps construction budget, which will maximize the overall net economic and environmental return
from the construction program. These funding guidelines are based on sound financial management
principles similar to those used by private industry to rank and select investments. The initiative
would improve the program’s overall performance and benefit to the Nation by redirecting funds from
low-performing to high-performing construction projects.
The 2006 Budget provides $1.4 billion for the Corps construction program, with an additional $0.2
billion available for the highest performing projects contingent upon congressional adoption of this
initiative. The President’s Budget directs resources to construction projects based on guidelines sum-
marized below.
The Performance Budgeting Initiative: Guidelines for Making Better, Smarter Construction
Investments
1. Budgeting by mission area. Projects compete for funding in each of the Corps’ three main mission
areas: commercial navigation, flood and storm damage reduction, and aquatic ecosystem restoration.
2. Performance-based project rankings. Projects are ranked based on objective performance criteria.
• In all mission areas except aquatic ecosystem restoration, projects are ranked based on their remaining
benefits, relative to their remaining costs.
• Aquatic ecosystem restoration projects are ranked based on the extent to which they use resources
effectively to address a significant regional or national ecological problem.
3. Performance-based funding allocations. The performance rankings will determine what level of fund-
ing projects will receive. Projects ranking at, or near, the top will be funded at very high levels, while
low-performing projects will receive reduced funding levels, and in some cases, may be suspended.
• Highest ranking projects will receive at least 80 percent of the amount that the Corps can efficiently
spend.
• Low-ranking projects that do not meet baseline performance thresholds will be considered for deferral.
4. Limitations on multiyear contracts. The Budget proposes appropriations language to repeal the Corps’
continuing contract authorities. The proposal will reduce out-year funding commitments, while allowing the
Corps to issue multiyear contracts where appropriate.
Reducing the Construction Backlog. Between 2000 and 2005, funding for the Corps construction
program increased by 30 percent in nominal terms. Much of this increase was for work on projects
with relatively low benefits or outside of the Corps’ three main mission areas: 1) facilitating commer-
cial navigation; 2) reducing damages caused by floods and storms; and 3) restoring aquatic ecosys-
tems. During the same period, the Corps construction workload grew at an unmanageable rate
and more projects faced construction delays, as additional projects were authorized without fund-
ing for timely completion. This growth trend has resulted in a $50 billion cost to complete authorized
THE BUDGET FOR FISCAL YEAR 2006 275
projects, of which only $15 billion is for projects that are both within the Corps’ main mission ar-
eas and meet current economic and environmental performance standards. Funding new projects
further stresses the Corps’ workload as these projects inevitably compete for funding with ongoing
projects that offer much greater benefits, relative to their costs. As a result, some projects cost more
than they need to, and most projects are completed many months—and sometimes years—later than
they could.
The Administration’s performance budgeting initiative will reduce the construction backlog over
time by placing a higher priority on completing high-return projects and limiting the start of new
projects to the highest performing projects that are consistent with long-term fiscal management
goals. In addition, the Administration’s principles for improving program performance, which were
in the President’s 2004 Budget, will contribute significantly to achieving this objective. Those princi-
ples emphasize the need for using sound economic analysis in the formulation and design of proposed
projects, funding only those new projects that have a very high net economic and environmental re-
turn and developing a process for de-authorizing projects that are inactive, have low return, or fall
outside the Corps’ mission areas.
Priority Funding for High-Ranking National Projects. Based upon the performance rankings
within each mission area, the Budget focuses funding on the highest-performing projects, including
nine projects that are national priorities.
2006 Budget
Authority
Priority Projects Project Purpose
(in millions
of dollars)
Sims Bayou, Houston (TX) .................................................................... 18 Flood Damage Reduction
West Bank, New Orleans (LA) ............................................................. 28 Flood/Storm Damage Reduction
New York/New Jersey Harbor (NY, NJ)............................................. 101 Commercial Navigation
Oakland Harbor (CA)............................................................................... 48 Commercial Navigation
Olmsted Locks and Dam, Ohio River (IL, KY)................................ 90 Commercial Navigation
Missouri River Fish and Wildlife Recovery (IA, NE, KS, MO) . 83 Hydropower, Flood Damage
Reduction, Commercial
Navigation/Mitigation
Upper Mississippi River Restoration (IL, IA, MN, MO, WI) ........ 34 Commercial Navigation/
Mitigation
Columbia River Fish Recovery (OR, WA, ID) ................................. 102 Hydropower, Commercial
Navigation/ Mitigation
Everglades (FL) ......................................................................................... 137 Aquatic Ecosystem Restoration
The Corps is developing a comprehensive five-year budget plan for future spending that meets the
goals set by the Administration’s performance budgeting initiative. This effort will encourage greater
fiscal discipline by requiring current budget decisions to be made in light of their long-term funding
implications. It also will establish an important link between Corps spending projections and the
agency’s annual and long-term performance targets. The plan will include a summary of projected
civil works funding by both appropriation and program area, disaggregated to the individual project
level.
276 CORPS OF ENGINEERS—CIVIL WORKS
Program Performance
Several Corps programs were assessed this year using the Program Assessment Rating Tool
(PART). The PART analyses helped shape the Budget by reviewing the programs’ design, purpose,
and strategic planning efforts; how well they are managed; and whether they are generating positive
returns for taxpayers. The PART analysis of the storm damage reduction program, for example,
concluded that the Budget should continue to limit funding for long-term beach re-nourishment,
and the Corps should better coordinate its beach nourishment activities with Federal, State and
local plans for hazard mitigation, to reduce overall storm damages more cost-effectively. In addition,
the reassessment of the Corps hydropower program concluded that in response to deficiencies cited
in the initial PART, the Corps has since developed an overall asset management plan for plant
and program managers to use in making risk-based hydropower investment decisions and setting
regional and national hydropower investment priorities.
The table below provides an update on the Corps’ implementation of the President’s Management
Agenda as of December 31, 2004.
Budget and
Competitive Financial
Human Capital E-Government Performance
Sourcing Performance
Integration
Status
Progress
The Corps is assessing implementation of its 2012 Reorganization Plan to determine whether organizational
changes are achieving intended results. The Corps also developed a leadership guide to focus leadership
training and development efforts. The Corps has ensured the security of 87 percent of its Information Technology
(IT) systems and expects to be fully accredited by 2005. The Corps has two ongoing competitions for IT and
Facilities Management and has completed plans for three more. To address problems identified in its financial
audit, the Corps is aggressively working to correct past audit deficiencies. To advance Budget and Performance
Integration, the Corps revised the Civil Works strategic plan and is using performance measurement to guide
budget and management decisions, such as in the wetlands permitting program.
The Corps has completed its initial assessment of its Real Estate Management Systems and has made
important progress in developing its real property inventory analysis and asset management plan.
THE BUDGET FOR FISCAL YEAR 2006 277
AGENCY-SPECIFIC GOALS
The Corps manages nearly 11,000 miles of commercial waterways and about 300 ports and harbors,
typically through lock and dam operations and dredging. In allocating operation and maintenance
funds, priority is given to maintaining key infrastructure, which yields the highest economic returns.
The average return on investment from completing the construction of ongoing commercial naviga-
tion projects included in the 2006 Budget is 6.4 to one.
Flood Damage Reduction. The 2006 Budget provides $390 million to continue construction on
highly cost-effective flood damage reduction projects, such as Sims Bayou, Texas and West Bank,
Louisiana. Upon completion, both ownership and maintenance responsibility for such projects will
be turned over to local sponsors. In addition, the Budget proposes a new flood damage reduction
project in Washington, D.C., for which the estimated benefits are 4.1 times greater than the costs.
Storm Damage Reduction. The Budget also provides $54 million to continue progress on beach
nourishment projects based on the degree to which they will reduce storm damage. Similar to the
President’s 2005 proposal, the Budget funds the initial construction phase of those projects, while
local sponsors will have the responsibility for financing long-term follow-up re-nourishment. The
Budget includes $14 million for beach nourishment and re-nourishment to mitigate the impacts of
Federal navigation projects.
The 2006 Budget provides $510 million for aquatic ecosystem restoration work, focusing resources
on nationally significant projects such as the Florida Everglades and Coastal Louisiana.
278 CORPS OF ENGINEERS—CIVIL WORKS
AGENCY-SPECIFIC GOALS—Continued
The Corps manages a permitting program that plays an important role in the status of our Nation’s
wetlands. It requires real estate developers and builders of roads, bridges, and shopping centers to
avoid, minimize or mitigate any damage they cause to aquatic resources, including wetlands. The
agency processes some 80,000 permits annually. In 2003, developers received permits for projects
that will adversely affect 21,300 acres of wetlands nationwide, in return for which they were required
to create or restore 43,400 acres (roughly the size of the District of Columbia) of wetlands. The 2006
Budget proposes $160 million for the agency’s regulatory program, an increase of 11 percent over
the 2005 level, which will help improve the speed and quality of permit processing and increase the
Corps’ mitigation and compliance activities.
The 2006 Budget provides $2.0 billion for the operation and
maintenance of existing Corps projects, including funding for
continued security improvements at Corps facilities to reduce
their vulnerability to terrorist threats. In order to allow more
timely maintenance at Corps hydropower facilities, the Budget
proposes that the Corps’ hydropower-related operation and
maintenance expenses be directly financed by the Department
of Energy’s Power Marketing Administration receipts, which
are generated by the sale of power from these Corps facilities.
This will enable the Corps to reduce downtime and increase
the reliability of power generation. In addition, the 2006
Budget proposes to create an emergency maintenance reserve
fund—managed directly by the Assistant Secretary of the Army
for Civil Works—to meet high-priority, unexpected, and urgent
maintenance needs at key Corps facilities each year. Under the
proposed arrangement, the Assistant Secretary for Civil Works
will be able to respond to these emergency situations promptly, The Corps maintains navigation infrastructure
without interfering with other program commitments. in Illinois.
The Corps is one of the largest Federal providers of outdoor recreation services, managing 4,300
recreation areas at 465 projects in 43 States. The Corps spends about $268 million each year to
support this popular program.
The 2006 Budget proposes a Corps recreation modernization initiative, based on a promising model
now used by other major Federal recreation providers such as the National Park Service and the
Forest Service. The agency would use a portion of the recreation fees that it collects (such as entrance
fees) to upgrade the site where the fees are collected. In addition, the Corps will seek legislative
authority to conduct a limited number of demonstration projects such as lake improvement districts.
These public/private partnerships encourage local community leaders and property owners to work
with the Corps to maintain and upgrade Corps recreation facilities. The work would be performed
in a collaborative manner, similar to the approach taken in the President’s cooperative conservation
efforts. The demonstration projects could be expanded subsequently if they prove to be an effective
way to pay for and improve the program.
280 CORPS OF ENGINEERS—CIVIL WORKS
2004 Estimate
Actual 2005 2006
Spending
Discretionary Budget Authority by Program:
Construction ................................................................................................................ 1,730 1,782 1,637
Operation and Maintenance .................................................................................. 1,955 1,943 1,979
Flood Control, Mississippi River and Tributaries............................................ 322 322 270
Flood Control and Coastal Emergencies ......................................................... 3 — 70
General Investigations............................................................................................. 116 143 95
Regulatory Program ................................................................................................. 139 144 160
Formerly Utilized Sites Remedial Action Program ........................................ 139 164 140
General Expenses .................................................................................................... 159 166 162
Office of Assistant Secretary (Civil Works)...................................................... — 4 —
Subtotal, Discretionary budget authority .......................................................... 4,563 4,668 4,513
Reclassification of PMA Receipts, Operation and Maintenance ............. — — 181
Total, Discretionary budget authority ................................................................. 4,563 4,668 4,332
Mandatory Outlays:
Existing law ............................................................................................................. 142 18 27
Legislative Proposal, Recreation Program User Fee .............................. — — 9
Total, Mandatory outlays ........................................................................................ 142 18 18
AT A GLANCE:
2006 Discretionary Budget Authority: $7.6 billion
(Decrease from 2005: 6 percent)
Major Programs:
• Superfund
• Clean Water and Drinking Water State Revolving Funds
• Brownfields
• Air, Water, and Hazardous Waste Regulatory Programs
• Homeland Security
• Encouraging business investment and job creation in local communities by increasing funding
to continue brownfields clean-up.
• Using market forces to protect public health and support economic growth through the
President’s Clear Skies Initiative and the related Clean Air Interstate Rule and Clean Air
Mercury Rule.
Protecting America
• Improving lab coordination and expanding research for the Environmental Protection Agency’s
(EPA’s) homeland security decontamination program.
• Implementing a new water security monitoring pilot program in five major cities and providing
emergency training to the operators of large drinking water systems.
• Providing competitive grants to States and Tribes for projects that can demonstrate environ-
mental and public health benefits.
• Establishing more stringent accountability measures and reforms for the Alaska Native Villages
Program to address systemic financial and programmatic deficiencies.
281
282 ENVIRONMENTAL PROTECTION AGENCY
Agency-specific Goals
• Preventing the emission of an estimated 1,200 tons of particulate matter annually by supporting
diesel engine retrofits, rebuilds and replacements, anti-idling measures, clean fuel infrastruc-
ture projects, and other activities.
• Working with partners to clean up contaminated sediments at approximately six sites in the
Great Lakes region, two to three more sites than in 2005.
THE BUDGET FOR FISCAL YEAR 2006 283
Brownfields Clean-up
Vibrant, healthy communities encourage business investment and job creation. However, many
communities’ revitalization efforts are hindered by abandoned industrial properties that blight the
landscape and pose the threat of contamination. The EPA’s Brownfields programs help States, Tribes,
and local communities redevelop these sites and make them productive, vital parts of the neigh-
borhood. Brownfields grants support revitalization efforts by funding environmental assessment,
cleanup, and job training activities, eventually allowing the property to be used for business, parks,
or housing. From 1995 through mid-2004, program participants have reported that more than 6,000
brownfields sites have been assessed and over 2,100 properties have been made ready for reuse. The
President’s Budget provides $210 million, $46 million more than 2005, funding brownfields work at
about 600 sites.
Clear Skies
Often the most cost-effective way to protect the environment and public health while encouraging
economic growth lies with market forces. The Acid Rain program, enacted in 1990, is a highly suc-
cessful illustration of the value of flexible solutions. With a compliance rate of nearly 100 percent,
the Acid Rain program reduced the electric power industry’s nitrogen oxides (NOX) and sulfur dioxide
(SO2) emissions by 37 and 32 percent, respectively, from 1990 levels. In recognition of the program’s
284 ENVIRONMENTAL PROTECTION AGENCY
accomplishments, the Administration proposed the Clear Skies Act. The Clear Skies legislation ex-
pands the Acid Rain program to dramatically reduce nationwide power plant emissions of SO2, NOX,
and, for the first time ever, mercury emissions from power plants.
PROTECTING AMERICA
Budget and
Competitive Financial
Human Capital E-Government Performance
Sourcing Performance
Integration
Status
Progress
EPA’s focus on management reforms has resulted in strong performance in financial management
and E-Government (E-Gov). EPA has linked financial and performance information to aid in day-to-day
decision-making, and has also submitted a timely and clean financial audit. In E-Gov, EPA has acceptable
business cases for its major systems and has demonstrated, using Earned Value Management or operational
analysis, that overruns and shortfalls average less than 10 percent for all major information technology projects.
EPA is also establishing a Government-wide electronic regulatory docket which, when fully implemented, will
increase public participation and access to Government information. To support the Human Capital initiative,
EPA is implementing a multi-level performance appraisal system, and identifying mission critical occupations;
however, further work is needed to implement its workforce planning strategy at the local level and reduce
skill gaps in mission critical areas. EPA announced its first standard competition and has an accelerated
timeline for additional competitions so that it can achieve savings in commercial activities. For Budget and
Performance Integration, EPA continues to focus on demonstrating results and improving programs based on
recommendations from PART evaluations. Approximately 89 percent of programs that were reassessed for the
2006 Budget showed improvements and received a higher rating, and over 80 percent of assessed programs
have been able to demonstrate results.
EPA identified two programs at risk for improper payments and completed a preliminary measurement plan
and corrective action plan for reducing improper payments to primary recipients. They initiated an enhanced
measurement strategy to better detect improper payments in all recipient transactions. (Because this is the first
quarter that agency efforts in this Initiative were rated, progress scores were not given.)
288 ENVIRONMENTAL PROTECTION AGENCY
AGENCY-SPECIFIC GOALS
The Great Lakes are the largest system of fresh surface water on Earth, and the basin is home
to more than one-tenth the population of the United States, one-quarter the population of Canada,
and heavy concentrations of industry. Over the years, industrial development has contaminated
sediments throughout the lakes with toxic pollutants such as polychlorinated biphenyls (PCBs) and
heavy metals, putting large populations and the tremendous water resource at risk. Currently, the
Great Lakes States have among the highest number of fish consumption advisories in the country
due to the accumulation of toxics in fish tissue.
Clean Diesel
Uncontrolled exhaust from old diesel engines can exacerbate the symptoms of people suffering from
serious respiratory illnesses, and can negatively impact the environment. During President Bush’s
first term, the Administration issued strict new rules to significantly reduce air pollutant emissions
from diesel fuel and engines so that the black puff of smoke from diesel tailpipes will become a thing
of the past. These rules will ensure that the next generation of trucks, buses, and offroad equipment
will be cleaner, quieter, more powerful, and more fuel efficient. The new engine and fuel standards,
which begin to take effect in 2007, are expected to reduce harmful emissions by as much as 95 percent
when the rules are fully implemented.
THE BUDGET FOR FISCAL YEAR 2006 289
Clean-up Programs
Clean-Up Construction Completed The remaining sites on the NPL are large,
at 900 Listed Superfund Sites complex sites that present more challenges.
NPL sites
1,800 Cleaning up these sites, which generally cost
NPL Sites $50 million or more, requires an innovative
1,600
Construction Completions approach. In 2003, funding needs for eight
1,400
such sites (out of a total of 94 such sites re-
1,200 ceiving funding) accounted for approximately
1,000 50 percent of the money available for Super-
800
fund-led remedial actions. EPA estimates that
clean-up at an average site costs $18 million,
600
while a large site costs $132 million. The
400 Administration will work with the Congress,
200 communities, and citizens over the upcoming
0 year to find ways to effectively and efficiently
1990 1992 1994 1996 1998 2000 2002 2004 address this growing challenge.
Source: EPA.
290 ENVIRONMENTAL PROTECTION AGENCY
AGENCY-SPECIFIC GOALS—Continued
Remaining Work Declines as LUST Program In 2004, EPA and States reduced the
Cleans Up Contaminated Sites number of leaking underground storage
350,000 tank sites requiring remedial action to fewer
Clean-ups Completed (Cumulative)
300,000 Clean-ups Underway than 130,000—the lowest level since 1992.
Releases Awaiting Clean-up Preventative measures, State inspections, and
250,000 increased training of underground storage
200,000
tank owners and operators contributed to over
4,000 fewer leaks reported in 2004. Coupled
150,000 with the effectiveness of the program’s
100,000
preventative measures, EPA expects to reduce
the backlog of sites requiring remedial action
50,000 to below 120,000 by the end of 2006. The
Administration proposes $73 million in 2006
0
1992 1995 1998 2001 2004
for the Leaking Underground Storage Tank
Source: EPA. (LUST) Program, $4 million above the 2005
enacted level.
Many cities and towns have expressed concerns about exposure to toxic pollutants. EPA’s Commu-
nity Action for a Renewed Environment (CARE) program is geared to help address these concerns.
Through cooperative agreements, the CARE program provides communities with technical support
and assistance in implementing local solutions that reduce exposures to toxic pollutants. In 2006,
EPA will increase the scope of the program by establishing cooperative agreements with up to 80
communities while still achieving much of the risk reduction through application of existing success-
ful voluntary programs. CARE empowers communities to reduce exposure risks and encourages the
formation of self-sustaining community-based partnerships that will continue to improve local envi-
ronments.
The Clean Water State Revolving Fund 2006 Budget Meets Capitalization Goal
(CWSRF) provides grants to States to capitalize for Clean Water State Revolving Fund
their municipal wastewater State revolving
Billions of dollars (cumulative)
funds. States provide matching funds and then 7 6.8
make loans to communities at below-market
6
rates for wastewater infrastructure projects
such as sewer rehabilitation and treatment 5
plant expansion. Loan repayments and interest 4
are recycled back into the program.
3
The 2006 Budget funds the CWSRF at $730
2 2004 Budget
million. Due to significant additional funds
2006 Budget, adjusted for enacted
provided by the Congress in 2004 and 2005, 1
at this funding level, the total capitalization 0
provided between 2004-2011 will remain the 2004 2005 2006 2007 2008 2009 2010 2011
same as committed to in the 2004 Budget. This
THE BUDGET FOR FISCAL YEAR 2006 291
will ensure communities have access to capital to finance their wastewater infrastructure needs. Ad-
ditionally, the program will meet its long-term revolving level target of $3.4 billion. The revolving
level is the amount of loans available annually over the long term after Federal capitalization ends
and an indicator of the CWSRF’s financial stability.
EPA has made the protection of drinking water a priority since enactment of the initial Safe Drink-
ing Water Act (SDWA) in 1974, and continues to work to improve its drinking water programs. Sta-
tistics show that drinking water quality is improving, and the Centers for Disease Control and Pre-
vention recently estimated that 31 drinking water-related waterborne disease outbreaks occurred in
2001-2002, down from 39 outbreaks in 1999-2000. The 1996 SDWA amendments created the Drink-
ing Water State Revolving Fund (DWSRF) which, like the CWSRF, provides grants to States to help
capitalize revolving loan funds. Communities use these funds to finance drinking water systems and
infrastructure improvements, including compliance with regulatory drinking water requirements.
The Budget provides $850 million to fund the DWSRF in 2006.
2004 Estimate
Actual 2005 2006
Spending
Discretionary Budget Authority:
Operating Program .............................................................................................. 4,325 4,268 4,439
Clean Water State Revolving Fund ................................................................ 1,342 1,091 730
Drinking Water State Revolving Fund ........................................................... 845 843 850
Brownfields cleanup funding ............................................................................ 93 89 121
Diesel School Bus Retrofit Program .............................................................. — 7 10
Targeted water infrastructure funding ........................................................... 429 408 69
Requested (non-add) .................................................................................... 98 94 69
Unrequested (non-add) ................................................................................ 331 314 —
Superfund ................................................................................................................ 1,258 1,247 1,279
Leaking Underground Storage Tanks ........................................................... 76 69 73
Total, Discretionary budget authority ................................................................. 8,368 8,023 7,571
Mandatory Outlays:
Superfund Recoveries ........................................................................................ 74 60 60
All other .................................................................................................................... 21 6 53
Total, Mandatory outlays ........................................................................................ 95 66 113
AT A GLANCE:
2006 Discretionary Budget Authority: $16.5 billion
(Increase from 2005: 2 percent)
Major Programs:
• Exploration and science
• Space Shuttle and Space Station operations
• Aeronautics
Agency-Specific Goals
• Pursuing a bold vision for sustained and affordable human and robotic exploration of space, with
the Moon as a first step toward human missions to Mars and beyond.
• Developing a new space vehicle to transport humans to the Moon.
• Focusing research and technology development activities, including those conducted on the
International Space Station, on enabling human and more productive robotic exploration of the
solar system.
• Returning the Space Shuttle safely to flight, completing construction of the International Space
Station, then retiring the Shuttle.
• Exploring the universe to understand its origin, structure, evolution, and destiny.
• Improving lives through Earth science and aeronautics research and education programs.
• Improving the reliability of the National Aeronautics and Space Administration’s financial
management system.
• Implementing new agency-wide policies and processes to increase the accuracy of program cost
estimates and, in turn, improve program management.
• Reformulating or eliminating programs that do not directly advance the President’s space
exploration vision or other agency priorities, have not performed as well as others, or are
unsustainable given their high projected costs.
293
294 NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
AGENCY-SPECIFIC GOALS
The National Aeronautics and Space Administration’s (NASA’s) activities center on four major
areas: exploration, science, Space Shuttle and Space Station operations, and aeronautics research.
Recognizing the need to reinvigorate the Nation’s civil space program and keep NASA focused on
compelling and inspiring goals, President Bush outlined a bold, new vision for human and robotic
space exploration on January 14, 2004. NASA will develop the necessary capabilities to move humans
beyond Earth orbit, where we have been confined for more than 30 years, and on to the Moon, Mars,
and destinations beyond. Both human and robotic explorers will help broaden scientific understand-
ing of the universe and the possible existence of life beyond Earth.
AGENCY-SPECIFIC GOALS—Continued
The Space Shuttle has served as the centerpiece of the Nation’s human space flight program for
more than two decades. This vehicle is instrumental to the continued assembly of the International
Space Station, the unique in-space laboratory shared by multiple international partners. NASA is
committed to returning the Shuttle safely to flight for this purpose. Having worked diligently for
more than a year to address the safety recommendations of the Columbia Accident Investigation
Board, NASA anticipates that the Shuttle will resume operations during 2005.
NASA will retire the Space Shuttle once its role in Space Station assembly is complete. On January
14, 2004, the President said in announcing his Vision:
The Shuttle’s chief purpose over the next several years will be to help finish assembly
of the International Space Station. In 2010, the Space Shuttle—after nearly 30 years
of duty—will be retired from service.
International Space Station assembly will be completed by the end of the decade. NASA is examin-
ing configurations for the Space Station that meet the needs of both the new space exploration vision
and our international partners using as few Shuttle flights as possible. This assessment is critical to
allowing NASA to continue work on Space Station assembly safely and retire the Shuttle as planned
to make way for the Crew Exploration Vehicle.
In concert with the new exploration vision, NASA will refocus U.S. Space Station research on ac-
tivities that prepare human explorers to travel beyond low Earth orbit, such as developing counter-
measures against space radiation and understanding the long-term physiological effects of reduced
gravity.
THE BUDGET FOR FISCAL YEAR 2006 297
NASA is undergoing a major transformation into a stronger, better managed Federal agency. As
its high ratings on several initiatives of the President’s Management Agenda show, the agency has
taken much-needed actions, such as improving the security of its computer systems, better managing
of its human capital needs, and justifying budget requests in terms of the results the agency expects
its programs to achieve. NASA is working toward improving the reliability of its financial manage-
ment system while strengthening the processes it uses to estimate its program and project costs.
In addition, the agency has addressed several of the management challenges uncovered by program
analyses using the Program Assessment Rating Tool. For example, the Space Station program has
improved management of its budget reserves and has developed new measures with which to gauge
its performance, while the Mars exploration program has begun to examine the technical feasibility,
potential schedules, and estimated costs associated with mission options for the next decade of Mars
exploration.
The table below provides an update on NASA’s implementation of the President’s Management
Agenda as of December 31, 2004.
Budget and
Competitive Financial
Human Capital E-Government Performance
Sourcing Performance
Integration
Status
Progress
NASA remained strong in Human Capital by rolling out a multi-level employee performance appraisal system
and beginning to address workforce need changes resulting from its organizational transformation to focus on
the exploration vision. In support of Competitive Sourcing, the agency received and began to evaluate proposals
under standard competitions for business functions agency-wide and testing and machining services at the
Langley Research Center. NASA advanced E-Government by migrating from agency-specific information
technology (IT) systems to more efficient, Government-wide IT solutions, including ePayroll, and supported
Budget and Performance Integration by releasing new cost management standards to increase the accuracy of
project cost forecasting. NASA’s 2004 financial statements received a disclaimer. Embracing the challenge of a
financial management overhaul that began with the implementation of a new, integrated financial management
system, the agency will strive to improve in Financial Performance by developing a plan with credible milestones
to strengthen its financial management.
The 2006 President’s Budget includes $16.5 billion for NASA to make progress toward realizing the
President’s vision for space exploration and other agency priorities in a fiscally responsible manner.
In support of the President’s goal to make Government spending more effective, some programs that
are not directly relevant to the vision or other agency priorities, have not performed as well as others,
or are unsustainable given their high projected costs will be reformulated or terminated to allow for
greater focus on the vision’s high-priority programs, as discussed previously in the chapter.
THE BUDGET FOR FISCAL YEAR 2006 299
NASA is an active participant on the Federal Real Property Council, which helps inform and develop
Government-wide best practices. The agency is currently developing a comprehensive asset management plan
to guide planning, acquisition, operation, and disposal of real property.
2004 Estimate
Actual 2005 2006
Spending
Discretionary Budget Authority:
Science, Aeronautics, and Exploration ......................................................... 7,873 7,681 9,661
Science (non-add) .......................................................................................... 5,600 5,527 5,476
Aeronautics (non-add) .................................................................................. 1,057 906 852
Biological Sciences Research (non-add) ............................................... 986 1,004 —
Exploration Systems (non-add) ................................................................. — 25 3,165
Education (non-add) ...................................................................................... 230 217 167
Exploration Capabilities ...................................................................................... 7,478 8,358 6,763
Space Operations (non-add) ...................................................................... 5,890 6,704 6,763
Exploration Systems (non-add) ................................................................. 1,588 1,654 —
Inspector General ................................................................................................. 27 31 32
Total, Discretionary budget authority ................................................................. 15,378 16,070 16,456
AT A GLANCE:
2006 Discretionary Budget Authority: $5.6 billion
(Increase from 2005: 2 percent)
Major Programs:
• Research and related activities
• Education and human resources
• Major research equipment and facilities construction
• Fostering innovations that will yield significant long-term economic benefits, especially in areas
such as nanotechnology and information technology research and development.
Protecting America
• Supporting research and training in cyber security to respond to threats to information technol-
ogy systems and infrastructure.
Agency-specific Goals
• Using automated systems to promote effectiveness and efficiency in the agency’s grant-making
process.
• Promoting the quality, relevance, and performance of research and development programs by
maintaining practices that are consistent with the Administration’s research and development
investment criteria.
301
302 NATIONAL SCIENCE FOUNDATION
The 2006 Budget provides a 2.4-percent increase for the National Science Foundation’s (NSF’s)
investments in science and engineering. Similar investments in the past have yielded important
scientific discoveries, which boost economic growth and enhance Americans’ quality of life. NSF sup-
ports a broad portfolio of fundamental research, ranging from the behavioral and social sciences to
mathematics and the physical sciences. This research keeps our Nation at the scientific forefront,
providing opportunities for growth in both small and large technologically based companies.
The Administration is reinforcing NSF investment in areas that will link discovery to inno-
vation. NSF leads two Administration priority research areas that are particularly likely to
further strengthen the economy: the National Nanotechnology Initiative and the Networking and
Information Technology Research and Development (NITRD) program. NSF-funded nanotechnology
research, funded at $344 million in 2006, a 1.6-percent increase over 2005, has advanced our
understanding of materials at the molecular level and has provided insights into how innovative
mechanisms and tools can be built atom by atom. This emerging field holds promise for a broad
range of developing technologies, including higher-performance materials, more efficient manu-
facturing processes, higher-capacity computer storage, and microscopic biomedical instruments
and mechanisms. NSF’s investments in NITRD, funded at $803 million in 2006, a one-percent
increase over 2005, support all major areas of basic information technology (IT) research. NSF also
incorporates IT advances into its scientific and engineering applications, supports using computing
and networking infrastructure for research, and contributes to IT-related education for scientists,
engineers, and the IT workforce.
THE BUDGET FOR FISCAL YEAR 2006 303
PROTECTING AMERICA
AGENCY-SPECIFIC GOALS
The 2006 Budget provides $4.3 billion in research and related activities to sustain the Nation’s
leadership in science and engineering, an increase of $113 million. Increased funding for “core” re-
search will also increase the share of well-rated grant proposals NSF can fund. The agency considers
three factors in evaluating the productivity of its research portfolio: award size, award duration, and
the share of proposals funded. In 2006, NSF will place greater emphasis on increasing its share of
proposals it can fund while striving to maintain recent gains in award size and duration.
NSF provides sustained funding to accelerate progress in areas that hold exceptional promise
for advancing knowledge and addressing national interests. In 2006, investments are focused in
four interdependent NSF priority areas: Biocomplexity in the Environment; Nanoscale Science and
Engineering; Mathematical Sciences; and Human and Social Dynamics.
NSF invests in research tools critical to scientists and engineers, including instruments, equip-
ment, facilities, databases, and large surveys. NSF makes awards primarily to universities and non-
profit organizations to construct, manage, and operate large scientific and engineering facilities. The
President’s Budget enhances science infrastructure in a wide range of fields, including astronomy,
earthquake research, and environmental research.
THE BUDGET FOR FISCAL YEAR 2006 305
The Budget provides $509 million for NSF’s targeted investments in cyberinfrastructure—the ad-
vanced computing, networking, and information tools and resources intended to broadly benefit sci-
ence and engineering. Examples of these technologies include: supercomputers, advanced networks,
techniques to visualize complex phenomena, massive data repositories, modeling and simulation,
and advanced digital sensor technologies. Because these investments support science and engineer-
ing broadly, rather than a single facility or project, they increase productivity across the Nation’s
entire science and engineering community.
The Budget continues support for facilities initiated in 2005, including the National Ecological
Observatory Network (NEON), the Scientific Ocean Drilling Vessel, and the Rare Symmetry Violat-
ing Processes (RSVP) installation. NEON is a proposed national network of observatories that will
transform ecological research and environmental forecasting. The Scientific Ocean Drilling Vessel
will provide a new resource to examine geological and biological processes beneath the ocean floor.
RSVP will address important questions in particle physics that have the potential to transform our
basic understanding of the universe, such as the nature of dark matter.
NSF ensures quality in its funding programs by using a competitive awards process based on the
merit of individual grant proposals, coupled with periodic external review of its programs that ap-
prove those grants. The President’s Management Agenda recognizes the importance of external re-
view and competition for funding; all eight NSF programs assessed using the Program Assessment
Rating Tool in the last two years have been rated Effective. These practices also help ensure qual-
ity, relevance, and performance, which are key components of the Research and Development (R&D)
Investment Criteria.
NSF Proposals Increased 54 Percent in 5 Years The 2006 Budget enhances the tools NSF
Full-time equivalents (FTEs) Proposals in thousands uses to solicit, process, and review, as well as
2,000 50 monitor its awards. The number of research
proposals the agency receives has grown
Proposals Received
1,600 40 significantly in recent years, while the agency’s
staffing level has remained relatively flat.
1,200 30 The agency has accommodated the increase in
FTEs funding and responsibilities through effective
800 20 use of information technology. NSF’s FastLane
grants-processing system enables NSF to
400 10 electronically process virtually all of the more
than 45,000 proposals the agency receives
0 0 each year. Over 200,000 scientists, engineers,
1999 2000 2001 2002 2003 2004 educators, and research administrators use
Source: NSF. this system to submit and review proposals
and report project results. But while the information technology investments of recent years have
provided impressive gains in efficiency, dramatic increases in both the number and complexity of
proposals submitted to NSF pose increasing administrative challenges. To address these challenges,
NSF continues to enhance existing systems, while also rethinking fundamental agency processes
to pursue an integrated approach to human capital, competitive sourcing, and E-Government. The
2006 Budget requests funds to improve information technology to further modernize and coordinate
the systems and processes NSF uses for merit review and grant management.
THE BUDGET FOR FISCAL YEAR 2006 307
The table that follows provides an update on NSF’s implementation of the President’s Management
Agenda as of December 31, 2004.
Budget and
Competitive Financial
Human Capital E-Government Performance
Sourcing Performance
Integration
Status
Progress
NSF has an improper payment rate of less than one percent to its awardees (typically colleges and universities),
but NSF will have to demonstrate that its methods are adequate to ensure that colleges and universities that
receive funding exercise fiscal responsibility consistent with Government-wide standards. (Because this is
the first quarter that agency efforts in this initiative were rated, progress scores were not given.) NSF is one
of 12 major R&D agencies that strive to plan, manage, and assess their R&D programs consistent with the
R&D Investment Criteria, which are discussed in detail in the chapter on Research and Development in the
Budget’s Analytical Perspectives volume.
308 NATIONAL SCIENCE FOUNDATION
2004 Estimate
Actual 2005 2006
Spending
Discretionary Budget Authority:
Research and Related Activities ..................................................................... 4,263 4,221 4,334
Education and Human Resources ................................................................. 939 841 737
Major Research Equipment and Facilities Construction ........................ 155 174 250
Salaries and Expenses....................................................................................... 219 223 269
National Science Board ...................................................................................... 4 4 4
Inspector General ................................................................................................. 10 10 12
Total, Discretionary budget authority ................................................................. 5,590 5,473 5,605
Mandatory Outlays:
H–1B Fee Programs ............................................................................................ 1 100 100
All other .................................................................................................................... 89 49 26
Total, Mandatory outlays ........................................................................................ 90 149 126
AT A GLANCE:
2006 Discretionary Budget Authority: $593 million
(Decrease from 2005: 3 percent)
Major Programs:
• Small Business Loans
• Small Business Development Centers
• Disaster Loans
• Issuing approximately 25,000 low-interest loans to businesses and homeowners under the
Disaster Loan program to cover uninsured losses resulting from natural disasters.
309
310 SMALL BUSINESS ADMINISTRATION
Small businesses account for more than half of existing private sector jobs, two-thirds of net new
private sector jobs, and more than half of the United States’ Gross Domestic Product. The Small Busi-
ness Administration’s (SBA’s) mission is to promote small business development and entrepreneur-
ship through business credit and technical assistance programs. In addition, SBA works with other
Federal agencies to reduce regulatory and paperwork burdens.
In order to meet the demand of the growing small business sector, the Budget supports more than
$25 billion in small business lending. The 7(a) program, which received an Adequate rating under
the Program Assessment Rating Tool, is being increased to support $16.5 billion in guaranteed loan
volume in 2006, the largest level in the history of the program. This will provide financing to en-
trepreneurs who could not obtain affordable loans without a Government guarantee. A 10-percent
increase in the Section 504 program, to $5.5 billion in loan volume, will increase borrower access
to fixed-rate financing for fixed assets such as land, equipment, and buildings. SBA will also sup-
plement the capital of Small Business Investment Companies with $3 billion in long-term loans for
venture capital investments in small businesses.
Economic Opportunity
For more than 20 years Beth Harshfield worked for prominent marketing and advertising companies. In June
of 2000, she formed a small business of her own, Exhibit Arts LLC, providing exhibit design and fabrication,
and conference and event management services
As an American Indian, she received her 8(a) certification in the fall of 2003. With this assistance, her once
part-time and home-based business now occupies a 7,000-square foot facility in downtown Wichita, Kansas.
Her clients include the Air Force, Army, and Environmental Protection Agency, in addition to numerous
commercial customers.
SBA and its partners provide technical assistance programs, including training, counseling,
mentoring, and information services to more than four million existing and potential entrepreneurs
annually. SBA also provides guidance to the new Urban Entrepreneurs Partnership, announced
by President Bush in July 2004. SBA provides grants to a network of over 1,100 Small Business
Development Centers; 389 SCORE chapters, which match executives with entrepreneurs for
business counseling; and 84 Women’s Business Centers. The Budget requests nearly $108 million
for technical assistance programs in 2006.
Regulatory and paperwork requirements are especially cumbersome on small businesses. SBA’s
studies have found that small businesses with fewer than 20 employees spend an average of $6,975
per employee complying with regulations as compared to $4,463 per employee for firms with more
than 500 employees. SBA works with Federal agencies to minimize the burden of regulations. As a
result of the Administration’s efforts since 2001, SBA estimates that the growth of regulatory costs
for small businesses has been reduced by over $50 billion. In 2006, SBA efforts are expected to reduce
such cost growth by an additional $5.6 billion.
In addition to SBA’s programs, the Administration is championing small business interests through
tax cuts and health care reform. As a result of the Jobs and Growth Tax Relief Reconciliation Act
of 2003 (JGTRRA), 25 million small businesses and their owners received tax relief averaging more
THE BUDGET FOR FISCAL YEAR 2006 311
than $3,000 each in 2004. JGTRRA quadrupled the expensing provision to $100,000, raised the ex-
pensing phase-out threshold to $400,000, and increased the first year “bonus” depreciation deduction
from 30 to 50 percent. The first two provisions were extended through 2007 by the American Jobs
Creation Act of 2004. The Administration also supports legislation enabling creation of Association
Health Plans, which will allow small businesses to band together and purchase insurance at lower
rates, and making insurance premiums associated with Health Savings Accounts tax deductible. In
addition, the proposed comprehensive reform of the Nation’s medical liability laws will make insur-
ance costs more affordable and reasonable for small businesses.
Procurement Policy
The Federal Government annually buys over $200 billion in goods and services, and has a statutory
goal of awarding at least 23 percent of its purchases to small businesses. The Federal Government
maintains its strong commitment to achieving and exceeding this goal.
As part of this effort, SBA assists agencies by negotiating agency-specific procurement goals,
monitoring performance, and encouraging use of small business sources. In addition, as part of
the President’s commitment to help small businesses, the Administration implemented a strategy
to minimize the adverse effects of inappropriate contract bundling—the grouping of separate and
often unrelated purchasing activities into a single contract, a practice that increased among Federal
agencies in the 1990s.
312 SMALL BUSINESS ADMINISTRATION
Consistent with the President’s Management Agenda, SBA is administering its programs more
efficiently to improve customer service and reduce program costs. Building upon its success in con-
solidating loan liquidation functions from 69 district offices to a single location, SBA is also working
to consolidate other loan origination and management functions. While providing administrative
cost savings, these changes ensure that loans are managed more consistently and efficiently. The
consolidation of loan liquidation activities in 2004 reduced agency costs for this function from $32
million to $16 million per year.
SBA seeks to target assistance more effectively to credit-worthy borrowers who would not get loans
from the commercial markets in the absence of a Government guarantee. SBA is actively encouraging
financial institutions to increase lending to start-up firms, low-income entrepreneurs, and borrowers
in search of financing below $150,000. Preliminary evidence shows that SBA’s outreach for the 7(a)
program has been successful. Average loan size has decreased from $241,000 in 2000 to $167,000 in
2004, while the number of small businesses served has grown from 43,748 to 81,133 during the same
time.
SBA has also begun monitoring and managing its portfolio risk through the Loan Monitoring Sys-
tem. The implementation of this system enables the agency to track the performance of lenders
relative to the credit scores of borrowers in their guaranteed loan portfolio. This provides the agency
with a tool to identify lenders that pose the greatest risk to Federal taxpayers for similar types of
borrowers, and to suggest intervention when necessary to avoid further risk.
The 2006 Budget proposes termination of the Microloan program, which has been excessively
expensive relative to other programs. The 7(a) program is capable of serving similar clientele
through the Community Express program at a much lower cost to the Government.
The 2006 Budget supports $3 billion in new guaranteed venture capital investments for small
businesses through the Small Business Investment Company Debenture program, which provides
credit financing. However, with realized and projected losses exceeding $2 billion in the Participating
Securities program, which provides equity-type venture capital financing, the 2006 Budget does not
support new guaranteed investments in this program. Rather than make new investments through
this program, SBA will continue to improve efforts to monitor and mitigate risk in the outstanding
$9 billion Participating Securities portfolio.
314 SMALL BUSINESS ADMINISTRATION
The table below provides an update on SBA’s implementation of the President’s Management
Agenda as of December 31, 2004.
Budget and
Competitive Financial
Human Capital E-Government Performance
Sourcing Performance
Integration
Status
Progress
SBA has made solid progress in most areas of the President’s Management Agenda. To improve service to the
public, the agency assessed its staff’s skills, contracted for training, increased accountability of managers, and
conducted competitive sourcing competitions in 2004. As the leader of the Business Gateway, SBA has launched
the website www.Business.gov, which helps small business owners easily find, understand, and comply with
Federal regulations. SBA is working with other Federal agencies to reduce the paperwork burden on businesses.
In the area of Budget Performance and Integration, SBA is making progress by improving its ability to measure,
monitor, and mitigate risk in its loan portfolio. SBA has also made progress in developing new estimation models
to improve financial management and more accurately measure the cost of providing credit to small businesses.
SBA developed targets for the Disaster Loan and Small Business Investment Company programs and is in the
process of developing new ones for the 7(a) General Business Loan program. (Because this is the first quarter
that agency efforts in this Initiative were rated, progress scores were not given.)
THE BUDGET FOR FISCAL YEAR 2006 315
2004 Estimate
Actual 2005 2006
Spending
Total, Discretionary budget authority ................................................................. 757 610 593
Memorandum: Budget authority from enacted supplementals ............... 30 929 —
Credit activity
Direct Loan Disbursements:
Direct Disaster Loans .......................................................................................... 467 2,900 1,100
Direct Business Loans ........................................................................................ 21 15 5
Total, Direct loan disbursements ......................................................................... 488 2,915 1,105
AT A GLANCE:
2006 Discretionary Budget Authority: $9.5 billion
(Increase from 2005: 8 percent)
Major Programs:
• Old-Age and Survivors Insurance
• Disability Insurance
• Supplemental Security Income
• Converting from paper to electronic disability application folders to speed decision-making and
reduce administrative costs.
• Providing access to video hearings for some people who live a long distance from a hearing office,
allowing them to have hearings scheduled sooner when they appeal decisions made by the Social
Security Administration.
• Ensuring that more than 99 percent of benefits are paid correctly.
Agency-specific Goals
• Improving the timeliness and accuracy of the Social Security Administration’s disability
decision-making process while continuing to improve productivity.
317
318 SOCIAL SECURITY ADMINISTRATION
Individuals with disabilities face many barriers in making the transition to work. The Social Secu-
rity Administration (SSA) has launched two demonstrations: one to support adults with disabilities
who want to enter the workforce and one to support children with disabilities making the transition
from school to work.
Under the Ticket to Work and Work Incentives Improvement Act of 1999, SSA is exploring ways to
more gradually reduce Disability Insurance (DI) benefits as beneficiaries enter the workforce. Under
current law, DI beneficiaries who exhaust their nine-month trial work period and three-month grace
period have their DI benefits completely stopped if they earn more than $830 per month. Under the
DI Benefit Offset Demonstration, such beneficiaries would be able to earn more than $830 per month
and still receive a portion of their DI benefits. This change would encourage them to return to work
by allowing a more gradual transition.
SSA is also testing approaches to support the successful transition of youth with disabilities from
school to post-secondary education and/or employment. Under the Youth Transition Demonstration
projects, California, Colorado, Iowa, Maryland, Mississippi, and New York have created service-deliv-
ery systems that blend education, rehabilitation, health care, and employment services. Each project
is different, but all show how communities can blend services and resources from Federal, State, and
local partners to support youth with disabilities as they progress through high school and go on to
work or post-secondary education. Services include mentoring, skills training, career planning, and
job search and placement services. The Budget includes $9 million for these demonstration projects.
Patrick’s Story
Patrick was an outgoing young man working
on his cosmetology license. That was in
1994—the year his life took a drastic turn.
Patrick began to feel weak, lost a lot of
weight, and had constant headaches. His
doctor diagnosed him with end-stage renal
disease. For the next seven years, Patrick
underwent kidney dialysis. He abandoned
his career goals and was approved for
Social Security disability benefits. His days
were long and unfulfilling. Then, in 2001,
he became eligible for a kidney transplant.
“After all this time, I couldn’t believe my good
fortune,” said Patrick. “Finally, a kidney was
Patrick has successfully returned to work through SSA’s Ticket to Work available, and all I could think of was going
program.
back to living a normal, healthy life.”
After the transplant, Patrick had some problems with his health, but finally began regaining his strength. It
was around that time that his Ticket to Work came in the mail from Social Security. He found out that he
could use his Ticket to go back to work without risking the loss of his Medicare benefits. Patrick started
working as an interim accountant, and now has a permanent position as a buyer for a manufacturer.
THE BUDGET FOR FISCAL YEAR 2006 319
The Budget proposes to require full-time school attendance as a condition of entitlement for Social
Security child’s benefits for children beginning at age 16. Current policy allows eligible children to
receive Social Security benefits up to the month they reach age 18, regardless of school attendance.
School attendance is required for children ages 18 and 19 to continue receiving benefits. Changing
the policy to age 16 will further encourage eligible children to remain in school.
SSA has put a priority on helping people get back to work, as evidenced by the new performance
measure it developed for the Supplemental Security Income (SSI) program. SSA is committed to
increase the number of SSI and DI beneficiaries with “tickets” who go to work, relative to 2003,
by 20 percent in 2004, 40 percent in 2005, and 60 percent in 2006. Tickets allow beneficiaries to
choose employment services, whether from a more traditional vocational rehabilitation agency or
other participating public and private providers.
320 SOCIAL SECURITY ADMINISTRATION
SSA will pay nearly $40 billion in SSI payments to needy elderly and disabled people in 2006
and about $90 billion in Social Security disability benefits. In addition, SSA will pay $68 billion in
Survivors Insurance benefits to widows and surviving children. In 2006, more than 20 million bene-
ficiaries will receive benefits from the SSI, DI, and Survivors programs.
The Medicare Prescription Drug Improvement and Modernization Act of 2003 includes a major
role for SSA in administering the new Medicare prescription drug benefit. Starting in the summer
of 2005, SSA will determine whether Social Security and Medicare beneficiaries are eligible for the
additional low-income prescription drug assistance that is part of the drug benefit.
Senior citizens and individuals with disabilities who have income less than 135 percent of the
poverty level and who have resources equal to or less than $6,000 will be eligible in 2006 for Medi-
care drug coverage with no premium and limited cost-sharing. Other beneficiaries—those with in-
come between 135 and 150 percent of poverty and somewhat higher resources—will be eligible for
Medicare drug coverage with a reduced premium and cost-sharing. Individuals will have the option
of applying for assistance through the Internet, telephone, mail, or at a local Social Security office.
SSA employees will also be on-site at many local community associations to assist individuals with
the filing of applications. The Budget continues funding for processing low-income prescription drug
assistance applications and related activities.
The Budget would allow refugees and asylees to receive SSI for eight years after entry into the coun-
try. Currently, refugees and asylees who have not become citizens can only receive SSI for seven years
after entry. Consistent with the President’s goals for immigration reform, this measure would pro-
vide legal asylees and refugees a greater opportunity to achieve citizenship. Funding for SSI comes
from general Government revenues—not from the Social Security trust funds. The policy would con-
tinue through 2008. Beginning in 2005, SSA will send letters annually to those refugees and asylees
receiving SSI reminding them of the requirement to become a citizen for continued benefits.
THE BUDGET FOR FISCAL YEAR 2006 321
A crucial aspect of good management in income support programs is ensuring that only eligible
individuals receive benefits, and that they receive the correct benefits. SSA undertakes a variety
of program integrity activities to minimize improper payments by verifying beneficiaries’ eligibility
status, collecting debt, investigating and deterring fraud, and other methods.
322 SOCIAL SECURITY ADMINISTRATION
The Budget proposes to improve payment accuracy by requiring that SSA review at least 50
percent of favorable SSI disability and blindness decisions before starting payments. Further, the
Administration will conduct more continuing disability reviews (CDRs) in 2006. This is a proven,
sound investment since SSA generates savings of approximately $10 for each $1 spent on such
activities. SSA’s 2003 CDRs are expected to yield over $5 billion in program savings.
Processing Time for Initial Disability Claims SSA is committed to improve its productivity
Number of Days and efficiency in providing services to citizens.
110 SSA performs a variety of tasks for citizens,
such as processing applications for retirement
105 and disability benefits, answering questions
Average Processing Time through its 1–800 number, and conducting
100 hearings for people who have appealed the
decision SSA makes on their application for
95 benefits. SSA measures its productivity in
conducting all of these transactions, and pushes
90
for greater efficiencies through increased use of
technology and changes in business processes.
85
SSA, for example, measures the number of
1999 2000 2001 2002 2003 2004 2005 2006
applications for disability benefits the average
Source: SSA.
worker processes each year, and strives to
increase this number. Using these kinds of measures, SSA has documented that the agency
increased productivity by an annual average of nearly three percent from 2000-2004. In addition,
SSA has reduced average processing time for initial disability claims by over 10 percent since 2001
(see accompanying chart).
save travel expenses and time for both the claimant and the ALJ. In 2006, SSA plans to schedule
30,000 hearings via video.
The table that follows provides an update on SSA’s implementation of the President’s Management
Agenda as of December 31, 2004.
Budget and
Competitive Financial
Human Capital E-Government Performance
Sourcing Performance
Integration
Status
Progress
SSA has achieved some significant milestones in its effort to implement the President’s Management Agenda.
The agency now has a multi-tiered performance appraisal system for executives and managers that effectively
differentiates between different levels of performance. SSA is working to include all employees under such a
system. Further, SSA is able to determine full and marginal cost of achieving performance goals and uses that
information to make decisions. In the area of Financial Performance, SSA is improving the quality, consistency,
and timeliness of data so managers can drive better results such as reducing the administrative costs of SSA’s
benefit programs. In Competitive Sourcing, SSA completed it first full competition, the Systems Help Desk
(covering 68 positions). The estimated savings from this competition is $35 million over a five-year period. In
addition, SSA identified a number of challenges involved in completing small competitions, and proposed an
alternate study approach to better address these competitions that was approved as a limited pilot.
SSA measures improper payments for its three major benefit programs: Old Age and Survivors Insurance
(OASI), Disability Insurance, and Supplemental Security Income (SSI). SSA has a corrective action plan and
reduction targets in place. The OASI program consistently has a very low improper payment rate. SSA did not
meet its target for improper payments for SSI in 2003. SSA is working to meet future targets with initiatives that
would allow for quicker and more accurate eligibility determinations. (Because this is the first quarter that agency
efforts in the Eliminating Improper Payments Initiative were rated, progress scores were not given.)
324 SOCIAL SECURITY ADMINISTRATION
AGENCY-SPECIFIC GOALS
SSA sets goals to provide high-quality service, which is reflected in the Agency’s commitment to
increase productivity, timeliness, and accuracy in processing applications for disability benefits. With
this Budget, SSA expects to achieve the performance targets outlined in the table below.
Goal
2004
Goal
Actual 2005 2006
Productivity:
Disability Decisions, Per Worker Per Year 1 ........................................................ 273 278 284
SSA Hearings Decisions, Per Worker Per Year ................................................. 100 103 105
Timeliness (in days):
Average Processing Time for Initial Disability Claims ...................................... 95 93 91
Average Processing Time for Hearing Decisions .............................................. 391 442 442
Accuracy:
Disability Determination Services Accuracy Rate ............................................. NA 97% 97%
Accuracy Rate for Hearing Decisions .................................................................... NA 90% 90%
1
In 2004, an SSA worker on average made 273 disability decisions. A higher number in a given year represents greater productivity.
2004 Estimate
Actual 2005 2006
Spending
Discretionary Budget Authority:
Limitation on Administrative Expenses (LAE) Base 1 ............................ 8,313 8,733 9,083
Office of the Inspector General ....................................................................... 88 90 93
Research and Development ............................................................................. 40 28 20
Subtotal ............................................................................................................................. 8,441 8,851 9,196
Medicare Reform Administrative Expenses 1 ..................................................... 500 — 320
Total, Discretionary budget authority ...................................................................... 8,941 8,851 9,516
Mandatory Outlays:
Old-age, Survivors, and Disability Insurance ............................................. 491,623 515,126 540,121
Supplemental Security Income........................................................................ 33,725 39,027 38,314
Special Benefits for Certain World War II Veterans ................................. 10 11 10
Offsetting Collections .......................................................................................... 2,583 2,613 2,727
Undistributed Offsetting Receipts ................................................................... 10,601 10,911 11,357
Legislative proposals ...................................................................................... — — 13
Total, Mandatory outlays ........................................................................................ 512,174 540,640 564,374
1
The LAE account includes funding from the Hospital Insurance and Supplementary Medical Insurance trust funds for services that support the
Medicare program, including implementation of Medicare Reform.
OTHER AGENCIES
325
326 OTHER AGENCIES
In conjunction with the USA Freedom Corps, a White House office created by President Bush
following the attacks of September 11th, CNCS is helping Americans of all ages and backgrounds
answer the President’s Call to Service to dedicate at least 4,000 hours, or two years, of their lives in
service. The 2006 Budget will enable an estimated 500,000 older Americans to volunteer through the
Senior Corps program. The Budget proposes $220 million for the Senior Corps program, which meets
a wide range of community needs such as helping seniors live independently in their homes, men-
toring children of prisoners, and tutoring children. The Budget also proposes $40 million for Learn
and Serve America to engage more than 1 million American youth in service learning education. In
THE BUDGET FOR FISCAL YEAR 2006 327
DISTRICT OF COLUMBIA
The 2006 President’s Budget provides $103 million for the District of Columbia (D.C.). This in-
cludes $75 million for D.C. school children, as well as $28 million in funding for other D.C. programs.
The 2006 Budget continues the 2004 and 2005 investment in the D.C. School Choice program, with
$15 million. This program helps increase the capacity of the District to provide parents—particu-
larly low-income parents—more options for obtaining a quality education for their children who are
trapped in low-performing schools. As part of the Administration’s commitment to improving educa-
tion in D.C., the Budget continues funding for D.C. public schools and D.C. charter schools, with $27
million. The Budget also continues to support the D.C. Resident Tuition Assistance program, with
$33 million. This program was started in 1999 and allows District residents to attend public colleges
nationwide at in-State tuition rates.
The President’s Budget continues support to help improve the Anacostia River for D.C.’s residents
and visitors. The 2006 Budget proposes $5 million to continue design and construction work on the
Anacostia trailwalk. The trailwalk will create pedestrian and bicycle trail systems from the Potomac
River to the District’s border with Maryland.
The 2006 Budget continues to support D.C.’s public safety response to events directly related to the
Federal Government’s presence in the District, with $15 million to defray the cost of events such as
protection for the annual World Bank and International Monetary Fund meetings.
The 2006 Budget supports funding for a bioterrorism and forensics laboratory in the District, with
$7 million. The present situation, in which the District relies on the laboratory facilities of Federal
agencies, does not allow the District to keep up with the demand of its current workload. Initial
planning and design work on the lab began in 2005. The 2006 funds will allow the District to move
forward with early construction phases, and will be matched by $1.5 million in local capital funds
from the District.
The 2006 Budget also proposes an increase in the amount of Federal funding the District receives
for child welfare services, specifically foster care and adoption assistance. The 2006 Budget would
increase the District’s reimbursement rate under Title IV-E of the Social Security Act from 50 to
70 percent. Title IV-E is the primary Federal funding source that provides foster care and adoption
subsidy payments, which enable families to adopt special needs children from foster care. This ad-
justment will bring the Title IV-E Federal match rate in line with the District’s Medicaid match rate,
as it is in other States.
328 OTHER AGENCIES
In 2006, the Administration will also work with the District to review the current portfolio of
Federal lands in the District of Columbia to determine whether any of these parcels would be bet-
ter utilized by the District. In addition, the Administration continues to support enactment by the
Congress of a law to allow the D.C. government’s proposed local budget to take effect without a
separate annual appropriations bill, subject to limitations imposed by the Congress by law.
The Executive Office of the President (EOP) includes a number of organizations dedicated to serv-
ing the President. As part of the 2006 Budget, the Administration requests a three-part financial
restructuring initiative, which would:
• Consolidate the annual appropriations in the Departments of Transportation, Treasury, Inde-
pendent Agencies, and General Government appropriations bill for EOP components that most
immediately serve the presidency—the White House Office, the Office of Policy Development,
Executive Residence, the Office of Administration, White House Repair and Restoration, Privacy
and Civil Liberties Oversight Board, National Security Council, and the Council of Economic Ad-
visers—into a single appropriation called The White House.
• Extend the general provision for limited transfer authority in section 533 of the Departments
of Transportation, Treasury, Independent Agencies, and General Government Appropriations
Act, 2005 (Division H of Public Law 108-447), to provide for a 10-percent transfer authority
among all of the following accounts: The White House, Special Assistance to the President and
Official Residence of the Vice President, Office of Management and Budget, United States Trade
Representative, Office of National Drug Control Policy, Council on Environmental Quality, and
Office of Science and Technology Policy. Transfers from the Special Assistance to the President
and the Official Residence of the Vice President account are subject to the approval of the Vice
President.
• Continue centralization of rent, after-hours utilities, and health unit funding for the EOP into
the Office of Administration program.
This initiative provides enhanced flexibility in allocating resources and staff in support of the
President and the Vice President, and permits more rapid response to changing national needs and
priorities.
Resources requested for the EOP, and for executive functions and official residence of the Vice
President (see 3 U.S.C. 106 and Public Law 93-346), in 2006 total $329 million, or 1.7 percent, below
the 2005 appropriated level. These resources will support approximately 1,840 personnel, as well as
information technology and other infrastructure needs to serve the President and the Vice President.
The President’s 2006 Budget proposes $304 million for the Federal Communications Commission
(FCC), of which $299 million would be offset directly by regulatory fees. This funding provides infla-
tionary increases and supports the Commission’s ongoing work to ensure that Americans have rapid
and efficient communications services.
330 OTHER AGENCIES
To encourage the digital transition, the Administration seeks to create incentives for television
broadcasters to vacate the analog spectrum, as required by law, in a timely fashion. The Administra-
tion supports authorizing legislation for the FCC to establish an annual lease fee for analog spectrum
use by commercial broadcasters starting in 2007. Individual broadcasters would be exempt as they
return their analog spectrum, and collections would decline.
The purpose of deposit insurance is to maintain stability and public confidence in the Nation’s
banking system. Federal deposit insurance, offered by the Federal Deposit Insurance Corporation
(FDIC) and the National Credit Union Administration (NCUA), is designed to protect depositors from
losses due to failures of insured commercial banks, thrifts (savings institutions), and credit unions.
THE BUDGET FOR FISCAL YEAR 2006 331
Individual deposits of up to $100,000 are covered in most U.S. banks, savings associations, and credit
unions.
Currently, the Federal Government, through FDIC and NCUA, insures $4 trillion in deposits at
more than 18,000 institutions. These agencies maintain insurance reserves to reimburse depositors
at failed institutions. FDIC and NCUA fund these reserves through assessments on insured institu-
tions, recoveries of assets liquidated from failed institutions, and interest credited to these reserves
from U.S. Treasury securities. At the end of 2004, the insurance reserves at the FDIC exceeded $46
billion, while the insurance fund balance at the NCUA was over $6 billion. In 2004, 27 commercial
banks and credit unions, worth approximately $300 million in combined assets, failed. This compares
to 2003, when 12 institutions with $1.2 billion in assets failed.
While the deposit insurance system for banks and thrifts is generally sound and well managed, it
has structural weaknesses that, in the absence of reform, could deepen over time. The Administra-
tion supports reforms that would strengthen the deposit insurance system managed by FDIC. The
Administration supports the proposal submitted by the Treasury Department and Federal banking
regulatory agencies to the Senate in 2003 that would accomplish this objective. The proposal drew
on a framework outlined by the FDIC and discussed in congressional testimony and elsewhere by
the Department of the Treasury officials.
• FDIC has been prohibited from charging premiums to well-capitalized and well-run institutions
since 1996. Therefore, under the current pricing structure, fewer than 10 percent of banks and
thrifts pay regular insurance premiums. The proposal would restore the FDIC’s ability to levy
premiums for the benefit of deposit insurance, and to vary those premiums according to the
relative risks to the insurance fund posed by each institution. It also would enable the FDIC to
ensure that institutions compensate the fund for insured deposit growth.
• Under the current system, FDIC is required to maintain a designated reserve ratio (DRR), the
ratio of insurance fund reserves to total insured deposits, of 1.25 percent. When the reserve
ratio falls below the DRR, the FDIC must charge premiums that are sufficient to restore the
reserve ratio to the DRR within one year. If the reserve ratio remains below the DRR for more
than one year, FDIC must charge premiums that average no less than 23 basis points. Such a
premium increase could occur when the banking system, and probably the economy, are under
serious stress. The proposal would permit FDIC to alter the DRR within a range and give FDIC
broad discretion in managing reserves within this range. This flexibility will enable reserves
to grow when economic conditions are good, in order to enable the fund to better absorb losses
under adverse conditions without sharp premium increases.
• The Administration supports merging the bank and thrift insurance funds, which offer an iden-
tical product. A single merged fund would be stronger and better diversified than either fund
alone, and, therefore, would improve the system’s ability to withstand future losses.
The Federal Election Commission (FEC) administers the Federal laws governing financing of can-
didates for the Presidency, Vice Presidency, the U.S. Senate, and the U.S. House of Representatives.
FEC requires candidate disclosure of campaign finance information, enforces financing and contribu-
tion limits, and oversees the public funding of Presidential elections. The President’s Budget proposes
$54.6 million to fund these activities in 2006.
332 OTHER AGENCIES
new performance appraisal system that holds employees accountable for their contributions to over-
all agency performance.
The 2006 President’s Budget also proposes changes to the funding mechanism and organization of
the Federal Technology and Supply Services. First, the Budget proposes to establish a new General
Services Fund by merging the Information Technology Fund and the General Supply Fund. This
action will improve accountability by bringing oversight of the Fund under the agency’s Chief Fi-
nancial Officer. Due to the evolution of how information technology is acquired—buying solutions
that are a mix of products and services rather than stand-alone hardware or services—two separate
Supply and Technology organizations are no longer needed. Therefore, the Budget proposes break-
ing down these artificial barriers by merging the two services into a Federal Supply and Technology
Service. The result of this restructuring includes increasing organizational efficiencies, improving
coordination by streamlining functions, and achieving savings for customer agencies by modifying
fee structures. GSA will develop an aggressive action plan to achieve these objectives by July 2005.
Also, in January 2006, GSA will reduce the fee agencies pay when using Government-wide contracts
to procure commercial services and products.
The Institute of Museum and Library Services (IMLS) is established within the National Founda-
tion on the Arts and Humanities. Through its grant programs and leadership activities, IMLS assists
museums and libraries in sustaining their contributions to educating our citizens and strengthen-
ing our communities. The Administration continues to support the important role of libraries and
museums with a 2006 Budget proposal of $262 million, including nearly $22 million in increases for
priority programs and activities. The request does not continue support for the nearly $40 million in
unrequested, noncompetitive projects that were funded in 2005.
The Budget proposes a $10 million increase for the Library State Grants program, which supports
State efforts to promote access, for individuals of all ages, to learning and information resources at
all types of libraries. The Administration is requesting $26 million for the Librarians for the 21st
Century program, a $3 million increase, to support partnerships between libraries and institutions of
higher education for the recruitment and education of a new generation of library professionals who
are prepared to tackle the technological challenges of the information age. In addition, the Budget
proposes $15 million in increases for IMLS museum programs to support initiatives that enhance
the educational and technological linkages between museums and their communities, and to foster
better evaluation of the impact of these programs on the communities they serve.
The National Archives and Records Administration (NARA) safeguards records of all three
branches of the Federal Government and ensures ready access to records documenting the actions
of Government officials and agencies. In 2006, the Budget proposes $314 million for NARA. Of this
funding, $36 million will go toward development of the initial deployment of the Electronic Records
Archives project, a comprehensive means for preserving and providing access to the Government’s
electronic records. The Budget level also includes $3 million to improve the security of NARA’s
holdings.
334 OTHER AGENCIES
was 96.1 percent. Through its performance goals, NLRB will continue to place a high priority on
reducing its case backlog, especially on the oldest pending cases.
The 2006 Budget provides $252 million for NLRB’s primary activities, including $208 million for
pay and benefits, which make up 82 percent of the agency’s budget. This amount also includes $8
million for information technology projects, such as automated case management, and the mainte-
nance of key administrative systems.
The National Transportation Safety Board (NTSB) is charged with determining the probable
causes of transportation accidents and promoting transportation safety. The Board investigates
accidents, conducts safety studies, issues recommendations, and evaluates the effectiveness of other
Government agencies in preventing transportation accidents. The agency also coordinates Federal
assistance to the families of victims of catastrophic domestic transportation accidents. The 2006
Budget provides funding for NTSB to investigate more than 2,500 accidents.
The 2006 Budget provides $77 million for salaries and expenses for the NTSB to fulfill its role of
improving the Nation’s transportation safety.
The Nuclear Regulatory Commission (NRC) regulates the commercial use of nuclear material in
the United States. Its programs facilitate the Nation’s safe and effective use of nuclear materials for
civilian purposes. Consistent with the National Energy Policy (May 2001), the Budget provides NRC
with the funds it needs to keep pace with the industry’s interest in the renewal of nuclear power re-
actor licenses and the possible construction of new nuclear power plants. To date, NRC has renewed
the operating licenses for 26 of the existing 104 nuclear power plants, and at least 18 more plants
are under review or anticipated through 2005. NRC will continue to improve the effectiveness and
efficiency of its review of designs for advanced reactors and to prepare for potential combined license
applications. In addition to licensing, NRC also performs inspections on all existing nuclear power
plants to ensure that safety issues are identified and resolved before they affect safe plant operation.
Since September 2001, NRC has strengthened its regulatory programs in support of the Nation’s
efforts to enhance homeland security and preparedness, including actions to improve security at the
Nation’s civilian nuclear power plants, nuclear fuel facilities, and other licensed users of radioactive
materials. These efforts will continue in 2006.
NRC also expects to receive from the Department of Energy in 2005 an application to build a
high-level waste repository at Yucca Mountain, Nevada. Upon receipt of the application, NRC’s
workload will expand significantly. This first-of-a-kind undertaking will involve conducting thorough
safety and security evaluations, performance assessments, adjudicatory hearings, and site inspec-
tions. NRC will complete its review and reach a license decision in a timely manner.
To carry out these and other activities, the Budget proposes $702 million in 2006 for NRC. User
fees from NRC licensees will recover approximately 90 percent of NRC’s budget. Appropriations from
the Nuclear Waste Fund will cover the costs of the high-level waste repository effort.
336 OTHER AGENCIES
The Office of Personnel Management (OPM) is the central human resources agency for the Federal
Government and the primary policy agency supporting the President as he carries out his responsi-
bilities for managing the Federal workforce. OPM oversees and safeguards merit system principles
and veterans’ preference and leads Federal agencies in the strategic management of their human
capital. It also proposes and implements human resources management policy, and provides agen-
cies with ongoing advice and technical assistance for implementing these policies and initiatives.
Furthermore, OPM administers Federal employee benefits programs and manages personnel secu-
rity and background checks for suitability and national security clearances.
The 2006 Budget requests $242 million to finance OPM’s efforts to continue its leadership in the
management and oversight of Government-wide human capital systems, initiatives and strategies,
and administration of the Federal employees’ benefit trust funds (retirement, health benefits, and
life insurance).
Through the Strategic Management of Human Capital, one component of the President’s Manage-
ment Agenda, OPM is leading efforts to transform the way agencies manage the Federal workforce
and enhance the value of the civil service. In this capacity, OPM provides agencies the tools to man-
age their workforce and implements new human resources management policies. In 2006, it will
further streamline the Federal hiring process, decrease the time agencies use to hire new Federal
employees, and change how Federal employees are paid and how their job performance is evaluated.
Many of these new policies will be informed by lessons being learned from OPM’s partnerships with
the Departments of Homeland Security and Defense in setting up new human resources manage-
ment systems in these two large agencies.
In addition, OPM is the managing partner for the Human Resources Line of Business, which in-
cludes five projects under the President’s E-Government initiative: Recruitment One Stop, E-Train-
ing, E-Clearance, Enterprise Human Resources Integration, and E-Payroll. These initiatives will
save the Government about $2.7 billion dollars over the next 10 years. For example, Recruitment
One Stop reduces the complexity of Federal hiring and decreases the cost per hire. To date, the
USAJOBS website has received over 100 million visits by citizens to locate and apply for Federal
jobs. In addition, the E-Training project offers the convenience of web-based training to the Federal
workforce, leading to savings in tuition and travel costs and by compressing learning time. Over
440,000 users have registered on the GoLearn.gov site and completed over 310,000 courses, since its
inception. The E-Clearance project will reduce the time to process clearances and reduce duplicative
investigative efforts, while the E-Payroll project alone will save the Government $1.1 billion dollars
over the next decade by consolidating civilian payroll processing. The Enterprise Human Resources
Integration project will reduce the need for paper personnel documents and improve the currency and
accuracy of Federal human resources data. Recruitment One Stop and E-Clearance are funded fully
now by user fees paid by agencies. The Administration anticipates that in 2006, E-Payroll will be
completed and that E-Training will mature to a level that will allow it to operate on a fully fee-funded
basis in 2007.
OPM will pay out $94 billion in benefits in 2006: $59 billion to more than 2.5 million Federal re-
tirees, survivor annuitants, and other beneficiaries; $33 billion in health benefits for about 8 million
enrollees and dependents; and about $3 billion in life insurance claims from policy holders. OPM will
enhance the competitiveness and value of these programs in 2006 as it implements dental and vision
coverage. These new offerings will join other recent additions to the suite of employee benefits, includ-
ing Health Savings Accounts, Flexible Spending Accounts, and long-term care insurance, ensuring
THE BUDGET FOR FISCAL YEAR 2006 337
that the Federal Government continues to be a competitive and model employer that balances work
and family needs and offers choices to employees as consumers.
OPM will continue its internal emergency preparedness planning and maintain its leadership in
this arena Government-wide. It will continue to be a strong advocate for such planning in all Federal
agencies.
POSTAL SERVICE
The Administration continues to support the enactment of comprehensive postal reform legislation
that is consistent with the report of the President’s Commission on the United States Postal Service
and is guided by the principles of Best Governance Practices, Transparency, Flexibility, Accountabil-
ity, and Self-Finance, as expressed by the President on December 8, 2003. The Postal Service provides
an important service to the American people and the economy, and the Administration believes that
the Postal Service should continue providing affordable and reliable universal service, while limiting
exposure to taxpayers and operating appropriately in the competitive marketplace.
The Administration is committed to working with the Congress and postal stakeholders in early
2005 to bring about needed reforms that ensure that we have a healthy Postal Service for future
generations. To this end, the Budget proposes to use the pension savings provided to the Postal
Service by the Postal Civil Service Retirement System Funding Reform Act of 2003 (P.L. 108-18) that
would otherwise be held in escrow in 2006 and beyond, to put the Postal Service on a path that fully
funds its substantial retiree health benefits liabilities.
The President’s 2006 Budget proposes $78 million for three regional economic development
agencies: the Appalachian Regional Commission, the Delta Regional Authority, and the Denali
Commission. The President’s proposal recognizes the constructive role of the regional economic
development agencies in coordinating, planning, and fostering partnerships among the Federal,
State, local, and private sectors. This coordination has a positive impact on the effectiveness and
efficiency of Federal activities targeted to improve the quality of life and remedy severe and chronic
economic distress within Appalachia, the Mississippi Delta area, and Alaska.
The Securities and Exchange Commission (SEC) protects investors and works to maintain fair,
honest, and efficient markets. SEC’s activities are critical to the health of our securities markets,
which in turn are a vital part of our national economy. In calendar year 2004, the dollar volume of
shares traded on the New York Stock Exchange and the Nasdaq Stock Market was almost $19 trillion.
SEC oversees key participants in the securities world, including stock exchanges, broker-dealers, in-
vestment advisors, mutual funds, and public companies. During that year, SEC oversaw roughly
5,330 broker-dealers with approximately 96,000 branch offices and 664,100 registered representa-
tives. SEC also oversaw an estimated 5,000 investment companies with 36,500 portfolios and $8.1
trillion in assets, and 8,550 investment advisers with $23 trillion in assets under management. In
2006, the President’s Budget makes available $888 million for SEC.
338 OTHER AGENCIES
Protecting Investors
SEC is the preeminent enforcement agency in investor markets. SEC works to prevent fraud and
manipulation in securities markets by reviewing corporate disclosure data, investigating investor
complaints, and monitoring exchanges for unusual activities. In addition, SEC recently created a
new Office of Risk Assessment designed to improve the agency’s ability to anticipate potential prob-
lem areas across the securities industry by focusing on early identification of new or resurgent forms
of fraud and illegal or questionable activities. In 2004, SEC opened 973 investigations and initiated
an estimated 610 enforcement actions against individuals and companies for violations of securities
laws. Through these efforts, SEC was able to halt fraudulent activities quickly, seek civil penalties,
and order violators to disgorge ill-gotten gains. Major enforcement actions in 2004 included:
• Seventeen actions against a variety of persons associated with mutual funds, including invest-
ment advisers, fund directors and brokers, and registered investment advisors. These actions
involved late trading of mutual fund shares, abusive market timing arrangements, or both. As
a result, SEC ordered $477 million in disgorgement and $457 million in penalties in abusive
market timing and late-trading cases to be distributed to injured investors.
• Charges against former Enron and WorldCom executives whose allegedly fraudulent activities
contributed to the collapse of the two companies and resulted in losses of billions of investor
dollars.
• More than $246 million in penalties and disgorgements against New York Stock Exchange spe-
cialist trading firms for profiting from improperly executing customer trading orders. These
activities resulted in customers receiving inferior prices or having orders that went unexecuted
altogether.
The SEC is also an active participant in the President’s Corporate Fraud Task Force, an intera-
gency working group, led by the Department of Justice, designed to aggressively pursue joint civil
and criminal actions against corporate wrong-doers.
Improving Transparency
SEC works to ensure that all investors have access to certain basic facts about an investment and
to prevent fraud and misrepresentation of those facts in securities markets. SEC requires that public
companies submit detailed financial information, which it makes available to the public through its
website (www.sec.gov/edgar.shtml).
SEC focuses on making sure that rules and regulations are clear for market participants, especially
small business and individual investors. It is important to the health of the economy and the role
that public companies play in job creation that the benefits of securities regulation outweigh the
costs. SEC recently established the Advisory Committee on Smaller Public Companies to examine
the benefits and costs of the Sarbanes-Oxley Act and other Federal securities laws on smaller public
companies. For example, the advisory committee will review the impact of new internal control rules,
financial reporting regulations, and corporate governance requirements to evaluate the net benefits
to investors. Its members will also make recommendations to SEC to ensure that smaller companies
are able to grow and succeed by accessing capital in the public markets.
THE BUDGET FOR FISCAL YEAR 2006 339
SMITHSONIAN INSTITUTION
In 1829, James Smithson, a British scientist, bequeathed his estate to the American people for the
“increase and diffusion of knowledge.” Today, the Smithsonian Institution supports that goal through
its operation of National museums and research institutes. Approximately two-thirds of the Smith-
sonian’s funding is from direct Federal appropriations; the remainder comes from its endowment
fund, private donations, business activities, and grants from other Federal agencies. In September
2004, the Smithsonian opened its eighteenth museum, the National Museum of the American Indian,
dedicated to celebrating the culture of the Native peoples of the Western Hemisphere.
The Smithsonian continues to receive low ratings in many of the President’s Management Agenda
initiative areas, in part due to its long history of decentralization and unique management struc-
ture. However, the Institution continues to implement management reforms and best practices and
has made marked progress in coordinating its information technology portfolio, assessing its future
workforce needs, and linking its budget and senior staff compensation to performance measures.
The Tennessee Valley Authority (TVA) is a wholly owned agency of the United States Government
created in 1933 by the TVA Act. TVA serves the people of the Tennessee Valley by providing power
to the Tennessee Valley region, and supports navigation, flood control, and economic development
in the area. TVA operates the largest public electric power system in the United States. It serves a
population of more than eight million customers throughout most of Tennessee, northern Alabama,
northeastern Mississippi, southwestern Kentucky, and small portions of Georgia, North Carolina,
and Virginia. TVA is the exclusive wholesale power provider within this geographic region.
TVA’s 2004 operating revenues totaled approximately $7.7 billion and its receipts and expendi-
tures are included in the Federal Budget. TVA uses its internally generated proceeds to fund power
generation and transmission operations as well as its resource stewardship programs. Annual ex-
penditures of $87 million are devoted to TVA’s resource stewardship program, which includes recre-
ational activities, river stewardship, and navigation services. The remaining funds are devoted to
power generation and transmission services.
340 OTHER AGENCIES
TVA continues to be burdened by its excessive debt level, currently estimated at $26 billion. The
2005 Budget included a goal endorsed by the TVA Board of reducing TVA’s debt by $3 billion to $5
billion over the next 10 to 12 years. In order to increase TVA’s financial flexibility and minimize its
risk exposure, the Budget maintains that goal. In addition, fulfilling a commitment in the President’s
2005 Budget, the 2006 Budget includes specific legislative language that clarifies the definition of
TVA’s debt. Some agency transactions, such as equipment lease/leasebacks and long-term power pre-
payment agreements, result in liabilities that make a claim on future agency resources and have risk
similar to traditional debt, and therefore constitute a form of debt which should be counted toward
TVA’s statutory debt limitation. To ensure the integrity and usefulness of TVA’s debt cap, the Ad-
ministration is proposing legislation to ensure that these types of debt-like transactions are treated
as debt and counted toward TVA’s $30 billion statutory debt limit.
In 2000, TVA’s Inspector General (IG) became Presidentially-appointed. TVA’s IG funding level is
subject to TVA Board approval and is derived directly from TVA revenues. All other Presidentially-
appointed IGs are funded through annual appropriations. The Budget reproposes to appropriate
funds for TVA’s IG out of TVA’s revenues beginning in 2006.
SUMMARY TABLES
THE BUDGET FOR FISCAL YEAR 2006
Table S–1. Budget Totals
(Dollar amounts in billions)
Budget Totals:
Receipts ....................................................... 1,880 2,053 2,178 2,344 2,507 2,650 2,821
Outlays ......................................................... 2,292 2,479 2,568 2,656 2,758 2,883 3,028
Deficit ..................................................... 412 427 390 312 251 233 207
Gross Domestic Product (GDP) .............. 11,553 12,227 12,907 13,617 14,349 15,111 15,906
343
344
Table S–2. Discretionary Totals
(Net budget authority; dollar amounts in billions)
Actual 2005–2006
2005 2006
Enacted Request Dollar
2001 2002 2003 2004 change
SUMMARY TABLES
Percent change by category:
Department of Defense ............................................................................ 6% 4% 4% 2%
Homeland Security (non-Department of Defense)......................... 5% 5% 5% 5%
Other Operations of Government ......................................................... 0% 0% 0% 0%
Total, Percent change.................................................................................... 3% 2% 2% 1%
Growth
Actual Estimate 2005–2006 Average Cumulative
Agency 2001 2002 2003 2004 2005 2006 Change Percent 2001–2006 2001–2006
Agriculture................................................... 19.2 20.1 21.7 21.1 21.4 19.4 2.0 9.6% 0.1% 0.7%
Commerce .................................................. 5.1 5.4 5.6 5.8 6.3 9.4 3.1 49.0% 13.0% 84.5%
Defense ....................................................... 302.5 327.8 365.3 375.7 400.1 419.3 19.3 4.8% 6.7% 38.6%
Education .................................................... 40.1 48.5 53.1 55.7 56.6 56.0 0.5 0.9% 6.9% 39.8%
Energy .......................................................... 20.0 20.9 22.0 23.4 23.9 23.4 0.5 2.0% 3.2% 17.1%
Health and Human Services ................ 54.0 59.5 65.7 69.2 69.2 68.9 0.3 0.5% 5.0% 27.5%
Homeland Security .................................. 14.0 15.7 21.9 27.9 29.0 29.3 0.3 1.2% 16.0% 109.7%
Housing and Urban Development ...... 28.4 29.4 30.1 32.0 32.2 28.5 3.7 11.5% 0.1% 0.5%
Interior .......................................................... 10.3 10.5 10.5 10.7 10.8 10.6 0.1 1.1% 0.7% 3.7%
Justice .......................................................... 18.4 18.6 19.0 19.5 20.2 19.1 1.1 5.5% 0.8% 3.9%
Labor............................................................. 11.9 12.1 11.8 11.8 12.0 11.5 0.5 4.4% 0.7% 3.6%
State and International Assistance
Programs ................................................ 20.3 21.7 22.8 25.0 27.5 31.8 4.3 15.7% 9.4% 56.4%
Transportation............................................ 14.6 12.8 13.5 13.9 12.7 11.8 0.9 6.7% 4.1% 18.8%
Treasury ....................................................... 10.3 10.5 10.7 10.7 11.2 11.6 0.4 3.9% 2.4% 12.7%
Veterans Affairs......................................... 22.4 23.8 26.4 29.1 30.6 31.3 0.7 2.1% 6.9% 39.8%
Corps of Engineers ................................. 4.7 4.5 4.6 4.6 4.7 4.3 0.3 7.2% 1.6% 7.6%
Environmental Protection Agency ...... 7.8 7.9 8.1 8.4 8.0 7.6 0.5 5.6% 0.7% 3.4%
Executive Office of the President ....... 0.3 0.3 0.3 0.3 0.3 0.3 0.0 1.7% 4.6% 25.5%
Judicial Branch .......................................... 4.0 4.3 4.6 4.8 5.1 5.6 0.5 9.9% 7.1% 41.0%
Legislative Branch.................................... 2.8 3.0 3.4 3.6 3.6 4.1 0.5 13.7% 8.2% 48.1%
National Aeronautics and Space
Administration ....................................... 14.3 14.8 15.3 15.4 16.1 16.5 0.4 2.4% 2.9% 15.5%
National Science Foundation ............... 4.4 4.8 5.3 5.6 5.5 5.6 0.1 2.4% 4.8% 26.5%
Social Security Administration............. 6.0 6.4 6.7 7.2 7.5 7.7 0.2 2.8% 4.9% 27.3%
Other Agencies ......................................... 8.1 7.7 10.0 9.0 8.4 6.6 1.7 20.8% 4.0% 18.4%
Total, Discretionary Spending ............ 643.8 691.0 758.5 790.1 822.7 840.3 17.6 2.1% 5.5% 30.5%
Note: Supplementals are excluded.
345
346
Table S–4. Discretionary Proposals By Appropriations Subcommittee
(Net budget authority in billions of dollars)
SUMMARY TABLES
THE BUDGET FOR FISCAL YEAR 2006
Table S–5. Homeland Security Funding By Agency
(Budget authority in millions of dollars)
347
348
Table S–6. Mandatory Proposals
(In millions of dollars)
Total
2005 2006 2007 2008 2009 2010
2006–2010 2006–2015
Programmatic Reforms:
Agriculture:
Commodity Credit Corporation:
Limit Loan Deficiency Payments to historical
production........................................................................ — 432 509 106 4 2 1,053 1,054
Tighten payment limits .................................................... — 200 190 175 150 130 845 1,200
Cut Crop Payments by 5 percent ................................ — 383 629 468 351 309 2,140 3,641
Sugar marketing assessment 1.2 percent ............... — 42 43 43 43 43 214 437
Tilt adjustment requirement........................................... — 130 80 50 50 50 360 610
Extend Milk Income Loss Compensation ................. — 600 600 — — — 1,200 1,200
Crop insurance coverage change.................................... — — 140 140 140 140 560 1,260
Forest Service:
Facilities working capital fund ....................................... — 5 1 1 — — 7 7
Enhanced facilities disposal authority ....................... — 9 — — 5 — 14 14
Limit Food Stamp categorical eligibility ......................... — 57 113 112 111 114 507 1,124
Allow State Food Stamp Agencies to use the
National Directory of New Hires (NDNH) ................. — — 2 2 2 2 8 18
Subtotal, Agriculture .................................................... — 658 1,107 1,097 856 790 4,508 8,165
Education:
Reform the Federal Student Aid Programs:
Payoff Pell Shortfall (non-add BA only) .................... — (4,301) — — — — (4,301) (4,301)
Increase the Pell Grant Maximum Award by $500
over Five Years .............................................................. — 101 509 915 1,321 1,734 4,580 14,959
Increase Borrowing Limits and Other Benefits to
Students ........................................................................... — 221 660 762 811 866 3,320 7,658
Recall Federal Perkins Loan Revolving Funds ...... — 580 642 675 735 697 3,329 5,987
Increase Lender Risk Sharing and Improve
SUMMARY TABLES
Program Efficiency ....................................................... — 171 601 785 838 902 3,297 8,749
Adjust Guaranty Agency Reinsurance and Default
Retention Rates ............................................................ — 43 116 152 168 187 666 1,788
Reform Federal Consolidation Loans ........................ — 269 610 544 484 503 2,410 3,769
Extend the Taxpayer-Teacher Extension Act .......... — 254 411 449 459 485 2,058 4,945
Other Student Loan Reforms........................................ 557 178 790 824 783 811 3,386 8,043
Subtotal, Education ...................................................... 557 1,172 2,001 1,752 1,337 986 7,248 10,667
THE BUDGET FOR FISCAL YEAR 2006
Table S–6. Mandatory Proposals—Continued
(In millions of dollars)
Total
2005 2006 2007 2008 2009 2010
2006–2010 2006–2015
Energy:
Allow Power Marketing Administrations to Charge
up to Market Rates ........................................................... — 40 157 446 1,145 1,406 3,194 12,434
Bonneville Power Administration borrowing
authority ................................................................................ — — — — — 140 140 200
Subtotal, Energy ................................................................ — 40 157 446 1,145 1,266 3,054 12,234
Health and Human Services:
Medicaid and State Children’s Health Insurance
Program Proposals ........................................................... 225 1,112 1,549 3,699 4,214 4,417 12,767 44,637
State grants and demonstrations ..................................... — 400 500 594 605 618 2,717 5,000
Temporary Assistance for Needy Families
Reauthorization.................................................................. 100 277 329 352 361 357 1,676 3,450
Child Support Enforcement: Increase Collections
and Improve Program Effectiveness .......................... — 63 1 54 31 32 55 122
Healthy Marriage and Fatherhood Initiative ................. 71 21 37 23 40 40 119 319
State-Based Abstinence Grants ....................................... 9 30 46 50 50 50 226 476
Foster Care Clarify Statutory Eligibility Definition ...... — 72 74 77 79 81 383 834
Foster Care Modify DC FMAP Rate ............................... — 7 7 8 8 8 38 85
Child Welfare Program Option .......................................... — 7 67 135 3 164 48 49
Subtotal, Health and Human Services ...................... 263 1,677 636 2,560 3,195 3,557 8,271 35,970
Housing and Urban Development:
Repeal Federal Housing Administration’s General
and Special Risk Insurance Authorities .................... — 60 100 100 100 100 460 960
Interior:
Southern Nevada Land Sales ........................................... — 227 418 636 641 642 2,564 5,783
Arctic National Wildlife Refuge, lease bonuses:
State of Alaska’s share:
Receipts ........................................................................... — — 1,201 1 101 1 1,304 1,588
Expenditures .................................................................. — — 1,201 1 101 1 1,304 1,588
Federal share:
Receipts ........................................................................... — — 1,201 1 101 1 1,304 1,588
Royalties Conservation Fund Outlays ................... — — — — — — — 115
349
Pick-Sloan Project Cost Repayment .............................. — 33 33 31 31 29 157 299
350
Table S–6. Mandatory Proposals—Continued
(In millions of dollars)
Total
2005 2006 2007 2008 2009 2010
2006–2010 2006–2015
Eliminate Bureau of Land Management Range
Improvements Fund ......................................................... — 7 10 10 10 10 47 97
Subtotal, Interior............................................................ — 267 1,662 678 783 682 4,072 7,652
Labor:
Pension Benefit Guaranty Corporation Reform .......... — 2,195 3,702 3,495 3,226 2,916 15,534 26,521
Unemployment Insurance Integrity ................................. — — 65 134 141 148 488 1,341
Unemployment Insurance Overpayment
Recoveries ........................................................................... — 281 282 284 288 288 1,423 3,082
Federal Employees’ Compensation Act Reforms ...... — 6 12 20 17 17 72 172
Subtotal, Labor................................................................... — 2,482 4,061 3,933 3,672 3,369 17,517 31,116
Treasury:
Continued Dumping and Subsidy Offset repeal ......... — 1,608 1,615 1,624 855 865 6,567 11,035
Eliminate 10–year Statute-of-Limitations on
Non-Tax Debt ...................................................................... — 11 6 6 6 6 35 65
Extend the Rum-Carryover for Puerto Rico ................. — 56 19 — — — 75 75
Subtotal, Treasury ............................................................. — 1,563 1,602 1,630 861 871 6,527 11,025
Federal Communications Commission (FCC):
Extend Spectrum Auction Authority ................................ — — — 1,083 2,156 3,239 4,312 5,112
Close Telecommunications Development Fund ......... — 2 2 3 3 4 14 34
Subtotal, FCC ..................................................................... — 2 2 1,080 2,159 3,243 4,326 5,146
Federal Deposit Insurance Corporation:
Merge Bank Insurance Fund and Savings
Association Insurance Fund .......................................... — — — 1 377 855 1,231 1,063
Social Security Administration (SSA):
Supplemental Security Income (SSI)
Pre-Effectuation Reviews and Other
SUMMARY TABLES
Technical Adjustments .................................................... — 4 18 40 64 92 218 1,133
Extend SSI Eligibility to Refugees and Asylees
to Eight Years after Entry ............................................... — 65 77 84 — — 226 226
Subtotal, SSA................................................................. — 61 59 44 64 92 8 907
Total, Programmatic Reforms ................................. 820 4,506 11,269 11,073 13,795 14,101 54,744 122,779
THE BUDGET FOR FISCAL YEAR 2006
Table S–6. Mandatory Proposals—Continued
(In millions of dollars)
Total
2005 2006 2007 2008 2009 2010
2006–2010 2006–2015
User Fee Proposals:
Agriculture:
Animal Plant and Health Inspection Service * ............ — 11 11 11 12 12 57 121
Food Safety and Inspection Service * ............................ — 139 142 145 148 151 725 1,529
Grain Inspection, Packers and Stockyards
Administration * .................................................................. — 25 26 26 27 27 131 276
Agricultural Marketing Service Standardization * ...... — 3 3 3 3 3 15 30
Justice:
Bureau of Alcohol, Tobacco, Firearms and
Explosives’ Explosives Regulation * .......................... — 120 120 120 120 120 600 1,200
Transportation:
St. Lawrence Seaway Development Corporation * ... — 8 17 17 17 17 76 170
Treasury:
Tax and Trade Bureau Regulatory Activity * ................ — 29 29 29 29 29 145 297
Veterans Affairs:
Annual Medical Fees for higher income veterans
with non-service-connected disabilities * ................. — 248 248 248 248 248 1,240 2,480
Drug Copay Increase * ........................................................ — 176 178 180 181 183 898 1,842
Total Medical Services (illustrative discretionary
spending authority—non-add) ..................................... — (424) (426) (428) (429) (431) (2,138) (4,322)
Environment Protection Agency:
Premanufacture Notification Fee Cap Removal * ...... — 4 8 8 8 8 36 76
Pesticide Tolerance * ............................................................ — 20 20 21 21 22 104 221
Pesticide Registration * ....................................................... — 26 27 27 28 28 136 288
Federal Communications Commission:
Authorize Spectrum License Fees .................................. — — 50 150 300 300 800 3,125
Analog Spectrum Lease Fees .......................................... — — 500 500 480 450 1,930 2,580
Total, User Fees ............................................................. — 809 1,379 1,485 1,622 1,598 6,893 14,235
351
352
Table S–6. Mandatory Proposals—Continued
(In millions of dollars)
Total
2005 2006 2007 2008 2009 2010
2006–2010 2006–2015
Outlay Effects of Tax Proposals: 1
Health tax credits ....................................................................... — 99 3,757 5,762 6,934 7,638 24,190 69,138
Earned income tax credit ........................................................ — 81 105 118 137 181 622 1,569
Child tax credit ............................................................................ — 34 45 50 59 77 265 670
Total, Outlay effects of tax proposals ............................. — 16 3,607 5,594 6,738 7,380 23,303 66,899
SUMMARY TABLES
THE BUDGET FOR FISCAL YEAR 2006
Table S–6. Mandatory Proposals—Continued
(In millions of dollars)
Total
2005 2006 2007 2008 2009 2010
2006–2010 2006–2015
Full-time School Attendance Required for Child’s
Social Security Benefits at Age 16 (off-budget) ......... — 10 75 135 140 145 505 1,326
Correct trust accounting deficiencies in individual
Indian money investments (non-paygo) ........................ 6 — — — — — — —
Third scorecard effects............................................................. — 31 31 32 32 33 159 334
Total, Other mandatory proposals............................... 6 21 44 103 108 112 346 992
Memorandum:
Paygo .............................................................................................. 820 5,346 9,046 6,961 8,674 8,314 38,341 70,097
Non-Paygo .................................................................................... 6 21 44 103 108 112 346 992
* The Administration will work with the Congress to reclassify the enacted fees as discretionary beginning in 2007. Once reclassified, the Administration
proposes to offset these fees against discretionary spending. Discretionary totals in those years will be reduced by these fees.
1
Affects both receipts and outlays. Only the outlay effect is shown here.
353
354
Table S–7. Effect of Proposals on Receipts
(In millions of dollars)
Total
2005 2006 2007 2008 2009 2010
2006–2010 2006–2015
Tax Incentives:
Simplify and encourage saving:
Expand tax-free savings opportunities .......................... — 3,709 7,151 4,069 1,693 199 16,821 1,461
Consolidate employer-based savings accounts ......... — 224 335 357 382 411 1,709 14,816
Establish Individual Development Accounts (IDAs) .. — — 134 286 326 300 1,046 1,763
Total simplify and encourage saving...................... — 3,485 6,682 3,426 985 512 14,066 15,118
Invest in health care:
Provide a refundable tax credit for the purchase of
health insurance 3 ............................................................ — 19 1,435 1,543 1,370 1,241 5,608 9,897
Provide an above-the-line deduction for
high-deductible insurance premiums ......................... — 200 2,029 2,316 2,636 2,876 10,057 28,495
SUMMARY TABLES
Provide a refundable tax credit for contributions of
small employers to employee HSAs 4 ...................... — 61 304 834 1,545 2,025 4,769 17,760
Improve the Health Coverage Tax Credit 5 ................. — — 3 4 5 5 17 49
Allow the orphan drug tax credit for certain
pre-designation expenses .............................................. — — — — — — 1 3
Total invest in health care .......................................... — 280 3,771 4,697 5,556 6,147 20,452 56,204
THE BUDGET FOR FISCAL YEAR 2006
Table S–7. Effect of Proposals on Receipts—Continued
(In millions of dollars)
Total
2005 2006 2007 2008 2009 2010
2006–2010 2006–2015
Provide incentives for charitable giving:
Permit tax-free withdrawals from IRAs for charitable
contributions........................................................................ 70 335 318 318 313 304 1,588 3,095
Expand and increase the enhanced charitable
deduction for contributions of food inventory .......... 42 87 96 106 116 127 532 1,388
Reform excise tax based on investment income of
private foundations ........................................................... — 148 98 105 111 119 581 1,321
Modify tax on unrelated business taxable income of
charitable remainder trusts ............................................ 6 5 6 6 6 7 30 69
Modify basis adjustment to stock of S corporations
contributing appreciated property ............................... 4 20 21 25 28 32 126 354
Repeal the $150 million limitation on qualified
501(c)(3) bonds ................................................................. 3 6 10 11 10 10 47 92
Repeal certain restrictions on the use of qualified
501(c)(3) bonds for residential rental property ....... — 2 5 9 16 24 56 278
Total provide incentives for charitable giving ...... 125 603 554 580 600 623 2,960 6,597
Strengthen education:
Extend, increase, and expand the above-the-line
deduction for qualified out-of-pocket classroom
expenses .............................................................................. — 27 267 279 282 285 1,140 2,630
Encourage telecommuting:
Exclude from income the value of employer-provided
computers, software, and peripherals ....................... — 29 50 50 55 65 249 767
Provide assistance to distressed areas:
Establish Opportunity Zones ............................................. — 433 806 853 899 912 3,903 9,594
Provide disaster relief:
Provide tax relief for FEMA hazard mitigation
assistance programs ........................................................ 20 40 40 40 40 40 200 400
Increase housing opportunities:
Provide tax credit for developers of affordable
single-family housing ....................................................... — 7 84 342 815 1,425 2,673 17,370
355
356
Table S–7. Effect of Proposals on Receipts—Continued
(In millions of dollars)
Total
2005 2006 2007 2008 2009 2010
2006–2010 2006–2015
SUMMARY TABLES
Total tax incentives .............................................. 275 1,191 230 4,896 8,682 10,614 23,232 117,417
Total
2005 2006 2007 2008 2009 2010
2006–2010 2006–2015
357
358
Table S–7. Effect of Proposals on Receipts—Continued
(In millions of dollars)
Total
2005 2006 2007 2008 2009 2010
2006–2010 2006–2015
Other proposals:
Modify pesticide registration fee....................................... — — — — — — — 152
Increase Indian gaming activity fees .............................. — — 4 4 5 5 18 43
Total tax administration, unemployment insurance,
and other.......................................................................... — — 10 2 124 525 641 2,965
Promote Trade:
Implement free trade agreements with Bahrain,
Panama and the Dominican Republic 6 .................... — 56 84 91 97 102 430 976
SUMMARY TABLES
terrorist activity 8 ............................................................... — — — — — — — —
LUST Trust Fund taxes 6 .................................................... 74 152 77 — — — 229 229
Abandoned mine reclamation fees.................................. — 304 312 318 322 323 1,579 3,230
Excise tax on coal 6 .............................................................. — — — — — — — 479
Total extend expiring provisions .............................. 74 1,849 4,453 5,704 6,601 7,371 25,978 72,973
THE BUDGET FOR FISCAL YEAR 2006
Table S–7. Effect of Proposals on Receipts—Continued
(In millions of dollars)
Total
2005 2006 2007 2008 2009 2010
2006–2010 2006–2015
359
360
Table S–8. Receipts By Source—Summary
(In billions of dollars)
2004 Estimate
Source
Actual 2005 2006 2007 2008 2009 2010
Individual income taxes............................... 809.0 893.7 966.9 1,071.2 1,167.2 1,245.1 1,353.3
Corporation income taxes .......................... 189.4 226.5 220.3 229.8 243.4 252.4 257.6
Social insurance and retirement
receipts ......................................................... 733.4 773.7 818.8 866.2 911.7 959.1 1,016.2
(On-budget) ................................................ (198.7) (212.4) (225.6) (237.0) (247.2) (258.4) (273.0)
(Off-budget) ................................................ (534.7) (561.4) (593.2) (629.2) (664.6) (700.7) (743.2)
Excise taxes .................................................... 69.9 74.0 75.6 77.2 79.0 81.0 82.9
Estate and gift taxes .................................... 24.8 23.8 26.1 23.5 24.3 26.0 20.1
Customs duties .............................................. 21.1 24.7 28.3 30.6 31.9 33.9 35.3
Miscellaneous receipts................................ 32.6 36.4 41.6 45.6 49.5 52.6 55.4
Total receipts .......................................... 1,880.1 2,052.8 2,177.6 2,344.2 2,507.0 2,650.0 2,820.9
(On-budget) ............................................ (1,345.3) (1,491.5) (1,584.4) (1,715.0) (1,842.4) (1,949.3) (2,077.7)
(Off-budget) ............................................ (534.7) (561.4) (593.2) (629.2) (664.6) (700.7) (743.2)
SUMMARY TABLES
THE BUDGET FOR FISCAL YEAR 2006
Table S–9. Comparison of Economic Assumptions
(Calendar years)
Projections Average
2005 2006 2007 2008 2009 2010 2005–2010
GDP (billions of current dollars):
2006 Budget ........................................................... 12,392 13,083 13,797 14,537 15,306 16,112
CBO January.......................................................... 12,396 13,059 13,766 14,486 15,210 15,940
Blue Chip Consensus January 1 .................... 12,398 13,066 13,763 14,496 15,265 16,098
Real GDP (chain-weighted): 2
2006 Budget ........................................................... 3.6 3.5 3.3 3.2 3.1 3.1 3.3
CBO January.......................................................... 3.8 3.7 3.7 3.4 3.1 2.9 3.5
Blue Chip Consensus January 1 .................... 3.6 3.4 3.2 3.2 3.1 3.3 3.3
Chain-weighted GDP Price Index: 2
2006 Budget ........................................................... 1.9 2.0 2.1 2.1 2.1 2.1 2.0
CBO January.......................................................... 1.8 1.5 1.7 1.8 1.8 1.8 1.7
Blue Chip Consensus January 1 .................... 2.0 2.0 2.1 2.1 2.1 2.1 2.1
Consumer Price Index (all-urban): 2
2006 Budget ........................................................... 2.4 2.3 2.4 2.4 2.4 2.4 2.4
CBO January.......................................................... 2.4 1.9 2.1 2.2 2.2 2.2 2.2
Blue Chip Consensus January 1 .................... 2.5 2.3 2.4 2.4 2.4 2.4 2.4
Unemployment rate: 3
2006 Budget ........................................................... 5.3 5.2 5.1 5.1 5.1 5.1 5.2
CBO January.......................................................... 5.2 5.2 5.2 5.2 5.2 5.2 5.2
Blue Chip Consensus January 1 .................... 5.3 5.2 5.1 5.1 5.1 5.1 5.1
Interest rates: 3
91–day Treasury bills:
2006 Budget ........................................................... 2.7 3.5 3.8 4.0 4.1 4.2 3.7
CBO January.......................................................... 2.8 4.0 4.6 4.6 4.6 4.6 4.2
Blue Chip Consensus January 1 .................... 3.0 3.8 4.1 4.3 4.2 4.2 3.9
10–year Treasury notes:
2006 Budget ........................................................... 4.6 5.2 5.4 5.5 5.6 5.7 5.3
CBO January.......................................................... 4.8 5.4 5.5 5.5 5.5 5.5 5.4
Blue Chip Consensus January 1 .................... 4.7 5.3 5.6 5.6 5.6 5.6 5.4
Sources: Congressional Budget Office; Blue Chip Economic Indicators, Aspen Publishers, Inc.
1
January 2005 Blue Chip Consensus forecast for 2005 and 2006; Blue Chip October 2004 long-run extension for 2007—2010.
2
Year-over-year percent change.
3
Annual averages, percent.
361
362
Table S–10. Budget Summary by Category
(In billions of dollars)
Outlays:
Discretionary:
DOD military........................................... 436 443 424 426 445 466 483
Non-DOD ................................................ 459 487 497 491 488 486 488
Total, Discretionary ......................... 895 930 922 917 932 952 971
Proposed Supplemental......................... — 35 25 18 2 1 —
Mandatory:
Social Security ...................................... 492 515 540 567 596 630 665
Medicare .................................................. 265 290 340 381 407 433 460
Medicaid and SCHIP .......................... 181 194 199 209 225 245 266
Other ......................................................... 299 337 331 319 324 328 351
Total, Mandatory .............................. 1,237 1,337 1,410 1,476 1,551 1,635 1,743
Net Interest ................................................. 160 178 211 245 272 294 314
Total Outlays ................................................... 2,292 2,479 2,568 2,656 2,758 2,883 3,028
Receipts............................................................ 1,880 2,053 2,178 2,344 2,507 2,650 2,821
Deficit ............................................................ 412 427 390 312 251 233 207
On-budget deficit ........................................... 567 589 560 506 466 463 460
Off-budget surplus ........................................ 155 162 170 194 215 230 252
SUMMARY TABLES
THE BUDGET FOR FISCAL YEAR 2006
Table S–11. Current Services Baseline Summary by Category
(in billions of dollars)
Discretionary:
DOD military .................................................. 436 443 417 416 428 439 453
Homeland security ...................................... 25 30 33 34 34 35 36
Other ................................................................ 434 457 464 473 480 487 497
Total, Discretionary ................................. 895 930 914 923 942 961 986
Mandatory:
Social Security .............................................. 492 515 540 567 596 630 666
Medicare ......................................................... 265 290 340 381 407 433 460
Medicaid and SCHIP .................................. 181 194 198 211 229 249 271
Other ................................................................ 299 337 337 327 327 333 355
Total, Mandatory ...................................... 1,237 1,336 1,416 1,485 1,558 1,645 1,752
Net Interest ......................................................... 160 177 209 242 269 291 310
Total Outlays ...................................................... 2,292 2,443 2,539 2,650 2,770 2,897 3,048
Receipts............................................................... 1,880 2,053 2,178 2,347 2,518 2,668 2,841
Surplus/deficit ............................................... 412 390 361 303 251 229 207
On-budget deficit ......................................... 567 552 534 500 469 462 462
Off-budget surplus....................................... 155 162 173 197 218 233 256
363
364
Table S–12. Impact of Budget Policy
(In billions of dollars)
Total
2005 2006 2007 2008 2009 2010
2006–2010
Current Services Baseline Deficit .......... 390 361 303 251 229 207 1,351
Proposals:
Discretionary policy:
Department of Defense..................... — 8 11 18 29 34 99
Homeland security .............................. — 1 * 1 2 2 5
Other spending .................................... * 1 16 29 41 52 138
Subtotal, discretionary ........................... * 8 5 10 10 16 34
2006 Budget Deficit ..................................... 427 390 312 251 233 207 1,393
SUMMARY TABLES
THE BUDGET FOR FISCAL YEAR 2006
Table S–13. Baseline Adjustments
(In billions of dollars)
Total
2005 2006 2007 2008 2009 2010
2006–2010 2006–2015
Budget Enforcement Act Baseline Deficit............................... 391 369 315 256 213 212 1,364
Current Services Baseline Deficit .............................................. 390 361 303 251 229 207 1,351
365
366
Table S–14. Federal Government Financing and Debt
(In billions of dollars)
Actual Estimate
2004 2005 2006 2007 2008 2009 2010
Financing:
Unified budget deficit ( ) ....................................................................................... 412 427 390 312 251 233 207
Change in debt held by the public....................................................................... 382 426 400 333 273 255 230
SUMMARY TABLES
Debt Subject to Statutory Limitation, End of Year:
Debt issued by Treasury ......................................................................................... 7,328 8,005 8,682 9,325 9,924 10,519 11,114
Adjustment for discount, premium, and coverage 4 .................................... 6 8 8 8 8 6 5
Total, debt subject to statutory limitation 5 ................................................. 7,333 7,997 8,673 9,316 9,915 10,513 11,109
THE BUDGET FOR FISCAL YEAR 2006
Table S–14. Federal Government Financing and Debt—Continued
(In billions of dollars)
Actual Estimate
2004 2005 2006 2007 2008 2009 2010
Debt Outstanding, End of Year:
Gross Federal debt: 6
Debt issued by Treasury .................................................................................... 7,328 8,005 8,682 9,325 9,924 10,519 11,114
Debt issued by other agencies ........................................................................ 27 26 26 26 25 24 24
Total, gross Federal debt ............................................................................... 7,355 8,031 8,708 9,350 9,949 10,544 11,137
Held by:
Debt held by Government accounts .............................................................. 3,059 3,310 3,587 3,896 4,222 4,562 4,926
Debt held by the public 7 .................................................................................. 4,296 4,721 5,121 5,454 5,727 5,982 6,212
As a percent of GDP ....................................................................................... 37.2% 38.6% 39.7% 40.1% 39.9% 39.6% 39.1%
367
GLOSSARY
Appropriation
An appropriation provides legal authority for Federal agencies to incur obligations and to make
payments out of the Treasury for specified purposes. Thirteen regular appropriations bills are
considered every year by the Congress and supplemental appropriations are considered from
time to time.
Authorization
An authorization is an act of the Congress that establishes or continues a Federal program or
agency and sets forth the guidelines to which it must adhere.
Balanced Budget
A balanced budget occurs when total receipts equal total outlays for a fiscal year.
Budget Authority
Budget authority is the authority provided by law to incur financial obligations that will result
in outlays.
Budget Resolution
The budget resolution is Congress’ annual framework that sets targets for total budget authority,
total outlays, total revenues, and the deficit (on-budget), as well as discretionary and mandatory
allocations within the spending targets. These targets guide the committees’ deliberations. A
budget resolution does not become law and is not binding on the Executive Branch.
Cap
A “cap” is a legal limit on annual discretionary spending.
Continuing Resolution
A continuing resolution provides for the ongoing operation of the Government in the absence of
enacted appropriations, usually at the same spending rate as the prior year.
369
370 GLOSSARY
Debt
Debt Held by the Public—The cumulative amount of money the Federal Government has
borrowed from the public and not repaid.
Debt Held by Government Accounts—The debt the Treasury Department owes to other
accounts within the Federal Government. Most of it results from the surpluses of the Social
Security and other trust funds, which are required by law to be invested in Federal securities.
Debt Limit—The maximum amount of Federal debt that may legally be outstanding at any
time. It includes both the debt held by the public and the debt held by Government accounts.
When the debt limit is reached, the Government cannot borrow more money until the Congress
has enacted a law to increase the limit.
Deficit
A deficit is the amount by which outlays exceed receipts in a fiscal year.
Discretionary Spending
Discretionary spending is what the President and the Congress decide to spend through annual
appropriations bills. Examples include spending for such activities as the FBI, the Coast Guard,
education, space exploration, highway construction, defense, and foreign aid. (See Mandatory
Spending.)
Entitlement
An entitlement program is one in which the Federal Government is legally obligated to make
payments or provide aid to any person who meets the legal criteria for eligibility. Examples
include Social Security, Medicare, Medicaid, and Food Stamps.
Fiscal Year
The fiscal year is the Federal Government’s accounting period. It begins on October 1st and
ends on September 30th. For example, fiscal year 2006 begins on October 1, 2005, and ends on
September 30, 2006.
Mandatory Spending
Mandatory spending is provided by permanent law rather than annual appropriations. Exam-
ples are Social Security and the Student Loan Program. The President and the Congress can
change the law with respect to the eligibility criteria or the payment formula, and thus change
the level of spending on mandatory programs, but they don’t have to take annual action to ensure
the continuation of spending. (See Discretionary Spending.)
THE BUDGET FOR FISCAL YEAR 2006 371
Obligations
Obligations are binding agreements that result in outlays, immediately or in the future.
Off-Budget
By law, Social Security and the Postal Service are accounted for separately from all other
programs in the Federal Government and amounts are designated as “off-budget.”
On-Budget
Those programs not legally designated as off-budget.
Outlays
Outlays are the amount of money the Government spends, minus business-like collections, in a
given fiscal year.
Pay-As-You-Go (PAYGO)
Created by the Budget Enforcement Act, PAYGO refers to requirements that new mandatory
spending proposals or tax reductions must be offset by cuts in other mandatory spending or by
tax increases. The purpose of these rules is to ensure that the deficit does not rise or the surplus
does not fall because of policy changes to mandatory spending and taxes.
Receipts
Governmental receipts (often simply “receipts”) are the collections of money that primarily result
from taxes and similar Government powers to compel payment. Examples of governmental re-
ceipts include income taxes, payroll taxes, excise taxes, and customs duties. They do not include
offsetting receipts or collections from the Federal Government’s business-like activities, such as
the entrance fees at national parks, or collections by one Government account from another.
Surplus
A surplus is the amount by which receipts exceed outlays in a fiscal year.
Trust Funds
Trust funds are Federal Government accounts designated as “trust funds” by law and
which record receipts for spending on specified purposes.
Unified Budget
The unified budget includes receipts from all sources and outlays for all programs of the Federal
Government, including both on- and off-budget programs. It is the most comprehensive measure
of the Government’s finances.
Unobligated Balance
Funding that has been approved or is available, but not yet obligated for any particular purpose.
OMB CONTRIBUTORS TO THE 2006 BUDGET
The following personnel contributed to the preparation of this publication. Hundreds, perhaps
thousands, of others throughout the Government also deserve credit for their valuable contributions.
Note: This list has been modified to add several names that were unintentionally omitted from the
printed document.
373
374 LIST OF CONTRIBUTORS AND IMAGE CREDITS
Image Credits
Jocelyn Augustino
Jim Beer, Meta House
Louai Beshara/AFP/Getty Images
Peter Bishop
Terrence Blackburne, Office of Management and Budget
Matthew Cavanaugh, Middle East Broadcasting Networks
TSGT Brian Christiansen
SSGT Shane A. Cuomo
Melissa Dettmer, Office of Management and Budget
Sonja Ervin, Central City Concern
CPL Paula M. Fitzgerald
Bob Flynn, City of Fresno
Bud Force, Texas Engineering Extension Service
John Frassanito & Associates/NASA
SGT Jose L. Garcia
Photographer’s Mate 1C William R. Goodwin
TSGT Lee Harshman
Thomas Hartwell
Al Hickey, National Science Foundation
Steve Hillebrand, U.S. Fish and Wildlife Service
Monique Holiday, Financial Management Service
THE BUDGET FOR FISCAL YEAR 2006 377