    [Analytical Perspectives]
    [Table of Contents]
    [From the U.S. Government Printing Office, www.gpo.gov]

                                 TABLE OF CONTENTS

                                                                                                                                                     Page

    List of Charts and Tables..................................................................................................................            v

    Introduction

         1.           Introduction.............................................................................................................            3

    Performance and Management Assessments

         2.           Budget and Performance Integration.......................................................................................            9

    Crosscutting Programs

         3.           Homeland Security Funding Analysis.......................................................................................           19

         4.           Strengthening Federal Statistics.........................................................................................           37

         5.           Research and Development.................................................................................................           45

         6.           Federal Investment.......................................................................................................           55

         7.           Credit and Insurance.....................................................................................................           67

         8.           Aid to State and Local Governments.......................................................................................          101

         9.           Integrating Services with Information Technology.........................................................................          153

        10.           Federal Drug Control Funding.............................................................................................          159

        11.           California-Federal Bay-Delta Program Budget Crosscut (CALFED)............................................................          161

    Economic Assumptions and Analyses

        12.           Economic Assumptions.....................................................................................................          165

        13.           Stewardship..............................................................................................................          175

        14.           National Income and Product Accounts.....................................................................................          203

    Budget Reform Proposals

        15.           Budget Reform Proposals..................................................................................................          211

    Federal Borrowing and Debt

        16.           Federal Borrowing and Debt...............................................................................................          223

    [[Page ii]]
    Federal Receipts and Collections

        17.           Federal Receipts.........................................................................................................          239

        18.           User Charges and Other Collections.......................................................................................          271

        19.           Tax Expenditures.........................................................................................................          285

    Dimensions of the Budget

        20.           Comparison of Actual to Estimated Totals.................................................................................          331

        21.           Outlays to the Public, Gross and Net.....................................................................................          339

        22.           Trust Funds and Federal Funds............................................................................................          341

        23.           Off-Budget Federal Entities and Non-Budgetary Activities.................................................................          357

        24.           Federal Employment and Compensation......................................................................................          361

    Current Services Estimates

        25.           Current Services Estimates...............................................................................................          371

    The Budget System and Concepts

        26.           The Budget System and Concepts...........................................................................................          391

    Detailed Functional Tables

        27.           Budget Authority and Outlays by Function, Category, and Program..........................................................       CD-ROM

    Federal Programs by Agency and Account

        28.           Federal Programs by Agency and Account...................................................................................       CD-ROM

    [[Page iii]]

    ......................................................................

                            LIST OF CHARTS AND TABLES

    ......................................................................

    [[Page v]]

                            LIST OF CHARTS AND TABLES

                                 LIST OF CHARTS

                                                                       Page

       2-1.....   Program Ratings are Improving.....................      15
       4-1.....   ICSP Statistical Quality and Program Performance        38
                  Dimensions........................................
       4-2.....   Most Recent PART Summary Ratings for Statistical        40
                  Programs..........................................
       5-1.....   Research in the American Competitiveness                45
                  Initiative........................................
       5-2.....  Scores of R&D PART Assessments.....................      47
       7-1.....   Fannie Mae and Freddie Mac Combined Retained            74
                  Mortgage Portfolios Year-End 2005.................
       7-2.....   Face Value of Federal Credit Outstanding..........      87
       13-1....   The Financial Condition of the Federal Government      177
                  and the Nation....................................
       13-2....   Net Federal Liabilities...........................     180
       13-3....   Health Care Cost Alternatives.....................     185
       13-4....   Effect of Entitlement Savings.....................     186
       13-5....   Alternative Receipts Projections..................     186
       13-6....  Alternative Productivity Assumptions...............     187
       13-7....  Alternative Fertility Assumptions..................     187
       13-8....   Alternative Immigration Assumptions...............     188
       13-9....   Alternative Mortality Assumptions.................     188
       13-10...   Sources of the Gross Tax Gap......................     194
       17-1....   Major Provisions of the Tax Code Under the 2001,       240
                  2003, 2004 and 2006 Enacted Tax Relief............
       20-1....   Illustrative Range of Budget Outcomes.............     337
       24-1....   Post Cold War End Strength and Spending...........     362
       24-2....   DoD Direct Compensation Costs.....................     363
       26-1....  Relationship of Budget Authority to Outlays for         402
                  2008..............................................

                                 LIST OF TABLES

                                                                     Page

    Crosscutting Programs

      Homeland Security Funding Analysis:
       3-1.....   Homeland Security Funding by Agency...........          20
       3-2.....  Homeland Security Funding by National Strategy           21
                  Mission Area..................................
       3-3.....  Intelligence and Warning Funding...............          22
       3-4.....  Border and Transportation Security Funding.....          23
       3-5.....  Domestic Counterterrorism Funding..............          25
       3-6.....  Protecting Critical Infrastructure and Key               26
                  Assets Funding................................
       3-7.....  Defending Against Catastrophic Threats Funding.          28
       3-8.....  Emergency Preparedness and Response Funding....          29
       3-9.....  Discretionary Fee-Funded Homeland Security               32
                  Activities by Agency..........................
       3-10....  Mandatory Homeland Security Funding by Agency..          32
       3-11....  Baseline Estimates--Total Homeland Security              33
                  Funding by Agency.............................
       3-12....  Homeland Security Funding by Budget Function...          34
       3-13....  Baseline Estimates--Homeland Security Funding            35
                  by Budget Function............................
       ........  Appendix--Homeland Security Mission Funding by       CD-ROM
                  Agency and Budget Account.....................

    [[Page vi]]

      Strengthening Federal Statistics:

       4-1.....   2006-2008 Budget Authority for Principal                43
                  Statistical Agencies..........................

      Research and Development:
       5-1.....  Federal Research and Development...............          51
       5-2.....  Federal Science and Technology Budget..........          53
       5-3.....  Agency Detail of Selected Interagency R&D                54
                  Efforts.......................................

      Federal Investment:
       6-1.....  Composition of Federal Investment Outlays......          57
       6-2.....  Federal Investment Budget Authority and                  58
                  Outlays: Grant and Direct Federal Programs....
       6-3.....  Summary of PART Ratings and Scores for Direct            61
                  Federal Investment Programs...................
       6-4.....  Net Stock of Federally Financed Physical                 64
                  Capital.......................................
       6-5.....  Net Stock of Federally Financed Research and             65
                  Development...................................
       6-6.....  Net Stock of Federally Financed Education                66
                  Capital.......................................

      Credit and Insurance:

          Text Tables:
                   Summary of PART Scores.......................          69
                   Largest Ten Claims Against the PBGC's Single-          83
                  Employer Insurance Program, 1975-2006.........
       7-1.....  Estimated Future Cost of Outstanding Federal             87
                  Credit Programs...............................
       7-2.....  Reestimates of Credit Subsidies on Loans                 89
                  Disbursed Between 1992-2006...................
       7-3.....  Direct Loan Subsidy Rates, Budget Authority,             91
                  and Loan Levels, 2006-2008....................
       7-4.....  Loan Guarantee Subsidy Rates, Budget Authority,          92
                  and Loan Levels, 2006-2008....................
       7-5.....  Summary of Federal Direct Loans and Loan                 93
                  Guarantees....................................
       7-6.....  Direct Loan Writeoffs and Guaranteed Loan                94
                  Terminations for Defaults.....................
       7-7.....  Appropriations Acts Limitations on Credit Loan           96
                  Levels........................................
       7-8.....  Face Value of Government-Sponsored Lending.....          98
       7-9.....  Lending and Borrowing By Government-Sponsored            99
                  Enterprises (GSEs)............................
       7-10....  Direct Loan Transactions of the Federal              CD-ROM
                  Government....................................
       7-11....  Guaranteed Loan Transactions of the Federal          CD-ROM
                  Government....................................

      Aid to State and Local Governments:

       8-1.....  Federal Grant Outlays by Agency................         101
       8-2.....  Summary of PART Ratings and Scores for Grants           105
                  to State and Local Governments................
       8-3.....  Trends in Federal Grants to State and Local             107
                  Governments...................................
       8-4.....  Federal Grants to State and Local Governments--         110
                  Budget Authority and Outlays..................
       8-5.....  Summary of Programs by Agency, Bureau, and              119
                  Program.......................................
       8-6.....  Summary of Programs by State...................         120
       8-7.....  School Breakfast Program.......................         121
       8-8.....  National School Lunch Program..................         122
       8-9.....  Special Supplemental Nutrition Program for              123
                  Women, Infants, and Children (WIC)............
       8-10....  Child and Adult Care Food Program..............         124
       8-11....  State Administrative Matching Grants for Food           125
                  Stamp Program.................................
       8-12....  Title I Grants to Local Educational Agencies...         126
       8-13....  Improving Teacher Quality State Grants.........         127
       8-14....  Special Education--Grants to States............         128
       8-15....  Rehabilitation Services--Vocational                     129
                  Rehabilitation Grants to States...............
       8-16....  State Children's Health Insurance Program......         130
       8-17....  Grants to States for Medicaid..................         131
       8-18....  Temporary Assistance for Needy Families (TANF)--        132
                  Family Assistance Grants......................
       8-19....  Child Support Enforcement--Federal Share of             133
                  State and Local Administrative Costs and
                  Incentives....................................
       8-20....  Low Income Home Energy Assistance Program......         134

    [[Page vii]]

       8-21....  Child Care and Development Block Grant.........         135
       8-22....  Child Care and Development Fund--Mandatory.....         136
       8-23....  Child Care and Development Fund--Matching......         137
       8-24....  Head Start.....................................         138
       8-25....  Foster Care--Title IV-E........................         139
       8-26....  Adoption Assistance............................         140
       8-27....  Social Services Block Grant....................         141
       8-28....  Homeland Security Grant Program................         142
       8-29....  Disaster Grants--Public Assistance                      143
                  (Presidentially Declared Disasters)...........
       8-30....  Public Housing Operating Fund..................         144
       8-31....  Section 8 Housing Choice Vouchers..............         145
       8-32....  Public Housing Capital Fund....................         146
       8-33....  Community Development Block Grants.............         147
       8-34....  Mineral Leasing and Associated Payments........         148
       8-35....  Airport Improvement Program....................         149
       8-36....  Highway Planning and Construction..............         150
       8-37....  Capital Investment Grants--Fixed Guideway               151
                  Modernization.................................
       8-38....  Federal Transit Formula Grants and Research....         152

      Integrating Services with Information Technology:
       9-1.....  Effectiveness of Agency's IT Management and E-       CD-ROM
                  Gov Processes.................................
       9-2.....  Management Guidance............................      CD-ROM
       9-3.....  Agencies with IT Investments on the Management       CD-ROM
                  Watch List....................................
       9-4.....  Status of the Presidential E-Government              CD-ROM
                  Initiatives...................................
       9-5.....  Lines of Business (LoB) Update.................      CD-ROM

      Federal Drug Control Funding:
       10-1....  Federal Drug Control Funding, FY 2006-2008.....         159

      California-Federal Bay-Delta Program Budget Crosscut (CALFED):

          Text Table:
                     CALFED-Related Federal Funding Budget               161
                  Crosscut......................................
                 CALFED FY 1998-2008 Budget Crosscut Methodology      CD-ROM
                 CALFED Federal Agency Funding--Summary by            CD-ROM
                  Category and Agency Breakout..................
                 CALFED Project Descriptions....................      CD-ROM
                 CALFED Fiscal Years 2005-2006 Federal Funding..      CD-ROM
                 CALFED Fiscal Years 2007-2008 Funding Under New      CD-ROM
                  and Old Authority.............................
                 CALFED State Agency Funding....................      CD-ROM
                 Department of the Interior Certification of          CD-ROM
                  Budget Numbers................................
    Economic Assumptions and Analyses

      Economic Assumptions:
       12-1....  Economic Assumptions...........................         168
       12-2....  Comparison of Economic Assumptions.............         170
       12-3....  Comparison of Economic Assumptions in the 2007          171
                  and 2008 Budgets..............................
       12-4....  Adjusted Structural Balance....................         171
       12-5....  Sensitivity of the Budget to Economic                   173
                  Assumptions...................................

      Stewardship:
       13-1....  Government Assets and Liabilities..............         181
       13-2....  Long-Run Budget Projections....................         184
       13-3....  Benefits in Excess of Future Taxes and                  192
                  Premiums--Actuarial Present Values............
       13-4....  Sources of the Tax Gap from Income                      194
                  Underreporting................................
       13-5....  National Wealth................................         196
       13-6....  Trends in National Wealth......................         197
       13-7....  Economic and Social Indicators.................         198

    [[Page viii]]

      National Income and Product Accounts:
       14-1....  Federal Transactions in the National Income and         205
                  Product Accounts, 1997-2008...................
       14-2....  Relationship of the Budget to the Federal               207
                  Sector, NIPA's................................
    Budget Reform Proposals

      Budget Reform Proposals:
       15-1....  Mandatory Proposals Subject to PAYGO...........         211
       15-2....  Discretionary Caps and Adjustments.............         213
       15-3....  Program Integrity Base and Cap Adjustments.....         214
       15-4....  Direct Savings Estimated from 2008 Program              215
                  Integrity Funding.............................
       15-5....  Transportation Category for Highways and Mass           216
                  Transit Spending..............................
    Federal Borrowing and Debt

      Federal Borrowing and Debt:
       16-1....  Trends in Federal Debt Held by the Public......         223
       16-2....  Federal Government Financing and Debt..........         225
       16-3....  Agency Debt....................................         228
       16-4....  Debt Held by Government Accounts...............         230
       16-5....  Federal Funds Financing and Change in Debt              234
                  Subject to Statutory Limit....................
       16-6....  Foreign Holdings of Federal Debt...............         235
    Federal Receipts and Collections

      Federal Receipts:
       17-1....  Receipts by Source--Summary....................         239
       17-2....  Effect on Receipts of Changes in the Social             239
                  Security Taxable Earnings Base................
       17-3....  Effect of Proposals on Receipts................         266
       17-4....  Receipts by Source.............................         269

      User Charges and Other Collections:
       18-1....  Gross Outlays, User Charges, Other Offsetting           271
                  Collections and Receipts from the Public, and
                  Net Outlays...................................
       18-2....  Total User Charge Collections..................         274
       18-3....  User Fee and Other User Charge Proposals.......         276
       18-4....  Offsetting Collections and Receipts from the            281
                  Public........................................
       18-5....  Offsetting Receipts by Type....................         282

      Tax Expenditures:
       19-1....  Estimates of Total Income Tax Expenditures.....         287
       19-2....  Estimates of Tax Expenditures for the Corporate         291
                  and Individual Income Taxes...................
       19-3....  Income Tax Expenditures Ranked by Total 2008-           296
                  2012 Projected Revenue Effect.................
       19-4....  Present Value of Selected Tax Expenditures for          299
                  Activity in Calendar Year 2006................

      Appendix A: Treasury Review of the Tax Expenditure                 313
       Presentation.............................................

        Appendix Tables:

             1.  Comparison of Current Tax Expenditures with             322
                  Those Implied by a Comprehensive Income Tax...
             2.  Comparison of Current Tax Expenditures with             323
                  Those Implied by a Comprehensive Consumption
                  Tax...........................................
             3.  Revised Tax Expendixture Estimates.............         323

      Appendix B: Performance Measures and the Economic Effects          324
       of Tax Expenditures......................................

    Dimensions of the Budget

      Comparison of Actual to Estimated Totals:
       20-1....  Comparison of Actual 2006 Receipts with the             331
                  Initial Current Services Estimates............
       20-2....  Comparison of Actual 2006 Outlays with the              332
                  Initial Current Services Estimates............
       20-3....  Comparison of the Actual 2006 Deficit with the          333
                  Initial Current Services Estimate.............

    [[Page ix]]

       20-4....  Comparison of Actual and Estimated Outlays for          334
                  Mandatory and Related Programs Under Current
                  Law...........................................
       20-5....  Reconciliation of Final Amounts for 2006.......         335
       20-6....  Comparison of Estimated and Actual Surpluses or         336
                  Deficits Since 1982...........................
       20-7....  Differences Between Estimated and Actual                337
                  Surpluses or Deficits for Five-Year Budget
                  Estimates Since 1982..........................

      Outlays to Public, Gross and Net:
       21-1....  Total Outlays, Gross and Net of Offsetting              339
                  Collections and Receipts from the Public, by
                  Agency, 2006-2008.............................

      Trust Funds and Federal Funds:
       22-1....  Receipts, Outlays, and Surplus or Deficit by            342
                  Fund Group....................................
       22-2....  Income, Outgo, and Balances of Trust Funds              343
                  Group.........................................
       22-3....  Relationship of Total Federal Fund and Trust            344
                  Fund Receipts to Unified Budget Receipts,
                  Fiscal Year 2006..............................
       22-4....  Income, Outgo, and Balances of Major Trust              346
                  Funds.........................................
       22-5....  Income, Outgo, and Balances of Selected Federal         353
                  Funds.........................................

      Off-Budget Federal Entities and Non-Budgetary Activities:
       23-1....  Comparison of Total, On-Budget, and Off-Budget          358
                  Transactions..................................

      Federal Employment and Compensation:

          Text Table:                                             ..........
         ......    Overseas Staffing Under Chief of Mission              363
                  Authority.....................................
       24-1....  Federal Civilian Employment in the Executive            364
                  Branch........................................
       24-2....  Total Federal Employment (As measured by total          365
                  positions filled).............................
       24-3....  Total Federal Employment (As measured by Full-          366
                  Time Equivalents).............................
       24-4....  Personnel Compensation and Benefits............         367
    Current Services Estimates

      Current Services Estimates:
       25-1....  Baseline Category Totals.......................         371
       25-2....  Impact of Budget Policy........................         372
       25-3....  Alternative Baseline Assumptions...............         374
       25-4....  Summary of Economic Assumptions................         374
       25-5....  Beneficiary Projections for Major Benefit               375
                  Programs......................................
       25-6....  Impact of Regulations, Expiring Authorizations,         376
                  and Other Assumptions in the Baseline.........
       25-7....  Baseline Receipts by Source....................         382
       25-8....  Change in Baseline Outlay Estimates by Category         383
       25-9....  Current Services Outlays by Function...........         384
       25-10...  Current Services Outlays by Agency.............         385
       25-11...  Current Services Budget Authority by Function..         386
       25-12...  Current Services Budget Authority by Agency....         387
       25-13...  Current Services Budget Authority by Function,       CD-ROM
                  Category and Program..........................
       25-14...  Current Services Outlays by Function, Category       CD-ROM
                  and Program...................................
    The Budget System and Concepts

      The Budget System and Concepts:
       26-1....  Totals for the Budget and the Federal                   395
                  Government....................................
    Detailed Functional Tables

      Detailed Functional Tables:
       27-1....  Budget Authority and Outlays by Function,            CD-ROM
                  Category and Program..........................
    Federal Programs by Agency and Account

      Federal Programs by Agency and Account:
       28-1....  Federal Programs by Agency and Account.........      CD-ROM