[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]


 
   THE PRESIDENT'S FISCAL YEAR 2007 DISCRETIONARY BUDGET PERFORMANCE

=======================================================================

                                HEARING

                               before the

                        COMMITTEE ON THE BUDGET
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION

                               __________

           HEARING HELD IN WASHINGTON, DC, FEBRUARY 16, 2006

                               __________

                           Serial No. 109-15

                               __________

           Printed for the use of the Committee on the Budget


  Available on the Internet: http://www.access.gpo.gov/congress/house/
                              house04.html



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                        COMMITTEE ON THE BUDGET

                       JIM NUSSLE, Iowa, Chairman
JIM RYUN, Kansas                     JOHN M. SPRATT, Jr., South 
ANDER CRENSHAW, Florida                  Carolina,
ADAM H. PUTNAM, Florida                Ranking Minority Member
ROGER F. WICKER, Mississippi         DENNIS MOORE, Kansas
KENNY C. HULSHOF, Missouri           RICHARD E. NEAL, Massachusetts
JO BONNER, Alabama                   ROSA L. DeLAURO, Connecticut
SCOTT GARRETT, New Jersey            CHET EDWARDS, Texas
J. GRESHAM BARRETT, South Carolina   HAROLD E. FORD, Jr., Tennessee
THADDEUS G. McCOTTER, Michigan       LOIS CAPPS, California
MARIO DIAZ-BALART, Florida           BRIAN BAIRD, Washington
JEB HENSARLING, Texas                JIM COOPER, Tennessee
DANIEL E. LUNGREN, California        ARTUR DAVIS, Alabama
PETE SESSIONS, Texas                 WILLIAM J. JEFFERSON, Louisiana
PAUL RYAN, Wisconsin                 THOMAS H. ALLEN, Maine
MICHAEL K. SIMPSON, Idaho            ED CASE, Hawaii
JEB BRADLEY, New Hampshire           CYNTHIA McKINNEY, Georgia
PATRICK T. McHENRY, North Carolina   HENRY CUELLAR, Texas
CONNIE MACK, Florida                 ALLYSON Y. SCHWARTZ, Pennsylvania
K. MICHAEL CONAWAY, Texas4           RON KIND, Wisconsin
CHRIS CHOCOLA, Indiana
JOHN CAMPBELL, California

                           Professional Staff

                     James T. Bates, Chief of Staff
       Thomas S. Kahn, Minority Staff Director and Chief Counsel


                            C O N T E N T S

                                                                   Page
Hearing held in Washington, DC, March 16, 2006...................     1
Statement of:
    Hon. Clay Johnson III, Deputy Director for Management, Office 
      of Management and Budget...................................     4
    Brian M. Riedl, Fellow in Federal Budgetary Affairs, the 
      Heritage Foundation........................................    46
    Robert Greenstein, Executive Director, Center on Budget and 
      Policy Priorities..........................................    52
Prepared statements, additional materials submitted by:
    Mr. Nussle...................................................     2
    Mr. Johnson:
        Prepared statement.......................................     6
        PART Tables..............................................    25
    Mr. Riedl....................................................    48
    Mr. Greenstein...............................................    55


   THE PRESIDENT'S FISCAL YEAR 2007 DISCRETIONARY BUDGET PERFORMANCE

                              ----------                              


                      THURSDAY, FEBRUARY 16, 2006

                          House of Representatives,
                                   Committee on the Budget,
                                                    Washington, DC.
    The committee met, pursuant to call, at 10:50 a.m., in room 
210, Cannon House Office Building, Hon. Jim Nussle (chairman of 
the committee) presiding.
    Members present: Representatives Nussle, Ryun, Crenshaw, 
Hulshof, Garrett, Barrett, Diaz-Balart, Hensarling, Sessions, 
Bradley, McHenry, Mack, Conaway, Chocola, Spratt, Moore, Baird, 
Cooper, and Cuellar.
    Chairman Nussle. Committee on the Budget will come to 
order. This is a hearing on the President's fiscal year 2007 
discretionary budget.
    Yesterday we had a hearing with regard to some of the 
mandatory accounts, and today we would like to talk about the 
performance evaluation and spending trends that we have.
    We have before us once again Clay Johnson, who is the 
Deputy Director for Office of Management and Budget (OMB)--we 
appreciate his leadership; he has been before our committee 
before--as our first panel.
    Our second panel will include witnesses Brian Riedl from 
the Federal Budget Affairs for the Heritage Foundation and 
Robert Greenstein from the Center on Budget and Policy 
Priorities.
    I apologize for the tardiness for which this hearing is 
starting. I have a statement that I will put in the record. Let 
me just summarize by saying that we certainly understand--and 
yesterday was again another hearing in a long line of hearings 
where we recognize that only about a third of the budget is 
made up the discretionary accounts.
    I will say, however, that those discretionary accounts tend 
to be the ones, the kinds of things that we see on television. 
We will argue today about $870 billion and how the President's 
budget carves that up from one way or another.
    But I will tell you that eight straight nights of watching 
rotting trailers on a runway in Hope, AR, is to my constituents 
much more relevant than whether or not we are putting a percent 
increase in this line item or a couple percent decrease in 
another line item.
    It seems that we are getting to a point with some of these 
challenges where we have simply thrown money at issues and they 
have not either been spent wisely or it appears as the 
sensationalism of the news sometimes reports, that they rot on 
a runway in Hope, AR. This can seemingly take over the 
sometimes good work that is done, particularly in your office 
as you look top to bottom, many of these programs for their 
results and their effectiveness.
    And so I understand that discretionary, while it is only a 
third of the budget, still has a huge impact on our 
constituents and on the bottom line in defense and homeland 
security and very important domestic accounts, and this is what 
we want to talk about today.
    I will put my statement in the record, and I will ask 
unanimous consent that all members be allowed to put statements 
in the record at this point. And I will turn to Mr. Spratt for 
any comments he would like to make.
    [The prepared statement of Jim Nussle follows:]

Prepared Statement of Hon. Jim Nussle, Chairman, House Committee on the 
                                 Budget

    Good morning, and welcome, everyone.
    Over the past few years, it's become more and more common to hear 
budget ``experts'' argue that since our annually appropriated or 
``discretionary'' spending isn't the biggest budgetary problem we have 
the extent to which we control this spending is relatively 
insignificant in the big scheme of things. The real problem, they say, 
is mandatory, entitlement spending which we discussed here yesterday.
    But that line of reasoning is only partly correct. It's true that 
mandatory spending takes up over half our total budget, is growing at 
unsustainable rates, and will eventually swamp the rest of the budget 
if we don't get a handle on it.
    But that doesn't make discretionary spending insignificant. Since 
2000, including emergency spending, the discretionary portion of 
Federal spending has grown about 11% per year. Excluding emergency 
spending, non-security accounts which we held to a near-freeze last 
year have grown about 3.9% per year in the last 5 years markedly more 
than inflation.
    In the coming year, our discretionary spending will exceed $900 
billion. So while it may not be at the level of our mandatory spending, 
that is still an enormous amount of money by what I hope would be 
anyone's standards. And we cannot control the budget if we don't 
control both the mandatory and the discretionary sides of the ledger.
    So that's what we're here to discuss today.
    As I mentioned yesterday, our priorities have shifted considerably 
in the past several years, and much of the effect has fallen on 
discretionary accounts. The terrorist attacks of 9-11 and ensuing war 
on terror and necessary build up of our homeland security also 
fundamentally changed the way we think and talk about discretionary 
spending. Today, we separate our discussions of this spending into 
three categories: 1) Department of Defense military discretionary 
spending, 2) homeland security discretionary spending; and 3) ``non-
defense, non-security discretionary spending,'' which we use to refer 
to everything else education, science, agriculture, the environment, 
etc.
    We've also seen a substantial upswing in our ``emergency'' spending 
in recent years for the war on terror, and most recently for the costs 
resulting from Hurricane Katrina on which we spent about $65 billion 
outside and obviously in addition to the discretionary spending that 
was planned for in the budget.
    So even getting a accurate picture of our discretionary spending 
needs isn't a simple thing to do let alone trying to determine how to 
best ``control'' this spending.
    Today, we're glad to welcome our witnesses: Mr. Clay Johnson, 
Deputy Director for Management of the Administration's Office of 
Management and Budget; Mr. Brian Riedl, Fellow in Budgetary Affairs 
with the Heritage Foundation; and Mr. Robert Greenstein, Executive 
Director of the Center on Budget and Policy Priorities.
    One of the important efforts the administration has been making 
since 2001 has been to evaluate government programs to help determine 
whether they're truly effective or useful. Deputy Director Johnson will 
discuss this process, and how it is applied to help make decisions 
about the allocation of limited resources.
    Nevertheless, we've got to remember that choosing priorities is a 
matter of judgment, and we have an obligation to make those kinds of 
choices.
    So for that reason, I hope Mr. Riedl and Mr. Greenstein, on our 
second panel, will discuss in part the kinds of considerations that 
should go into these judgments. The two of them represent differing 
philosophical views, and I believe the exchange will provide some 
valuable input.
    I welcome all of you today, and look forward to receiving your 
testimony.
    With that, I'll turn it over to Mr. Spratt for any opening comments 
he might have, and then we'll hear from our witnesses.

    Mr. Spratt. Thank you, Mr. Chairman.
    And quickly, first of all, let me also welcome Mr. Johnson 
back again. Thank you very much. What you are doing is very 
important.
    For the record, I would like to note that this is 
bipartisan. We want government to do more for less cost. And 
this emphasis was renewed by President Clinton, among others, 
when he signed into law the Government Performance and Results 
Act and then instituted the National Performance Review.
    For the first time under that act, every agency is required 
to set clear goals for each program it administers and to 
establish standards for measuring success. So it began some 
time ago and it is an ongoing quest because--and it always will 
be if you are in earnest about doing this--no question about 
it.
    This is no reflection on Mr. Johnson, but we have some 
major cuts in the discretionary spending, some specified, 
others unspecified, but clearly in the danger path as they 
clamp down on discretionary spending and continues over the 
next 5 years.
    We should have, as we have had in the past, I think, 
witnesses from HHS to defend the requests there. It is a $35 
billion hit on Medicare, and a $17 billion decrease in 
Medicaid, we should have the Secretary of HHS. We should also 
have the Secretary of Treasury, as we normally do. It would be 
good if we could have the Chairman of the Fed, Mr. Bernanke.
    We have had before the Deputy Security of Defense, and 
Secretary of State Colin Powell came over here. This year, we 
are not doing that. We have got a panel of witnesses who are 
outside experts, and they are all helpful. Glad to have Mr. 
Johnson, and he will be helpful, I am sure.
    But I think we need to give more scrutiny to the budget 
than we are giving with the witnesses that we are calling in 
the hearings that we are holding on a budget that could have 
serious consequences out in time.
    This administration has created two that OMB uses to 
separately assess the performance of programs called the 
Program Assessment Rating Tool (PART). The President's budget 
sometimes uses PART, scores his justification for cutting a 
program and sometimes it does not. It ignores the PART results.
    In fact, there are many programs that had pluses, positive 
PART ratings that the President eliminates altogether in his 
budget. For instance, the National Nuclear Securities and 
Global Initiatives for Proliferation Prevention. I know 
something about that program, and I can tell you it is very, 
very effective.
    And if you want to determine whether or not it is 
important, look at what ground of agreement the President, Mr. 
Bush, and Senator Kerry found in their presidential debates. 
When they were asked what do you regard as the single-most 
significant threat to the security of the United States today, 
both answered terrorists armed with nuclear weapons.
    And the single-best answer we have to that threat is our 
constellation of nuclear non-proliferation programs. And this 
is one of the most important because it keeps busy gainfully 
employed in other pursuits the enormous infrastructure of 
scientists who otherwise can go sell their talents to Pakistan, 
to North Korea, to Iran, and to places like that. That is 
exactly what this program is doing, and we are seeing the 
consequences right now in places like Iran and we are cutting 
it out.
    So, I have to wonder if this PART analysis, this PART 
assessment, if it produces a result, is geared up to adequately 
deal with what is good and what is bad, what is needed and what 
is not.
    So, we would like to explore that with you after you have 
made your testimony in further question. We do appreciate your 
coming. We do regard what you are doing as important, and we 
would like to understand it much better.
    We are very concerned, very concerned, with the hits on 
what we regard as very, very effective programs, 
notwithstanding what the PART assessment may be, and we would 
like to discuss that with you.
    Thank you again for coming.
    Chairman Nussle. All statements will be placed in the 
record at this point.
    Director Johnson, welcome back to the Budget Committee, and 
we are pleased to also include your full testimony in the 
record. And you may summarize as you see fit. Thank you.
    Mr. Johnson. Mr. Chairman, Ranking Member Spratt, members 
of the Committee, thank you very much for having me back.
    Briefly let me say that we--to state the obvious--that the 
Federal Government spends a lot of money. We spend it on weapon 
systems. We spend it on cures for diseases. We spend it on 
improving the education of our young people. We spend it to 
reduce crime rates. We spend a lot of money and we need to 
spend it well. We are not as good as we need to be and can be.
    Americans deserve to have us spend their money well and 
they deserve to have us spend their money better every year. 
Every President, every Member of Congress, every Federal 
employee should be held accountable--and I know you all would 
agree with this--should be held accountable for getting results 
with the money we spend. We are not as results oriented today 
as we can and should be.
    The two key messages in what I have just said apply to 
budgeteers, appropriators, Members of Congress, members of the 
executive branch. We have to get better at focusing on results. 
We have to get better at being accountable for how we spend the 
taxpayers' money.
    The President's management agenda (PMA), which is the thing 
that I am primarily involved in spearheading in the Federal 
Government, is designed to help us do that. It is designed to 
help us equip Federal agencies with financial management, 
people management, cost management, and program management 
tools that if they are so inclined to increase the results of 
their program, they will have the tools and the discipline to 
do that.
    A big part of the PMA is the transparency and the candor 
and the specificity about what each program is supposed to do. 
Oftentimes it is not clear what each program is supposed to do, 
and if it is clear, it is oftentimes difficult for them to 
demonstrate that they are, in fact, doing what they are 
supposed to do.
    The PART primarily is an attempt to, for every program, 
create clear performance goals, and clear cost goals which they 
then can be held accountable for achieving or exceeding. It is 
also a process by which they identify for all the world to see 
what they are doing to drive performance. This is important 
whether you are a budgeteer, appropriator, member of the 
executive branch, or member of the public.
    It is important that we focus in our budgeting and in 
everything else we do, we focus on what it is we are trying to 
accomplish more so than the amount of money we are spending.
    If you say, well, I like to teach illiterate adults how to 
read, I like it $500 million worth, and someone else says, 
well, I like it $600 million worth, the $600 million person 
does not necessarily care more about adult literacy than the 
$500 million person. The person that says how many people are 
we teaching to read and at what cost per person and what are we 
doing to find more effective ways of teaching illiterate adults 
how to read, that is the person, I would suggest, that cares 
most about adult literacy.
    What I encourage your Committee to do as you consider the 
2007 budget going forward is to focus on outcomes as opposed to 
the dollars being spent. Focus on what we hope to get for the 
money that we are spending.
    I also encourage you all to make us tell you what we are 
going to deliver for the money that we propose spending--be 
demanding. Demand the executive branch demonstrate results from 
every program and every agency. We are saying, for this amount 
of money, here is what we are going to deliver and hold us 
accountable. You and the authorizers hold us accountable for 
actually delivering that as you consider the following year's 
budget. How programs work, how the executive branch currently 
spends the money should be a significant factor in determining 
what the going-forward budget ought to be.
    The last time we were here, sir, we talked about a Web site 
we were developing where we were going to try to significantly 
increase the transparency of what works and what does not, and 
in every case, what we are doing to make every program work 
better.
    We have launched a week ago, 2 weeks ago that Web site. And 
if I can take just 2 minutes, 3 minutes to show you that. The 
Web site is called expectmore.gov. It allows taxpayers to 
review the assessments of nearly 800 programs. As it says, we 
want you to know how we are doing, where we are doing well, 
where we are not doing so well, and, in every case, what we are 
doing to get better.
    This site shows programs that account for about 80 percent 
of the budget. The remaining 20 percent of the budget will be 
added to this group this year, the end of this year.
    Want to go to the next page. Each program is categorized. 
You can search by rating, whether it is effective, adequate, or 
ineffective, as well as by topic or by using a simple key word 
search. You can go to all categories even with the same subject 
or all the ineffective programs.
    We have chosen the category of programs marked effective 
and specifically Health Centers Program. This gives you an idea 
of--for each of these programs, it describes a little bit about 
what the program does. It describes why we think it is working 
the way it is or is not working the way it is. And it explains 
down at the bottom what the program management is doing to 
improve program performance.
    At the bottom are links to more detailed information, 
budgetary information, more detailed information about the 
performance over the last several years for those that want to 
dig a little deeper. There is lots of transparency, lots of 
candor, lots of check and balance, a lot of quality control.
    The belief is, our belief is that with transparency, you 
have the opportunity for accountability. If you have 
transparency about how we are doing, what we are doing well, 
what we are not doing well, and you have people in agencies 
with tools to cause program performance to improve, you have 
the opportunity to hold that program manager accountable. And 
only when you are able to hold him accountable do you have the 
opportunity to deliver a specific goal at a preferred cost 
every year and improve that performance every year.
    Thank you very much for having me back, and I welcome your 
questions.
    [The prepared statement of Clay Johnson follows:]

   Prepared Statement of Hon. Clay Johnson III, Deputy Director for 
              Management, Office of Management and Budget

                              EXPECT MORE

    The President's 2006 budget set several major goals. The President 
proposed to hold growth in overall discretionary spending below the 
rate of inflation. He proposed an actual cut in the non-security 
portion of discretionary spending, the first such proposal since the 
Reagan administration. And he proposed major reductions or eliminations 
in 154 government programs that were not getting results or not 
fulfilling essential priorities. The Congress substantially delivered 
on those goals.
    The 2007 budget follows a similar course. It again holds overall 
discretionary spending growth below the rate of inflation. It again 
proposes an actual cut in non-security discretionary spending. It also 
calls for major reductions in, or total eliminations of 141 Federal 
programs, saving nearly $15 billion.
    Reductions in these areas do not mean Americans should expect less 
from Federal agencies or programs. On the contrary, they should expect 
the government to give them more for their tax dollars. They should 
expect the government to become more effective and efficient each year.

                 HOW WE ARE GETTING MORE FOR OUR MONEY

    With the help of the President's Management Agenda, Federal 
employees are doing more to improve the way we spend the taxpayers' 
money. We want to and can be held accountable for:
     Significantly, quantifiably and annually improving the way 
the government works.
     Being very candid and forthcoming at all times about where 
we're successful and where we fall short, and in both situations, what 
we're doing to improve performance.
     Providing better levels of service, comparable to the 
private sector.
     Properly accounting for where we spend the taxpayers' 
money.
    As part of the President's Management Agenda, Federal employees 
have already eliminated $7.8 billion in improper payments in Fiscal 
Year 2005, reducing the government-wide improper payment total by 17 
percent. Agencies the past 3 years conducted competitive sourcing 
studies of their commercial activities that, upon implementation will 
produce savings of $900 million per year. Agencies have completed an 
exhaustive inventory of real property assets and anticipate disposing 
of $9 billion in unneeded assets by 2009. Almost 800 programs are 
implementing plans to improve their performance and have made them 
public so as to increase the level of their accountability for the 
results.
    Common among these initiatives was a clear definition of success, 
an aggressive plan for improvement, unambiguous accountability; and 
then because leadership deemed success important, everyone involved was 
held responsible for doing what they said they were going to do. We 
were transparent about what we were trying to do and how we were 
performing relative to our goals. This transparency and candor produced 
strong accountability, which in turn, has produced results.

               PROGRAM ASSESSMENTS AND THE FEDERAL BUDGET

    This year, the Administration assessed an additional 20 percent of 
the government's programs, marking the fourth year in our effort to 
find out what works, what doesn't, and what we need to do to improve. 
Program assessments are a factor in budgeting, but they are one among 
many factors. No budget decision is made automatically based on a 
program's rating. It may be that a highly rated program is not a 
priority for this Administration; therefore the President may propose 
to decrease funding for the program. A poorly rated program may need 
additional funds to address a weakness uncovered in the assessment. If 
we believe a program has been demonstrated to be ineffective and can't 
be fixed, or has outlived its usefulness, the Administration may 
recommend Congress spend the money on higher priority programs. The 
attached table shows the funding recommendation by program rating and 
by program.

          THE FEDERAL GOVERNMENT WANTS TO BE HELD ACCOUNTABLE

    Americans deserve to have the government spend their hard earned 
tax dollars effectively, and better every year. The President, every 
Member of Congress and all Federal employees need to be held 
accountable for getting results with the money they spend. A new OMB 
Web site, ExpectMore.gov, promotes accountability by posting candid 
information about programs that are successful and programs that fall 
short, and in both cases, what the government is doing to improve 
performance next year.
    Currently, the ratings on ExpectMore.gov show that more than 70 
percent of Federal programs are performing. A program which enhances 
highway safety provides a clear example of a program that demonstrates 
improved results. To reduce fatalities from automobile accidents, the 
National Highway Traffic Safety Administration promoted greater seat 
belt use among high-risk groups such as younger drivers, rural 
populations, pick-up truck occupants, 8-15 year-old passengers, 
occasional safety belt users, and motor vehicle occupants in states 
with secondary safety belt use laws. As a result, nationwide seat belt 
use increased from 73 percent in 2001 to 82 percent in 2005, an all-
time high.
    However, almost 30 percent of all programs are either ineffective 
or cannot demonstrate their success. A youth employment program created 
under the Workforce Investment Act demonstrates the need for 
improvement. The program awards grants for America's neediest youth to 
successfully transition to the workplace. The program is currently 
rated as ineffective. It does not provide services in a cost-effective 
manner and does not have authority to target or reallocate resources to 
areas of greatest need. To remedy this problem, the Administration is 
working with Congress to gain increased authority to reallocate 
resources to areas of need. The Administration has also proposed 
legislation to consolidate this program with other Department of Labor 
job training grants. This will reduce overhead, ensure that more funds 
go directly to participants, and give States the flexibility to design 
processes that best serve their citizens.
    We hope that the transparency provided by ExpectMore.gov will make 
us even more accountable to the American people. By making program 
performance information readily available, we hope that Congressional 
and public attention can provide additional motivation and means for 
programs to improve their performance. ExpectMore.gov is not targeted 
to Democrats or Republicans, liberals or conservatives. Its audience is 
all Americans.
    The message is simply that we want our citizens to expect more from 
their Federal Government, and we want to be held accountable for how 
programs perform and how aggressively they improve. Of course, we do.

                         OUR FUTURE COMMITMENTS

    With the structure and discipline of the President's Management 
Agenda, Federal employees are committed, by 2015, to:
     Improving annual program efficiency by $30 billion;
     Reducing annual improper payments by $50 billion;
     Reducing annual commercial activity costs by $6+ billion; 
and
     Disposing of $15B of unneeded Federal real property 
assets.
    The American people can and should expect the executive branch and 
Congress to make these commitments a reality.


                                 PART RATINGS AND PROGRAM FUNDING LEVELS SUMMARY
                                              (Dollars in millions)
----------------------------------------------------------------------------------------------------------------
                                                                                             Change from 2006
                                                                     2006        2007    -----------------------
                                                                    Enacted     Budget      Dollars     Percent
----------------------------------------------------------------------------------------------------------------
Effective (124).................................................     231,853     231,968         115        0.0%
Moderately Effective (231)......................................     433,843     443,435       9,592        2.2%
Adequate (219)..................................................     335,470     334,744        -726       -0.2%
Ineffective (28)................................................      16,930      14,105      -2,825      -16.7%
Results Not Demonstrated (191)..................................     139,147     135,991      -3,156       -2.3%
----------------------------------------------------------------------------------------------------------------
*The Medicare program is excluded in the Moderately Effective category calculation above. When it is included in
  the calculations, the percentage change in funding is 6.7%.


                           PART RATINGS AND PROGRAM FUNDING LEVELS EFFECTIVE PROGRAMS
                                              (Dollars in millions)
----------------------------------------------------------------------------------------------------------------
                                                                                              Change from 2006
                             Program Name                    Agency       2006      2007   ---------------------
                                                                         Enacted   Budget    Dollars    Percent
----------------------------------------------------------------------------------------------------------------
      1      Engineering and Technical Services for               BBG        138       133        -5       -3.6%
              International Broadcasting................
      2      Inspector General Oversight of Federal               OPM         11        15         4       36.4%
              Health Benefits Program...................
      3      Smithsonian Institution Facilities Capital.  Smithsonian         99       114        15       15.2%
      4      Capital Security Construction Program......        State      1,000     1,165       165       16.5%
      5      Educational and Cultural Exchange Programs         State        177       194        17        9.6%
              in Near East Asia and South Asia..........
      6      Global Educational and Cultural Exchanges..        State        426       474        48       11.3%
      7      Secret Service: Domestic Protectees........          DHS        819       903        84       10.3%
      8      National Nuclear Security Administration:            DOE        782       795        13        1.7%
              Naval Reactors............................
      9      National Institutes of Health--Buildings             HHS         89        89         0        0.0%
              and Facilities............................
     10      Migration and Refugee Assistance Protection        State        125       123        -2       -1.6%
     11      United Nations High Commissioner for               State        250       253         3        1.2%
              Refugees..................................
     12      New Currency Manufacturing.................     Treasury        276       375        99       35.9%
     13      Secret Service: Protective Intelligence....          DHS        355        73      -282      -79.4%
     14      Maritime Security Program..................          DOT        155       155         0        0.0%
     15      GSA--New Construction......................          GSA      1,060       893      -167      -15.8%
     16      Construction and Operations of Research              NSF        514       579        65       12.6%
              Facilities................................
     17      Information Technology Research............          NSF        160       160         0        0.0%
     18      Nanoscale Science and Engineering Research.          NSF        245       229       -16       -6.5%
     19      Polar Research Tools, Facilities and                 NSF        307       345        38       12.4%
              Logistics.................................
     20      Air Force Depot Maintenance................          DOD      3,533     3,772       239        6.8%
     21      National Nuclear Security Administration:            DOE         38         0       -38     -100.0%
              Global Initiatives for Proliferation
              Prevention................................
     22      National Assessment for Educational                   ED         89        93         4        4.5%
              Progress..................................
     23      Research on Biocomplexity in the                     NSF         83        58       -25      -30.1%
              Environment...............................
     24      Basic Energy Sciences......................          DOE      1,135     1,421       286       25.2%
     25      Asset Management of GSA-Owned Real Property          GSA      2,780     2,670      -110       -4.0%
     26      Nuclear Materials Users Licensing &                   NRC        66        74         8       12.1%
              Inspection................................
     27      Fundamental Science and Engineering                  NSF      2,240     2,387       147        6.6%
              Research..................................
     28      Humanitarian Demining......................        State         55        64         9       16.4%
     29      Migration and Refugee Assistance Other             State        103        83       -20      -19.4%
              Population, Refugee and Migration Programs
     30      South Asia Military Assistance.............        State        316       319         3        0.9%
     31      Alcohol and Tobacco Tax and Trade Bureau        Treasury         44        45         1        2.3%
              Collect the Revenue Program...............
     32      Financial Management Service Payments......     Treasury        271       282        11        4.1%
     33      U.S. Mint: Protection Program..............     Treasury         37        36        -1       -2.7%
     34      Bureau of Economic Analysis................           DOC        76        76         0        0.0%
     35      Strategic Petroleum Reserve................          DOE        875       172      -703      -80.3%
     36      Bureau of Reclamation--Hydropower..........          DOI         69        71         2        2.9%
     37      FAA Research, Engineering & Development....          DOT        137       130        -7       -5.1%
     38      Federal Transit Administration--Formula              DOT      5,086     5,395       309        6.1%
              Grant Programs............................
     39      Indian Health Service Health Care                    HHS         38        18       -20      -52.6%
              Facilities Construction...................
     40      Federally Funded Research and Development            NSF        187       193         6        3.2%
              Centers...................................
     41      Visa and Consular Services.................        State      1,035     1,139       104       10.0%
     42      Worldwide Security Upgrades................        State        808       914       106       13.1%
     43      Financial Management Service Collections...     Treasury         17        17         0        0.0%
     44      Military Force Management..................          DOD    113,649   110,776    -2,873       -2.5%
     45      National Center for Education Statistics...           ED         91        94         3        3.3%
     46      Regulation of Federal Credit Unions........            NCUA      89        91         2        2.2%
     47      Peace Corps: International Volunteerism....       Peace Corps   338       343         5        1.5%
     48      Contribution to the United Nations                 State         95        95         0        0.0%
              Development Programme.....................
     49      Humanitarian Migrants to Israel............        State         40        40         0        0.0%
     50      Financial Management Service Debt               Treasury         50        66        16       32.0%
              Collection................................
     51      Thrift Institution and Savings Association      Treasury        216       221         5        2.3%
              Supervision...............................
     52      Census Bureau: Economic Census.............           DOC        68        82        14       20.6%
     53      Air Force Aircraft Operations..............          DOD      6,455     7,755     1,300       20.1%
     54      Army Land Forces Operations................          DOD     10,649    10,426      -223       -2.1%
     55      Energy Conservation Investment.............          DOD         50        60        10       20.0%
     56      Navy/Marine Corps Air Operations...........          DOD      5,795     5,689      -106       -1.8%
     57      US Geological Survey--Geographic Research,           DOI        129       142        13       10.1%
              Investigations, and Remote Sensing........
     58      United States Trustees.....................          DOJ        212       236        24       11.3%
     59      Saint Lawrence Seaway Development                    DOT         47        40        -7      -14.9%
              Corporation--Operations and Maintenance...
     60      National Institutes of Health--Intramural            HHS      2,956     2,946       -10       -0.3%
              Research..................................
     61      Office of Child Support Enforcement........          HHS      3,322     3,953       631       19.0%
     62      NASA Astronomy and Astrophysics Research...         NASA        378     1,516     1,138      301.1%
     63      Fuel Facilities Licensing & Inspection.....           NRC        38        38         0        0.0%
     64      Reactor Inspection and Performance                    NRC       204       222        18        8.8%
              Assessment................................
     65      Spent Fuel Storage and Transportation                 NRC        24        27         3       12.5%
              Licensing and Inspection..................
     66      Support for Individual Researchers.........          NSF        496       519        23        4.6%
     67      Export Control Assistance..................        State         43        45         2        4.7%
     68      US Trade and Development Agency............          TDA         61        51       -10      -16.4%
     69      National Bank Supervision..................     Treasury        579       605        26        4.5%
     70      Coast Guard: Domestic Icebreaking Program..          DHS         67        58        -9      -13.4%
     71      Secret Service: Foreign Protectees and               DHS        130       132         2        1.5%
              Foreign Missions..........................
     72      Department of Defense Depot Maintenance:             DOD      4,042     3,882      -160       -4.0%
              Ship......................................
     73      Bureau of Justice Statistics...............          DOJ         35        59        24       68.6%
     74      Maritime Administration--State Maritime              DOT         11        10        -1       -9.1%
              Schools...................................
     75      National Institutes of Health--Extramural            HHS     21,223    21,249        26        0.1%
              Research Programs.........................
     76      Support for Research Institutions..........          NSF        147       147         0        0.0%
     77      Support for Small Research Collaborations..          NSF        388       404        16        4.1%
     78      Nonproliferation and Disarmament Fund......        State         37        38         1        2.7%
     79      Rural Water and Wastewater Grants and Loans         USDA      1,604     1,414      -190      -11.8%
     80      Broadcasting to Latin America..............          BBG         42        42         0        0.0%
     81      Navy Ship Operations.......................          DOD      5,186     5,536       350        6.7%
     82      Advanced Simulation and Computing (ASCI)...          DOE        660       630       -30       -4.5%
     83      Elimination of Weapons-Grade Plutonium               DOE        174       207        33       19.0%
              Production Program........................
     84      Bureau of Reclamation--Safety of Dams                DOI         65        70         5        7.7%
              Program...................................
     85      Minerals Management Service--Outer                   DOI         51        54         3        5.9%
              Continental Shelf Minerals Regulation and
              Compliance................................
     86      Bureau of Labor Statistics.................          DOL        537       563        26        4.8%
     87      Indian Health Service Resource and Patient           HHS         45        55        10       22.2%
              Management System.........................
     88      Support for East European Democracy/Freedom        State        864       715      -149      -17.2%
              Support Act...............................
     89      Customs and Border Protection: Security              DHS      2,273     2,343        70        3.1%
              Inspections and Trade Facilitation........
     90      Science and Technology: Biological                   DHS        372       337       -35       -9.4%
              Countermeasures...........................
     91      Census Bureau: Current Demographic                    DOC        77        52       -25      -32.5%
              Statistics................................
     92      Depot Maintenance--Naval Aviation..........          DOD        977       991        14        1.4%
     93      National Nuclear Security Administration:            DOE        217       211        -6       -2.8%
              Weapons Activities--Readiness Campaign....
     94      Nonproliferation and International Security          DOE         74       127        53       71.6%
     95      Bureau of Reclamation--Science and                   DOI         17        10        -7      -41.2%
              Technology Program........................
     96      Refugee Transitional and Medical Services..          HHS        268       282        14        5.2%
     97      Homeless Assistance Grants (Competitive)...          HUD      1,327     1,536       209       15.7%
     98      Solar System Exploration...................         NASA      1,582     1,603        21        1.3%
     99      Disaster Loan Program......................          SBA      1,261       218    -1,043      -82.7%
    100      Administering the Public Debt..............     Treasury        175       178         3        1.7%
    101      U.S. Mint: Numismatic Program..............     Treasury      1,282     1,321        39        3.0%
    102      Economic Research Service..................         USDA         75        83         8       10.7%
    103      Plant and Animal Health Monitoring Programs         USDA        286       346        60       21.0%
    104      African Development Foundation.............          ADF         46        52         6       13.0%
    105      Census Bureau: Survey Sample Redesign......           DOC        11        11         0        0.0%
    106      Defense Basic Research.....................          DOD      1,476     1,420       -56       -3.8%
    107      Biological and Environmental Research......          DOE        580       510       -70      -12.1%
    108      Contributions For International                    State      1,022     1,135       113       11.1%
              Peacekeeping Activities...................
    109      Non-Security Embassy Construction Program..        State          0         0         0        0.0%
    110      Refugee Admissions to the US...............        State        159       223        64       40.3%
    111      Pest and Disease Exclusion.................         USDA        156       182        26       16.7%
    112      Preparedness Grants and Training Office              DHS         52        42       -10      -19.2%
              National Exercise Program.................
    113      National Institute for Standards and                  DOC       569       535       -34       -6.0%
              Technology Laboratories...................
    114      Department of Defense Training and                   DOD      4,957     4,984        27        0.5%
              Education Programs--Basic Skills and
              Advanced Training.........................
    115      International Nuclear Materials Protection           DOE        423       413       -10       -2.4%
              and Cooperation...........................
    116      Nuclear Physics............................          DOE        367       454        87       23.7%
    117      Department of Justice General Legal                  DOJ        767       795        28        3.7%
              Activities................................
    118      CDC: Global Immunizations..................          HHS        138       138         0        0.0%
    119      Health Centers.............................          HHS      1,782     1,963       181       10.2%
    120      Medicare Integrity Program.................          HHS        820       829         9        1.1%
    121      Anti-Terrorism Assistance..................        State        122       136        14       11.5%
    122      Terrorist Interdiction Program.............        State          5        12         7      140.0%
    123      U.S. Mint: Coin Production.................     Treasury        567       573         6        1.1%
    124      TVA Resource Stewardship...................          TVA         83        84         1        1.2%
                                                                       -----------------------------------------
                 Total funding for Effective programs\1\  ............   231,853   231,968       115        0.0%
----------------------------------------------------------------------------------------------------------------
\1\ Funding levels represent program level and include BA, obligations, user fees, loan levels, etc. as
  appropriate


                      PART RATINGS AND PROGRAM FUNDING LEVELS MODERATELY EFFECTIVE PROGRAMS
                                              (Dollars in millions)
----------------------------------------------------------------------------------------------------------------
                                                                                              Change from 2006
                             Program Name                    Agency       2006      2007   ---------------------
                                                                         Enacted   Budget    Dollars    Percent
----------------------------------------------------------------------------------------------------------------
      1      Formerly Utilized Sites Remedial Action                 Corps   139       130        -9       -6.5%
              Program...................................
      2      Advanced Scientific Computing Research.....          DOE        235       319        84       35.7%
      3      Directed Stockpile Work (DSW)..............          DOE      1,372     1,380         8        0.6%
      4      High Energy Physics........................          DOE        717       775        58        8.1%
      5      National Criminal History Improvement                DOJ         10        39        29      290.0%
              Program...................................
      6      EPA Acid Rain Program......................          EPA         19        20         1        5.3%
      7      NASA Earth-Sun System Research.............         NASA      2,164     2,211        47        2.2%
      8      Internal Revenue Service Taxpayer Advocate      Treasury        164       164         0        0.0%
              Service...................................
      9      TVA Power..................................          TVA      8,632     8,946       314        3.6%
     10      Corps of Engineers: Regulatory Program.....             Corps   158       173        15        9.5%
     11      Census Bureau: Current Economic Statistics            DOC       140       156        16       11.4%
              and Census of Governments.................
     12      National Oceanic & Atmospheric                        DOC        93        91        -2       -2.2%
              Administration: Navigation Services.......
     13      Vehicle Technologies.......................          DOE        182       166       -16       -8.8%
     14      Bureau of Indian Affairs--Dam Safety and             DOI         22        22         0        0.0%
              Dam Maintenance...........................
     15      National Park Service--National Historic             DOI         96        89        -7       -7.3%
              Preservation..............................
     16      National Park Service--Natural Resource              DOI        210       215         5        2.4%
              Stewardship...............................
     17      US Geological Survey--Energy Resource                DOI         24        26         2        8.3%
              Assessments...............................
     18      Hazardous Materials Transportation Safety--          DOT         14        28        14      100.0%
              Emergency Preparedness Grants.............
     19      Highway Research and Development/                    DOT        430       430         0        0.0%
              Intelligent Transportation Systems........
     20      Maritime Administration--Merchant Marine             DOT         64        62        -2       -3.1%
              Academy...................................
     21      GSA--Real Property Leasing.................          GSA      4,443     4,483        40        0.9%
     22      HIV/AIDS Research..........................          HHS      2,904     2,988        84        2.9%
     23      Peace Keeping Operations--Organization for         State         30        30         0        0.0%
              Security and Cooperation in Europe
              Programs..................................
     24      Emergency Pest and Disease Management               USDA        267       284        17        6.4%
              Programs..................................
     25      Broadcasting to Near East Asia and South             BBG        149       159        10        6.7%
              Asia......................................
     26      Coast Guard Marine Environmental Protection          DHS        374       332       -42      -11.2%
     27      Census Bureau: Intercensal Demographic                DOC         9        10         1       11.1%
              Estimates.................................
     28      Fusion Energy Sciences.....................          DOE        288       319        31       10.8%
     29      National Nuclear Security Administration:            DOE        277       265       -12       -4.3%
              Weapons Activities--Science Campaign......
     30      Weatherization Assistance..................          DOE        243       160       -83      -34.2%
     31      Minerals Management Service--Outer                   DOI         16        20         4       25.0%
              Continental Shelf Environmental Studies...
     32      US Geological Survey--Geologic Hazard                DOI         81        82         1        1.2%
              Assessments...............................
     33      Arson and Explosives Program...............          DOJ        188       196         8        4.3%
     34      Federal Lands Highway Program..............          DOT        806       903        97       12.0%
     35      Federal Transit Administration New Starts..          DOT      1,488     1,466       -22       -1.5%
     36      Export Import Bank--Long Term Guarantees...        EX-IM        474       203      -271      -57.2%
     37      GSA--Vehicle Leasing.......................          GSA      1,000     1,030        30        3.0%
     38      National Center for Health Statistics......          HHS        109       109         0        0.0%
     39      Inter-American Foundation..................          IAF         37        37         0        0.0%
     40      Military Assistance to New NATO and NATO           State        155       154        -1       -0.6%
              Aspirant Nations..........................
     41      Research on Protection and Safety of                USDA        392       388        -4       -1.0%
              Agricultural Food Supply..................
     42      Snow Survey Water Supply Forecasting.......         USDA         11        11         0        0.0%
     43      Coast Guard Migrant Interdiction Program...          DHS        464       488        24        5.2%
     44      Immigration and Customs Enforcement:                 DHS      1,450     2,076       626       43.2%
              Detention and Removal.....................
     45      Department of Defense Training and                   DOD        829       878        49        5.9%
              Education Programs--Accession Training....
     46      Secure Transportation Asset (STA)..........          DOE        210       210         0        0.0%
     47      Fish and Wildlife Service--National Fish             DOI         60        61         1        1.7%
              Hatchery System...........................
     48      US Geological Survey--National Cooperative           DOI         25        26         1        4.0%
              Geological Mapping........................
     49      DOT Pipeline Safety........................          DOT         72        76         4        5.6%
     50      Mobile Source Air Pollution Standards and            EPA         62        71         9       14.5%
              Certification.............................
     51      Administration on Aging....................          HHS      1,363     1,335       -28       -2.1%
     52      Child Care and Development Fund............          HHS      4,979     4,979         0        0.0%
     53      National Community Development Initiative..          HUD         30         0       -30     -100.0%
     54      Veterans Health Research and Development...           VA        786       765       -21       -2.7%
     55      US Geological Survey--Mineral Resource               DOI         53        31       -22      -41.5%
              Assessments...............................
     56      Federal Motor Carrier Safety                         DOT        211       223        12        5.7%
              Administration--Operations and Programs...
     57      Railroad Safety Program....................          DOT        143       143         0        0.0%
     58      Maternal and Child Health Block Grant......          HHS        693       693         0        0.0%
     59      Office of Transition Initiatives...........        USAID         40        50        10       25.0%
     60      Agricultural Credit Insurance Fund--                USDA      2,796     2,498      -298      -10.7%
              Guaranteed Loans..........................
     61      Mutual Self-Help Housing Technical                  USDA         34        38         4       11.8%
              Assistance Grants.........................
     62      Generation IV Nuclear Energy Systems                 DOE         55        32       -23      -41.8%
              Initiative................................
     63      Criminal Justice Services..................          DOJ        286       411       125       43.7%
     64      Pension Benefit Guaranty Corporation.......          DOL        374       398        24        6.4%
     65      EPA Lead-Based Paint Risk Reduction Program          EPA         23        25         2        8.7%
     66      Indian Health Service Sanitation Facilities          HHS         92        94         2        2.2%
              Construction Program......................
     67      Center for Talent Services--HR Products and          OPM        159       167         8        5.0%
              Services for Federal Agencies.............
     68      Federal Crop Insurance.....................         USDA      3,365     4,212       847       25.2%
     69      National Agricultural Statistics Service...         USDA        139       153        14       10.1%
     70      Protection and Safety of Agricultural Food          USDA        238       207       -31      -13.0%
              Supply (Grants)...........................
     71      Veterans Burial Benefits...................           VA        153       161         8        5.2%
     72      Broadcasting to Africa.....................          BBG         12        13         1        8.3%
     74      Federal Protective Service.................          DHS      1,648     1,706        58        3.5%
     75      Science and Technology: Homeland Security            DHS         62        52       -10      -16.1%
              University Fellowships....................
     76      National Oceanic & Atmospheric                        DOC       156       180        24       15.4%
              Administration: Climate Program...........
     77      Air Combat Program.........................          DOD     13,737    11,784    -1,953      -14.2%
     78      Defense Housing............................          DOD     17,047    16,545      -502       -2.9%
     79      Department of Defense Recruiting...........          DOD      3,973     4,060        87        2.2%
     80      Bonneville Power Administration............          DOE        -19       -11         8      -42.1%
     81      Facilities and Infrastructure..............          DOE        283       294        11        3.9%
     82      US Geological Survey--Biological Research            DOI        140       136        -4       -2.9%
              and Monitoring............................
     83      H-1B Work Visa for Specialty Occupations--           DOL          5         6         1       20.0%
              Labor Condition Application Program.......
     84      National Highway Traffic Safety                      DOT        572       584        12        2.1%
              Administration Grant Program..............
     85      GSA--Real Property Disposal................          GSA         55        52        -3       -5.5%
     86      NASA Aeronautics Technology................         NASA        884       724      -160      -18.1%
     87      Child Survival and Health--Population......        USAID        440       295      -145      -33.0%
     88      Economic Development Administration........           DOC       250       297        47       18.8%
     89      Airlift Program............................          DOD      5,771     5,367      -404       -7.0%
     90      Inertial Confinement Fusion Ignition and             DOE        544       451       -93      -17.1%
              High Yield Campaign/NIF Construction
              Project...................................
     91      National Nuclear Security Administration:            DOE        319       269       -50      -15.7%
              Nonproliferation and Verification Research
              and Development...........................
     92      Safeguards and Security....................          DOE        766       721       -45       -5.9%
     93      Western Area Power Administration..........          DOE      1,117     1,283       166       14.9%
     94      US Geological Survey--Biological                     DOI         24        22        -2       -8.3%
              Information Management and Delivery.......
     95      Firearms Programs Integrated Violence                DOJ        663       765       102       15.4%
              Reduction Strategy........................
     96      Railroad Research and Development..........          DOT         55        35       -20      -36.4%
     97      Food and Drug Administration...............          HHS      1,876     1,947        71        3.8%
     98      Pharmaceutical Outcomes....................          HHS         26        26         0        0.0%
     99      Homeownership Voucher......................          HUD          5        14         9      180.0%
    100      Security Assistance to Sub-Saharan Africa..        State        113       148        35       31.0%
    101      Development Credit Authority...............        USAID         38        53        15       39.5%
    102      Single Family Housing Direct Loans.........         USDA      1,131     1,237       106        9.4%
    103      Corps of Engineers: Emergency Management...             Corps     4        85        81     2025.0%
    104      Federal Emergency Management Agency--                DHS      5,481     5,526        45        0.8%
              Mitigation Programs.......................
    105      Science and Technology: Rapid Prototyping            DHS         31        10       -21      -67.7%
              of Countermeasures........................
    106      Census Bureau: Decennial Census............           DOC       454       512        58       12.8%
    107      National Oceanic & Atmospheric                        DOC     1,779     1,908       129        7.3%
              Administration: Weather and Related
              Programs..................................
    108      Advanced Fuel Cycle Initiative.............          DOE         80       250       170      212.5%
    109      Veterans' Employment and Training State              DOL        161       161         0        0.0%
              Grants....................................
    110      FAA Grants-in-Aid for Airports.............          DOT      3,415     3,000      -415      -12.2%
    111      TRIO Student Support Services..............           ED        273       273         0        0.0%
    112      HOME (Affordable Housing Block Grant)......          HUD      1,757     1,917       160        9.1%
    113      Nonproliferation of Weapons of Mass                State         52        56         4        7.7%
              Destruction Expertise.....................
    114      Bank Secrecy Act Data Collection, Retrieval     Treasury         17        29        12       70.6%
              and Sharing...............................
    115      Internal Revenue Service Criminal               Treasury        718       728        10        1.4%
              Investigations............................
    116      Internal Revenue Service Examinations......     Treasury      3,598     3,658        60        1.7%
    117      Internal Revenue Service Submission             Treasury      1,117     1,112        -5       -0.4%
              Processing................................
    118      Agricultural Export Credit Guarantee                USDA        133       117       -16      -12.0%
              Programs..................................
    119      Food Stamp Program.........................         USDA     33,890    36,003     2,113        6.2%
    120      Forest Service: Forest Legacy Program......         USDA         57        62         5        8.8%
    121      Small Business Development Centers.........          SBA        107       109         2        1.9%
    121      Manufacturing Extension Partnership........           DOC       105        46       -59      -56.2%
    122      Readiness in Technical Base and Facilities           DOE      1,161     1,220        59        5.1%
              (RTBF), Operations........................
    123      Wind Energy................................          DOE         39        44         5       12.8%
    124      Minerals Management Service--Outer                   DOI         51        55         4        7.8%
              Continental Shelf Minerals Evaluation and
              Leasing...................................
    125      National Park Service--Visitor Services....          DOI        465       502        37        8.0%
    126      Federal Employees Compensation Act.........          DOL      2,719     2,775        56        2.1%
    127      National Highway Traffic Safety                      DOT        235       231        -4       -1.7%
              Administration--Operations and Research...
    128      Improving Teacher Quality State Grants.....           ED      2,887     2,887         0        0.0%
    129      EPA New Chemicals Program..................          EPA         15        14        -1       -6.7%
    130      Health--Data Collection and Dissemination..          HHS         63        66         3        4.8%
    131      Indian Health Service Federally-                     HHS      1,886     1,979        93        4.9%
              Administered Activities...................
    132      National Bone Marrow Donor Registry........          HHS         25        23        -2       -8.0%
    133      Projects for Assistance in Transition from           HHS         54        54         0        0.0%
              Homelessness..............................
    134      Manufactured Housing and Standards.........          HUD         13        13         0        0.0%
    135      Neighborhood Reinvestment Corporation......          NR Corp.   117       120         3        2.6%
    136      Service Corps of Retired Executives Small            SBA         19        21         2       10.5%
              Business Assistance.......................
    137      Security Assistance for the Western                State        125       118        -7       -5.6%
              Hemisphere................................
    138      Child Survival and Health for Latin America        USAID        141       128       -13       -9.2%
              and the Caribbean.........................
    139      Development Assistance to Latin America and        USAID        257       167       -90      -35.0%
              the Caribbean.............................
    140      Forest Service: Recreation.................         USDA        275       250       -25       -9.1%
    141      Research/Extension Grants: Economic                 USDA        435       354       -81      -18.6%
              Opportunities for Producers...............
    142      USDA Foreign Market Development Programs...         USDA        249       149      -100      -40.2%
    143      Broadcasting to East Asia and Eurasia......          BBG         91        91         0        0.0%
    144      Coast Guard Fisheries Enforcement..........          DHS        815       808        -7       -0.9%
    145      Southwestern Power Administration..........          DOE         55        63         8       14.5%
    146      Prisons Operations.........................          DOJ      4,830     4,987       157        3.3%
    147      Unemployment Insurance Administration State          DOL      2,549     2,650       101        4.0%
              Grants....................................
    148      GSA--Personal Property Management..........          GSA         32        33         1        3.1%
    149      Health and Human Services--Office for Civil          HHS         35        36         1        2.9%
              Rights....................................
    150      Medicare...................................          HHS    407,249   453,890    46,641       11.5%
    151      Lead Hazard Grants.........................          HUD         76        92        16       21.1%
    152      Examining Compliance with Securities Laws..           SEC       223       228         5        2.2%
    153      Agricultural Marketing Loan Payments.......         USDA      5,124     4,444      -680      -13.3%
    154      USDA Research: Economic Opportunities for           USDA        392       314       -78      -19.9%
              Producers.................................
    155      Department of Veterans Affairs- General               VA        296       313        17        5.7%
              Administration............................
    156      Distributed Energy Resources...............          DOE         56        30       -26      -46.4%
    157      Hydrogen Technology........................          DOE        156       196        40       25.6%
    158      Solar Energy...............................          DOE         83       148        65       78.3%
    159      Southeastern Power Administration..........          DOE         38        40         2        5.3%
    160      Bureau of Indian Affairs--Job Placement and          DOI          8         8         0        0.0%
              Training..................................
    161      Bureau of Reclamation--Site Security.......          DOI         50        50         0        0.0%
    162      US Geological Survey--Water Information              DOI         64        66         2        3.1%
              Collection and Dissemination..............
    163      US Geological Survey--Water Resources                DOI        141       138        -3       -2.1%
              Research..................................
    164      Hazardous Materials Transportation Safety..          DOT         26        27         1        3.8%
    165      Adoption Assistance........................          HHS      1,883     2,044       161        8.6%
    166      Reactor Licensing..........................           NRC       264       341        77       29.2%
    167      President's Emergency Plan For AIDS Relief:        State      1,774     2,776     1,002       56.5%
              Focus Countries...........................
    168      Natural Resources Conservation Service:             USDA         10        11         1       10.0%
              Plant Materials Research Centers..........
    169      Veterans Life Insurance....................           VA          4         4         0        0.0%
    170      Corps of Engineers: Recreation Management..             Corps   283       267       -16       -5.7%
    171      Preparedness Infrastructure Protection               DHS        286       286         0        0.0%
              National Communications Service...........
    172      Bureau of Industry and Security............           DOC        75        79         4        5.3%
    173      U.S. Patent and Trademark Office--                    DOC       188       203        15        8.0%
              Trademarks................................
    174      Department of Defense Education Activity...          DOD      1,776     1,821        45        2.5%
    175      Federal Energy Management Program..........          DOE         19        17        -2      -10.5%
    176      Bureau of Indian Affairs--Indian Land                DOI         34        59        25       73.5%
              Consolidation.............................
    177      Federal Motor Carrier Safety Administration          DOT        279       294        15        5.4%
              Grant Program.............................
    178      TRIO Talent Search.........................           ED        143         0      -143     -100.0%
    179      EPA Support for Cleanup of Federal                   EPA         31        31         0        0.0%
              Facilities................................
    180      Superfund Removal..........................          EPA        240       250        10        4.2%
    181      Family Planning............................          HHS        283       283         0        0.0%
    182      Human Trafficking..........................          HHS         10        15         5       50.0%
    183      Strategic National Stockpile...............          HHS        525       592        67       12.8%
    184      Fair Housing Assistance Program............          HUD         20        25         5       25.0%
    185      Housing Vouchers...........................          HUD     15,418    15,920       502        3.3%
    186      Human Systems Research and Technology......         NASA        624       275      -349      -55.9%
    187      Historically Underutilized Business Zone--           SBA          7        10         3       42.9%
              HUBZone...................................
    188      Protection of Foreign Missions and                 State          9         9         0        0.0%
              Officials.................................
    189      Agricultural Credit Insurance Fund Direct           USDA        951       930       -21       -2.2%
              Loans.....................................
    190      Environmental Quality Incentives Program...         USDA      1,017     1,000       -17       -1.7%
    191      Multi-Family Housing Programs..............         USDA        899       745      -154      -17.1%
    192      Natural Resource Base & Environment                 USDA        191       162       -29      -15.2%
              (Grants)..................................
    193      Perishable Agricultural Commodities Act....         USDA         10        10         0        0.0%
    194      Corps of Engineers: Coastal Ports and                   Corps 1,136     1,061       -75       -6.6%
              Harbors...................................
    195      District of Columbia: Pretrial Services                DC Court  42        46         4        9.5%
              Agency....................................
    196      Defense Air Transportation System..........          DOD      7,482     6,820      -662       -8.8%
    197      Geothermal Technology......................          DOE         23         0       -23     -100.0%
    198      Bureau of Land Management--Wildlife Habitat          DOI        148       150         2        1.4%
              Restoration...............................
    199      FBI Counterintelligence Program............          DOJ     Class.    Class.  ........  ..........
    200      Black Lung Benefits Program................          DOL      1,401     1,374       -27       -1.9%
    201      Employee Benefits Security Administration..          DOL        134       144        10        7.5%
    202      EPA Indoor Air Quality.....................          EPA         37        39         2        5.4%
    203      Surface Water Protection...................          EPA        189       192         3        1.6%
    204      Temporary Assistance for Needy Families              HHS     17,058    17,158       100        0.6%
              (TANF)....................................
    205      Universal Newborn Hearing Screening and              HHS         10         0       -10     -100.0%
              Intervention Program......................
    206      International Space Station................         NASA      1,753     1,812        59        3.4%
    207      Supplemental Security Income...............          SSA     41,108    40,702      -406       -1.0%
    208      Economic Support Fund for the Western              State        122       152        30       24.6%
              Hemisphere................................
    209      Conservation Reserve Program...............         USDA      2,021     2,192       171        8.5%
    210      Soil Survey Program........................         USDA         87        89         2        2.3%
    211      Immigration Services.......................          DHS      1,889     1,986        97        5.1%
    212      Science and Technology: Emerging Homeland            DHS          8         9         1       12.5%
              Security Threat Detection.................
    213      Defense Applied Research Program...........          DOD      5,188     4,478      -710      -13.7%
    214      DoD Unmannned Aircraft Systems (UAS).......          DOD      1,588     1,785       197       12.4%
    215      Future Combat Systems/Modularity Land                DOD      9,623    10,349       726        7.5%
              Warfare...................................
    216      High Temperature Superducting (HTS)                  DOE         50        45        -5      -10.0%
              Research and Development..................
    217      Bureau of Reclamation--Water Reuse and               DOI         20        10       -10      -50.0%
              Recycling.................................
    218      Job Corps..................................          DOL      1,586     1,531       -55       -3.5%
    219      FAA Aviation Safety........................          DOT        941     1,007        66        7.0%
    220      Highway Emergency Relief Program...........          DOT      2,850       100    -2,750      -96.5%
    221      Highway Infrastructure.....................          DOT     34,215    37,650     3,435       10.0%
    222      Advanced Placement.........................           ED         32       122        90      281.3%
    223      Childrens Mental Health Services...........          HHS        104       104         0        0.0%
    224      National Health Service Corps..............          HHS        126       126         0        0.0%
    225      Protection and Advocacy for Individuals              HHS         34        34         0        0.0%
              with Mental Illness.......................
    226      Substance Abuse Prevention Projects of               HHS        193       181       -12       -6.2%
              Regional and National Significance........
    227      Social Security Disability Insurance.......          SSA     92,989   100,051     7,062        7.6%
    228      US Agency for International Development            USAID        770       836        66        8.6%
              Administration and Capital Investment.....
    229      Federal Grain Inspection Services..........         USDA         60        66         6       10.0%
    230      School Breakfast Program...................         USDA      2,076     2,204       128        6.2%
    231      USDA Food Aid Programs.....................         USDA        394       250      -144      -36.5%
             I11    Total funding for Moderately          ............   841,092   897,325    56,233        6.7%
              Effective programs\1\.....................
                                                                       -----------------------------------------
                 Total funding for Moderately Effective   ............   433,843   443,435     9,592        2.2%
              programs (excluding Medicare)\1\..........
----------------------------------------------------------------------------------------------------------------
\1\ Funding levels represent program level and include BA, obligations, user fees, loan levels, etc. as
  appropriate


                            PART RATINGS AND PROGRAM FUNDING LEVELS ADEQUATE PROGRAMS
                                              (Dollars in millions)
----------------------------------------------------------------------------------------------------------------
                                                                                              Change from 2006
                             Program Name                    Agency       2006      2007   ---------------------
                                                                         Enacted   Budget    Dollars    Percent
----------------------------------------------------------------------------------------------------------------
      1      Science and Technology: Standards                    DHS         33        22       -11      -33.3%
              Development for Homeland Security
              Technology................................
      2      Missile Defense............................          DOD      7,695     9,318     1,623       21.1%
      3      Nuclear Power 2010.........................          DOE         66        55       -11      -16.7%
      4      Department of the Interior--Central Utah             DOI         34        40         6       17.6%
              Project...................................
      5      National Institute of Justice..............          DOJ         54        56         2        3.7%
      6      Federal Pell Grants........................           ED     13,045    12,739      -306       -2.3%
      7      GSA--Vehicle Acquisition...................          GSA      1,213     1,233        20        1.6%
      8      Tribally-Operated Health Programs..........          HHS      1,648     1,720        72        4.4%
      9      Urban Indian Health Program................          HHS         33         0       -33     -100.0%
     10      Section 7 (a) Guaranteed Loan Program......          SBA         97        83       -14      -14.4%
     11      Agricultural Crops Counter Cyclical                 USDA      5,893     6,661       768       13.0%
              Payments..................................
     12      Single Family Housing Loan Guarantees......         USDA      3,745     3,564      -181       -4.8%
     13      National Oceanic & Atmospheric                        DOC        56        42       -14      -25.0%
              Administration: Protected Areas...........
     14      Space Launch...............................          DOD      1,175     1,255        80        6.8%
     15      Industrial Technologies Program............          DOE         57        46       -11      -19.3%
     16      Charter Schools Grant......................           ED        215       215         0        0.0%
     17      National Institute on Disability and                  ED        107       107         0        0.0%
              Rehabilitation Research...................
     18      EPA Climate Change Programs................          EPA        111       105        -6       -5.4%
     19      Leaking Underground Storage Tank Cleanup             EPA         68        69         1        1.5%
              Program...................................
     20      CDC: Environmental Health..................          HHS        146       141        -5       -3.4%
     21      Poison Control Centers.....................          HHS         23        13       -10      -43.5%
     22      Overseas Private Investment Corporation--            OPIC        48        50         2        4.2%
              Finance...................................
     23      Overseas Private Investment Corporation--            OPIC      -211      -209         2       -0.9%
              Insurance.................................
     24      Appalachian Regional Commission............           ARC        65        65         0        0.0%
     25      U.S. Patent and Trademark Office--Patents..           DOC     1,495     1,640       145        9.7%
     26      National Security Space Weather Programs...          DOD        394       437        43       10.9%
     27      Fish and Wildlife Service--Partners for              DOI         50        43        -7      -14.0%
              Fish and Wildlife.........................
     28      National Park Service--Facility Maintenance          DOI      1,034       933      -101       -9.8%
     29      Criminal Enterprises.......................          DOJ        788       750       -38       -4.8%
     30      Stratospheric Ozone Protection.............          EPA         15        19         4       26.7%
     31      GSA--Global Supply.........................          GSA      1,032     1,051        19        1.8%
     32      CDC: Infectious Diseases...................          HHS        227       245        18        7.9%
     33      Ryan White HIV/AIDS........................          HHS      2,083     2,158        75        3.6%
     34      FHA Single-Family Mortgage Insurance.......          HUD        414       414         0        0.0%
     35      Section 504 Certified Development Company            SBA         38        23       -15      -39.5%
              Guaranteed Loan Program...................
     36      Economic Support Fund for Africa...........        State        123       164        41       33.3%
     37      Farmland Protection Program................         USDA         74        50       -24      -32.4%
     38      Food Safety and Inspection Service.........         USDA        829       863        34        4.1%
     39      Coast Guard: Marine Safety.................          DHS        685       678        -7       -1.0%
     40      Advanced Technology Program................           DOC        79         0       -79     -100.0%
     41      National Park Service--Cultural Resource             DOI         96        99         3        3.1%
              Stewardship...............................
     42      US Marshals Service- Protection of the               DOJ        340       343         3        0.9%
              Judicial Process..........................
     43      Agency for Toxic Substances and Disease              HHS         75        75         0        0.0%
              Registry..................................
     44      State Children's Health Insurance Program..          HHS      4,316     5,040       724       16.8%
     45      Space and Flight Support...................         NASA        339       367        28        8.3%
     46      Economic Support Fund--Human Rights and            State         63        35       -28      -44.4%
              Democracy Fund............................
     47      USAID's Development Assistance for Sub-            USAID        594       563       -31       -5.2%
              Saharan Africa............................
     48      Rural Electric Utility Loans and Guarantees         USDA      3,893     3,842       -51       -1.3%
     49      Wetlands Reserve Program...................         USDA        250       403       153       61.2%
     50      Office of Federal Contract Compliance......          DOL         81        84         3        3.7%
     51      FAA Air Traffic Services...................          DOT      6,575     6,748       173        2.6%
     52      Nonpoint Source Pollution Control Grants...          EPA        204       194       -10       -4.9%
     53      CDC: Sexually Transmitted Diseases and               HHS        296       294        -2       -0.7%
              Tuberculosis..............................
     54      National Archives and Records                       NARA        413       430        17        4.1%
              Administration: Records Services Program..
     55      Small Business Surety Bonds................          SBA          9        11         2       22.2%
     56      Interagency Cooperative Administrative             State      1,269     1,359        90        7.1%
              Support Services..........................
     57      President's Emergency Plan For AIDS Relief:        State        545       299      -246      -45.1%
              Global Fund...............................
     58      Treasury Technical Assistance..............     Treasury         60        48       -12      -20.0%
     59      Agricultural Commodity Grading and                  USDA        195       191        -4       -2.1%
              Certification Programs....................
     60      Watershed Protection and Flood Prevention..         USDA        111        15       -96      -86.5%
     61      AmeriCorps State and National Grants.......             CNCS    268       259        -9       -3.4%
     62      Bureau of Indian Affairs--Forestry                   DOI         52        52         0        0.0%
              Management................................
     63      Permanent Labor Certification Program......          DOL         38        40         2        5.3%
     64      Howard University..........................           ED        237       237         0        0.0%
     65      EPA Enforcement of Environmental Laws                EPA         51        51         0        0.0%
              (Criminal)................................
     66      EPA Existing Chemicals Program.............          EPA         17        17         0        0.0%
     67      CDC: Occupational Safety and Health........          HHS        255       250        -5       -2.0%
     68      Animal Welfare.............................         USDA         17        19         2       11.8%
     69      Corps of Engineers: Hydropower.............             Corps   296       285       -11       -3.7%
     70      Immigration and Customs Enforcement: Office          DHS      1,493     1,619       126        8.4%
              of Investigations.........................
     71      Preparedness Grants and Training Office              DHS        210        92      -118      -56.2%
              Training Program..........................
     72      National Oceanic & Atmospheric                        DOC       201       167       -34      -16.9%
              Administration: Ecosystem Research........
     73      Navy Shipbuilding..........................          DOD     13,778    13,280      -498       -3.6%
     74      Bureau of Reclamation Water Management--             DOI        338       346         8        2.4%
              Operation and Maintenance.................
     75      US Marshals Service--Apprehension of                 DOJ        242       260        18        7.4%
              Fugitives.................................
     76      Childhood Immunization Program.............          HHS        520       509       -11       -2.1%
     77      Refugee Social Services....................          HHS        210       203        -7       -3.3%
     78      Rural Health Activities....................          HHS        160        27      -133      -83.1%
     79      Alcohol, Tobacco, and Firearms Consumer         Treasury         46        48         2        4.3%
              Product Safety............................
     80      Direct Crop Payments.......................         USDA      5,237     5,237         0        0.0%
     81      Rural Telecommunications Loan Programs.....         USDA        690       691         1        0.1%
     82      Veterans Medical Care......................           VA     30,825    34,295     3,470       11.3%
     83      Preparedness Grants and Training Office              DHS         20        24         4       20.0%
              Technical Assistance Program..............
     84      National Telecommunications and Information           DOC        18        23         5       27.8%
              Adminstration.............................
     85      FBI Counterterrorism Program...............          DOJ      1,245     1,336        91        7.3%
     86      Weed and Seed..............................          DOJ         49        49         0        0.0%
     87      Occupational Safety and Health                       DOL        472       484        12        2.5%
              Administration............................
     88      Assets for Independence....................          HHS         24        24         0        0.0%
     89      CDC: Buildings and Facilities..............          HHS        158        30      -128      -81.0%
     90      Organ Transplantation......................          HHS         23        23         0        0.0%
     91      Drug-Free Communities Support Program......          ONDCP       79        79         0        0.0%
     92      Forest Service: Energy Resource Needs......         USDA         91        95         4        4.4%
     93      Intermediary Relending Program.............         USDA         34        34         0        0.0%
     94      Defense Health Care........................          DOD     20,021    21,025     1,004        5.0%
     95      Bureau of Indian Affairs--Economic                   DOI          6         6         0        0.0%
              Development Guaranteed Loans..............
     96      Bureau of Land Management--Recreation                DOI         65        64        -1       -1.5%
              Management................................
     97      Cybercrime.................................          DOJ        234       260        26       11.1%
     98      Prison Construction........................          DOJ         89       -25      -114     -128.1%
     99      Drinking Water State Revolving Fund........          EPA        837       842         5        0.6%
    100      EPA Human Health Research..................          EPA         61        61         0        0.0%
    101      EPA's Recycling, Waste Minimization, and             EPA        180       183         3        1.7%
              Waste Management Program..................
    102      Pesticide Reregistration...................          EPA         59        55        -4       -6.8%
    103      Food Aid for Emergencies and Development           USAID      1,138     1,218        80        7.0%
              (Public Law 480 Title II).................
    104      Corps of Engineers: Environmental                       Corps    94        89        -5       -5.3%
              Stewardship...............................
    105      Federal Emergency Management Agency:                 DHS      1,307       326      -981      -75.1%
              Disaster Response.........................
    106      Biomass and Biorefinery Systems............          DOE         91       120        29       31.9%
    107      Vaccine Injury Compensation Program........          DOJ         10        10         0        0.0%
    108      White Collar Crime.........................          DOJ        708       674       -34       -4.8%
    109      American Indian Vocational Rehabilitation             ED          0         0         0        0.0%
              Services..................................
    110      IDEA Special Education Grants to States....           ED     10,583    10,683       100        0.9%
    111      Pesticide Registration.....................          EPA         44        43        -1       -2.3%
    112      Developmental Disabilities Grant Programs..          HHS        155       155         0        0.0%
    113      Health Care Patient Safety.................          HHS         84        84         0        0.0%
    114      Bioenergy..................................         USDA         60         0       -60     -100.0%
    115      Rural Business and Industry Guaranteed Loan         USDA        953     1,000        47        4.9%
              Program...................................
    116      Department of Defense Facilities                     DOD     11,366    11,518       152        1.3%
              Sustainment, Restoration, Modernization,
              and Demolition............................
    117      Building Technologies......................          DOE         69        77         8       11.6%
    118      Environmental Management...................          DOE      6,590     5,828      -762      -11.6%
    119      Drug Enforcement Administration............          DOJ      2,285     2,276        -9       -0.4%
    120      EPA Enforcement of Environmental Laws                EPA        451       470        19        4.2%
              (Civil)...................................
    121      Community Mental Health Services Block               HHS        429       429         0        0.0%
              Grant.....................................
    122      Contributions to International Fisheries           State         24        21        -3      -12.5%
              Commissions...............................
    123      Internal Revenue Service Taxpayer Service..     Treasury      2,179     2,134       -45       -2.1%
    124      Pesticide Data/Microbiological Data                 USDA         21        15        -6      -28.6%
              Programs..................................
    125      District of Columbia: Community Supervision            DC Court 130       135         5        3.8%
              Program...................................
    126      Federal Law Enforcement Training Center....          DHS        280       245       -35      -12.5%
    127      International Trade Administration: Market            DOC        39        39         0        0.0%
              Access and Compliance.....................
    128      US Attorneys...............................          DOJ      1,580     1,637        57        3.6%
    129      Trauma-EMS Systems Program.................          HHS          0         0         0        0.0%
    130      President's Emergency Plan For AIDS Relief:        State        935       915       -20       -2.1%
              Other Bilateral Programs..................
    131      Africa Child Survival and Health...........        USAID        392       479        87       22.2%
    132      US Agency for International Development            USAID         **        **        **          **
              Climate Change Program....................
    133      Work Incentive Grants......................          DOL         20         0       -20     -100.0%
    134      Impact Aid Construction....................           ED         18        18         0        0.0%
    135      Student Aid Administration.................           ED        744       734       -10       -1.3%
    136      Water Pollution Control Grants.............          EPA        216       222         6        2.8%
    137      Chronic Disease--Diabetes..................          HHS         63        63         0        0.0%
    138      Housing Counseling.........................          HUD         42        45         3        7.1%
    139      International Disaster and Famine Account..        USAID        365  ........      -365     -100.0%
    140      National Forest Improvement and Maintenance         USDA        442       385       -57      -12.9%
    141      Veterans Pension...........................           VA      3,640     3,718        78        2.1%
    142      International Trade Administration: U.S.              DOC       229       248        19        8.3%
              and Foreign Commercial Service............
    143      Bureau of Indian Affairs--K-12 School                DOI        535       519       -16       -3.0%
              Operations................................
    144      Bureau of Indian Affairs--Tribal Colleges..          DOI        103       102        -1       -1.0%
    145      Employment Service.........................          DOL        827       753       -74       -8.9%
    146      Federal Family Education Loans.............           ED      9,839     6,125    -3,714      -37.7%
    147      William D. Ford Direct Student Loans.......           ED        599        36      -563      -94.0%
    148      National Ambient Air Quality Standards and           EPA         97        97         0        0.0%
              Regional Haze Programs....................
    149      Family Self-Sufficiency Program............          HUD         48        48         0        0.0%
    150      Indian Community Development Block Grant             HUD         59        57        -2       -3.4%
              Program...................................
    151      International Development Association......     Treasury      2,820     2,850        30        1.1%
    152      Denali Commission..........................       Denali         53         6       -47      -88.7%
                                                                     Commission
    153      National Marine Fisheries Service..........           DOC       687       649       -38       -5.5%
    154      Coal Energy Technology.....................          DOE        376       345       -31       -8.2%
    155      Bureau of Land Management--Energy and                DOI        134       157        23       17.2%
              Minerals Management.......................
    156      Longshore and Harbor's Workers Compensation          DOL        248       248         0        0.0%
              Program...................................
    157      Mine Safety and Health Administration......          DOL        278       288        10        3.6%
    158      Javits Fellowships.........................           ED         10        10         0        0.0%
    159      Transition to Teaching.....................           ED         44        44         0        0.0%
    160      Vocational Rehabilitation State Grants.....           ED      2,693     2,837       144        5.3%
    161      Drinking Water Research....................          EPA         45        49         4        8.9%
    162      Ocean, Coastal, and Estuary Protection.....          EPA         37        31        -6      -16.2%
    163      Toxic Air Pollutants--Regulations and                EPA         97        99         2        2.1%
              Federal Support...........................
    164      NASA Education Program.....................         NASA        162       153        -9       -5.6%
    165      Space Shuttle..............................         NASA      4,776     4,057      -719      -15.1%
    166      Federal Employees Retirement...............          OPM     58,501    61,427     2,926        5.0%
    167      Homeland Security Operations Center........          DHS         51        55         4        7.8%
    168      Transportation Security Administration:              DHS         88        88         0        0.0%
              Screener Training.........................
    169      Bureau of Land Management--Realty and                DOI        104        98        -6       -5.8%
              Ownership Management......................
    170      National Park Service--Concessions                   DOI         56        58         2        3.6%
              Management................................
    171      Office of Labor Management Standards.......          DOL         46        52         6       13.0%
    172      Clean Water State Revolving Fund...........          EPA        887       688      -199      -22.4%
    173      Endocrine Disruptors.......................          EPA         19        17        -2      -10.5%
    174      Resource Conservation and Recovery Act               EPA         38        41         3        7.9%
              Corrective Action.........................
    175      Superfund Remedial Action..................          EPA        601       592        -9       -1.5%
    176      U. S.-Mexico Border Water Infrastructure...          EPA         49        25       -24      -49.0%
    177      Underground Injection Control Grant Program          EPA         11        11         0        0.0%
    178      Children's Hospitals Graduate Medical                HHS        297        99      -198      -66.7%
              Education Payment Program.................
    179      Chronic Disease--Breast and Cervical Cancer          HHS        204       204         0        0.0%
    180      Foster Care................................          HHS      4,633     4,757       124        2.7%
    181      Substance Abuse Treatment Programs of                HHS        399       375       -24       -6.0%
              Regional and National Significance........
    182      Tribal Housing Activities Loan Guarantees..          HUD          2         2         0        0.0%
    183      Merit System Compliance....................          OPM         17        17         0        0.0%
    184      Nutrition Assistance for Puerto Rico.......         USDA      1,518     1,559        41        2.7%
    185      Federal Emergency Management Agency:                 DHS      6,466     1,374    -5,092      -78.8%
              Disaster Recovery.........................
    186      National Park Service--Technical Assistance          DOI         12        12         0        0.0%
    187      Workforce Investment Act--Adult Employment           DOL        871       726      -145      -16.6%
              and Training..............................
    188      Comprehensive School Reform................           ED          8         0        -8     -100.0%
    189      Gaining Early Awareness and Readiness for             ED        303         0      -303     -100.0%
              Undergraduate Programs....................
    190      EPA Tribal General Assistance Program......          EPA         57        57         0        0.0%
    191      National Ambient Air Quality Standards               EPA         67        66        -1       -1.5%
              Research..................................
    192      Federal Employees Group Life Insurance.....          OPM      3,607     3,844       237        6.6%
    193      International Narcotics Control and Law            State         15        31        16      106.7%
              Enforcement Programs, Africa/Asia.........
    194      International Narcotics Control and Law            State         61        55        -6       -9.8%
              Enforcement Programs, Western Hemisphere..
    195      Forest Service: Land Acquisition...........         USDA         42        25       -17      -40.5%
    196      Chemical Demilitarization..................          DOD      1,387     1,408        21        1.5%
    197      Bureau of Reclamation--Recreation and                DOI         16        15        -1       -6.3%
              Concessions...............................
    198      21st Century Community Learning Centers....           ED        981       981         0        0.0%
    199      EPA Oil Spill Control......................          EPA         12        13         1        8.3%
    200      Andean Counterdrug Initiative..............        State        735       722       -13       -1.8%
    201      International Child Labor Program and                DOL         73        12       -61      -83.6%
              Office of Foreign Relations...............
    202      Workforce Investment Act--Native American            DOL         56        53        -3       -5.4%
              Programs..................................
    203      National Technical Institute for the Deaf..           ED         56        55        -1       -1.8%
    204      Brownfields Revitalization.................          EPA        162       163         1        0.6%
    205      Public Water System Supervision Grant                EPA         98        99         1        1.0%
              Program...................................
    206      Adoption Opportunities.....................          HHS         27        27         0        0.0%
    207      Federal Employees Health Benefits..........          OPM     32,126    34,625     2,499        7.8%
    208      8(a) Business Development Program..........          SBA         38        35        -3       -7.9%
    209      Financial and Technical Assistance.........     Treasury         35         0       -35     -100.0%
    210      Civilian Radioactive Waste Management                DOE        495       544        49        9.9%
              Program: Yucca Mountain Project...........
    211      Workforce Investment Act--Dislocated Worker          DOL      1,200       976      -224      -18.7%
              Assistance................................
    212      FAA Facilities and Equipment...............          DOT      2,555     2,503       -52       -2.0%
    213      Education--State Assessment Grants.........           ED        400       400         0        0.0%
    214      Magnet Schools.............................           ED        107       107         0        0.0%
    215      Projects with Industry for People with                ED         20         0       -20     -100.0%
              Disabilities..............................
    216      Troops-to-Teachers.........................           ED         15        15         0        0.0%
    217      Adoption Incentives........................          HHS         18        30        12       66.7%
    218      Nursing Education Loan Repayment and                 HHS         31        31         0        0.0%
              Scholarship Program.......................
    219      New Markets Tax Credit.....................     Treasury          8         8         0        0.0%
                                                                       -----------------------------------------
                 Total funding for Adequate programs\1\.  ............   335,470   334,744      -726       -0.2%
----------------------------------------------------------------------------------------------------------------
\1\ Funding levels represent program level and include BA, obligations, user fees, loan levels, etc. as
  appropriate


                          PART RATINGS AND PROGRAM FUNDING LEVELS INEFFECTIVE PROGRAMS
                                              (Dollars in millions)
----------------------------------------------------------------------------------------------------------------
                                                                                              Change from 2006
                             Program Name                    Agency       2006      2007   ---------------------
                                                                         Enacted   Budget    Dollars    Percent
----------------------------------------------------------------------------------------------------------------
      1      EPA Pesticide Enforcement Grant Program....          EPA         19        19         0        0.0%
      2      Oil Technology.............................          DOE         32         0       -32     -100.0%
      3      EPA Ecological Research....................          EPA         85        80        -5       -5.9%
      4      Workforce Investment Act--Youth Activities.          DOL        951       851      -100      -10.5%
      5      Trade Adjustment Assistance................          DOL        966       939       -27       -2.8%
      6      Internal Revenue Service Earned Income Tax      Treasury        167       168         1        0.6%
              Credit Compliance.........................
      7      Natural Gas Technology.....................          DOE         33         0       -33     -100.0%
      8      Substance Abuse Prevention and Treatment             HHS      1,759     1,759         0        0.0%
              Block Grant...............................
      9      TRIO Upward Bound..........................           ED        311         0      -311     -100.0%
     10      HOPE VI (Severely Distressed Public                  HUD         99       -99      -198     -200.0%
              Housing)..................................
     11      Health Professions.........................          HHS        295       159      -136      -46.1%
     12      Gallaudet University.......................           ED        107       108         1        0.9%
     13      Air Quality Grants and Permitting..........          EPA        194       160       -34      -17.5%
     14      Workforce Investment Act--Migrant and                DOL         81         2       -79      -97.5%
              Seasonal Farmworkers......................
     15      Project-Based Rental Assistance............          HUD      5,037     5,676       639       12.7%
     16      Healthy Community Access Program...........          HHS          0         0         0        0.0%
     17      State Planning Grant Program...............          HHS          0         0         0        0.0%
     18      Rural Housing and Economic Development.....          HUD         17         0       -17     -100.0%
     19      Alaska Native Village Water Infrastructure.          EPA         34        15       -19      -55.9%
     20      Community Development Block Grant (Formula)          HUD      3,248     2,975      -273       -8.4%
     21      AmeriCorps National Civilian Community                  CNCS     27         5       -22      -81.5%
              Corps.....................................
     22      Even Start.................................           ED         99         0       -99     -100.0%
     23      Community Service Employment for Older               DOL        432       388       -44      -10.2%
              Americans.................................
     24      Safe and Drug Free Schools State Grants....           ED        347         0      -347     -100.0%
     25      Juvenile Accountability Block Grants.......          DOJ         49         0       -49     -100.0%
     26      Amtrak.....................................          DOT      1,294       900      -394      -30.4%
     27      Vocational Education State Grants..........           ED      1,182         0    -1,182     -100.0%
     28      Federal Perkins Loans......................           ED         65         0       -65     -100.0%
                                                                       -----------------------------------------
                 Total funding for Ineffective            ............    16,930    14,105    -2,825      -16.7%
              programs\1\...............................
----------------------------------------------------------------------------------------------------------------
\1\ Funding levels represent program level and include BA, obligations, user fees, loan levels, etc. as
  appropriate


                    PART RATINGS AND PROGRAM FUNDING LEVELS RESULTS NOT DEMONSTRATED PROGRAMS
                                              (Dollars in millions)
----------------------------------------------------------------------------------------------------------------
                                                                                              Change from 2006
                             Program Name                    Agency       2006      2007   ---------------------
                                                                         Enacted   Budget    Dollars    Percent
----------------------------------------------------------------------------------------------------------------
      1      Enforcement of Commodity Futures and                    CFTC     27        27         0        0.0%
              Options Markets...........................
      2      Credit Union Loan and Technical Assistance             NCUA      13        13         0        0.0%
              Grant Program.............................
      3      Consumer Product Safety Commission.........             CPSC     62        62         0        0.0%
      4      Office of Surface Mining--State Managed              DOI         70        72         2        2.9%
              Regulation of Surface Coal Mining.........
      5      Office of Surface Mining--State Managed              DOI        152       151        -1       -0.7%
              Abandoned Coal Mine Land Reclamation......
      6      Housing Opportunities for Persons with AIDS          HUD        286       300        14        4.9%
      7      Energy Information Administration..........          DOE         86        91         5        5.8%
      8      Drug Courts................................          DOJ         10        69        59      590.0%
      9      Flood Damage Reduction.....................             Corps 1,492     1,197      -295      -19.8%
     10      Natural Resources Conservation Service:             USDA          0         0         0        0.0%
              National Resources Inventory..............
     11      Border Patrol..............................          DHS      1,847     1,862        15        0.8%
     12      Coast Guard: Aids to Navigation............          DHS      1,095     1,062       -33       -3.0%
     13      Marine Corps Expeditionary Warfare.........          DOD     10,223     9,234      -989       -9.7%
     14      Agriculture Marketing Service--Research and         USDA          3         3         0        0.0%
              Promotion Programs........................
     15      Securities and Exchange Commission--                  SEC       286       292         6        2.1%
              Enforcement...............................
     16      Securities and Exchange Commission--Full              SEC        74        75         1        1.4%
              Disclosure Program (Corporate Review).....
     17      Coast Guard: Search and Rescue.............          DHS        886       880        -6       -0.7%
     18      Public Defender Service for the District of            DC        30        32         2        6.7%
              Columbia..................................
     19      Office of Surface Mining--Federal Managed            DOI         67        67         0        0.0%
              Regulation of Surface Coal Mining.........
     20      National School Lunch......................         USDA      7,415     7,667       252        3.4%
     21      Fair Housing Initiatives Program...........          HUD         26        20        -6      -23.1%
     22      Forest Service: Invasive Species Program...         USDA        166       165        -1       -0.6%
     23      Economic and Trade Sanctions Program--          Treasury         22        23         1        4.5%
              Office of Foreign Assets Control..........
     24      Mentoring Children of Prisoners............          HHS         50        40       -10      -20.0%
     25      Wildlife Habitat Incentives Program........         USDA         43        55        12       27.9%
     26      African Development Fund...................     Treasury        134       136         2        1.5%
     27      Conservation Technical Assistance..........         USDA        723       643       -80      -11.1%
     28      Fish and Wildlife Service--Migratory Bird            DOI        124       132         8        6.5%
              Management and Conservation...............
     29      Community Facilities Program...............         USDA        550       522       -28       -5.1%
     30      GSA--National Information Technology                 GSA      6,782     6,401      -381       -5.6%
              Solutions.................................
     31      Tropical Forest Conservation Act...........     Treasury         20         *         *           *
     32      Emergency Watershed Protection Program.....         USDA        300         0      -300     -100.0%
     33      Rural Business Enterprise Grant Program....         USDA         40         0       -40     -100.0%
     34      Montgomery GI Bill- Veterans Education                VA      1,982     2,041        59        3.0%
              Benefits..................................
     35      Inland Waterways Navigation................             Corps   934       871       -63       -6.7%
     36      Transportation Security Administration:              DHS      2,529     2,618        89        3.5%
              Screener Workforce........................
     37      Minerals Management Service--Minerals                DOI         78        79         1        1.3%
              Revenue Management........................
     38      Office of Disease Prevention and Health              HHS          7         7         0        0.0%
              Promotion.................................
     39      Dairy Payment Program......................         USDA        500        50      -450      -90.0%
     40      Coast Guard: Drug Interdiction.............          DHS      1,219     1,240        21        1.7%
     41      Bureau of Reclamation--Rural Water Supply            DOI         79        66       -13      -16.5%
              Projects..................................
     42      GSA--Regional Information Technology                 GSA          0         0         0        0.0%
              Solutions.................................
     43      Defense Communications Infrastructure......          DOD      3,820     3,760       -60       -1.6%
     44      Department of the Interior--Wildland Fire            DOI        755       770        15        2.0%
              Management................................
     45      Developing Hispanic-serving Institutions...           ED         95        95         0        0.0%
     46      Strengthening Historically Black Colleges             ED        238       238         0        0.0%
              and Universities..........................
     47      Strengthening Historically Black Graduate             ED         58        58         0        0.0%
              Institutions..............................
     48      Federal Election Laws--Compliance and                 FEC        21        23         2        9.5%
              Enforcement...............................
     49      Asian Development Fund.....................        State         99       115        16       16.2%
     50      Food and Nutrition Service--Child and Adult         USDA      2,159     2,274       115        5.3%
              Care Food Program.........................
     51      Science and Technology: Threat and                   DHS         40        40         0        0.0%
              Vulnerability, Testing and Assessment.....
     52      International Trade Administration: Import            DOC        61        61         0        0.0%
              Administration............................
     53      Partnership for Advancing Technology in              HUD          5         0        -5     -100.0%
              Housing...................................
     54      Rural Distance Learning and Telemedicine            USDA         50        25       -25      -50.0%
              Loan and Grant Program....................
     55      Afghanistan Health Initiative..............          HHS          6         6         0        0.0%
     56      Health Care Fraud and Abuse Control........          HHS        320       160      -160      -50.0%
     57      Bank Enterprise Award......................     Treasury         12         0       -12     -100.0%
     58      Internal Revenue Service Tax Collection....     Treasury      2,106     2,131        25        1.2%
     59      Enhancing Education Through Technology.....           ED        272         0      -272     -100.0%
     60      National Archives and Records                       NARA         38        45         7       18.4%
              Administration: Electronic Records
              Services..................................
     61      International Information Programs.........        State         53        62         9       17.0%
     62      Rural Business-Cooperative Service Value-           USDA         21        20        -1       -4.8%
              Added Producer Grants.....................
     63      National Nuclear Infrastructure............          DOE         98        97        -1       -1.0%
     64      State Energy Programs......................          DOE         36        49        13       36.1%
     65      Fish and Wildlife Service--National                  DOI        386       382        -4       -1.0%
              Wildlife Refuge System....................
     66      Community-Based Child Abuse Prevention.....          HHS         42        42         0        0.0%
     67      Public Diplomacy...........................        State        703       762        59        8.4%
     68      Transportation Security Administration: Air          DHS         44        40        -4       -9.1%
              Cargo Security Programs...................
     69      Bureau of Indian Affairs--K-12 School                DOI        207       157       -50      -24.2%
              Construction..............................
     70      Graduate Assistance in Areas of National              ED         30        30         0        0.0%
              Need......................................
     71      Child Abuse Prevention and Treatment Grants          HHS         27        27         0        0.0%
     72      United States-Mexico Border Health                   HHS          4         4         0        0.0%
              Commission................................
     73      Global Environment Facility................     Treasury         79        56       -23      -29.1%
     74      USDA Wildland Fire Management..............         USDA      1,646     1,676        30        1.8%
     75      Coastal Storm Damage Reduction.............             Corps   113        53       -60      -53.1%
     76      Fish and Wildlife Service--Wildlife and              DOI        717       800        83       11.6%
              Sport Fish Restoration....................
     77      International Education Domestic Programs..           ED         92        93         1        1.1%
     78      CDC: State and Local Preparedness Grants...          HHS        824       822        -2       -0.2%
     79      Dairy Price Support Program................         USDA         42        21       -21      -50.0%
     80      Transportation Security Administration:              DHS        164       173         9        5.5%
              Passenger Screening Technology............
     81      Coastal Zone Management Act Programs.......           DOC       109        98       -11      -10.1%
     82      Department of Defense Training and                   DOD      1,271     1,291        20        1.6%
              Education Programs--Other Training and
              Education.................................
     83      Preparedness Grants and Training Office              DHS        564       668       104       18.4%
              State Homeland Security Grants............
     84      Pacific Coastal Salmon Recovery Fund.......           DOC        67        67         0        0.0%
     85      Job Training Apprenticeship................          DOL         21        21         0        0.0%
     86      Child Care Access Means Parents in School..           ED         16        16         0        0.0%
     87      Education--Neglected and Delinquent State             ED         50        50         0        0.0%
              Agency Program............................
     88      GSA--Office of Governmentwide Policy.......          GSA         62        65         3        4.8%
     89      GSA--Travel Management.....................          GSA         14        15         1        7.1%
     90      Head Start.................................          HHS      6,876     6,786       -90       -1.3%
     91      Office of Minority Health..................          HHS         57        47       -10      -17.5%
     92      Minority Business Development Agency.......           DOC        30        30         0        0.0%
     93      Smaller Learning Communities...............           ED         94         0       -94     -100.0%
     94      EPA Environmental Education................          EPA          9         0        -9     -100.0%
     95      Domestic HIV/AIDS Prevention...............          HHS        651       739        88       13.5%
     96      National Bioterrorism Hospital Preparedness          HHS        474       474         0        0.0%
              Program...................................
     97      Transportation Security Administration:              DHS        441       442         1        0.2%
              Baggage Screening Technology..............
     98      Bureau of Reclamation--Water Management--            DOI        222       175       -47      -21.2%
              Project Planning and Construction.........
     99      Community Oriented Policing Services.......          DOJ        387       -23      -410     -105.9%
    100      Federal Work-Study.........................           ED        980       980         0        0.0%
    101      Physical Education Program.................           ED         73        26       -47      -64.4%
    102      Ready to Learn Television..................           ED         24        24         0        0.0%
    103      Mental Health Programs of Regional and               HHS        263       228       -35      -13.3%
              National Significance.....................
    104      Youth Anti-Drug Media Campaign.............          ONDCP       99       120        21       21.2%
    105      Transportation Security Administration:              DHS        686       699        13        1.9%
              Federal Air Marshal Service...............
    106      Bureau of Land Management--Land Use                  DOI         50        49        -1       -2.0%
              Planning..................................
    107      Bureau of Land Management--Southern Nevada           DOI        738       735        -3       -0.4%
              Land Sales................................
    108      Emergency Medical Services for Children....          HHS         20         0       -20     -100.0%
    109      Family Violence Prevention and Services              HHS        129         0      -129     -100.0%
              Program...................................
    110      Runaway and Homeless Youth.................          HHS        103       103         0        0.0%
    111      Transportation Security Administration:              DHS        221       218        -3       -1.4%
              Aviation Regulation and Enforcement.......
    112      Transportation Security Administration:              DHS         30        30         0        0.0%
              Flight Crew Training......................
    113      DOL--Women's Bureau........................          DOL         10         9        -1      -10.0%
    114      Impact Aid Basic Support Payments and                 ED      1,141     1,141         0        0.0%
              Payments for Children with Disabilities...
    115      High Intensity Drug Trafficking Areas......          ONDCP      225       207       -18       -8.0%
    116      Resource Conservation and Development......         USDA         51        26       -25      -49.0%
    117      Residential Substance Abuse Treatment......          DOJ          9         0        -9     -100.0%
    118      IDEA Special Education--Research and                  ED         72        72         0        0.0%
              Innovation................................
    119      GSA--Transportation Management.............          GSA         23        23         0        0.0%
    120      Supplemental Educational Opportunity Grants           ED        771       771         0        0.0%
    121      Teaching American History..................           ED        120        50       -70      -58.3%
    122      Adolescent Family Life Program.............          HHS         30        30         0        0.0%
    123      Independent Living Program.................          HHS        140       140         0        0.0%
    124      Immigration and Customs Enforcement:                 DHS         40         0       -40     -100.0%
              Automation Modernization Program..........
    125      Training and Advisory Services.............           ED          7         7         0        0.0%
    126      Low Income Home Energy Assistance Program..          HHS      2,162     2,782       620       28.7%
    127      Bureau of Indian Affairs--Housing                    DOI         28        28         0        0.0%
              Improvement...............................
    128      Bureau of Indian Affairs--Operation and              DOI         38        38         0        0.0%
              Maintenance of Irrigation Projects........
    129      College Assistance Migrant Program.........           ED         15        15         0        0.0%
    130      Office on Women's Health...................          HHS         28        28         0        0.0%
    131      Counterdrug Technology Transfer Program....          ONDCP       16         0       -16     -100.0%
    132      Adult Education State Grants...............           ED        564       564         0        0.0%
    133      Traumatic Brain Injury.....................          HHS          9         0        -9     -100.0%
    134      FHA Multi-Family Mortgage Insurance........          HUD        309       316         7        2.3%
    135      Counterdrug Research & Development.........          ONDCP       14        10        -4      -28.6%
    136      High School Equivalency Program............           ED         19        19         0        0.0%
    137      IDEA Special Education--Parent Information            ED         26        26         0        0.0%
              Centers...................................
    138      IDEA Special Education--Technical                     ED         49        49         0        0.0%
              Assistance and Dissemination..............
    139      Teacher Quality Enhancement................           ED         60         0       -60     -100.0%
    140      Community Services Block Grant.............          HHS        630         0      -630     -100.0%
    141      Veterans Home Loans........................           VA      7,698     6,634    -1,064      -13.8%
    142      Preparedness Grants and Training Office              DHS        648       293      -355      -54.8%
              Assistance to Firefighters Grant Program..
    143      Bureau of Indian Affairs--Operation and              DOI         29        26        -3      -10.3%
              Maintenance of Roads......................
    144      Vocational Rehabilitation Demonstration and           ED          7         7         0        0.0%
              Training Programs.........................
    145      Coast Guard: Polar Icebreaking Program.....          DHS         85        89         4        4.7%
    146      Independent Living for People with                    ED         98        98         0        0.0%
              Disabilities..............................
    147      Pesticide Field Programs...................          EPA         37        38         1        2.7%
    148      Commodity Purchase Services (Section 32)...         USDA      1,416       907      -509      -35.9%
    149      Delta Regional Authority...................          DRA         12         6        -6      -50.0%
    150      Bureau of Land Management--Mining Law                DOI         33        33         0        0.0%
              Administration............................
    151      IDEA Special Education Grants for Infants             ED        436       436         0        0.0%
              and Families..............................
    152      IDEA Special Education Personnel                      ED         90        90         0        0.0%
              Preparation Grants........................
    153      The Emergency Food Assistance Program               USDA        196       190        -6       -3.1%
              (TEFAP)...................................
    154      Comprehensive Regional Assistance Centers..           ED         56        56         0        0.0%
    155      Leveraging Educational Assistance                     ED         65         0       -65     -100.0%
              Partnership...............................
    156      Pollution Prevention and New Technologies            EPA         26        21        -5      -19.2%
              Research..................................
    157      Native American Housing Block Grants.......          HUD        622       624         2        0.3%
    158      University Nuclear Education Programs......          DOE         27         0       -27     -100.0%
    159      Bureau of Indian Affairs--Law Enforcement..          DOI        193       202         9        4.7%
    160      Prevailing Wage Determination Program......          DOL         10        10         0        0.0%
    161      Multipurpose Law Enforcement Grants........          DOJ        517         0      -517     -100.0%
    162      Assistive Technology Alternative Financing            ED          4         0        -4     -100.0%
              Program...................................
    163      Public Housing.............................          HUD      6,003     5,742      -261       -4.3%
    164      Commerce Small Business Innovation Research           DOC         8         7        -1      -12.5%
              Program...................................
    165      American Printing House for the Blind......           ED         18        18         0        0.0%
    166      National Writing Project...................           ED         22         0       -22     -100.0%
    167      Tech-Prep Education State Grants...........           ED        105         0      -105     -100.0%
    168      Tribally Controlled Postsecondary                     ED          7         7         0        0.0%
              Vocational and Technical Institutions.....
    169      Preparedness Infrastructure Protection               DHS        146       178        32       21.9%
              Cyber Security............................
    170      National Park Service--Land and Water                DOI         30         2       -28      -93.3%
              Conservation Fund State Grants............
    171      Commodity Supplemental Food Program........         USDA        111         0      -111     -100.0%
    172      Fish and Wildlife Service--Endangered                DOI        330       330         0        0.0%
              Species...................................
    173      Parental Information and Resource Centers..           ED         40         0       -40     -100.0%
    174      Social Services Block Grant................          HHS      1,700     1,200      -500      -29.4%
    175      Housing for Persons with Disabilities......          HUD        239       119      -120      -50.2%
    176      Housing for the Elderly....................          HUD        742       546      -196      -26.4%
    177      Defense Small Business Innovation Research/          DOD      1,264     1,282        18        1.4%
              Technology Transfer.......................
    178      B.J. Stupak Olympic scholarships...........           ED          1         0        -1     -100.0%
    179      Byrd Honors Scholarships...................           ED         41         0       -41     -100.0%
    180      States Grants for Occupational and                    ED          0         0         0        0.0%
              Employment Information....................
    181      Universal Service Fund High Cost...........            FCC    3,982     4,367       385        9.7%
    182      Impact Aid Payments for Federal Property...           ED         64        64         0        0.0%
    183      IDEA Special Education Preschool Grants....           ED        766       766         0        0.0%
    184      Universal Service Fund E-Rate..............            FCC    2,274     2,405       131        5.8%
    185      State Criminal Alien Assistance Program....          DOJ        400         0      -400     -100.0%
    186      Education State Grants for Innovative                 ED         99        99         0        0.0%
              Programs..................................
    187      Veterans Disability Compensation...........           VA     30,970    35,012     4,042       13.1%
    188      Department of the Interior--Land and Water           DOI        103       112         9        8.7%
              Conservation Fund Land Acquisition........
    189      National Park Service--Heritage Partnership          DOI         13         7        -6      -46.2%
    190      Bureau of Indian Affairs--Tribal Courts....          DOI         12        12         0        0.0%
    191      Health Care Facilities Construction and              HHS          0         0         0        0.0%
              Other Miscellaneous Congressional Earmarks
                                                                       -----------------------------------------
                 Total funding for Results Not            ............   139,147   135,991    -3,156       -2.3%
              Demonstrated programs\1\..................
----------------------------------------------------------------------------------------------------------------
\1\ Funding levels represent program level and include BA, obligations, user fees, loan levels, etc. as
  appropriate.

*Tropical Forest Conservation Act Funding for 2007 will be provided within the amount appropriated for debt
  relief based on the program's ability to demonstrate results in 2006.
**US AID Climate Change Program Funding is included in other programs reported separately. Total funding for
  this activity was $189 in FY 05, $162 in FY 06, and to be determined for FY 07.

    Chairman Nussle. Thank you, Director Johnson.
    Since you have invited us to talk about results and 
outcomes, let me focus on two that are in the news. One is, as 
I referred to, the what appears to be thousands of trailers on 
a runway in Hope, AR, after Congress very expeditiously and 
generously provided $62 billion for hurricane victims.
    And let me start by asking what is the role of OMB in a 
situation like that?
    Mr. Johnson. Well, there is the role of OMB and then there 
is specifically my role. I am the Chair of the PCIE 
(President's Council on Integrity and Efficiency) and the ECIE 
(Executive Council on Integrity and Efficiency), which are the 
two Inspector General's (IG) groups. So I have worked with Rick 
Skinner as he took to organize all the IGs related to Katrina 
and bring a government-wide approach to Katrina.
    And I personally worked with the Department of Homeland 
Security initially and then with the Corps of Engineers, the 
agencies that were involved in responding to Katrina, to 
develop stewardship plans for how they were going to make sure 
that we were spending money on real needs and when we obligated 
to spend some money, we actually get what we paid for.
    Chairman Nussle. Well, why were they purchased? Why were 
these trailers purchased?
    Mr. Johnson. I don't know the particulars of the trailers. 
I do know that there was a commitment made in the very early 
stages of a hundred thousand or so trailers. And as Rick 
Skinner will say, in those first 72 hours of a disaster, which 
I think is when these commitments were made, in that very few 
first few days, there was very few facts. You are dealing with 
assumptions and extrapolations and estimates. And a bad 
estimate was made, as I understand it, of how many trailers 
they needed. The question I would ask is, why did they believe 
they had to commit, formally commit to those trailers in that 
first 72 hours?
    One of the things that we did in this whole stewardship 
process was to go back into all the obligations that were made 
in that first week, which is when you have very few facts to go 
on, all the obligations that were made and were there 
obligations that you could lessen, recompete the contract to 
get a better price, or change the delivery dates. And all those 
situations where we were able to do that, we took that action.
    And I do not know the particulars of the trailers, but the 
assumption I can make, only from just reading is that we own 
them and do not need them, is that we were not able to decrease 
the contractual obligation for those trailers.
    Chairman Nussle. Well, I do not represent a gulf area. I 
maybe should defer to somebody who does. But I cannot believe 
everybody who needs a home has got a home yet. So I mean, I 
will just tell you, this is one of the most ridiculous things I 
have ever seen.
    So I understand Inspector Generals get together and they 
look at this and they try and figure out what went wrong and 
all of that, but does anyone call to somebody and say, guys, 
move the trailers to the gulf, get them to people who are 
living in tents still as I understand it? My understanding is 
people are still living in tents.
    Mr. Johnson. That would be Homeland Security Council, I 
believe. OMB----
    Chairman Nussle. OMB does not give that kind of direction.
    Mr. Johnson. No, sir.
    Chairman Nussle. That is what I was asking about the role.
    Mr. Johnson. No, sir.
    Chairman Nussle. You do not have a role in that?
    Mr. Johnson. [Shakes head negatively.]
    Chairman Nussle. So each and every agency and department 
has their own authority outside of OMB to make these decisions 
and OMB's role is to gather the IGs afterwards and find out 
if--I mean, I am just trying to understand this.
    Mr. Johnson. Yeah. OMB has no formal role over the IGs. I 
do as the Deputy Director for Management. We create mechanisms 
whereby agencies are held accountable for the money they spend.
    Chairman Nussle. All right. Well, how much was spent for 
these trailers?
    Mr. Johnson. I do not know. But I would be glad to get back 
to you with that information and answer this and any other 
question you have about them. But I just do not have that 
information.
    [The information requested follows:]

    Answer: The 9,993 units now staged in Hope, Arkansas will cost FEMA 
an estimated $677 million, factoring in both their purchase cost (about 
$27,000 each) and the distributed cost of various support contracts 
(about $41,000 each).

    Chairman Nussle. Well, we are ready to vote on another 
supplemental. And I got to tell you that, you know, we tried to 
reduce discretionary spending last year, and we did it. I mean, 
we got that done.
    But on 60 Minutes, there was a--I believe the company's 
name was Custer Battles which spent $2.5 billion on a contract 
in Iraq out of defense budget which everybody comes screaming 
in here every year saying we need more for defense, more for 
defense, more defense.
    I am the guy who said we ought to start planning for it and 
putting it into the budget. And you all thankfully have at 
least done that this year, but $2.5 billion--that is pretty 
darn close to the entire budget for the State of Iowa--to one 
contractor who according to the people that are watching this 
over there says that it was borderline incompetent behavior.
    So, you know, we have got a real problem on the 
accountability side, and it is not just the programmatic. My 
guess is that if you log onto this Web site, you will not find 
those two instances anywhere on the Web site.
    Mr. Johnson. There is a Web site for FEMA, but there is not 
one for trailer purchasing for Katrina. There is not.
    Chairman Nussle. Of course not, I do not know why they 
would. I mean, my point is that I think it is great that we are 
now tracking these programs, but there is an unbelievable and 
indefensible amount of resources that are still falling off the 
table and being wasted inappropriately.
    Mr. Johnson. To add to that comment, the Federal Government 
makes incorrect payments, improper payments each year to the 
tune of $45 billion per year.
    Chairman Nussle. Incorrect payments to whom?
    Mr. Johnson. To somebody that we are not sure is supposed 
to get it.
    Chairman Nussle. These are individuals? These are 
companies? These are for contracts? These are soup to nuts?
    Mr. Johnson. Yes.
    Chairman Nussle. That is the total amount of----
    Mr. Johnson. Forty-five billion dollars a year. The 
universe of programs that are most susceptible to improper 
payments, because some decision has to be made about who 
qualifies for a benefit or is this the right amount for this 
contract, it is like $1.4 trillion. And the error on that $1.4 
trillion based of audits of accurate and inaccurate payments, 
proper, improper payments is about 3.8 or 3.9 percent. A 3.8 or 
3.9 percent error rate sounds pretty low except it equates to 
$45 billion.
    Now, our goal is--and the purchase of----
    Chairman Nussle. Billion.
    Mr. Johnson. Billion.
    Chairman Nussle. B, billion.
    Mr. Johnson. This is not hidden. This is in our financial 
reports to you all. This past year, for instance, the purchase 
of the delivery of benefits to Katrina victims that were 
unauthorized, somebody that had a fake Social Security number 
or whatever, that is an improper payment.
    The buying a trailer that we did not need, that is an 
improper purchase. That is not an improper payment, but that is 
an improper purchase. But the error rate is 3-point-something 
percent, that should be zero.
    This past year, for instance, efforts were taken to, for 
the first time, consistently across the government to reduce 
improper payments. That number, $45 billion, was reduced 17 
percent, $7.8 billion. That still means that there is $37 
billion in improper payments.
    So we have a long way to go to make sure that we are 
spending every dollar on a real need and that we are getting 
what we pay for. There are lots of indicators that suggest that 
we do not always spend our money where the need is and that 
when we spend it, we do not always get what we contracted for.
    And all I can tell you is we are better at it today than we 
were last year, and we are better last year than the year 
before. However, we have a good ways to go still.
    Chairman Nussle. We have votes on the floor. Let me yield 
to Mr. Spratt for time he would like to consume at this point.
    Mr. Spratt. Mr. Johnson, I want to go back to a point that 
I made in my opening statement, namely that there is a 
bewildering pattern of what gets approved and what does not get 
approved. It does not seem to correlate completely with the 
PART assessment.
    For example, I gave an issue for proliferation prevention 
and the gravity of the threat, that is nuclear terrorism. It 
got an effective PART rating, but the budget eliminated all 
funding for it. Can you explain that?
    Mr. Johnson. I do not know the particulars of that program, 
but I would be glad to get back to you and will do that. I do 
have a couple of examples of one that was rated effective that 
is recommended. Similar situation, but it is not that 
particular program. It might be illustrative.
    [The information requested follows:]

    Answer: Funding for the ``Global Initiatives for Proliferation 
Prevention'' was not eliminated but the program was shifted in FY2007 
to a different organization within NNSA. The Administration has not 
proposed to reduce any of the NNSA nonproliferation efforts.

    Mr. Spratt. Public Diplomacy, State Department, I believe 
that is Secretary Hughes, Karen Hughes.
    Mr. Johnson. Yes.
    Mr. Spratt. Rating results not demonstrated, but it was 
approved, fully funded notwithstanding that rating?
    Mr. Johnson. Yes. They are not able to demonstrate the 
outcomes that are resulting from their public diplomacy 
efforts. We know what is important. We know we have to become 
more results oriented.
    If you might, let me give you two examples----
    Mr. Spratt. Sure.
    Mr. Johnson [continuing]. That, I think, touch on this. And 
then I can get back to you with a response to those two 
specific programs.
    There is a program called Gear Up in the Education 
Department that is rated adequate. And it is an attempt to 
encourage students to take more challenging courses to better 
prepare them for college. It is rated----
    Mr. Spratt. Trio and Gear Up are companion programs----
    Mr. Johnson. I am sorry?
    Mr. Spratt. Trio and Gear Up are companion programs to take 
kids from families that have not been college bound, college 
oriented in the past, and to help them make curriculum choices 
and college choices and find financing and do things that is 
otherwise Greek to them. Two good programs----
    Mr. Johnson. Right.
    Mr. Spratt [continuing]. Just based on my personal 
observations in my----
    Mr. Johnson. Right.
    Mr. Spratt [continuing]. Because I come from a district 
with lots of kids like that.
    Mr. Johnson. Right. That has been proposed for termination, 
and the reason is--it is an effective program, but we believe 
that the administration's High School Reform Initiative deals 
with that aspect and other aspects and will be a more effective 
results-oriented way to deal with that and related issues.
    So it is not that we do not believe that the goal is not 
worthwhile, but that there is an even more effective way of 
accomplishing that goal. So you do not need to have duplicative 
programs. We are proposing that you terminate one and replace 
it with one that dealt with that and other matters.
    There is a program, the project-based----
    Mr. Spratt. The budget cuts education by $2.2 billion and 
it eliminates 42 other programs, some of which have related 
purposes, in order to save $4.1 billion. How do you fund this 
alternate or substitute program with a budget that is 
shrinking?
    Mr. Johnson. I do not have the particulars on that, but I 
would be glad to get back to you on the particulars of the High 
School Initiative.
    [The information requested follows:]

    Answer: The Administration proposes to consolidate funding from the 
seven narrow purpose programs that support a particular high school 
intervention strategy and to redirect it to the President's High School 
Reform program. While such programs were intended to support promising 
educational approaches, most lack strong accountability mechanisms and 
have largely failed to demonstrate measurable results despite decades 
and billions of dollars of investment.
    Furthermore, because the Federal Government sets annual spending 
levels for each of these programs, States and school districts do not 
have the flexibility and control to allocate funds to activities they 
determine will best meet the needs of at-risk students.
    These programs would be replaced by the new $1.5 billion High 
School Reform program which will provide States with flexible funding 
to support a wide range of effective interventions. In return for this 
flexibility, States would be held accountable for improving student 
achievement and graduation rates. These new initiatives would augment 
new or expanded high school activities that are being proposed by the 
President, including $100 million for Striving Readers and $380 million 
in new funding for programs that are part of America's Competitiveness 
Initiative.
    The strategies supported by the existing programs--vocational 
training, mentoring, and partnerships with institutions of higher 
education to prepare students for college--would be allowable 
activities under the new High School Reform program. The Administration 
expects that States and localities would continue those projects 
supported under existing programs if the projects are performing 
effectively and reaching students who need them most. During the 
initial years of the program, the Administration would honor its 
commitment to fund multi-year continuation awards under the current 
programs.

    Mr. Spratt. We would appreciate it. And, once again, it is 
no reflection on you. I respect what you are doing.
    I worked once with the Defense Comptroller in a similar 
effort to establish something called a Selected Acquisition 
Report, which is woefully inadequate for the job. We are 
talking about small potatoes right now compared to military 
procurement. The investment accounts at DOD are running $125 
billion for research, development, procurement, production.
    And do you feel that you have an adequate baseline, for 
example, with respect to those programs against which to 
measure cost, performance, and schedule?
    Mr. Johnson. I do not know the particulars of those 
specific programs. I hate to keep answering your questions that 
way, and I know it must be frustrating for you.
    But I know for all programs, we do have, because we insist 
on it--and if they do not have it, their rated results not 
demonstrated--we require all programs to have a clear 
definition, a measurable definition of what the desired goal is 
and what the desired cost level is for the money that they are 
being given to spend each year.
    And when we first started rating programs in 2002, only 45 
percent of the programs could demonstrate that they were 
performing; 55 percent were either rated ineffective or they 
could not demonstrate a result. Today that number is 70 
percent. So there is more attention today than in 2002 being 
paid to----
    Mr. Spratt. One quick question. We will come back to it. 
International Affairs gets a $3 billion increase this year, and 
that is more than 10 percent. Sticks out as a spike in the 
budget which otherwise is pretty stingy with allocation for new 
money.
    Three billion dollars, are you seeing that kind of 
performance justification in international aid programs and the 
International Affairs Program?
    [The information requested follows:]

    Answer: The 2007 Budget requests a large percentage increase for 
international affairs programs because 2007 represents a critical year 
for American foreign policy. The largest proposed increases are 
targeted to programs that will greatly expand the number of people who 
receive life-saving treatment for HIV/AIDS; help strengthen the 
democratic government in Iraq, Afghanistan, and elsewhere; or will help 
countries with good governing practices grow their way out of poverty 
through the Millennium Challenge Account. (These initiatives account 
for over three-fourths of the proposed increase in international 
affairs funding.)
    Nearly $1 billion of the proposed increase is for the President's 
Emergency Plan for AIDS Relief, which is achieving measurable results 
and saving lives. In 2003, only 50,000 people in sub-Saharan Africa 
received treatment. With 2007 funding, the number of people receiving 
life-saving treatment in Africa and the Caribbean focus countries will 
increase from over 400,000 supported by the program in FY 2005 to 1.3 
million. This Budget will keep us on track to reach the President's 
goals supporting lifesaving treatment for 2 million persons, prevention 
of 7 million new HIV infections, and care for 10 million persons 
infected or affected by this disease after 5 years of funding. The 
Budget also includes funds to fight malaria in Africa and around the 
world and to build global capacity to prevent and respond to a 
potential influenza pandemic.
    Another $1.2 billion of the proposed increase is for the Millennium 
Challenge Corporation (MCC), which expects to approve a total of 21 
transformational Compacts by the end of 2007 totaling up to $6 billion. 
MCC has already achieved results and encouraged countries to adopt 
political and economic reforms. MCC is expected to have even more 
positive and transformational results when disbursements increase 
significantly in FY 2006 and FY 2007 as the first group of signed 
compacts move beyond the initial implementation stage. To sustain 
results, Compacts need to be large enough to have a transformational 
impact.
    The proposed increases also includes $771 million to transition 
U.S. assistance to Iraq from the large scale approach that was needed 
to quickly repair 20 years of neglect to a ``capacity-building'' 
approach that will help Iraqis build and sustain a democratic society 
and healthy economy. This budget request is closely linked with the 
President's National Strategy for Victory in Iraq, helping Iraqis 
defeat the terrorists and rebuild their nation.

    Mr. Johnson. Again, I am not familiar with the specifics of 
that program. I apologize.
    Mr. Spratt. Well, we will come back.
    Thank you very, Mr. Chairman.
    Chairman Nussle. Mr. Spratt, I am told there are two votes 
on the floor now, this one and then followed, we believe, by 
another vote. So we will recess and then come back after that 
second vote.
    Thank you, Mr. Johnson.
    We'll stand at recess.
    [Recess.]
    Chairman Nussle. The Budget Committee will resume. I 
believe when we left off, Mr. Spratt was in the middle of his 
questions. Let me return to Mr. Spratt for any more time he 
wishes to consume.
    Mr. Spratt. Thank you, Mr. Chairman.
    Mr. Johnson and I were talking during the recess. And the 
question I was about to ask him, I will ask him so he can give 
me the answer he gave me off the record. And that is one would 
expect if this system is working that as you look through the 
budget, some rational pattern will begin to emerge. Namely you 
would see those things that were scored well and highly by PART 
getting funded, maintained, even increased, and those things 
that were not getting decreased.
    I do not see that pattern here because as I look through 
it, part of the problem is I do not know what the PART's scores 
is, but I see programs that in my own experience I regard as 
highly effective.
    I will give you an example, the Economic Development 
Administration. The administration frequently wants us to cut 
it out. Every time it goes to the floor, there are 435 members, 
400 of whom have seen its positive results in their district 
and they rise up in support of the program, last year CDBG was 
to some extent the same way.
    But where is the rational pattern, the correlation between 
your PART assessment and budget funding?
    Mr. Johnson. Two answers, two aspects to the answer to that 
question. One of them is, the greatest use of the program 
assessment is to improve program performance. A secondary use 
of the information is to inform the budget and appropriation 
decision.
    We cannot hold program managers accountable for improving 
the performance of their program every year unless we have 
clear definitions of what their performance and financial and 
cost goals are. And until they have laid out for us what their 
program performance plan is, we cannot hold them accountable 
for achieving desired goals if they cannot define them.
    So the primary purpose of this is to let us cause programs 
to work better. A secondary purpose, but very important, is to 
inform what you all do here and what the appropriators do. 
There is a general correlation. The programs that were rated 
ineffective in the 2007 budget, we are proposing--there are 28 
of those programs--the sum of all those budget proposals is 
minus 16.7 percent 2007 versus 2006.
    The programs rated results not demonstrated, there is a 
minus 2. something percent 2007 to 2006 budget. Some of those 
programs might work. Some of them do not work. We just cannot 
demonstrate whether they work or not, and they are working on 
it.
    The programs that are rated effective have a zero percent 
increase. The programs that are rated moderately effective have 
a plus 2.2 percent. Programs rated adequate have a minus .2 
percent.
    There is a general correlation, but there is nothing that 
happens automatically as a result of programs assessment. It is 
one of many factors. Priorities are another factor, and 
buplication is another factor. There are several things that go 
into the decision about what the budget proposal ought to be.
    In some cases, we propose additional funding because we 
need to build extra safeguards in, extra quality control, extra 
compliance activities that will give us the return on the 
investment that we believe is possible.
    Mr. Spratt. Well, let me give you an example. When we had 
the debate on the floor just weeks ago about stiffer sanctions 
and penalties for immigration, one of the arguments raised was 
that even if you have stiffer sanctions, you do not have the 
personnel, border patrol, immigration and customs enforcement, 
and the elsewhere to implement and carry these out. So you are 
putting the cart before the horse. You need people out there 
who will actually implement the rather stiff and rigid rules we 
have got already.
    The typical response to that amongst those who were 
supporting the bill was, what we want to do is enlist the 
support of State and local law enforcement, engage them along 
with the border patrol and the customs and others in the 
process of enforcing immigration law.
    As I understand it, the chief program for that purpose in 
the Justice Department is the State Criminal Alien Assistance 
Program--it is zeroed out completely. One week we hear this 
argument on the House floor, part of the passage of a big, 
major initiative in immigration law toughening. The next week 
we get the budget and the principal account that would fund 
what they are touting is gone altogether.
    How did a program of that apparent importance get zeroed 
out altogether? Do you have any idea?
    Mr. Johnson. I do not on that particular program. Again, I 
apologize.
    [The information requested follows:]

    Answer: The 2007 Budget proposes to terminate SCAAP. Due to SCAAP's 
lack of adequate goals and performance measures and the fact that it 
can not demonstrate results, as well as other Federal efforts to 
strengthen immigration enforcement, the Administration proposes to 
reallocate funding to other priority needs such as Federal 
counterterrorism, immigration enforcement, and other efforts.

    But what we are able to do now, I believe, that we were not 
able to do 5 years ago is to take immigration, whatever the 
issue is, and define specifically what the definition of 
success is. What are our goals? How do we measure success, the 
turnaround time, catching the bad guys, incident rates? What 
are we trying to accomplish? What are our plans for 
accomplishing that? What sort of resources are we devoting to 
accomplishing that?
    So we do not get into philosophical arguments or $1 billion 
sounds like more than $900 million. We can talk about our 
resources and our commitments and our accountabilities are 
relative to what we are trying to accomplish. Therefore, it is 
a more intelligent, professional, results-oriented conversation 
as a result of having this information.
    Mr. Spratt. Well, let us take education. The President 
touted that particularly math and science education in the 
State of the Union message. The budget he sent up shortly 
thereafter cuts education by $2.1 billion overall. It is way 
short, $15 billion below what was represented as the authorized 
level for No Child Left Behind. Forty-two programs are 
eliminated.
    Did you find 42 programs in education that did not pass 
muster, that did not have a positive assessment rating?
    Mr. Johnson. As I mentioned earlier, a reason why we 
recommend that programs be eliminated is some are due to 
performance, some due to duplication, some due to the fact that 
there is a better solution, we believe, a new program that will 
replace the program that was already there. There are many----
    Mr. Spratt. Well, 42 programs is the better part of the 
universe of all of the education programs after Title 1, 
Elementary, and Education----
    Mr. Johnson. Education is full of a large number of very 
small dollar programs. I do not know what the dollar value of 
those program elimination proposals are, but there are a lot of 
small programs.
    Mr. Spratt. Let us take Head Start, a successful program. 
You hardly have to argue for it because everybody knows whom it 
affects and helps, and they have seen the results themselves. 
And, furthermore, we have had various outside consultants over 
the years like Mathematica come look at and say you are getting 
a positive return on your money. Down the road, there was some 
speculation years ago that it washed out by third or fourth 
grade. But, nevertheless, it certainly helped these kids over 
the threshold into the first and second grade.
    It has not been too long ago when this Committee said we 
are going to balance the budget, but there are a few things we 
are going to squirrel away and protect. Head Start was one of 
them. This year Head Start is frozen.
    Do you know if you found that Head Start was not worthy of 
any increase at all, even though it only reaches maybe 50, 60 
percent of the eligible kids?
    Mr. Johnson. What I understand of the assessment of the 
Head Start Program showed is it is rated results not 
demonstrated. They are not able to demonstrate quantifiably the 
impact that they have on the target population. There was a lot 
of anecdotal information, but they are not able to demonstrate 
tangible impact.
    So the challenge there is to go out and better understand 
and better define the desired outcomes and be able to measure 
them.
    We talked when I was in here the last time about CDBG and 
because there was another venue, there was a lot of 
conversation about what the funding for that ought to be and 
whether they all ought to be combined and moved to Commerce and 
so forth. And that is also a program where a lot of Members of 
Congress like that program, CDBG. One of the reasons is a lot 
of them used to be mayors and it is a lot of no-strings-
attached money. And there were some knowing smiles, I think, in 
this panel when we talked about that.
    But meanwhile, it is difficult to quantify that they are 
having the desired impact, creating economic vitality where it 
would not otherwise exist. And that is what the program is 
designed to do.
    So anecdotal evidence is better than no evidence, but we 
want, with all these programs, to be able to go beyond the 
anecdotes and be able to say we are taking measurements and 
here is, in fact, the impact that it is having.
    Mr. Spratt. Two more questions and then I will turn it over 
to others. I am using more than my fair share.
    But defense. Do you feel that you have an adequate grasp of 
defense programs, the investment programs, R&D, and production, 
procurement programs?
    With the PART system that you have in place now or are 
developing, are you able to baseline the initial 
representations as to cost, performance, and schedule and then 
track them quarter by quarter or year by year as the system 
progresses?
    Mr. Johnson. I do not have the details. I would bet we do 
not have it to your or our satisfaction. Some programs are very 
difficult to measure that the Federal Government is involved 
in. Research and development are some of the more difficult 
ones. Buying large weapon systems----
    Mr. Spratt. Well, typically, DOD will not draw you a 
baseline until they are well along in R&D, to engineering and 
development. Then they can define the cost much better. So they 
win that argument. They get a postponement of the commitment to 
their specifications until they put them down in engineering 
form.
    Mr. Johnson. They are not the only ones that are not doing 
as well as we all would like. As I mentioned earlier, we spend 
a lot of money, and every dollar we spend, we are buying 
something. Whether we are buying a weapon system, a better-
educated child, or we are buying a new computer system. We are 
particularly bad in investing money in new computer systems, 
and the more money we spend, the worse we are at it.
    A reason why we wasted a lot of money at FBI with their 
Case Management System was they never defined up front what it 
was, the functionality, what we were trying to do with this new 
Case Management System. If we are not--this is to your point 
about weapon systems--if we are not clear at the outset, 
disciplined and knowledgeable and clear at the outset about 
what we are trying to do, we are going to make a bad purchase 
decision.
    Mr. Spratt. Take ballistic missile defense (BMD), for 
example. If you go all the way back to the mid 1970's when 
Safeguard was started and add everything up and raise it to a 
present value, I would guess that the total amount we have 
spent is $150 billion.
    We are about to field one system, a ground-based 
interceptor, but there is a galaxy of other systems, 
interceptors of different sorts, kinetic and laser and directed 
energy and what have you. There are a lot of other ancillary 
programs like Sibbers Low and Sibbers High which are not 
performing well. Yet, BMD is getting an increase this year of 
$1.7 billion.
    Did the Office of Management and Budget (OMB) pass judgment 
on that increase and did you apply the PART application, the 
PART analysis to that program to determine whether or not it 
was worthy or warranted of an increase of that magnitude?
    Mr. Johnson. Again, the PART would be one of the factors 
that anybody would look at. OMB is integrally involved in the 
development of all budgets including DOD's budget. So when the 
budget comes up here, OMB is saying we sign off on this. So, 
yes, we are involved in that. I do not know what the PART 
assessment----
    Mr. Spratt. Well, several years ago, they put into play 
something they called spiral development. They call it 
capabilities management. You do not represent you are going to 
do something. You simply say that you are going to pursue it to 
the limit of its capabilities and you are going to spiral 
upward until you eventually attain your goal.
    Doesn't that take what you are trying to do and kind of 
throw it into a cocktail?
    Mr. Johnson. Yes.
    Mr. Spratt. Have you had that problem with ballistic 
missile defense, trying to figure out what the baseline is 
against which you are measuring, cost performance and schedule?
    Mr. Johnson. If we are not able to clearly define what it 
is we are trying to purchase, we are going to make a bad 
purchase decision.
    Mr. Spratt. Thank you very much for your testimony.
    Chairman Nussle. Mr. Ryun.
    Mr. Ryun. First of all, I would like to begin with just a 
comment and I do have a question. I know when we left for 
votes, you made a comment with regard to decision makers within 
the Government, how they control approximately $1.4 trillion 
with an error rate of roughly 3.8 percent which, if you do the 
math on that, it comes out to about $45 billion a year.
    And I think I can speak for most everyone here, that is a 
lot of money. And in a sense, it is a question, but it is 
really a comment. I think the 3.8 percent error rate can be 
reduced and improved upon. Certainly as Republicans, that is 
what we are doing, you know, looking for ways to save money and 
it is what this hearing is in part about.
    So my point is I would like to see if you can't take a 
message back that $1.4 trillion, as far as we are concerned, is 
too much money with regard to the error rate, and see if we 
can't lower that error rate. That is certainly a lot of dollars 
back home that people who send their tax dollars in would like 
to see greater accountability.
    I would like to address the question that actually the 
Chairman brought up, and that is with regard to the money that 
was sent for FEMA in the last hurricane situation. You know, we 
were told they needed a lot of trailers and those trailers, as 
has been acknowledged, are sitting on a runway in Hope, AR.
    And it is my understanding that part of the reason that 
they did not arrive at their destination is that where they 
would go is in a floodplain. Now, if that is really true, my 
question is, is there some way that Federal agencies and FEMA 
and your area of authority can work together to address those 
problems ahead of time so that Congress is not asked to write 
checks that ultimately really, should be addressed in a more 
accountable way?
    In other words, can you help us with regard to agencies 
asking those questions? You know, if you are going to build 
trailer homes and you are going to build them in an area where 
there is a floodplain problem, why don't we address that before 
we build the trailers and spend the money?
    Mr. Johnson. Right. This is a broken record. I do not know 
the particulars of the trailer situation. I read and hear that 
there are a lot of communities that do not want trailers. 
Trailers are an effective way of housing displaced persons, 
however, the communities do not want trailers.
    So, I do not know if that is a primary factor, why they are 
on the runway unused or not. I do believe that FEMA would tell 
you that they bought more trailers than they needed. They make 
the commitment in those first few days when the facts were few 
and they feel like they needed to make a commitment then. 
Looking back, I bet you they would do it differently.
    So I do not think they are saying we made the right 
decision when we purchased those trailers. I cannot answer the 
question about why they are sitting in Hope, AR, and not 
somewhere with families in all of them.
    One comment about the improper payments. There is an 
initiative to eliminate, not reduce, eliminate improper 
payments. Every agency--there are 11, I think it is--that are 
involved in our improper payment elimination effort where they 
are required to audit all the programs susceptible to improper 
payments to find the level, to find the causes, implement a 
plan.
    It is about a 10-year plan, 8- to 10-year plan. We reduced 
it 17 percent last year. The 17 percent was what we had planned 
to reduce it in the first 3 years. So we got a huge jump on it. 
There is a huge commitment to reduce this.
    I can give you information by agency. There is a report 
already that comes out that lays this out, that can tell you 
what each agency is doing and how much they reduced it and by 
program. And I will be sure you get a copy of that. We are very 
public, very candid about this. We have laid out our goals. 
This is not something we want to cut into. This is something we 
need to eliminate.
    Mr. Ryun. I am going to follow-up with one more quick 
question. As part of your PART assessment, you present this as 
a useful way of weeding out wasteful programs in the budget. 
But I would like to look at a way or ask you how you might 
address those programs that are successful, how you would wean 
those out.
    I mean, when a community becomes dependent and then becomes 
independent because those programs are working well, is there 
something that you would recommend as an assessment for these 
programs that have become successful and perhaps could move on?
    Mr. Johnson. They move on because we do not need them 
anymore.
    Mr. Ryun. Yes. As they become----
    Mr. Johnson. Well, that is part of the assessment is, is 
there another provider of services that produce the same thing? 
Has it achieved the desired goal? There are several programs--
Hope Six is one in particular--that has achieved the desired 
goal. And there are other ways of dealing with the same issue 
that are more effective and more efficient. So our proposal is 
that that be eliminated.
    So I think the current process does look at programs that 
have served their purpose or the need is less or the need is a 
lower priority. And there is nothing to prevent us from 
recommending, even though it is an effective program, from 
recommending that it be reduced or combined with another 
program.
    The primary purpose of this is to cause programs to work 
better, and that means we want great programs to be 
outstanding, even greater than great. We want medium programs 
to be great and we want not-performing programs to be 
performing. Separately, there is the use of information to 
inform how much money goes to each of the programs. But there 
is nothing in either case that happens automatically as a 
result of the assessment.
    When we first went out and started evaluating programs in 
the executive branch, there was a lot of resistance from the 
career employees because they thought, oh, this is an attempt 
to get rid of programs and get rid of me. I am going to be seen 
to be working with a program that does not work. That means my 
job is in jeopardy. It took them about 18 months to understand 
this is all about programs working better.
    There is another process that decides whether a program 
stays or goes, but our dealing with each agency is focused on 
programs getting better. And we cannot work with them to get 
programs better if we do not know where we are now and what we 
think the program's strengths and weaknesses are and what the 
opportunities to make it better are.
    So only with an assessment, initial assessment, can you 
have intelligent discussions about going forward, and can you 
have candor and transparency with regard to--that allows you to 
hold someone accountable for actually moving from where you are 
now to some higher state of affairs.
    Mr. Ryun. Thank you for your answer and thanks for coming 
before this Committee.
    Mr. Johnson. Sure.
    Chairman Nussle. Mr. Baird.
    Mr. Baird. I thank the chairman. I thank the gentleman.
    I just want to raise a couple questions about the PART 
Program. First of all, I applaud the notion that we would 
evaluate the efficacy of programs. And I have never been one 
that we just throw money at a program and pat ourselves on the 
back. So I commend you for that, but I have some concerns about 
the PART Program, and let me share with you why I have 
concerns.
    First of all, David Walker has testified and written a 
document December 14 to Comptroller GAO that a great number of 
Federal agencies do not have their books in order well enough 
for him to complete an audit, an adequate audit. Given that, it 
would follow to me that it is a fairly difficult task to 
decide, since we do not know how the money is actually being 
spent, whether or not a particular program is or is not meeting 
its goals. So that would be one point.
    But sort of more directly, I believe that you have a 
problem in this administration getting accurate information 
from employees. I have talked to VA staffers about whether or 
not they have the resources to do their jobs, and they have 
told me point blank, I will tell you we do not, Congressman, 
but if you reveal my name publicly, I will lose my job. In an 
environment like that, I think you are going to have some 
skewed data.
    Third, and this is most relevant, I suppose, you have 
identified programs in your PART analysis as ineffective and 
propose to zero them out when the people who are involved in 
those programs--and I do not think these are just self-serving, 
protect-my-turf people--tell us it is absolutely essential for 
the survival of their programs.
    And let me give you two examples. One is the Perkins 
Program----
    Mr. Johnson. The what program?
    Mr. Baird. The Perkins Program, the vocational grants. Now, 
I have read the documentation. We got it off of the Web during 
the break. You have proposed zeroing out Perkins.
    I can tell you the vocational schools and the community 
colleges that I represent say they cannot meet their mission if 
you zero out Perkins. Perkins' monies are used to provide 
things like drill presses, saws, nursing equipment depending on 
the vocational program. That is the money they use to get the 
equipment you need to train people.
    Now, I have looked through the assessment and it looks 
actually like you have got some pretty good indicators of 
achievement. Now, admittedly, there are some States that have 
not reported, but you have reported it as not meeting any of 
its goals and zeroed it out. And that is so at odds with, I 
think, some of your data. I will not say objective data, but I 
will say data. But it is clearly at odds with the empirical 
experience of the people out in the field.
    A second example that I think is very relevant is when it 
comes to fighting methamphetamine. And I will tell you that the 
National Association of Counties has identified this as the 
single-biggest drug problem in the country. It is behind a 
great deal of crimes of all sorts throughout our communities.
    And, yet, this is what the administration has proposed for 
this, a $353 million reduction in the Safe and Drug Free 
Schools Program, complete elimination of the Edward Burn Grants 
Program, $388 million complete elimination of Justice 
Assistance grants, $376 million to the Cops Program.
    Now, I know the administration has proposed a very modest, 
I think, $80 million increase in drug courts. And that is to be 
appreciated, but the net cut is over a billion, $1.4 billion.
    So I have two questions, and I know it is difficult. We 
cannot expect you as one person to know all of these 
categories. But here is a broad-based question I think you can 
answer.
    If I look at Perkins and I look at Burn Grants and Cops, et 
cetera, and you say we are going to zero these out, where in 
your report or the PART analysis have you reported on the 
impact of zeroing out the programs because it seems to me sound 
management strategy would say, OK, we may not be sure this is 
meeting its goal, but what are the consequences if we zero it 
out? How many officers off the street? How much less 
investigatory potential? How many students will not be able to 
get a vocational education and, therefore, drop out of high 
school and become other statistics that we do not want? Can you 
address that issue?
    Mr. Johnson. Let me try. It will necessarily be at a very 
high level. First of all, there is a document we put out in the 
last week, I think it was, that goes through the 141 
recommendations for reduction or elimination. And it goes into 
the rationale for the recommendation for each program.
    Performance is not the rationale or the primary rationale 
for all of them. It is for some, but fFor others, it is 
duplication, because there is a better solution. So the 
specific answers to the programs you have asked about are in 
that document, and I would be glad to make sure you get one.
    Mr. Baird. I would like to look at that. My assessment is, 
as I have looked through the rest of the budget, and we do not 
usually supplement, we usually are just cutting or you are 
putting out the administration's favorite program that made a 
good sound bite in the State of the Union, but you do not 
adequately fill in the gap.
    Mr. Johnson. This is a very high level and I bet you it is 
unsatisfactory for you. But we believe that you have to focus 
on your priorities. You have to live within your means. And 
that is why increases in budget are entertained for Homeland 
Security and the Global War on Terror.
    An important priority is also the vitality and vibrancy of 
our economy and, therefore, that is why we believe that 
taxation at historical levels, not higher, is very important. 
And there is a conflict there. You do not have all the money to 
do all the things that somebody, some segment of our population 
would like us to do.
    Mr. Baird. So I respect that and----
    Mr. Johnson. Choices have to be made.
    Mr. Baird. I respect that. So I think the choices you are 
saying is that we are choosing, the administration is choosing 
in its budget proposal to leave our communities less well 
protected against methamphetamine, less able to enforce our 
laws that restrict drug trafficking this, less able to educate 
our kids so they do not get involved in methamphetamine, less 
able to educate our kids in vocational education, et cetera, in 
order to prosecute the War in Iraq and push forward the tax 
cuts. Those are the choices I see.
    Mr. Johnson. Let me be real clear. That is not what the 
administration is saying. I know on the Drug Free Schools--I 
believe this is correct--the reason that is recommended for 
elimination is it is a very little bit of money to be spread 
all across the United States. And so there is a pittance that 
goes to each school or each school district and it is not 
enough to have any impact whatsoever. And so, therefore, the 
money that we are spending now is wasted.
    Mr. Baird. I can guarantee you on Burn Grants and Cops, if 
you talk to my local law enforcement officers, and Perkins, 
they do not say it is a pittance, it is an absolute essential. 
I know that my time is up.
    Mr. Johnson. Yeah. But I would suggest that the question to 
the administration ought to be or to the agency that is working 
this--I guess it is a number of agencies--is drugs and schools, 
what are we doing? What is the Federal Government doing, what 
is the State, what is the local governments doing, private 
sector? What is happening and is the total effort, not just the 
federal, is the total effort adequate to address the 
opportunity to do good, the need.
    Chairman Nussle. Mr. Hensarling.
    Mr. Hensarling. Thank you, Mr. Chairman.
    Mr. Johnson, first let me applaud you personally, OMB, the 
administration for the PART Program. It is, as you know, fairly 
novel in this city to judge the effectiveness of a program by 
any other measurement besides how much more money can we spend 
on the program next year than this year. So any step in the 
direction of accountability is one that certainly deserves high 
praise.
    I believe that OMB has now performed 800 assessment 
summaries----
    Mr. Johnson. Yes.
    Mr. Hensarling [continuing]. Is that correct? Sounds like 
there is still a lot of work to be done. How many Federal 
programs are there out there? I saw a report from the Heritage 
Foundation that led me to believe the number was roughly 
10,000. Is that in the ballpark?
    Mr. Johnson. Well, you can define a program as a 
combination of a bunch of little ones or one big one. Generally 
the number we have used is there is about 1,150 or so programs. 
What we think we have done, reasonably we have done, is we have 
evaluated 800. Those are programs that account for about 80 
percent of the budget.
    So we will assess programs that account for the remaining, 
roughly the remaining 20 percent of the budget this next year. 
I mean, it will be 90 something percent of the budget. But it 
is in the 1,100 plus or minus is the way we think of the number 
of programs.
    Mr. Hensarling. Well, I certainly will expect to spend some 
more time on expectmore.gov and learn more about your program, 
but kind of a philosophical question. It is one thing to 
measure the effectiveness of a program. It is another thing to 
incent the effectiveness of a program.
    Given that all too often still the incentive structure is 
for people to want to increase their budget, increase the 
number of programs they administer, increase the number of 
employees, how can you ever expect the bureaucrat planted deep 
in the bowels of Commerce to have an incentive to be a good 
steward of the taxpayer money? What is it we can do in 
Congress? What is it the administration can do?
    Mr. Johnson. Well, one, employees tell me, managers tell me 
that they welcome transparency about how their programs are 
working. As we see, 70 percent of the programs are deemed to be 
effective to some degree. That is not well understood. So it is 
incentivizing to have it known that this program is excellent, 
moderate, so forth, or adequate or so forth.
    So transparency is good, and being held accountable is 
good. The thing that we think is very, very important is now 
that they have tools, now that we have a clear definition of 
what programs are supposed to be doing, it is important to 
ensure, to require agencies to better manage, develop, and 
reward their employees.
    And that means that every individual's performance 
evaluation needs to reference the performance goals of the 
program they work on and they need to clearly understand, have 
a clear definition from their boss what is expected of them as 
it relates to the performance of the program.
    And our proposal in draft form this past year and more 
formal form going forward will be that a part of person's pay 
raise be tied to their individual performance.
    Mr. Hensarling. Sounds like an excellent idea. Let me 
change subjects on you.
    Apparently the administration will send out very soon a new 
$18 billion supplemental appropriation request for further 
funding on Katrina relief. This is on top of, I believe, 
roughly $88 billion that has already been approved, with 
another $8 billion roughly in tax incentives.
    We all know where the budget is headed in generations to 
come. I am under the impression that the administration is 
going to send up this supplemental request without offsets.
    So my first question is, is that correct and, if so, why 
isn't the administration offering offsets?
    Mr. Johnson. The one part I know is they are sending it up 
this afternoon, I think it is, or shortly. But that is the only 
part of it I know for details, I mean in terms of details.
    Mr. Hensarling. OK. A different subject. I notice that you 
assessed the effectiveness of a number of DOD programs. If I am 
reading the budget correctly, since we continue to essentially 
fund the War on Terror through supplemental requests, non-War 
on Terror, DOD spending is due to increase almost 7 percent in 
this next budget. That strikes me as a very, very large number 
if that is not associated directly with conducting the War on 
Terror.
    Surely the Pentagon is not immune from waste and fraud, 
abuse and duplication and ineffectiveness and lower priority 
spending. What is the administration doing about all that?
    Mr. Johnson. Well----
    Mr. Hensarling. Why do we have 6.9 percent increase?
    Mr. Johnson. Why what?
    Mr. Hensarling. And why the 6.9 percent increase?
    Mr. Johnson. The next time I come up here, I am bringing a 
budget person. Everybody will be happier, starting with me. But 
you all----
    Mr. Hensarling. You are the only guy here.
    Mr. Johnson. But you all will be getting answers to your 
questions as opposed to this shuck and jive that you are 
getting from me.
    We did not start with 6-point-something percent and then 
back into it. It was a buildup, and OMB worked with the Defense 
Department to develop their budget. And it is designed they 
want to accomplish this and here is how much money they believe 
is required to do that.
    So it is very goal oriented. It is tied where we have 
program assessments. Program assessments is a factor in that 
discussion. But the goal, they want to spend X amount of money 
to accomplish this and Y amount of money to accomplish that.
    So it is focused on individual goals, and that is what the 
budget should present to you. That is one of the reasons why we 
are proposing and worked with both Houses of Congress to better 
accomplish the things you are talking about, Mr. Cuellar, is 
performance budgeting. Tell me here is what we are going to 
spend and here is why we recommend spending this amount of 
money. We want to spend this amount of money to accomplish X.
    Mr. Hensarling. Well, thank you for your testimony. I am 
out of time, but I do look forward to hearing exactly what 
these non-War on Terror goals are.
    Chairman Nussle. Mr Cooper.
    Mr. Cooper. Thank you. I will reserve my questions for the 
next time.
    Chairman Nussle. Mr. Cuellar.
    Mr. Cuellar. Thank you, Mr. Chairman, Mr. Spratt, also 
members.
    Clay, I have handed out a--and I do not know if you got a 
copy of the----
    Mr. Johnson. No.
    Mr. Cuellar [continuing]. Handout. I believe all the 
members should have a copy of it. And all I want to do is just 
ask you. I think we are all in agreement as to performance-
based budgeting, at least moving to that direction, the results 
oriented.
    What I have done is, all I have done is just present three 
copies, a copy of the President's budget--and I just used an Ag 
because the other committee I am in is on the agriculture. 
There is a copy of the Department of Agriculture budget as 
presented by the President. There is a copy of the budget that 
the U.S. Congress presents. And then there is a copy--as a 
model, I am using just Texas as a model.
    Mr. Johnson. Just to pick a State at random?
    Mr. Cuellar. Just to pick a State that's random.
    Mr. Johnson. Right.
    Mr. Cuellar. And what I will ask the members and ask you 
also, Clay, to just look at this. Look at the President's 
budget and the format that it is in, and notice, members, look 
at the structure that we have. Then ask you to look at what the 
U.S. Congress presents when it talks about the agricultural 
budget. And then ask you to look at, you know, just a random--
you know, the other one that we use in Texas, and look at the 
format. And if you look at the format, there is a format first.
    The first part of it is a method of financing, so we know 
what are the monies coming in to finance that budget. And then 
the second part is the item of appropriations where we go into 
the goals and the objectives of the Department of Agriculture. 
And then the third part of it deals with the performance 
measures and has other items dealing with capital budget, et 
cetera, and a more systematic approach to address the issue.
    I had asked Mr. Bolten last time when he was here, and I 
believe he referred this to you, Mr. Johnson, is, just so we 
can get the process started because we have been talking about 
it--and I want to thank the chairman for allowing us to be here 
last--I think it was last July when we were here last time--is 
if your department, even if you use dummy figures or 
percentages on the performance, if you all could just put 
something together so we can at least look at what a Federal 
budget would look like----
    Mr. Johnson. Right.
    Mr. Cuellar [continuing]. Using the format--and, again, I 
hate to use Texas--but I mean using Texas, I mean that model 
just so we can get an example. And I think if we are able to do 
that, I think on a show and tell, I think for members, I think 
this will give us a pretty good idea as to what it would mean 
for us because we would ask more intelligent, more in-depth 
questions, more----
    Mr. Johnson. Even more intelligent.
    Mr. Cuellar. More intelligent questions, even more 
intelligent questions. And I mean for everybody, I mean whether 
it is on the executive branch or the legislative branch or even 
for the agencies themselves. I think this would allow us. Could 
you all put something together----
    Mr. Johnson. Sure.
    Mr. Cuellar [continuing]. And, again, as to what the 
performance measures, come up with some, but I think that is 
something that the members can come up, and what the numbers 
will be, just use some dummy numbers as an example.
    Mr. Johnson. Right.
    Mr. Cuellar. But I would ask you if you can do that because 
I think this will go a long way to show us what we could 
actually come out from results-oriented government.
    Mr. Johnson. Be glad to do that. We welcome that, that 
challenge.
    Mr. Cuellar. OK.
    Mr. Johnson. But, again, I think, as I said at the very 
beginning, we in the executive branch should be focused on what 
are we doing with the money. Appropriators should be focused on 
that, budgeters and authorizers should be focused on that. And 
if we do not organize our expenditures by goal, by program as 
opposed to by travel versus personnel versus administrative 
supplies, we cannot really engage in a conversation about what 
we are getting for this expenditure and that expenditure and so 
forth. So we welcome the challenge.
    Mr. Cuellar. Mr. Chairman----
    Chairman Nussle. Can I just ask--would the gentleman 
yield--the last part of this which is on your letterhead, is 
this your recommendation or this is what you think it ought to 
look like or what you are----
    Mr. Cuellar. That is the bill pattern that I would ask for 
us to look at. And what we put there or what performance, I 
mean, that is up to us to decide.
    Chairman Nussle. Right. I just was not sure what this last 
part was.
    Mr. Cuellar. Right. It is the last part that has my 
letterhead. And it is basically, if you look at it, the first 
part is the source of funding. The second part is the items of 
appropriations by goals. And then the third part is it has the 
performance measures plus some other items that we might 
budget, the capital budget and those items.
    But if you look at it, Mr. Chairman and Mr. Spratt, this 
will give us--it is a more systematic approach to address this. 
And I think this will allow us to ask more in-depth questions 
as to what we are doing. And I think if you look at it, I mean, 
I think this will answer a lot of the questions.
    I know that a lot of this information, Clay, is available 
in other places. I know it is all available somewhere. But in 
practicality, how many of us do we really go out there and have 
it available? I mean, I think if we put it at our fingertips, I 
think this will provide us more legislative oversight, which we 
should be doing.
    Chairman Nussle. I thank the gentleman. And I would ask 
unanimous consent that this be made part of the record, too----
    Mr. Cuellar. Thank you, Mr. Chairman.
    Chairman Nussle [continuing]. Unless you have an objection 
to that.
    Mr. Cuellar. No, sir.
    Chairman Nussle. I think it would be good to have that in 
the record. Thank you.
    Mr. Cuellar. Thank you.
    Chairman Nussle. Mr. Chocola.
    Mr. Chocola. Thank you, Mr. Chairman.
    Mr. Johnson, thanks for being here and thank you for the 
work you are doing.
    Just an initial matter, there has been some discussion of 
trailers here today. Most of those trailers are made in my 
district or nearby my district. And I will just offer that even 
the manufacturers of the trailers understand that there have 
been mistakes made in this program and they are more than 
willing to sit down with OMB, with FEMA, with Homeland Security 
and talk about a better way to manage a program in response to 
a disaster like we had in temporary housing. So they would love 
to do that.
    In your opening remarks, you talked about probably the two 
most important things as focusing on results and being 
accountable, and I agree with you. But one way it is hard to be 
accountable is when we pass a budget and then we have spending 
outside of the budget that we call emergencies. And I think 
over the past 5 years, we have had about $88 billion a year 
spending outside the budget.
    There has been a group of us that have worked on budget 
process reform issues that would include having a rainy-day 
fund to budget for emergencies. We know we are going to spend 
money on emergencies. We do not know how much or when, but use 
history as our guide and use a super majority vote procedure if 
something exceeds our expectations.
    I used to be in the business world and if we knew we were 
going to spend money, we would budget for it.
    Do you think it is a good idea to have a rainy-day fund to 
try to anticipate those emergencies and have really a more 
accountable budget and if not a rainy-day fund, do you have any 
other suggestions?
    Mr. Johnson. Let me state again, the next time I am 
bringing a budget person up here for your all's benefit and a 
little bit for mine.
    Texas had a rainy-day fund and used it to sort of smooth 
things out. I think actually there is plenty of accountability 
with supplementals. We have to be very detailed about what we 
want to do. And you all are prepared to ask a lot of questions 
about why do we need this when we are not doing this or having 
already spent this or whatever.
    So I do not believe that using supplementals diminishes the 
level of accountability. I think in the world of limited 
resources that we are in today and with the growing mandatory 
program expenditures in the future, which suggest we are going 
to be in the limited resource environment from this point 
onward, to agree to a rainy-day fund because it might rain, 
that might be a difficult pill to swallow.
    But if you come in with a very specific need, here is a 
war, here is a Katrina, here is a something we need to respond 
to, here is why we need the money, that is actually something 
that is more apt to create a specific yes, no answer from 
Congress than a rainy-day fund. But I am not a budget person.
    Mr. Chocola. When we talk about budgets and we talk about 
how much more or less we are going to spend compared to last 
year, it is not as accountable as it could be because we know 
we are going to spend more than that. We do not know exactly 
which count or how much, but I think it is more transparent, it 
is more accountable to say we know we are going to spend it, we 
are going to budget for it, and then when the need comes, we 
can evaluate it at that time.
    Mr. Johnson. Yeah.
    Mr. Chocola. You also talked about, you know, focusing on 
results. We had a panel here yesterday focused on entitlement 
spending and we discussed the fact that we may understand the 
challenge here, in many cases insurmountable challenge, but we 
are not sure our constituents do.
    And so when you talk about focusing on results, it is not 
only us, but it is the American people that are the recipients 
of the services that Government provides.
    Do you have any ideas how to use these performance measures 
to get our constituents to understand how well these programs 
are performing?
    I have not been in Congress long, but I understand there is 
a constituent for every dollar we spend. Nobody has ever come 
in my office and said spend less on me. And so how do we make 
sure that we are hearing from our constituents that they demand 
that we are better managers by spending their tax dollars 
better based on results?
    Mr. Johnson. Well, one, this information allows a lot of 
things. It allows us to have a conversation about these 
performance measures that are pathetic. We need better 
performance measures. It is better than having no performance 
measures, which was the case in a large percentage of our 
programs 5 years ago. So you could say I need more service 
performance measures or I need more information about how our 
constituents are really being served.
    So, it encourages that kind of conversation to have it be 
even more focused on the good we are doing or not doing. Also, 
it is information that you, any Member of Congress, can use to 
go out in their district and say here are the programs. I have 
a lot of people in my district that benefit from this program 
or receive services from this program. Here it works or it does 
not work or here is what we are doing to make it work. I think 
the things they are working on to make the program work better 
are OK, better than nothing, but they are not being as 
aggressive as they can, and I am here to tell you I am going to 
work with the agency to get them to be more aggressive and to 
get better performance measures or to do some things to drive 
the performance even more aggressively than they are.
    So it allows you to have a more informed dialogue with your 
constituents and allows you to have a more informed dialogue 
with the appropriate agency and allows us all to have a 
conversation about what is--it is nice to pay attention to 
performance. That is better than not, but is it enough 
attention to performance?
    Mr. Chocola. I see we are out of time. Is there any 
marketing effort on expectmore.gov to the general population, 
they know it is there?
    Mr. Johnson. We have gone with the press. Our first goal 
has been with Congress, with agencies, agency employees, and 
primary constituent groups. Here are programs that you, the 
farmers, are interested in or that you, the housing community, 
is interested in to give them information.
    But in terms of general public, we have gotten some press. 
We have gone and talked to general press just with the budget 
release the President mentioned in his speech last week in New 
Hampshire. So that has gotten some word out.
    But there is no plans, more aggressive marketing plans to 
the public at large. We figure that the greatest opportunity to 
do that to the relevant people would be Members of Congress to 
go out as they communicate with their constituents.
    Mr. Chocola. OK. Thank you very much.
    Thank you, Mr. Chairman.
    Chairman Nussle. If there are no further questions for this 
panel, thank you, Director Johnson, for being with us today, 
and we appreciate your testimony.
    Mr. Johnson. Right.
    Chairman Nussle. Thank you.
    Mr. Johnson. Thanks for having me.
    Chairman Nussle. I will now be in order to call the second 
panel forward, and we have Brian Riedl. I hope I am pronouncing 
that correctly. Riedl?
    Mr. Riedl. Riedl.
    Chairman Nussle. Riedl. Well, I did not pronounce Robert 
Greenstein's name correctly either, as I understand, so I 
have--I just did. But when I opened up the hearing, I believe I 
pronounced it incorrectly. So I apologize for that. Welcome 
both the Director, Executive Director for the Center of Budget 
and Policy Priorities, Robert Greenstein, here, as well as 
Brian Riedl, the fellow in Federal Budgetary Affairs from the 
Heritage Foundation. We welcome you to the Budget Committee.
    We are pleased to include your entire testimony in the 
record as it is written, and we will give you 5 minutes to 
summarize your statement, and let me call on, in order of the 
way they appear on our sheet, and that is Brian Riedl to begin 
the testimony. You are recognized for 5 minutes. Thank you.

   STATEMENT OF BRIAN M. RIEDL, FELLOW IN FEDERAL BUDGETARY 
                AFFAIRS, THE HERITAGE FOUNDATION

    Mr. Riedl. Thank you. Chairman Nussle, Ranking Member 
Spratt, members of the committee, thank you for offering me the 
opportunity to share my views. My name is Brian Riedl. I am the 
Grover Herman fellow in Federal Budgetary Affairs at the 
Heritage Foundation. The views I express in this testimony are 
my own and should not be construed as representing any official 
position of the Heritage Foundation.
    My testimony will explain that discretionary spending 
levels are not out of line with historical trends. However, 
budget increases since 2001 have set the spending on a steeply 
upward course, just as escalating entitlements are putting an 
enormous strain on the Federal budget.
    Let me begin with the historical context. The 7.9 percent 
of GDP we currently spend on discretionary spending is not far 
off the historical average. Discretionary spending topped 10 
percent of GDP from World War II through the 80s, before 
dropping down to 6.3 percent of GDP in 2000, but it has since 
spiked back up to 7.9 percent of GDP.
    Defense has driven many of these fluctuations. From 9.3 
percent of GDP in 62, it usually remained over 5 percent, that 
is, until the Soviet Union fell in 1991, and it dipped all the 
way down to 3.0 percent of GDP before rebounding to 4.1 percent 
of GDP today.
    Non-defense discretionary spending by contrast has remained 
stable over the past few decades. However, after dropping to 
3.2 percent of GDP in 1999, non-defense discretionary spending 
has since spiked up to 3.9 percent of GDP.
    Let me jump into some of the recent spending increases. 
Conventional wisdom holds that non-defense discretionary 
spending has been cut to make room for defense spending 
increases. Conventional wisdom is wrong. According to OMB 
historical table 8.2, non-defense discretionary outlays 
adjusted for inflation, surged by 34 percent from 1999 through 
2005. That is the largest 6-year expansion of non-defense 
discretionary spending since the 1970s.
    One way to compare discretionary spending trends is by 
presidential administration. Overall discretionary outlays rose 
2.3 percent under President Clinton versus 9.7 percent annually 
under President Bush. Defense was virtually frozen in nominal 
dollars under President Clinton and has averaged 12 percent 
annual growth under President Bush.
    Non-defense discretionary outlays rose 4.0 percent annually 
under President Clinton versus 8.0 percent annually under 
President Bush. Let me reemphasize that last point. Non-defense 
discretionary outlays have grown twice as fast under President 
Bush as President Clinton.
    From 2001 through 2006, inflation was about 12 percent 
total. With that in mind, over these 5 years, 2001 through 
2006, we have had education increase by 62 percent or 10 
percent annually. International affairs has increased by 74 
percent or 12 percent annually. Health research and regulation 
is up 57 percent or 9 percent annually. Veterans' benefits were 
up 46 percent or 8 percent annually.
    Science and basic research is up 40 percent or 7 percent 
annually, and overall non-defense discretionary outlays are up 
46 percent or 8 percent annually. Again, this is versus 
inflation of only 12 percent.
    Now budgets are about making trade-offs among competing 
priorities, and these recent guns and butter budgets raise 
serious questions about Federal priorities. To enact the 
largest 6-year, non-defense discretionary spending hike, at the 
same time funding a war, has placed Federal spending on an 
unsustainable path. Last week's harsh reaction to the 
President's budget proposal shows that certain constituencies 
have now grown accustomed to large annual spending increases 
and consider even a temporary freeze at these higher levels to 
be out of bounds.
    Let me finish up by focusing on the future. Discretionary 
spending faces a perilous future, not because President Bush 
put out a proposal that lowers it through 2011, those out-year 
numbers are typically ignored when writing future budgets.
    The real reason for concern comes from Social Security, 
Medicare, and Medicaid, which you heard of yesterday. Spending 
on the three big entitlements is going to increase by 10.5 
percent of GDP between now and 2050. Yet the entire 
discretionary budget is only 7.9 percent of GDP.
    Now the math is simple. Again, we can raise taxes to pay 
for the spending, but raising taxes by 10.5 percent of GDP 
would be the equivalent of raising taxes by 11,000 per 
household permanently.
    Assuming that Congress balks at such large tax hikes, it 
becomes more likely that discretionary spending will have to be 
reduced to make up for these spending increases entitlements.
    Overall, if we took Social Security, Medicare, and Medicaid 
increases out of the--and squeezed it out of the defense--our 
discretionary budget, we would have to wipe out the entire non-
defense discretionary budget by 2020. We would have to wipe out 
the entire discretionary budget by 2034.
    Now I'm not saying obviously that that's going to happen, 
but I'm showing the trade-offs we face as entitlement spending 
continue to increase, there will be enormous pressure on 
discretionary programs. So if you prioritize education, health 
research, veterans' health, homeland security, defense, or 
environment, the single biggest threat to these programs is 
Social Security, Medicare and Medicaid.
    The CBO estimates that in a decade spending on the big 
three entitlements is going to grow $172 billion per year. That 
will be more than the entire Department of Education and 
Justice at that time. At that point it will be difficult to 
maintain even a shell of current discretionary programs. Social 
Security, Medicare, and Medicaid will swallow almost all of the 
tax dollars.
    Heritage is creating an online budget calculator that we 
can show to offices that will show this, and I see that my time 
is up, and so with that, I will thank you for your time.
    Chairman Nussle. Thank you.
    [The prepared statement of Brian M. Riedl follows:]

   Prepared Statement of Brian M. Riedl, Fellow in Federal Budgetary 
                    Affairs, the Heritage Foundation

    My name is Brian Riedl. I am the Grover M. Hermann Fellow in 
Federal Budgetary Affairs at The Heritage Foundation. The views I 
express in this testimony are my own, and should not be construed as 
representing any official position of The Heritage Foundation.
    Discretionary spending is not out of the line with historical 
trends. However, budget increases since 2001 have set this spending on 
a steeply upward course just as escalating entitlement costs are 
putting an enormous strain on the entire budget.

                           HISTORICAL CONTEXT

    The 7.9 percent of GDP spent on discretionary programs in 2005 was 
not far off the historical average. Discretionary spending topped 10 
percent of GDP from World War II through the early 1980's, before 
falling to 6.3 percent in 2000, and then spiking back up to 7.9 percent 
in 2005.
    Defense spending has driven much of these fluctuations. From 9.3 
percent of GDP in 1962, it typically remained over 5 percent until the 
Soviet Union fell in 1991. Then, after dropping all the way down to 3.0 
percent of GDP in 2000, the War on Terrorism has pushed it back up to 
4.1 percent.
    Non-defense discretionary spending has remained more stable over 
the past few decades. After dropping to 3.2 percent of GDP in 1999, it 
has since surged to 3.9 percent in 2005.

                    RECENT LARGE SPENDING INCREASES

    Conventional wisdom holds that non-defense discretionary spending 
has been cut to make room for defense spending increases. Conventional 
wisdom is wrong. According to OMB Historical Table 8.2, non-defense 
discretionary outlays--adjusted for inflation -surged by 34 percent 
between 1999 and 2005. That is the largest 6-year expansion since the 
1970's.
    One way to compare current discretionary spending trends is by 
presidential administration:
     Overall discretionary outlays rose 2.3 percent annually 
under President Clinton, compared to 9.7 percent annually under 
President Bush.
     Defense was virtually frozen in nominal dollars under 
President Clinton, and has averaged 12 percent annual growth under 
President Bush.
     Non-defense discretionary outlays rose 4 percent annually 
under President Clinton, versus 8 percent annually under President 
Bush.
    Let me re-emphasize that last point: Non-defense discretionary 
spending has grown twice as fast under President Bush as under 
President Clinton. Examples of discretionary spending increases between 
2001 and 2006 include the following:
     Education is up 62 percent, or 10 percent annually;
     International affairs is up 74 percent, or 12 percent 
annually;
     Health research and regulation is up 57 percent, or 9 
percent annually;
     Veterans' benefits are up 46 percent, or 8 percent 
annually;
     Science and basic research is up 40 percent, or 7 percent 
annually. and
     Overall non-defense discretionary outlays are up 46 
percent, or 7.8 percent annually.
    Budgets are about making trade-offs among competing priorities, and 
these recent guns and butter budgets raise serious questions about 
Federal priorities. To enact the largest 6-year non-defense 
discretionary spending hike, at the same time funding a war, has placed 
Federal spending on an unsustainable path. Last week's harsh reactions 
to the President's budget proposal shows that certain constituencies 
have now grown accustomed to large annual spending increases, and 
consider even a temporary freeze at these higher spending levels to be 
out of bounds.

           LARGE ENTITLEMENTS THREATEN DISCRETIONARY PROGRAMS

    Discretionary spending faces a perilous future. The reason is not 
because the President's budget proposal forecasts discretionary 
spending cuts through 2011. Discretionary spending is budgeted on a 
yearly basis, and any projected discretionary spending numbers after 
2007 hold no statutory weight, but serve only as temporary placeholders 
to make future budget deficits appear smaller. These out-year numbers 
are typically dismissed by the White House when writing subsequent 
budget requests.
    The real reason for concern comes from Social Security, Medicare, 
and Medicaid, whose steep growth will likely crowd out all other 
spending.
    The math is simple. Annual spending on Social Security, Medicare, 
and Medicaid--what I call the ``big three entitlements''--is projected 
to leap by 10.5 percent of GDP between now and 2050. That money will 
have to come from somewhere. The entire 7.9 percent of GDP currently 
spent on discretionary programs will be at risk.
    It is possible that Congress will raise taxes to pay for this 
spending. However, Congress would have to keep raising taxes every year 
until they reach the current equivalent of $11,000 per household above 
current levels to fund those entitlement costs.
    Assuming that Congress balks at such large tax hikes, it becomes 
more likely that discretionary spending will have to be substantially 
reduced to make room for those entitlements. Competition for scarce 
budget resources will become increasingly intense, and the big three 
entitlements will leave smaller and smaller crumbs for discretionary 
spending. Overall, Social Security, Medicare, and Medicaid spending 
increases are projected to squeeze out the entire non-defense 
discretionary budget by 2020, and the entire discretionary budget 
(including defense) by 2034.
    The message is clear: If you prioritize spending on education, 
health research, veterans' health care, homeland, security, defense or 
the environment--the single biggest threat to these programs is Social 
Security, Medicare, and Medicaid. The Congressional Budget Office 
estimates that within a decade, the big three entitlements will be 
growing $172 billion each year--which will be more than the entire 
combined budgets of the Departments of Education and Justice at that 
time. At that point, it will become difficult to maintain even a shell 
of current discretionary programs. Social Security, Medicare, and 
Medicaid will swallow almost all of the tax dollars.
    The Heritage Foundation is creating a budget calculator that allows 
lawmakers to work with the long-term tax and spending baselines, and 
test different scenarios to cover these long-term entitlement 
shortfalls. We would be happy to bring this program to your offices.

                                 REFORM

    While Congress' top domestic priority should be reforming Social 
Security, Medicare, and Medicaid, they should also seize this 
opportunity to take a fresh look at discretionary spending growth. For 
example, education, housing, and transportation, are traditionally 
state and local functions, and may be devolved again. Many of these 
Federal programs currently force Americans to pay large taxes to 
Washington, who shave some administrative costs, and then send the 
money right back to state and local governments with new strings 
attached. It may be more efficient, more democratic, and less costly to 
bypass the Federal middleman and have taxpayers send the taxes for 
these programs directly to local governments who can tailor these 
programs to local needs. This would allow Congress to focus more on key 
national issues such as national security. A Federal Government that 
tries to do everything, risks succeeding at little.
    Congress should also consider creating a commission, similar to the 
successful BRAC model that closed obsolete military bases, to package 
all outdated, wasteful, and unnecessary programs into one termination 
bill that would receive expedited floor consideration. This could 
reduce some of the enormous waste in the Federal budget.
    At that very least, basic budget caps can help lawmakers set 
priorities and make trade-offs. Congress should consider attaching 
these caps to the debt limit vote later this month.

                                APPENDIX



    Source: Both charts come from the Office of Management and Budget, 
Historical Tables, Budget of the United States Government, Fiscal Year 
2007 (Washington, D.C.: U.S. Government Printing Office, 2006), Table 
8.1, at http://www.whitehouse.gov/omb/budget/fy2007/hist.html.

                                  DISCRETIONARY OUTLAYS BY CATEGORY, 2001-2006
                                         [Nominal dollars, in millions]
----------------------------------------------------------------------------------------------------------------
                                                                                     2001-06 Percent
                                                                                        Increase       1993-2001
             Discretionary Spending Category                  2001        2006    --------------------   Annual
                                                                                              Annual      Avg.
                                                                                     Total     Avg.
----------------------------------------------------------------------------------------------------------------
National Defense.........................................    $306,068    $532,215       74%     11.7%       0.6%
Education................................................      37,659      61,040       62%     10.1%       5.4%
Income Security..........................................      43,972      54,978       25%      4.6%       4.3%
Health Research and Regulation...........................      33,158      51,910       57%      9.4%       6.8%
Highways & Mass Transit..................................      34,595      44,844       30%      5.3%       7.2%
Justice Administration...................................      29,853      39,977       34%      6.0%       9.1%
International Affairs....................................      22,496      39,171       74%     11.7%       0.5%
Natural Resources & Environment..........................      25,960      33,875       30%      5.5%       3.3%
Veterans Benefits........................................      22,399      32,709       46%      7.9%       4.4%
Community/Regional Development...........................      12,417      29,485      137%     18.9%       4.9%
Training/Employment/Soc. Services........................      16,607      20,460       23%      4.3%       4.4%
Air Transportation.......................................      11,617      19,304       66%     10.7%       1.8%
General Government.......................................      12,644      16,650       32%      5.7%       1.3%
Space and Other Technology...............................      13,236      14,742       11%      2.2%       0.1%
General Science and Basic Research.......................       6,509       9,117       40%      7.0%       6.5%
Water/Other Transportation...............................       3,901       6,152       58%      9.5%       2.0%
Agriculture..............................................       4,958       6,045       22%      4.0%       2.3%
Medicare.................................................       3,323       5,102       54%      9.0%       2.9%
Social Security..........................................       3,590       4,553       27%      4.9%       4.1%
Energy...................................................       2,897       3,948       36%      6.4%      -7.8%
Commerce and housing credit..............................       1,467       2,076       42%      7.2%      -4.4%
Allowances...............................................           0       3,726       N/A       N/A        N/A
Total Discretionary Outlays..............................     649,326   1,032,079       59%      9.7%       2.3%
Total Defense............................................     306,068     532,215       74%     11.7%       0.6%
Total Non-Defense........................................     343,258     499,864       46%      7.8%       4.2%
----------------------------------------------------------------------------------------------------------------
From 2001 through 2006, inflation will have totaled 12 percent, and the population will have grown 5 percent.
2006 numbers reflect current OMB estimates. Additional supplemental spending will add to this total.

Source: Office of Management and Budget, Historical Tables, Budget of the United States Government, Fiscal Year
  2007 (Washington, D.C.: U.S. Government Printing Office, 2006), Tables 3.2 and 8.5, at http://
  www.whitehouse.gov/omb/budget/fy2007/hist.html.

  
  

    Chairman Nussle. Mr. Greenstein. And I am pleased to 
receive your testimony.

 STATEMENT OF ROBERT GREENSTEIN, EXECUTIVE DIRECTOR, CENTER ON 
                  BUDGET AND POLICY PRIORITIES

    Mr. Greenstein. Thank you, Mr. Chairman. Some people have 
an impression that there has been an explosion in domestic 
discretionary programs in recent years. Some might have gotten 
that impression from some of Brian's comments. But if you 
actually look at the data, it's not the case.
    Now, he talked about non-defense discretionary spending. 
That includes international affairs. He noted a 74 percent 
increase for that. Reconstruction in Iraq and Afghanistan shows 
up in the international affairs part of the budget, not the 
defense part. I am going to look at appropriations for domestic 
discretionary programs outside homeland security.
    What you find when you look at that is that on a real per 
capita basis, total funding for all domestic discretionary 
programs outside homeland security is only 2 percent higher in 
2006 than in 2001. By comparison, defense is up 32 percent. 
That's an average annual growth rate of four-tenths of 1 
percent per year.
    If you look at total funding for domestic discretionary 
programs outside homeland security as a share of GDP, it's 
actually a little lower in 2006 than in 2001. This is not what 
has caused the return of deficits.
    Turning now to the President's budget proposal: the 
President's budget contains substantial reductions in domestic 
discretionary programs over the next 5 years. Total funding for 
the programs would be cut $16 billion below the OMB baseline in 
the first year, rising to $57 billion in the fifth year, a 
total of $183 billion over 5 years.
    In fact, under the President's budget total outlays for 
domestic discretionary programs would, by 2011, be at their 
lowest level since 1962. Now, it is not the case that these 
reductions are limited to a small number of programs thought to 
not be high performing.
    There are 15 budget categories or functions that include 
domestic discretionary programs. Under the President's budget, 
total funding would be cut significantly over the next 5 years 
for 14 of the 15 categories.
    A few examples. Funding for veterans' programs: this is the 
discretionary part of the budget functions, not including the 
mandatory part. Funding for discretionary veterans' programs 
would be cut $10.3 billion over the next 5 years.
    Funding for environmental and natural resource programs 
would be cut $28 billion, a total of 22 percent by the fifth 
year. Funding for education, job training, and social services 
programs: a total of $53 billion over the next 5 years, with 
the cuts reaching 17 percent in the fifth year.
    Materials from OMB also show the proposed funding levels 
for each of the next 5 years for each budget subcategory or 
subfunction. There are 56 domestic, discretionary subfunctions. 
Discretionary funding would be cut in 49 of the 56.
    Again, a few examples. Elementary, secondary, and 
vocational education would be cut a total of $18 billion over 
the next 5 years. Higher ed: $16 billion, 20 percent in the 
fifth year. Total education funding cut nearly $36 billion over 
5 years. Healthcare research and training, including NIH, cut 
$15.5 billion over 5 years. Veterans' healthcare: $9.3 billion 
over 5 years. And national parks and pollution control and 
abatement, each cut 22 percent by the fifth year.
    Now there has been a certain amount of focus on program 
terminations. The much bigger savings are in substantial 
program reductions, and if you look at the OMB computer run 
nearly all domestic discretionary programs outside of some 
space and science areas would be cut over the next 5 years. 
Funding for special education for children with disabilities, 
down $5.5 billion over 5 years. A cut of over a billion over 
the next 5 years in discretionary child care funding.
    The President's budget has a table which itself shows you 
that the number of child care slots for children from low-
income working families would be reduced by more than 400,000 
by 2011.
    One more example: this December the Department of Housing 
and Urban Development (HUD) issued a report, finding that over 
a million very low-income elderly who receive no Federal 
housing assistance have what HUD calls worst-case-housing 
needs, which means they either pay more than 50 percent of 
income for housing or live in severely substandard housing. The 
budget proposes cuts starting at 27 percent in 2007, reaching 
30 percent by 2011, in the Section 202 Supportive Housing for 
the Elderly program.
    Now let me make three observations about these proposals 
for substantial reductions in domestic discretionary programs. 
The first is that none of the savings would go for deficit 
reduction.
    The budget's figures show that OMB expects its combined 
reductions in domestic discretionary and entitlement programs 
to reduce outlays by $191 billion over 5 years, but the budget 
proposes $285 billion in tax cuts over 5 years; by the Treasury 
figures, $1.7 trillion over 10 years.
    The net effect of the policy proposals in the budget is to 
increase the deficit in each year above what it would be if we 
put everything on automatic pilot and did nothing, because the 
costers in the budget cost more than the savers save, and that 
means that the reductions in the domestic discretionary 
programs are effectively going to offset a portion of the cost 
of the tax cuts, not to reduce the deficit.
    Secondly, on the PART issue, I think everyone will agree 
that evaluation and measuring of performance is important. It's 
the right thing to do. I do think, however, there are some 
problems with how the PART system is used in the budget to 
justify various program terminations.
    In the case of many programs slated for termination, PART 
did not find the program to be ineffective. In a number of 
cases, programs rated as effective were targeted for 
elimination. But I want to focus on one particular issue which 
is that, in many cases, when you look at a proposed program 
termination, what it says next to it is ``results not 
demonstrated.''
    Now that normally does not mean the program has been 
studied and found to be ineffective. For most of these 
programs, what it means is that the executive branch and 
Congress have never put up the funds to finance a program 
evaluation.
    In most cases, because these are small programs and the 
judgment has been made that, given the limited amount of 
research and evaluation dollars available, money would be best 
spent elsewhere.
    Let me give you a specific example. The budget proposes to 
terminate a program, the Commodity Supplemental Food Program, 
that provides modest, nutritious food packages to about 430,000 
low-income, elderly people across the country.
    The PART document acknowledges that this program may 
contribute positively to the nutrition needs of those people. 
But it gives the program a low rating for results not 
demonstrated.
    Now, there is no research showing the program is 
ineffective. This is a $100 million a year program and 
executive branch officials and appropriators have generally 
made the decision that they want to focus program evaluation 
dollars and money for sophisticated program performance 
measurement and reporting where the big money is: food stamps 
and school lunches are many times bigger in cost than this $100 
million a year program.
    So they have not put up the money for sophisticated program 
measurement, program monitoring, or research evaluation. Now, 
maybe we should do that, but the fact that that has not been 
done is not a valid basis for eliminating a program where the 
elimination is going to create hardship among significant 
numbers of low-income elderly people.
    The other major problem I want to highlight with PART is 
that it's not even-handed, because it leaves out a big part of 
spending. And the part of spending it leaves out are what OMB 
and the Joint Tax Committee call ``tax expenditures.''
    In a report issued a year ago, the Joint Tax Committee 
explained, I'm quoting, ``special income tax provisions are 
referred to as tax expenditures because they may be considered 
analogous to direct outlay programs.'' Some of these 
expenditures are of dubious value. Certainly for some of them 
results have not been demonstrated. The GAO has explicitly 
called on OMB to expand PART to include tax expenditures.
    Unfortunately, the continued exclusion of tax expenditures 
from PART and the fact that it is being used to justify 
terminations of some programs that have not been found to be 
ineffective, but where Congress and various administrations, 
not just the current one, have not put up the funds to conduct 
program evaluations, mean in my view that while PART is very 
important, it is being somewhat misused in the current budget.
    The last comment I want to make is with regard to where 
domestic discretionary programs fit into the larger budget.
    Chairman Nussle. Could you make it quickly?
    Mr. Greenstein. Yes. I'm a strong advocate of shared 
sacrifice. I think everything should be on the table. I would 
note that when fully in effect, the cost of the tax cuts, if 
made permanent, including continued alternative minimum tax 
(AMT) relief, will be three times all Federal funding for 
education at all levels, three times all Federal funding for 
veterans, and most strikingly, equal to the combined cost of 
the entire departmental budgets for agriculture, labor, 
education, VA, transportation, HUD, justice, state, interior, 
EPA, and energy.
    The conclusion I draw from all of this, Mr. Chairman, is 
that I do think the proposed cuts in the domestic discretionary 
area are significantly too deep. I think we need a balanced 
approach where you put everything on the table: entitlements, 
domestic discretionary, defense, revenues. Put everything on 
the table.
    In 90 and 93, policymakers put the entire budget on the 
table. In each of those 2 years, they achieved deficit 
reduction of about $500 billion over 5 years. In my view, 
that's the kind of approach we need to go back to. Thank you.
    [The prepared statement of Robert Greenstein follows:]

Prepared Statement of Robert Greenstein, Executive Director, Center on 
                      Budget and Policy Priorities

    Thank you for inviting me to testify. I am Robert Greenstein, 
executive director of the Center on Budget and Policy Priorities, a 
policy institute that conducts research and analysis on fiscal policy 
issues, with a particular focus on the impact of policies and programs 
on low- and moderate-income families. The Center does not receive (and 
never has received) any funds from Federal grants or contracts. It is 
supported by foundations and individual donors.
    My testimony today is divided into three sections. The first 
examines the extent to which domestic discretionary programs have grown 
in recent years. The second section examines what the President's 
budget proposes with regard to domestic discretionary programs. The 
final section examines several important issues that these budget 
proposals raise.

  I. WHAT HAS HAPPENED TO DOMESTIC DISCRETIONARY PROGRAMS SINCE 2001?

    Many people have come to believe that domestic discretionary 
programs have exploded since 2001. This is not the case. Depending on 
the measure used, total funding (i.e., total appropriations) for 
domestic discretionary programs has risen modestly, fallen slightly, or 
remained largely unchanged.
     On a real per capita basis, total funding for domestic 
discretionary programs outside homeland security is only 2 percent 
higher in fiscal year 2006 than it was in fiscal year 2001. This 
represents an average annual growth rate of 0.4 percent per year.
    (In comparing funding levels for years such as 2001 and 2006, it is 
necessary to adjust for inflation, as 2006 dollars and 2001 dollars are 
not equivalent and do not have the same buying power. The OMB and CBO 
baselines for discretionary programs both adjust for inflation. One 
also should adjust for changes in the size of the U.S. population. When 
the population grows, the cost of government programs rises because 
more children attend school, the number of people seeking government 
services from passports to child care assistance increases, etc. When 
the population grows, revenues also increase, because there are more 
workers paying taxes, and the economy grows as well because the size of 
the labor force--a key component of economic growth--expands. If one 
adjusts for inflation but not for population growth, then total funding 
for domestic discretionary programs outside homeland security grew at 
an average annual rate of 1.4 percent between 2001 and 2006.)
     As a share of the economy, total funding for domestic 
discretionary programs outside homeland security actually declined 
between 2001 and 2006. It stood at 3.36 percent of GDP in 2001 and 
stands at 3.13 percent of GDP in 2006.
    Increases (or decreases) in deficits are usually measured as a 
share of the economy. As these data indicate, domestic discretionary 
programs have not been a significant contributor to the shift in recent 
years from budget surpluses to budget deficits.

  II. WHAT THE PRESIDENT'S BUDGET PROPOSES FOR DOMESTIC DISCRETIONARY 
                                PROGRAMS

    The President's budget proposes substantial reductions in domestic 
discretionary programs over the next 5 years. Total funding for these 
programs would be cut $16 billion in 2007, relative to the OMB baseline 
(i.e., relative to the 2006 level adjusted for inflation). The funding 
reduction would grow larger with each passing year. By 2009, funding 
for these programs would be $37 billion below the OMB baseline. In 
2011, funding would be $57 billion below the baseline, and outlays for 
domestic discretionary programs would fall to their lowest level since 
1962, measured as a share of the economy. Over the 5 years as a whole, 
funding for domestic discretionary programs would be cut a total of 
$183 billion. (See Figure 1.)



    These cuts would be achieved both through program terminations and 
through program reductions. Nearly every category of domestic 
discretionary programs would be cut significantly.
     There are 15 budget categories (or ``functions '') that 
include domestic discretionary programs. Under the President's budget, 
total funding for domestic discretionary programs would be cut 
significantly over the next 5 years in 14 of these 15 categories. Only 
the General Science, Space, and Technology category would be spared.
     A few examples:
     Funding for veterans programs would be cut by a total of 
$10.3 billion over the next 5 years, with the cuts reaching 13 percent 
in 2011.
     Funding for energy programs--which include research on 
alternatives to oil, conservation efforts, and emergency energy 
preparedness programs--would be cut a total of $4.4 billion over 5 
years, with the cuts reaching 29 percent in 2011.
     Environmental and natural resources programs would be cut 
22 percent by 2011, with the cuts totaling $28.1 billion over 5 years.
     Education, job training, and social services programs 
would be cut $52.7 billion over 5 years. The cuts would reach 17 
percent in 2011.
     Funding for discretionary health programs--including 
medical research at NIH, community health centers, and HIV/AIDS 
treatment funds--would be cut $24.2 billion over 5 years, with the cuts 
reaching 13 percent in 2011.
    OMB materials also show the proposed discretionary funding levels 
for each of the next 5 years for each budget sub-category (or 
``subfunction ''). There are 56 budget subfunctions that include 
domestic discretionary programs. By 2011, discretionary funding would 
be cut for 49 of these 56 program areas, or nearly 90 percent of them.



     Elementary, secondary, and vocational education programs 
would be cut a total of $18.1 billion over 5 years, with the cut 
reaching 13.5 percent by 2011. Higher education programs would be cut 
$15.8 billion over 5 years, and 20 percent in 2011. Total education 
funding would be cut nearly $36 billion over 5 years.
     Health care research and training, which includes the 
National Institutes of Health, would be cut $15.5 billion over 5 years 
(and by 14 percent in 2011).
     Consumer and occupational health and safety, which 
includes funding for mine safety, would be cut by 15 percent by 2011.
     Hospital and medical care for veterans would be affected 
substantially, with the cuts amounting to $9.3 billion over 5 years and 
$4.5 billion in 2011 alone (a 13 percent reduction in that year). Given 
the rising cost of medical care and the large number of wounded 
servicemen returning from Iraq and Afghanistan, these reductions do not 
seem tenable.
     Within the natural resources and environment function, 
recreational resource programs--including the national parks--and 
pollution control and abatement programs each would be cut 22 percent 
by 2011.

                  PROGRAM TERMINATIONS AND REDUCTIONS

    The budget proposes terminations or reductions of hundreds of 
domestic discretionary programs. The Administration has issued a list 
of the programs it would terminate in 2007. In addition, an OMB listing 
has become available that shows the funding level envisioned for every 
discretionary program account for each of the next 5 years.



    The terminations include, among others:
     The Commodity Supplemental Food Program, which provides 
nutritious food packages for less than $20 a month to 420,000 low-
income elderly people, one-third of whom are over age 75;
     The Preventive Care Block Grant, which is operated by the 
Centers for Disease Control and Prevention and provides grants to 
states for preventive health services for underserved populations;
     The TRIO Talent Search program, under which colleges and 
universities--in many cases, Historically Black Colleges and 
Universities--assist disadvantaged secondary school students (two-
thirds of whom are minority) by providing them with academic, career, 
and financial counseling so they will be better able to finish high 
school and attend college; and
     The Community Services Block Grant, which provides funding 
for a range of social services and other types of assistance to low-
income families and elderly and disabled individuals.
    Other programs that would be terminated include: vocational 
education, the Emergency Watershed Protection Program, Gaining Early 
Awareness and Readiness for Undergraduate Programs, and Safe and Drug 
Free Schools Grants.
    A much larger number of programs would face deep funding cuts:
     Funding for special education, under which states receive 
grants to help cover the added costs of providing special education to 
children with disabilities, would be cut about $5.5 billion over 5 
years.
     EPA grants to states (and Indian tribes) for environmental 
protection, clean-up, and land preservation activities--which already 
were cut by $427 million in nominal terms in 2006--would be cut another 
$420 million below the baseline in 2007, and by larger amounts in 
subsequent years.
     Discretionary appropriations for the Child Care and 
Development Block Grant would be cut by $1 billion over the next 5 
years. The President's budget includes a table showing that under the 
budget, the number of lower-income children receiving child care 
assistance would be cut from 2.2 million in 2005 (and 2.45 million in 
2000) to 1.8 million in 2011. In other words, the number of such 
children aided would be reduced by more than 400,000.
     In December 2005, HUD issued a report finding that 1.1 
million very-low-income elderly households that receive no Federal 
housing assistance have ``worst-case housing needs,'' which means they 
either pay more than 50 percent of their limited incomes for housing or 
live in severely substandard housing. The budget proposes to cut deeply 
into the Section 202 Supportive Housing for the elderly program, which 
provides capital grants and operating subsidies to non-profit 
institutions to develop and generate affordable housing for elderly 
people with low incomes. Large cuts (a cut of 27 percent) would start 
in 2007; by 2011, the funding cut would be 37 percent.
     The equivalent housing program for low-income people with 
disabilities would be sliced by more than half in each of the next 5 
years. The recent HUD report found over 500,000 low-income people with 
disabilities who have worst-case housing needs and receive no Federal 
housing aid.

                 III. ISSUES RAISED BY THESE PROPOSALS

    These proposals calling for substantial reductions in nearly all 
domestic discretionary program areas raise several issues:
     Would the savings be used for deficit reduction?
     Is the ``Program Assessment Rating Tool'' system sound and 
is it being used appropriately when it is cited as justification for 
various of these program terminations and reductions?, and
     Are the cuts proposed in domestic discretionary programs 
equitable--are they part of a program of shared sacrifice?
    I address each of these issues in turn.

           WOULD THE SAVINGS CONTRIBUTE TO DEFICIT REDUCTION?

    The nation faces serious long-term fiscal problems. Deficit 
reduction is needed. The data in the President's budget show, however, 
that the substantial reductions that the budget proposes in domestic 
discretionary programs would not be used to reduce the deficit. 
Instead, the resulting savings would be used to offset a portion of the 
costs of other, costly budget proposals.
     The budget's figures show that OMB expects the proposals 
for reductions in domestic programs--in both discretionary and 
entitlement programs--to reduce Federal expenditures by $191 billion 
over the next 5 years. (This does not reflect proposed Katrina or avian 
flu supplementals or the proposal for Social Security private 
accounts.)
     But the budget also proposes $79 billion in increased 
defense and homeland security spending (not counting the additional 
expenditures that would result from the supplemental appropriations 
requested for military operations in Iraq and Afghanistan).
     And the budget proposes $285 billion in tax cuts over the 
next 5 years--and $1.7 trillion over 10 years.\1\ (These figures 
underestimate the tax-cut costs, because the budget omits the cost of 
continuing to provide relief from the Alternative Minimum Tax after 
2006.)
---------------------------------------------------------------------------
    \1\ These figures are taken directly from the Treasury Department's 
book explaining the Administration's tax proposals. It includes the 
revenue and outlay effects of the Administration's tax proposals.
---------------------------------------------------------------------------
     As a result, the overall effect of the President's 
proposals would be to increase the deficit in every year, compared to 
what the deficit would be in the absence of the proposals. The 
Administration's own numbers indicate its budget proposals would 
increase deficits by $192 billion over the next 5 years.\2\ Data in the 
Administration's budget materials show that deficits would total $760 
billion over the next 5 years without the policy proposals in the 
budget, and would total $952 billion with these proposals.
---------------------------------------------------------------------------
    \2\ The $192 billion total includes the increased interest payments 
on the debt that would have to be paid because of the effects of the 
Administration's proposals in increasing deficits and debt. Note: the 
deficit estimates used here do not include the effects of the 
Administration's proposal to convert part of Social Security to private 
accounts. Were that proposal included, the increases in the deficit 
that the Administration's proposals would cause would be larger.
    The baseline used here is the Administration's current services 
baseline, adjusted to remove the effect of making the 2001 and 2003 tax 
cuts permanent. (The Administration includes in its baseline the costs 
of its proposal to make the tax cuts permanent, in order to make that 
proposal appear to have no cost.) The Administration's baseline--and 
the baseline used here--do not assume any future supplemental 
appropriations for operations in Iraq and Afghanistan or for domestic 
emergencies. Likewise, expenditures from emergency funding that the 
President is requesting for 2006 and 2007 have been excluded from the 
calculations here. Were they included, the President's budget would be 
seen as increasing deficits by more than $192 billion over five years.
---------------------------------------------------------------------------
    In other words, since the tax cuts would cost substantially more 
than the domestic program reductions would save, there would be no 
deficit reduction. The budget would continue to ``dig the hole 
deeper,'' and the budget's steep domestic discretionary cuts would be 
used to offset a fraction of the cost of the proposed tax cuts rather 
than to shrink the deficit.

                            THE PART SYSTEM

    Many of the domestic program cuts being proposed have been defended 
on the grounds that OMB's PART (``Program Assessment Rating Tool '') 
system has found them to be ineffective. The concept of PART is very 
reasonable. But the use of the PART system in the new budget to justify 
the termination of numerous programs is fraught with problems.
    In the case of many programs that the budget slates for 
termination, PART did not find the programs to be ineffective. In some 
cases, programs rated as moderately effective are targeted for 
elimination. In other cases, programs for which the Administration has 
failed to gather sufficient evidence of effectiveness or lack thereof 
are slated for termination.
    A phrase found in the budget alongside many of the proposed program 
terminations is ``Results not demonstrated.'' This generally does not 
mean that the program has been studied and found ineffective, but that 
Congress and the Executive Branch have not bothered to invest the funds 
to conduct research to evaluate the program, usually because the 
program has been considered too small in cost to justify using a 
portion of limited research and evaluation funds to conduct a rigorous 
evaluation of it.
    Consider, for example, the budget's proposal to terminate the 
Commodity Supplemental Food Program (CSFP), a $107 million program that 
provides nutritious food packages that cost the government less than 
$20 per month to 420,000 low-income seniors, one-third of whom are over 
age 75. (The program also serves a much smaller number of low-income 
pregnant women, infants, and young children.) The Administration's PART 
document acknowledges that the CSFP program may ``contribute positively 
to access to food assistance for low-income elderly people in the 
places where the program operates.'' But the PART system gave the 
program a low rating on two of the PART criteria--demonstrated program 
results and strategic program planning on the part of the operating 
agency (in this case, USDA).
    It is not unreasonable for OMB to expect USDA to engage in 
strategic planning with respect to the program and to ask whether the 
program is effective. Lack of adequate steps by USDA to complete a 
strategic planning process, however, is not sufficient cause for 
eliminating a program that serves about half a million low-income 
seniors, mothers, and young children. Moreover, research has not found 
CSFP to be ineffective; to the contrary, the reason for the low PART 
rating on program ``results'' is that Federal funding has not been 
provided either to conduct evaluation research on the program's 
effectiveness or to develop sophisticated reporting systems to measure 
program performance. Current and prior Administrations and Congresses 
have opted to focus the limited research and evaluation funds available 
for Federal food assistance programs on the major programs such as food 
stamps and the school lunch program. The small amount of funding 
provided for CSFP has been dedicated to delivering services to needy 
people rather than conducting research and instituting sophisticated 
performance measurement systems.
    It may be appropriate for Congress and USDA to invest more energy 
and resources in setting and evaluating CSFP's performance goals and 
effectiveness. But a low PART ranking simply because such activities 
have not yet been conducted is not a valid basis for eliminating the 
program and causing hardship among many program participants.
    This problem is magnified by a major deficiency with PART: it is 
not even-handed, because it leaves out a large part of the budget--the 
Federal tax code.
    It has long been recognized that the tax code contains numerous 
provisions that use the tax system to deliver subsidies. These 
provisions are referred to as ``tax expenditures.'' In a report that 
the Joint Committee on Taxation issued in January 2005, JCT explained 
that ``special income tax provisions are referred to as tax 
expenditures because they may be considered analogous to direct outlay 
programs, and the two can be considered as alternative means of 
accomplishing similar budget policy objectives. Tax expenditures are 
similar to those direct spending programs that are available as 
entitlements to those who meet the statutory criteria established for 
the programs.''
    The Joint Committee on Taxation periodically publishes a list of 
all tax expenditures. The cost of these items, as estimated by JCT, 
totals $914 billion in 2006. The President's budget also contains a 
list of tax expenditures; the costs listed for these measures total 
$872 billion in 2007.\3\
---------------------------------------------------------------------------
    \3\ Due to interaction effects between various tax expenditure 
provisions, the precise total cost of all tax expenditures would vary 
somewhat from these JCT and OMB figures.
---------------------------------------------------------------------------
    There is little question that some tax expenditures are of dubious 
value or have outlived their usefulness. A January 2005 Joint Tax 
Committee report included options for narrowing some tax expenditures. 
So does CBO's new volume on deficit reduction options. Of particular 
note, various tax expenditures have not been rigorously evaluated and 
likely would score poorly if PART were applied to them.
    The Government Accountability Office has explicitly called for PART 
to be revised to include tax expenditures. The GAO has specifically 
asked OMB to ``require that tax expenditures be included in the PART 
process and any future such budget and performance review processes so 
that tax expenditures are considered along with related outlay programs 
in determining the adequacy of Federal efforts to achieve national 
objectives.''\4\
---------------------------------------------------------------------------
    \4\ Government Accountability Office, ``Government Performance and 
Accountability: Tax Expenditures Represent a Substantial Federal 
Commitment and Need to be Reexamined,'' September 2005, p. 74.
---------------------------------------------------------------------------
    Unfortunately, the continued exclusion of tax expenditures from 
PART--and the use of PART to help justify terminating programs on the 
grounds that their effectiveness has not been demonstrated, even when 
the reason for such a finding is that funds have not been provided to 
conduct a program evaluation--mean that PART is being misused. It 
appears that PART is being used inappropriately to advance a rather 
ideological agenda.

                           SHARED SACRIFICE?

    The deepest cuts in the President's budget would come in domestic 
discretionary programs, despite the fact that expenditures for these 
programs have been well behaved as a share of GDP and the programs have 
contributed little to the return of deficits. The nation's looming 
long-term fiscal problems stem entirely from other parts of the budget. 
There is a striking absence of shared sacrifice here.
    Particularly stark is the contrast between expenditures for many 
discretionary programs and the cost of the tax cuts enacted in recent 
years, which the budget would make permanent. Figure 3 compares the 
annual cost of the 2001 and 2003 tax cuts when they are fully in effect 
(including the cost of continuing relief from the AMT) to the annual 
cost of various agency budgets. It shows that when the tax cuts are in 
full effect:



     Their annual cost will be more than three times as large 
as the current level of Federal funding for education at elementary, 
secondary, and post-secondary levels combined. It also will be more 
than three times the cost of all veterans programs, including veterans 
health care, veterans pensions, veterans disability compensation, and 
other veterans services.
     The cost of the tax cuts will equal the combined cost of 
all of the following agency budgets: agriculture, labor, education, 
veterans affairs, transportation, HUD, justice, state, interior, EPA, 
and energy.
     The cost of the tax cut for the top 1 percent of 
households, whose average income is close to $1 million a year, will be 
nearly the same as the total amount the Federal Government spends on 
education at all levels. The cost of the tax cut for the top 1 percent 
also will be about as large as the cost of everything the Federal 
Government spends for veterans.
    In short, rather than there being shared sacrifice, the prime 
beneficiaries of the tax cuts would move farther ahead while less-
fortunate people for whom domestic discretionary programs are most 
important--such as low-income seniors in the CFSP program or children 
in working-poor families who need child care--would fall farther 
behind. This becomes even more troubling when the distribution of the 
tax cuts is taken into account: the Urban Institute-Brookings 
Institution Tax Policy Center estimates that when the tax cuts enacted 
in 2001 and 2003 are fully in effect, the average tax cut will be $650 
a year for households in the middle of the income scale but $136,000 
for households that make more than $1 million a year. (These figures 
are in 2004 dollars.)
    Among those who would fare badly from this unbalanced approach to 
the budget--i.e., from the lack of shared sacrifice--would be state and 
local governments. Under the Administration's budget, grants to state 
and local governments for programs other than Medicaid would decline 
nearly $14 billion between 2005 and 2007, after adjusting for 
inflation. This drop reflects the fact that many domestic discretionary 
programs operate as grants-in-aid to state or local governments, which 
run the programs or provide the services. The Administration's budget 
also includes $35.5 billion over 10 years in Federal savings from 
legislative and regulatory changes in the Medicaid program; four-fifths 
of these Federal Medicaid savings would come from measures that shift 
costs from the Federal Government to state and local governments.

                             IV. CONCLUSION

    The conclusion that I draw from this is that the proposed cuts in 
domestic discretionary programs are substantially too deep and that the 
nation needs a more balanced fiscal approach in which all parts of the 
budget--revenues, entitlements, domestic discretionary programs, and 
the Pentagon--are put on the table for review. In both 1990 and 1993, 
policymakers placed all parts of the budget on the table, and they 
achieved deficit reduction of about $500 billion over 5 years on each 
of those occasions. That sort of effort is badly needed again.

    Chairman Nussle. Let me begin by what may be the obvious 
observation and that is I hear from one of our witnesses that 
we are spending way too much, and I hear from one of our 
witnesses that the facts evidently demonstrate that we are 
spending way too little.
    Mr. Greenstein. I do not think I said way too little.
    Chairman Nussle. All right. Too little.
    Mr. Greenstein. No, I did not say that either. I was 
critical of the----
    Chairman Nussle. All right. Just wait a minute. Giminny 
Christmas. I think there was some conflict in the testimony. 
Would you agree, Mr. Greenstein?
    Mr. Greenstein. Yeah, I do want to clarify. I did not come 
here----
    Chairman Nussle. All right. Never mind. I will----
    Mr. Greenstein. I will agree----
    Chairman Nussle [continuing]. Now I'll pass.
    Mr. Greenstein. I will agree that there is conflict. I 
think----
    Chairman Nussle. I will ask the question, and then I will 
let you respond. OK?
    Mr. Greenstein. I'm sorry. I thought you had asked it.
    Chairman Nussle. No, I had not.
    Mr. Greenstein. I apologize, Mr. Chairman.
    Chairman Nussle. It may not be worth it. In fact, it's not 
worth it. I will pass.
    Mr. Spratt.
    Mr. Spratt. You did not address the issue of discretionary 
caps in looking back to prior experience. Would you comment on 
what you think those caps fairly and properly should be or if 
indeed that should be used as a budget process mechanism.
    Mr. Greenstein. Yes, could I very briefly? First, I want to 
apologize again to the Chairman and I do want to say that Brian 
Riedl and I are working from the same set of numbers. I can 
produce his numbers with the numbers I'm using. The differences 
stem from a couple of things.
    His definition of non-defense discretionary includes 
international: function 150. Mine does not. I'm not sure 
whether he includes homeland security. I do not. He is looking 
at outlays over the same period that I'm looking at budget 
authority. I would argue that budget authority for this purpose 
is better, but they are both valid.
    I think once you take those differences in method into 
account, you will find that our numbers otherwise exactly 
match. Neither of us is doing anything funny with the numbers.
    With regard to discretionary caps, a minute ago I said I 
thought we really made major achievements in 1990 and in 1993. 
And we had discretionary caps as part of those packages.
    I think there are two issues here. The first is that the 
desirability of discretionary caps, to me, is inseparable from 
the levels at which you put them. Discretionary caps that are 
tied to figures that require excessively deep cuts in domestic 
discretionary programs I think are likely to be problematic for 
either or both of two reasons.
    First, either they do cut too deeply and cause real 
problems in meeting national needs, or, because they are set at 
unrealistic levels, they get blown through. The 90 and 93 
discretionary caps were largely honored. They were set at 
realistic levels.
    I recall that in 1993, President Clinton, I think, proposed 
a budget that would have breached the caps, and a Democratic 
majority rejected that.
    By contrast, in the 1997 balanced budget agreement the caps 
were set too low. They would have required reductions that were 
too large. They were blown through. If one set caps for a 
multi-year period at the level in President Bush's budget, it 
would require cuts significantly deeper than those in 1997, 
which were not enforced.
    The other issue is, I think that to sell discretionary 
caps, as in 90 and 93, they have got to be part of a balanced 
deficit reduction package that puts everything on the table 
from provider payments in the healthcare area to farm programs, 
to, yes, revenues, and even looking for waste in the Defense 
Department.
    Mr. Spratt. In 1997, we fixed the caps for 5 years at a 
level in the out years that we all knew were so tight they were 
unrealistic. That included a Domenici proposal that was 
effectively implemented that saw defense spending rise, and 
then in the latter 2 years of the 5-year time period, actually 
decline, which nobody thought would be the likely outcome.
    Once we hit the target, that is, a balanced budget and 
budget in surplus sooner than anyone anticipated, the pressure 
for the maintenance of those caps, particularly an unrealistic 
level, was relieved and that part of the reason that the caps 
were not strictly adhered to in the out years 01 and 02 and 
onward.
    But they--I would put the question to both of you. Were 
they not effective as a spending constraint throughout the 90s, 
beginning with the Budget Enforcement Act in 91?
    Mr. Greenstein. Well, I think they were effective from 90 
through about 97. I actually think the caps set in the '97 
balanced budget agreement did harm. And what I mean by that is 
because they were set so tight and they were waived away, once 
they were waived away, there was no real constraint in their 
place.
    I think unrealistic discretionary caps are worse than no 
caps at all. Realistic discretionary caps as part of a larger 
balanced deficit reduction approach that covers every part of 
the budget, I think make sense.
    Mr. Riedl. I think Bob and I are in agreement on this. 
Spending caps work best when they're realistic. I believe the 
caps through most of the 90s were realistic enough that 
lawmakers felt an attachment to make them work. However, the 
caps remained a little tighter toward the end, and also once 
the budget was balanced, there was less political pressure to 
adhere to the caps.
    And once a cap--if a cap requires a little bit of pain, I 
think lawmakers will endure that. If a cap endures a lot of 
pain, the lawmakers will sweep it away and say forget the whole 
thing. We're just going to spend as if there was no cap at all.
    And so I agree that budget caps are important because I 
feel your pain as lawmakers having to listen to requests all 
day long for groups that are looking for funding. Some are 
justifiable, and I think some of them are questionable.
    But I think lawmakers are assisted by spending caps that 
help them make the best decisions and then saying no those to 
whose claims on Federal funding are not as strong as others. 
And I think caps are a very important part of a spending 
control strategy.
    Mr. Greenstein. I do think there is a difficulty in having 
discretionary spending caps in the absence of what we had in 
the 90s: PAYGO rules. If you don't have PAYGO rules that apply 
to both entitlement increases and tax cuts, then appropriators 
can rightly feel that living within the caps is simply coming 
up with money to fund either an entitlement increase or a tax 
cut.
    I think you have to have, as an essential part of the 
architecture PAYGO rules that cover both entitlements and 
revenues.
    Mr. Spratt. And what about enforcement, the sequestration 
process or some kind of extraordinary process, that either 
mandates across the board, abatement or does something to 
impede the process until you have adhered to the goals you have 
set yourself for the discretionary caps?
    Mr. Riedl. I think right now caps can be--spending caps can 
be waived too easily, and I think I would like to see some sort 
of super majority requirement. I'm not--there are many--there 
are different ways to enforce that sort of thing, but I think 
some sort of super majority requirement to exceed a 
discretionary----
    Mr. Spratt. Would you apply that to defense discretionary 
as well as----
    Mr. Riedl. Yes, I would. I think even at defense, if it's 
important enough to exceed a cap, it should have no problem 
getting a super majority vote.
    Right now we see this with emergency spending, today, which 
is even easier, but we saw this in the 90s, that it was too 
easy to waive a cap. Of course, there has to be, I believe, 
some sort of sequestration formula if it's done around a super 
majority rule, but something--I think it has to be tightened up 
for it to have teeth.
    Mr. Greenstein. The 1990 Budget Enforcement Act (BEA) had 
both PAYGO rules and the discretionary caps, and both were 
backed by sequestration enforcement mechanisms. I continue to 
be a fan of the 1990 BEA architecture.
    Mr. Spratt. Mr. Greenstein showed some fairly draconian 
reductions in discretionary spending at the end of the 5-year 
period we are now forecasting. You mentioned that discretionary 
caps are not useful if they are not realistic. Do you regard 
the percentage level decreases that he portrayed up there, 
depicted up there, is realistic?
    Mr. Riedl. I have a two-part answer to that question. 
First, I think Congress would have a very difficult time 
adhering over the next 5 years to the numbers in President 
Bush's budget. If I were--I think any of us, if we were finding 
a way, could find a way to fund our priorities and make it 
work, but I think when you look at 435 Members of Congress 
having to work together to write a budget, I think it would be 
very difficult to hold the caps that would actually reduce 
total discretionary outlays by $40 billion in 2011 versus what 
they are today. I think that would be quite difficult for 
Congress.
    The second part of my answer is one--well, we always look 
at these 2011 projections. I think there are two points to make 
on that. First, President Bush will not be in office when the 
2011 budget is written.
    Second, we have actually--I have a sheet I can hand around 
that shows the evolution of the out-year numbers in President's 
Bush's budget since he has become president. And what it shows 
is that the President's budgets have always, to a degree, low-
balled the out-year numbers and then gotten higher and higher 
as we--the closer we get to them.
    On average, the President's budget proposal for the 
following year was $59 billion more than he proposed the year 
before when that was an out year, and $91 billion more than he 
has proposed 2 years ago when it was 2 out years.
    And so what that shows is that every year we get closer to 
these out years, the numbers do go back up. And so I wouldn't 
put a lot of weight into the President's out year numbers.
    I mean to give an example, his first budget, released in 
February 2001, forecast a projection of $787 billion in 
discretionary spending for 2007. When we actually got to the 
2007 budget proposal this year, he proposed one trillion and 
$29 billion, about $240 billion more than a few years ago when 
this was an out year. And I think that's actually typical. And 
so I would not put a lot of weight into the 2010 and 2011 
numbers. Again, not only will President Bush not be in office, 
but the numbers usually go up as the President goes.
    Mr. Greenstein. I would somewhat disagree with that.
    Mr. Hulshof. Mr. Chairman, could we have regular order. I 
have got a plane to catch just----
    Chairman Nussle. Go ahead. Go ahead.
    Mr. Hulshof. I appreciate that.
    Chairman Nussle. Sure.
    Mr. Hulshof. First of all, I apologize for not being with 
you yesterday during the mandatory hearing. As you know, we had 
a couple of hearings in Ways and Means with Secretary Snow and 
also U.S. Trade Representative Portman. Today we are 683 days 
away from the baby boomers beginning to retire, and one out of 
every two baby boomers will in fact take early retirement. I 
know that was the subject of yesterday's hearing.
    But let me move now then, and I think perhaps capturing 
your frustration, Mr. Chairman, my most famous constituent, 
Mark Twain, said that there are lies, there are damn lies, and 
there are statistics.
    Mr. Spratt. Disraeli said that.
    Mr. Hulshof. And I think that probably the conflict and 
conclusions, maybe the numbers are the same or assumptions are 
the same, but the conclusions are different, and certainly, Mr. 
Greenstein, I acknowledge that you do put qualifiers in your 
testimony, for instance, on page 1, on a real per capita basis, 
and then your conclusion, as a share of the economy, and then 
your conclusion.
    Although I do want to take a bit of an issue with you when 
you say everything on the table. Let me take that assumption 
for the purpose of this question. You don't do that in your 
testimony.
    You acknowledge on page 8 that tax expenditures should be 
included, for instance, as far as program assessment rating 
tool, and yet you don't take that into account when you talk 
about programs that are being cut.
    An example would be, for instance, on page 2, funding for 
energy programs. And I recognize you're focusing on 
discretionary. But when you consider the energy bill, and we 
provide tax incentives for renewable fuels, or we provide tax 
incentives for hybrid vehicles, or we provide tax incentives 
for conservation and weatherization and building homes that are 
energy efficient, were we to take your conclusion on page 8, 
the tax expenditure should be on the table because in your 
words, everything is on the table, then perhaps we should 
include tax expenditures on these energy conservation areas to 
perhaps take issue with your conclusion that funding for energy 
programs will be cut.
    We could make the same argument as far as education savings 
accounts, prepaid tuition plans, et cetera, as far as education 
funding is being cut. And so I realize, again, your appropriate 
qualifiers are there on page 2, and yet I would suggest that 
later in your testimony, that you talk about everything being 
on the table and I would--that's just something I would note.
    Let me ask you this, Mr. Greenstein. Yesterday Secretary 
Snow told us that the top 5 percent of taxpayers in this 
country, which is roughly $130,000 or above, 5 percent of 
taxpayers in this country pay over half the bills. And I think 
I heard him say 55 percent of the Nation's bills. Is that an 
appropriate number? Is it too little or is it too high in your 
opinion?
    Mr. Greenstein. Well, I don't think one can assess the 
figure in the absence of a second figure, which is what 
percentage of the national income goes to the top 5 percent. 
Now, I would be happy to get back to you. I don't have all of 
the figures here with me.
    I would note, however, that the best data on trends in 
income, pretax and after tax, and tax rates is a series 
published by the congressional budget office that currently 
runs from 1979 through 2003.
    Those data show a fairly dramatic increase in recent 
years--I don't mean just under President Bush, but over the 
whole 24-year period--the significant increase in the 
percentage of income at the top----
    Mr. Hulshof. Well, let me say this to you and get back with 
me, because my time, I want to try to stay close--I want to 
stay close to my----
    Mr. Greenstein. Can I make one quick statement----
    Mr. Hulshof. If you can make it quick, sir.
    Mr. Greenstein [continuing]. Which is simply that I think 
the more relevant question is ``what percentage of income are 
we collecting in taxes from people of different income 
groups?'' And it has dropped significantly at the top as a 
result of the tax cuts.
    Mr. Hulshof. I would take issue. In fact, let's continue 
this dialogue. You may get to come in front of our committee 
sometime, but yesterday, Secretary Snow also pointed out the 
fact that after the 2001 and 2003 tax relief items, that the 
upper-income taxpayers in this country are actually paying a 
greater share of the nation's bills today after the tax relief 
than they were before. But again that's something that you and 
I can discuss.
    Mr. Greenstein. It's true for income taxes, but not for 
total taxes.
    Mr. Hulshof. I can't help what South Carolina property 
taxes are, or the State----
    Mr. Greenstein. Total Federal taxes.
    Mr. Hulshof. OK.
    Mr. Greenstein. Not true for total Federal taxes.
    Mr. Hulshof. Let me ask your opinion quickly, as my time 
dwindles, because you talk about the AMT. May I assume that you 
would agree that even a temporary patch, since it's not--was 
not indexed--I think the last time Congress had the 
opportunity, was in 1993, to index incomes so that they would 
not be subject to AMT, that salary for Member of Congress, that 
we should not be providing tax relief? Some have said that the 
AMT is hitting the middle class.
    In Keokuk or Ames or Ottumwa, certainly in Memphis, Paris 
and Mexico, Missouri, $160,000 is not middle class. It's upper 
income. And so I think, you know, often what we say was the AMT 
fix is hitting the middle class and it's difficult for me to 
explain to constituents in Missouri that $160,000 plus a year, 
what Members of Congress make, is somehow in the middle class.
    May I assume that you would be opposed either personally or 
as the executive director of Center on Budget and Policy 
Priorities that we should not provide this temporary relief or 
even permanent relief as far as the AMT is concerned, or is 
that an incorrect assumption on my part?
    Mr. Greenstein. An incorrect assumption. I agree with you 
that claims that the AMT is killing the middle class are really 
somewhat overblown rhetoric. The bulk of the AMT collections 
now come from people with incomes between $200,000 and $500,000 
a year.
    I am concerned, however, that if we don't do any AMT relief 
at all, eventually it really will get into the middle class. Is 
it there in a big way now? No. But if you go out 10 years, you 
would have over 40 million filers subject to the AMT.
    Ideally, we would have a tax system where we didn't need an 
AMT, but I think it's unlikely that we will--I loved the '86 
Tax Reform Act. It's unlikely we will eliminate so many tax 
expenditures and breaks that we won't need an AMT.
    So I think what we need is to do some AMT reforms so that 
it doesn't, over time, get down into the middle class, and I 
think we have to pay for them. I do favor PAYGO, including for 
the AMT relief.
    Mr. Hulshof. Perhaps we can continue this discussion in 
further hearings. I know you're frequently a witness in front 
of our Committee. I want to--sorry--Mr. Riedl. I want to try to 
practice what I preach, and I see my time has expired, and so I 
would yield back. Thank you, Mr. Chairman.
    Chairman Nussle. Mr. Spratt is recognized to continue.
    Mr. Spratt. That's OK.
    Chairman Nussle. You were done?
    Mr. Spratt. The one question I was about to ask--I mean I 
was glad to yield. If you want more time, I will gladly yield. 
One question I was about to ask is it appears to me that in the 
Bush proposals for mitigating the deficit, almost all of the 
weight comes down on discretionary domestic spending.
    Certainly defense, certainly international spending are 
demonstrably going up. It's only 16.3 percent of the total 
piece of pie, to the total pie. And yet we see, Mr. Riedl--is 
it Reedal, Ridal----
    Mr. Riedl. Reedl.
    Mr. Spratt. Riedl, that the cuts by year five have become 
very significant and probably unrealistic. How far can we go? 
Just how much can be squeezed out of discretionary spending 
constraints realistically over the next 5 years to be applied 
to deficit reduction or deficit mitigation?
    Mr. Riedl. Long term, non-defense discretionary spending is 
not going to solve our problems. The entire non-defense 
discretionary budget is under $500 billion. The deficit within 
a couple of years is going to be $500 billion. As a matter of 
fact, we project the deficit by 2016 hitting $800 billion.
    That's not to say that these programs should--I believe 
caps can help these programs. I believe all parts of the budget 
should be on the table, and that these programs can play a 
part. Long term, though, this is a criticism that I have with 
the President's budget. Most of the long-term deficit 
reduction, by our calculation, 25 percent of it comes from 
excluding the AMT after 2007, and the other 75 percent comes 
out of discretionary spending.
    You know, long-term entitlements are growing so fast, we 
will not get spending under control. We will not get the budget 
deficit under control until we tackle Social Security, 
Medicare, and Medicaid.
    Again budget caps are important on discretionary. There is 
a role to play there, but long term, the game is big three 
entitlements.
    Mr. Spratt. Mr. Greenstein.
    Mr. Greenstein. It's difficult for me to come up with a 
figure and say here's the figure for what you could get from 
domestic discretionary. I want to refer back to a point which I 
agree with that Brian made a few minutes ago, which is: if we 
did not live in the world we do and were not subject to the 
lobbying pressures we are, one could get by--if one could 
surgically figure out where to get savings in domestic 
discretionary, regardless of interest group pressures with a 
lower level than you can in the real world.
    Part of the fears that I have about various parts of the 
budget is the fear that a realistic cut may be proposed, the 
interest groups may push back, and Congress may get the money 
in a less reasonable way instead, and just one quick example, 
the Medicare proposals that the President has in the budget, a 
number of them come from the MedPac recommendation. My two 
concerns with them are, one, I wish they were going for deficit 
reduction rather than to offset a portion of the tax cut, but 
two, and this is the point I want to make, I have a little bit 
of a fear that the provider groups will push back and the 
savings could get pushed into hitting low-income beneficiaries 
in Medicaid instead.
    To the degree that Congress is able to withstand various 
interest group pressures, there is an ability to do more in any 
part of the budget, and the more we can withstand interest 
group pressures on all parts, including revenues, the better we 
can do, and that's why I end up thinking that if you can put 
every part of the budget on the table and have some kind of 
bipartisan agreement, kind of like the 83 Social Security 
Commission, where everybody holds hands together, that it's 
easier to take on interest groups than if you say we're just 
going after one part of the budget and we're shielding other 
parts of the budget.
    Mr. Spratt. Thank you very much, both of you. Appreciate 
your testimony.
    Chairman Nussle. Thank you, panel. If there's nothing 
further to come before the Committee, we will stand adjourned.
    [Whereupon, at 1:23 p.m., the hearing was adjourned.]

                                  
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