Major Savings and Reforms in The President's 2008 Budget: Ebruary

Major Savings and Reforms
in the
President's 2008 Budget
FEBRUARY 2007
Table of Contents
Introduction .............................................................................................................. 1
Savings from Discretionary Program Terminations and Reductions:
Program Terminations .................................................................................... 11
Program Reductions ........................................................................................ 77
Department of Defense Restructuring ...................................................................... 127
Mandatory Program Reforms ................................................................................... 137
Budget Enforcement and Other Reforms ................................................................. 195
General Notes
1. All years referred to are fiscal years, unless otherwise noted.

2. Detail in this document may not add to the totals due to rounding.
3. PART refers to the Program Assessment Rating Tool.
4. At the time of this writing, only two of the appropriations bills for 2007 had been enacted;
therefore, the programs provided for in the remaining 2007 appropriations bills were operating
under a continuing resolution (P.L. 109–289, Division B, as amended). For these programs,
references to 2007 spending in the text and tables in the Budget and this document reflect the
levels provided by the continuing resolution.
i
INTRODUCTION
1
Major Savings and Reforms in the President's 2008 Budget
The President's 2008 Budget continues its focus on pro-growth policies that have helped
fuel our Nation's strong economic expansion. The President's tax relief helped generate
increased economic activity that resulted in robust job creation and record tax receipts in
the last two years. Even in the face of historic challenges -- the 2001 recession, corporate
scandals, the terrorist attacks on September 11th, and Hurricane Katrina -- America's
robust and resilient economy, coupled with fiscal restraint, has helped cut the deficit in
half three years ahead of schedule and put the budget on a path to balance by 2012.
Spending restraint in combination with sustained economic expansion is critical to deficit

reduction. While making necessary investments in the Global War on Terror and
homeland security, the President has worked with the Congress to successfully reduce the
growth in non-security discretionary spending. The President also signed into law
mandatory spending reforms in 2006 that were estimated to generate nearly $40 billion in
savings over five years.
The 2008 Budget builds on this record of spending discipline by holding the growth in
non-security discretionary spending to one percent, well below the rate of inflation. It
takes steps to improve the budget process, including proposals such as comprehensive
earmark reform and the Legislative Line-Item Veto. The Budget also takes sensible steps
toward reforming the Nation's vital entitlement programs like Medicare, Medicaid, and
Social Security to ensure they are sustainable in the long term.
To achieve spending discipline and help put the Budget on a path to balance by 2012, the
Administration is proposing a number of terminations, reductions, and reforms for
discretionary and mandatory spending that are outlined in this volume. These proposals
will result in savings to taxpayers and improved Government services by eliminating or
restructuring low-priority programs and programs that are not producing results. The list
of proposed major reforms and budget savings was guided by criteria that considered
3
whether the programs met the Nation's priorities, constituted an appropriate and effective
use by the Federal Government of taxpayer resources, and produced the intended results.
In appropriations for 2006, the Congress answered the call for restraint and accepted 89 of
the President's 154 proposals -- all or in part -- for a total savings of $6.5 billion, as well as
passed the Deficit Reduction Act to deliver the first significant savings from mandatory
spending reforms since 1997. Congressional leadership has also indicated that it is going to
meet the spending limits established for 2007.
The Administration looks forward to continuing to work with the Congress to maintain
budget discipline while ensuring critical investments in America's security and
prosperity.
Savings from Discretionary Program Terminations and Reductions
About one-third of budget spending comes from discretionary spending, which is the
day-to-day Government spending that the Congress must approve each year. The
Administration has undertaken a thorough review of these programs to identify
duplicative, inefficient programs, or lower priority activities. As a result, the Budget
proposes terminations or reductions of 141 discretionary programs, which would reduce
spending by $12.0 billion in 2008.
Savings from Mandatory Spending Reductions and Reforms
Comprising nearly two-thirds of the Federal spending, mandatory spending is generally

not subject to annual congressional review. The resulting automatic growth in mandatory
spending, particularly in Medicare, Medicaid, and Social Security, poses a significant
challenge to the Nation's fiscal health, placing a growing and unsustainable burden on the
budget in the long term.
The 2008 Budget slows spending growth through sensible reforms in entitlement and
other mandatory programs, resulting in $96 billion in net savings over five years. This
includes $66 billion in savings in Medicare and $6.8 billion in Medicaid and the State
Children's Health Insurance Program.
4
Budget Enforcement and Other Reforms
The 2008 Budget includes several budget reforms, including:

• New caps on discretionary spending;
• Pay-as-you-go controls to limit mandatory spending;
• A proposal for the enactment of the Legislative Line Item Veto (all savings from
the use of this line item veto would, by statute, be directed to deficit reduction);
• Comprehensive earmark reform that brings greater transparency and accountability
to the congressional budget process and would cut the number and amount of
earmarks by half; and
• Sunset and Results Commissions to review programs and their results and make
recommendations about whether to retain, reform, or terminate them.
The PART: Assessing Government Efficiency and Effectiveness
With the Program Assessment Rating Tool (PART), agencies and OMB ask
approximately 25 common-sense questions about each program's performance and
management. These include:
• Is the program's purpose clear and is it well designed to achieve its objectives?
• Does the program have clear, outcome-oriented goals?
• Is the program well managed?
• Does the program achieve its goals?
For all the responses to these questions, there is an explanation and the relevant evidence
is cited. The website, www.ExpectMore.gov, provides easy access to information about
the performance of Federal programs. The conclusions in these assessments are based on
evidence, including information from reports by agency Inspectors General and the
Government Accountability Office.
This marks the fifth year that PART was used to assess programs' strengths and
weaknesses and to inform action plans to improve program performance. These
assessments, in turn, are factors in decisions about program funding. To date, the
Administration has assessed:
5
• 977 programs, or 96 percent of the Budget, with the following program ratings:
o 17 percent are "Effective"
o 30 percent are "Moderately Effective"
o 28 percent are "Adequate"
o 3 percent are "Ineffective"
o 22 percent are "Results Not Demonstrated"
The primary purpose of PART is to make sure that Federal programs live up to their
congressionally-mandated intent and are effectively managed to provide the best value
for taxpayers. PART is a diagnostic tool and is not the only basis for program funding
proposals. When a program is ineffective, it can become a candidate for termination or
reduction or it can be reformed so that it achieves results.
In Spring 2005, this assessment tool received the Innovations in American Government
Award from the Kennedy School of Government at Harvard University. This award
recognized these assessments for their ability to systemically help Federal programs
establish clearly defined goals and measure results.
6
SAVINGS FROM DISCRETIONARY PROGRAM
TERMINATIONS, REDUCTIONS, AND REFORMS
7
Discretionary Program Terminations and Major Reductions
in the 2008 Budget
OVERVIEW
Terminations of Discretionary Programs

91 programs terminated in the 2008 Budget
$5.0 billion savings over the 3rd 2007 Continuing Resolution (P.L. 109-289,
Division B, as amended)
Major Program Reductions

50 programs have major reductions in the 2008 Budget
$7.0 billion savings over the 3rd 2007 Continuing Resolution
Discretionary TOTAL for Program Terminations and Major Reductions

$12.0 billion in savings over the 3rd 2007 Continuing Resolution
9
PROGRAM TERMINATIONS
11
Discretionary Program Terminations in the 2008 Budget
(Budget authority in millions)
Has this been proposed 2007 2008 Request
Terminations before? 2007 CR 2008 less
2005 2006 2007 Request level Request 2007 CR
Department of Agriculture
Community Connect (Broadband) Grants................................................... Y Y Y --- 9 --- -9
Commodity Supplemental Food Program................................................... N N Y --- 107 --- -107
Community Facility Grants.......................................................................... N N N 17 25 --- -25
Economic Impact Grants............................................................................. Y Y Y --- 15 --- -15
Multifamily Housing Direct Loans................................................................ Y Y Y --- 41 --- -41
Research & Extension Grant Earmarks/Low Priority Programs.................. Y Y Y --- 157 --- -157
Rural Business Grants…………………………………………………………… N Y Y --- 45 --- -45
Rural Enterprise Zones/Empowerment Communities................................. N Y Y --- 11 --- -11
Single Family Housing Direct Loans............................................................ N N N 124 117 --- -117
Watershed Programs…………………………………………………………… Y Y Y --- 46 --- -46
Total, Agriculture Terminations.............................................................................................................. 141 573 --- -573
Department of Commerce
Emergency Steel Guarantee Loan Program............................................... Y Y Y -49 -39 -49 -10
Public Telecom. Facilities, Planning and Construction Grants ................... Y Y Y --- 20 --- -20
Technology Administration.......................................................................... N Y Y 1 2 2 ---
Total, Commerce Terminations............................................................................................................... -48 -17 -47 -30
Department of Education
Even Start.................................................................................................... Y Y Y --- 112 --- -112
Educational Technology State Grants......................................................... N Y Y --- 273 --- -273
State Grants for Innovation.......................................................................... N N N 99 99 --- -99
Small Elementary and Secondary Education Programs:
Comprehensive School Reform................................................................ Y Y Y --- 10 --- -10
Javits Gifted and Talented Education....................................................... Y Y Y --- 10 --- -10
Education For Native Hawaiians............................................................... N N N 31 34 --- -34
Alaska Native Education Equity................................................................ N N N 34 34 --- -34
National Writing Project............................................................................ Y Y Y --- 22 --- -22
School Leadership.................................................................................... Y Y Y --- 15 --- -15
Advanced Credentialing............................................................................ N N N 8 17 --- -17
Dropout Prevention Program.................................................................... Y Y Y --- 5 --- -5
Close-Up Fellowships............................................................................... Y Y Y --- 1 --- -1
Academies for American History and Civics............................................. N/A N/A Y --- 2 --- -2
Star Schools............................................................................................. Y Y Y --- 15 --- -15
Ready to Teach........................................................................................ Y Y Y --- 11 --- -11
Historic Whaling and Trading Partners..................................................... Y Y Y --- 9 --- -9
Excellence in Economic Education........................................................... Y Y Y --- 1 --- -1
Mental Health Integration in Schools........................................................ N/A Y Y --- 5 --- -5
Foundations for Learning.......................................................................... Y Y Y --- 1 --- -1
Arts in Education....................................................................................... Y Y Y --- 35 --- -35
Parental Assistance Information Centers................................................. Y Y Y --- 40 --- -40
Women's Educational Equity.................................................................... Y Y Y --- 3 --- -3
Alcohol Abuse Reduction.......................................................................... Y Y Y --- 32 --- -32
Mentoring Program................................................................................... N N Y 19 19 --- -19
Elementary and Secondary School Counseling....................................... Y Y Y --- 35 --- -35
Physical Education................................................................................... N Y Y 26 73 --- -73
Civic Education......................................................................................... Y Y Y --- 29 --- -29
Supplemental Education Opportunity Grants.............................................. N N N 771 771 --- -771
Tech Prep Education State Grants.............................................................. Y Y Y --- 105 --- -105
Smaller Learning Communities................................................................... Y Y Y --- 90 --- -90
Teacher Quality Enhancement.................................................................... Y Y Y --- 60 --- -60
Small Higher Education Programs:
Strengthening Alaska Native/Native Hawaiian Institutions....................... N N N 9 12 --- -12
Higher Education Demos for Students with Disabilities............................ Y Y Y --- 7 --- -7
State Grants for Incarcerated Youth ........................................................... Y Y Y --- 23 --- -23
Small Postsecondary Financial Assistance Programs:
Perkins Loan Cancellations...................................................................... N Y Y --- 65 --- -65
Leveraging Educational Assistance Programs ........................................ Y Y Y --- 64 --- -64
Byrd Honors Scholarships........................................................................ N Y Y --- 41 --- -41
Thurgood Marshall Legal Opportunity...................................................... Y Y Y --- 3 --- -3
B.J. Stupak Olympic Scholarships............................................................ Y Y Y --- 1 --- -1
Small Vocational Rehabilitation Programs:
Supported Employment State Grants....................................................... Y Y Y --- 30 --- -30
Projects with Industry................................................................................ Y Y Y --- 20 --- -20
VR Recreational Programs....................................................................... Y Y Y --- 3 --- -3
VR Migrant and Seasonal Farmworkers................................................... Y Y Y --- 2 --- -2
Total, Education Terminations................................................................................................................ 997 2,239 --- -2,239
Department of Energy
University Nuclear Energy Program............................................................ N N Y --- 27 --- -27
Oil and Gas Research and Development ................................................... N Y Y --- 12 --- -12
Geothermal Technology Program............................................................... N N Y --- 23 --- -23
Total, Energy Terminations..................................................................................................................... --- 62 --- -62
13
Discretionary Program Terminations in the 2008 Budget
Terminations before? 2007 CR 2008 less
2005 2006 2007 Request level Request 2007 CR
Department of Health and Human Services (HHS)
AoA- Alzheimer's Demonstration Project..................................................... N Y Y --- 12 --- -12
AoA- Preventive Health Services................................................................ N Y Y --- 21 --- -21
ACF- Community Services Block Grant...................................................... N Y Y --- 630 --- -630
ACF- Other Community Service Programs:
Community Economic Development......................................................... N Y Y --- 27 --- -27
Job Opportunities for Low-Income Individuals.......................................... N Y Y --- 6 --- -6
Rural Communities................................................................................... Y Y Y --- 7 --- -7
CDC- Preventive Health and Health Services Block Grant......................... N Y Y --- 99 --- -99
HRSA- Bioterrorism Curriculum Development............................................ N N N 12 21 --- -21
HRSA- Maternal & Child Health Small Categorical Grants......................... Y Y Y --- 39 --- -39
IHS- Urban Indian Health Program.............................................................. N N Y --- 33 --- -33
Total, HHS Terminations.......................................................................................................................... 12 895 --- -895
Department of Housing and Urban Development (HUD)
HOPE VI...................................................................................................... Y Y Y -99 183 -99 -282
Rural Housing and Economic Development................................................ Y Y Y --- 24 --- -24
Section 108 Loan Program.......................................................................... Y Y Y --- 3 --- -3
Total, HUD Terminations.......................................................................................................................... -99 210 -99 -309
Department of the Interior
BIA- Housing Improvement Program........................................................... N N N 23 23 --- -23
BIA- Johnson-O'Malley Assistance Grants.................................................. N N Y --- 16 --- -16
FWS- Landowner Incentive Grants............................................................. N N N 24 15 --- -15
FWS- Private Stewardship Grants............................................................... N N N 9 7 --- -7
Land and Water Conservation Fund State Recreation Grants.................... N Y Y --- 28 --- -28
National Park Service Statutory Aid............................................................ N Y Y --- 7 --- -7
Rural Fire Assistance Program.................................................................... Y Y --- 8 --- -8
Total, Interior Terminations..................................................................................................................... 56 104 --- -104
Department of Justice
National Drug Intelligence Center................................................................ N Y Y 16 39 16 -23
State Criminal Alien Assistance Program.................................................... Y Y Y --- 400 --- -400
Total, Justice Terminations..................................................................................................................... 16 439 16 -423
Department of Labor
Denali Commission Job Training Earmark.................................................. Y Y Y --- 7 --- -7
Migrant and Seasonal Farmworkers Training Program............................... Y Y Y --- 79 --- -79
Susan Harwood Training Grants ................................................................ Y Y Y --- 3 --- -3
Work Incentive Grants................................................................................. N N Y --- 23 --- -23
Total, Labor Terminations....................................................................................................................... --- 112 --- -112
Environmental Protection Agency (EPA)
Unrequested Water Infrastructure Projects................................................. Y Y Y --- 200 --- -200
Targeted Watershed Grants........................................................................ N N N 7 16 --- -16
Total, EPA Terminations.......................................................................................................................... 7 216 --- -216
National Aeronautics & Space Administration (NASA)
Red Planet Venture Capital Fund................................................................ N N N 12 6 --- -6
Total, NASA Terminations....................................................................................................................... 12 6 --- -6
Other Agencies
National Veterans Business Development Corporation.............................. N Y Y --- 2 --- -2
Postal Service Forgone Revenue Appropriation......................................... Y Y Y --- 29 --- -29
Commission of Fine Arts, National Capital Arts and Cultural Affairs........... N N N 7 7 --- -7
Total, Other Agencies Terminations....................................................................................................... 7 38 --- -38
Total, Discretionary Program Terminations................................................................................................. 1,101 4,877 -130 -5,007
14
Department of Agriculture: Discretionary Proposal
Community Connect (Broadband) Grants
Funding Summary
(In millions of dollars)
2007 2008 Change

CR level Proposed From 2007
Budget Authority…...................... 9 --- -9
Administration Proposal and Impact
The 2008 Budget proposes no new funding for Broadband grants. Funds will still be available through
the Rural Utilities Service's (RUS) broadband loan program to provide broadband service to rural areas.
Using loans to provide support is less expensive than grants by allowing for more support (loan level)
with fewer appropriated dollars. Communities can obtain loans through RUS, which, due to the low
interest rate, the communities are able to repay.
Background
The purpose of the Broadband Grant Program is to provide broadband transmission service that fosters
economic growth and delivers enhanced educational, health care, and public safety services. Grants
would be used for the deployment of broadband transmission service to extremely rural, lower-income
communities on a ''community-oriented connectivity'' basis. This program is duplicative of the
Broadband Loan Program authorized in the 2002 farm bill. The areas eligible for grants are also eligible
for low-cost broadband loans through the RUS.
15
Commodity Supplemental Food Program
Funding Summary
2007 2008 Change

The 2008 Budget proposes to eliminate the Commodity Supplemental Food Program (CSFP). In the
limited areas where it is available, the program duplicates two of the Nation's largest Federal nutrition
assistance programs: Food Stamps and the Special Supplemental Nutrition Program for Women, Infants
and Children (WIC). Instead, the Budget provides funding to serve all eligible individuals who apply for
WIC, and provides resources for outreach and temporary benefits to help elderly households transition
from CSFP to the Food Stamp Program.
Background
CSFP provides a monthly food package to low-income women, infants, children, and elderly in selected
sites in 32 States, the District of Columbia, and on two Indian reservations. Many recipients are eligible
for the Food Stamp and WIC programs. By contrast, these programs provide nationwide access to
generally larger and more flexible nutrition benefits for all eligible individuals who apply.
16
Community Facilities Grant Program
Funding Summary
2007 2008 Change

Budget Authority…..................... 25 --- -25
The Administration proposes no funding for the Community Facilities (CF) Grant Program. Thirty-five
percent of the funds are earmarked. Also, a program assessment by the Department of Agriculture and
the Office of Management and Budget revealed that the grants are not always used in conjunction with
the community facilities direct loan program. In addition, this program is redundant with other Federal
programs at the Departments of Commerce and Housing and Urban Development. The Budget fully
funds the community facilities direct and guaranteed loan programs.
Background
The CF Grant Program was newly authorized in the 1996 Farm Bill. Grants were to be used in
conjunction with the CF direct loan program or as a stand alone grant to provide financial assistance for
essential community facilities such as health care, public safety, and educational/cultural services. The
grants are for rural areas, defined as communities of less than 20,000 people.
17
Economic Impact Grant Program
Funding Summary
2007 2008 Change

The Administration proposes no funding for the Economic Impact Grants Program. Economic Impact
Grants are a special kind of community facilities grant designed specifically for areas of high
unemployment and out-migration. This program is redundant with other Federal programs at the
Departments of Commerce and Housing and Urban Development.
Background
Economic Impact Grants were authorized in the Grain Standards and Warehouse Improvement Act of
2000. This is a specialized community facilities grant program that has added criteria requiring the
community to be experiencing extreme unemployment and/or severe economic depression and out-
migration. It was to be used in conjunction with the community facilities direct loan program or as a
stand alone grant to provide financial assistance for essential community facilities such as health care,
public safety, and educational/cultural services. The grants are for rural areas, defined as communities of
less than 20,000 people.
18
Multifamily Housing Direct Loan Program
Funding Summary
2007 2008 Change

Budget Authority…....................... 41 --- -41
Loan Level………......................... 90 --- -90
The Administration proposes no funding for the Multifamily Housing Direct Loan Program. Instead, the
Administration proposes to provide rural multifamily housing units through the multifamily housing loan
guarantee program. This will allow the Department of Agriculture (USDA) to provide a similar number
of units at a lower cost.
The Budget also proposes funding in the multifamily housing revitalization account to deal with issues
currently impacting existing USDA financed properties, including prepayment and dilapidation.
Background
The Multifamily Housing Direct Loan Program, authorized in the Housing Act of 1949, provides capital
financing for the development of housing for very low- and low-income, elderly or handicapped residents.
Loans are made to private developers or non-profits to construct, rehabilitate, and/or repair multi-family
rural rental housing in rural areas. To help achieve affordable rents, the interest rate is subsidized to one
percent, and, in addition, the tenant's rents are further reduced to 30 percent of their adjusted income
through rental assistance grants.
The Administration has never requested funds for this program because focus and funding has been
needed to deal with dilapidation in the current portfolio. The dilapidation issue arose because the original
loan agreement did not require adequate reserves for major property improvements. In addition, these
loans are for 50 years and pre-payment is prohibited.
19
Research and Extension Grant Earmarks and Low Priority Programs
Funding Summary
2007 2008 Change

The Budget reprioritizes funding for research by eliminating an amount based on what the Congress has
traditionally earmarked, as well as several lower priority programs that do not represent the most effective
use of Federal dollars. The Budget redirects a portion of these funds to competitive, peer review grants,
such as the National Research Initiative (NRI), the Department of Agriculture's main discretionary
competitive grants program. Such grants could be targeted to national priority needs.
Background
The Congress provides funding for several hundred research and extension grants that are earmarked to
specific locations and for specific purposes, often for work that may not be in the national interest or a
Federal responsibility. Examples of these have included: asparagus technology and production; jointed
goatgrass control; dairy and meat goat research; and alternative salmon products. Many of these projects
have received continuous funding for more than a decade. Despite the fact that annual budget requests
have proposed not to continue such earmarks, the Congress has continued to provide funding at
increasingly higher levels in recent years, from $66 million in 1994 to $184 million in 2006.
Furthermore, these projects and low priority programs use valuable taxpayer resources that could be
devoted to higher priorities, such as competitive research grants that respond to national needs.
20
Rural Business Grants
Funding Summary
2007 2008 Change

Budget Authority...................... 45 --- -45
The Administration proposes no funding for Rural Business Enterprise Grants and Rural Business
Opportunity Grants. These programs are duplicative of other Rural Development and Federal programs
in the Departments of Commerce, Health and Human Services, Housing and Urban Development, and the
Treasury. In addition, the programs are traditionally earmarked limiting their effectiveness.
Background
Rural Business Enterprise Grants and Rural Business Opportunity Grants were authorized in the
Consolidated Farm and Rural Development Act of 1972. The Rural Business Enterprise Grants program
provides grants to public bodies, private nonprofit corporations, and federally-recognized Indian tribal
groups to assist emerging businesses in rural communities. The Rural Business Opportunity Grants
program funds economic planning for rural communities, technical assistance for rural businesses, and
training for rural entrepreneurs or economic development officials.
21
Rural Enterprise Zones/Empowerment Communities
Funding Summary
2007 2008 Change

The Administration proposes no funding for Rural Enterprise Zones/Empowerment Communities

program. This program is duplicative of other Rural Development and Federal programs administered by
the Departments of Commerce, Health and Human Services, Housing and Urban Development, and the
Treasury. These communities will continue to be eligible for other rural development assistance available
through the Departments of Agriculture, and Housing and Urban Development, as well as the Small
Business Administration.
Background
Rural Enterprise Zones/Empowerment Communities grants were authorized in Title XIII of the Omnibus
Budget Reconciliation Act of 1993. The program provides grants that encourage public and private
partnerships to attract investments for long-term economic and community development in 162
communities designated as "distressed." Designated communities are eligible for various tax incentives
and credits as well as priority ranking for many Federal programs.
22
Single Family Housing Direct Loan Program
Funding Summary
2007 2008 Change

Loan Level………......................... 1,165 --- -1,165
The Administration proposes no funding for the Single Family Housing Direct Loan Program, which
provides Federal loans for low-income individuals to buy homes in rural areas. Using loan guarantees,
instead of direct loans, to provide assistance for single family housing mortgages is consistent with other
Federal homeownership programs. In fact, there are no Federal single family direct loan home ownership
programs for urban areas.
Furthermore, financial markets have become more efficient and have increased the reach of mortgage
credit to lower credit qualities and incomes. While there are still rural areas that are isolated from wide
credit availability, these areas are shrinking as broadband internet access and correspondent lending
grows. Therefore, utilizing the private banking industry to provide this service, with a guarantee from the
Federal Government, is a more efficient way to deliver that assistance.
The Budget includes an increase to the single family housing loan guarantees of $1.2 billion for a total of
$4.8 billion. In order to assist very low- to low-income rural borrowers, the Administration will propose
legislation to authorize a subsidized guaranteed single family housing program.
Background
The Single Family Housing Direct Loan Program, authorized in the Housing Act of 1949, provides
Federal loans for low-income individuals or households purchase homes in rural areas. Families must be
without adequate housing, but be able to afford the mortgage payments, including taxes and insurance. In
addition, interest payment subsidy is available to applicants to enhance repayment ability. The interest
rate is based on the borrower's income and can be subsidized down to as low as one percent. Applicants
must be unable to obtain credit elsewhere, yet have a reasonable credit history.
The direction of Rural Development's single family housing mortgage assistance over the last two
decades has been towards guaranteed loans. The single family housing guaranteed loan program,
authorized in 1990, has grown from a $100 million program to a $3 billion program annually. Meanwhile
the single family direct loan program has been stagnant at approximately a $1 billion loan level.
23
Natural Resources Conservation Service Watershed Programs
Funding Summary
2007 2008 Change

The 2008 Budget proposes to terminate the Natural Resources Conservation Service's (NRCS’)
Watershed Protection and Flood Prevention Operations Program. The program funds local—in many
cases privately-owned—flood prevention and water improvement projects that are not Federal priorities.
In addition, an Office of Management and Budget analysis in the 2004 Budget found that NRCS' program
was the least cost effective Federal flood damage reduction program. In conjunction with this
termination, the 2008 Budget also proposes to terminate the Watershed Surveys and Planning Program.
The Department of Agriculture anticipates that local sponsoring organizations, as well as State and local
governments, will assume a more active role in identifying water resource problems and their solutions.
The Budget proposes to eliminate funding for these programs and to redirect the dollars to other higher
priority programs.
Background
The Watershed Protection and Flood Prevention Operations program provides technical and financial
assistance to local communities to plan, design, and construct flood prevention, water supply, and water
quality improvement projects. The Watershed Survey and Planning Program provides technical
assistance to local communities to perform surveys and develop plans to address local water issues, such
as water supply and quality.
By agreement with the Army Corps of Engineers, NRCS’ watershed programs fund only operations in
small, rural watersheds and in communities with small populations. NRCS has helped to construct
thousands of dams and other flood control projects across the country over the program's 60-year history.
In the 2004 Budget, OMB compared the cost effectiveness of the Corps of Engineers, NRCS, and Federal
Emergency Management Agency flood damage reduction programs. Evaluation of projects completed
over a five-year period demonstrated that NRCS' program provided the fewest benefits per dollar.
24
Department of Commerce: Discretionary Proposal
Emergency Steel Guarantee Loan Program
Funding Summary
2007 2008 Change

Budget Authority…....................... -39* -49 -10
*The 2007 House appropriations bill cancelled $39 million from this program; however, the Budget assumes that if the
Department is funded under a full-year 2007 continuing resolution, the 2007 cancellation would not be enacted, which would
leave $49 million available for cancellation in 2008.
The Administration is proposing to cancel all remaining credit subsidy balances for the Emergency Steel
Guarantee Loan Program (ESGLP), as the financing assistance that these funds support is no longer
needed due to the recovery of the industry.
Background
ESGLP was enacted in 1999 to help steel firms suffering financial losses from low prices and the inability
to obtain financing for continued operations and facility re-investment. However, since 2003, the
Administration has proposed to cancel funds from the program as it has become an unwarranted corporate
subsidy and exposes taxpayers to significant costs from loan guarantee defaults. Further, demand for the
guarantees has been much lower than expected. No loans have been made from the program since 2003.
Beginning in 2004, international demand for steel increased significantly, and numerous consolidations
occurred in the domestic steel production market. The industry's recovery is further evidence that ESGLP
is no longer needed.
25
Public Telecommunications, Facilities, Planning, and Construction Grants
Funding Summary
2007 2008 Change

The Administration proposes to terminate Public Telecommunications, Facilities, Planning and

Construction Program (PTFP) grant funding in the 2008 Budget. The Administration proposes instead
that $30.6 million of the Corporation for Public Broadcasting's already-enacted 2008 funding be made
available for public television's digital transition, to assist the remaining broadcasters that are not yet
meeting Federal Communications Commission (FCC) mandates. Most public broadcasters have
completed the transition to digital broadcasting, in order to comply with the rules of the FCC.
Termination of PTFP appropriations will reduce redundancy in digital transition funding for public
broadcasters.
Background
The PTFP program was created in the early 1960s to assist in the planning and construction of public
telecommunications facilities through matching grants. The Commerce Department's National
Telecommunications and Information Administration has administered the program since 1979.
Since 2000, almost 70 percent of PTFP awards have supported public television stations' conversion to
digital broadcasting. Funding for public television's conversion to digital is available elsewhere.
26
Technology Administration
Funding Summary
2007 2008 Change

Budget Authority…....................... 2 2 ---
The Administration proposes to terminate the Technology Administration (TA) with a two-year $1.5
million appropriation in 2008 for transitioning and modernizing the Department’s approach to technology
policy by elevating the coordination of technology policy activities to the Secretarial level. In place of a
stand-alone Technology Administration, the Budget proposes to create a Department-wide Technology
Council that will coordinate technology policy activities that are distributed across the Department and to
appoint a senior advisor in the Department’s Office of Policy and Strategic Planning to serve as the
primary coordinator of the Department's technology policy activities. The Budget proposes to shift funds
to higher performing programs that have a greater impact on technological competitiveness, including
providing a more than 10 percent increase for National Institute of Standards and Technology (NIST) labs
as part of the American Competitiveness Initiative for high-priority investments in physical science
research.
Background
TA works on U.S. technology policy and, in principle, is the capstone office above NIST and the National
Technical Information Service. The Budget seeks to modernize the Department’s approach to technology
policy by focusing on coordination of technology policy activities that are distributed in bureaus
throughout the Department rather than having a single stand-alone organization. Further, the 2008
Budget supports the President’s American Competitiveness Initiative that includes a strong commitment
to double over 10 years the investments that support basic research programs in the physical sciences and
engineering. The initiative also strengthens science and mathematics education and training programs,
and will continue to be carried out through the National Science Foundation, the Department of Energy’s
Office of Science, the Department of Education, and NIST.
27
Department of Education: Discretionary Proposal
Even Start
Funding Summary
2007 2008 Change

In 2008, the Administration proposes to eliminate the Even Start program and redirect funds to programs
that are likely to be more effective at improving early childhood education, including Title I. An
assessment by the Department of Education and the Office of Management and Budget that rated Even
Start as Ineffective due to its poor results on national evaluations over a number of years provides strong
justification for terminating the program.
Background
Launched as a small demonstration program in 1988, Even Start combines early childhood education,
adult education, and parenting classes into "family literacy" programs for low-income children and their
parents. However, three national evaluations of the program, including two with rigorous random control
trial designs, show that Even Start is not effective. The children and adults who participate in the
program do not make greater literacy gains than non-participants. The most recent evaluation concluded
that, while Even Start participants made small gains, they did not perform better than the comparison
group that did not receive Even Start services. In addition, the scores of Even Start participants after one
year of participation in the program were very low. For example, Even Start children scored at the sixth
percentile when tested at the end of the program on a measure of vocabulary knowledge and Even Start
parents scored at the third grade level when tested at the end of the program on a measure of reading
comprehension. Consequently, Even Start received an Ineffective PART rating in 2004.
In 2004, the Administration proposed to fund only continuation awards, based on PART findings and the
national evaluations, and to begin phasing out the program. In 2005, the Administration proposed
termination. The Congress provided the first funding reduction for the program in 2005 (-$22 million),
reducing it from $247 million to $225 million. The Congress reduced the program further in 2006 to $99
million. The 2007 CR level is $112 million.
28
Educational Technology State Grants
Funding Summary
2007 2008 Change

The 2008 Budget proposes to terminate the Educational Technology State Grants program and redirect its
funding to higher priority programs that are more closely focused on student achievement and have a
more rigorous accountability structure in place.
Background
The Educational Technology State Grants program supports funding for States and local school districts
to utilize technology to improve instruction and student learning. It was created in the No Child Left
Behind Act of 2001 as a consolidation of disparate educational technology programs. Funding supports
teacher training in educational technology, technology deployment, and a host of other activities designed
to utilize educational technology to improve student achievement.
While the program was created to better focus educational technology investments on student
achievement, it is not clear that Educational Technology State Grants has been successful in
accomplishing this mission. When the Department of Education and the Office of Management and
Budget recently completed a PART assessment of this program, they found that there are not yet enough
data available to determine the program's impact on improving student academic achievement.
Educational technology may have a positive impact on student achievement, but it is not necessary to
have a stand-alone Federal program solely dedicated to this purpose. States can continue to support
similar activities through other, larger Department of Education programs such as Title I Grants to Local
Educational Agencies ($13.9 billion) and Teacher Quality State Grants ($2.8 billion).
The Congress decreased funding for this program by $224 million in 2006, a 42-percent decrease from
the 2005 level. The CR level is $273 million.
29
State Grants for Innovative Programs
Funding Summary
2007 2008 Change

The 2008 Budget proposes to terminate the State Grants for Innovative Programs and redirect its funding
to higher priority programs that are more closely focused on student achievement and have a more
rigorous accountability structure in place.
Background
State Grants for Innovative Programs is a flexible block grant that provides grants to States and school
districts for a broad array of projects supporting reform and improvement of elementary and secondary
education.
State Grants for Innovative Programs was assessed using the PART in 2005. The Department of
Education and the Office of Management and Budget determined that because the program gives States
and school districts broad flexibility to fund virtually any K-12 activity, it is duplicative of other Federal,
State, and local education programs. The PART analysis also found that the program is neither well-
targeted to meet the needs of children in high-need schools nor designed in a manner that allows its
effectiveness or efficiency to be measured or enables States and local educational agencies to be held
accountable for results.
The Congress has decreased funding for this program by $286 million since 2001. The CR level is $99
million.
30
Small Elementary and Secondary Education Programs
Funding Summary
2007 2008 Change

The Administration proposes to terminate 24 small elementary and secondary education grant programs.
Termination of these narrow-purpose programs does not mean that Federal support is no longer available
for these activities. States and school districts that view these issues as a high priority can support them
with funds provided under broad-purpose Federal education programs, such as Title I, Teacher Quality
State Grants, and other programs.
Background
The 24 grant programs described below are narrow-purpose and have no demonstrated results. Many of
the activities supported by these programs can be supported under large formula grants if localities
determine the need to be pressing. Others support activities that do not fill an appropriate Federal role.
While most of these programs are intended to support laudable purposes, their design has not allowed
them to meet their goals. Many of them lack performance objectives and measures and none have
rigorous evaluations, preventing the Department of Education from assessing program effectiveness and
identifying successful intervention strategies that could have broad national impact. Further, most of
these programs lack administrative mechanisms for holding grantees accountable for achieving results,
and several earmark funds for specific service providers rather than running true competitions. These
programs differ from many other programs authorized under the Elementary and Secondary Education
Act of 1965 (ESEA), such as Title I and Reading First, which have a strong accountability framework and
encourage the use of scientifically based interventions, improving the prospects for participants to achieve
positive and measurable outcomes.
Most of these programs are authorized by the ESEA and are subject to reauthorization this year. The
Administration is not recommending reauthorization for any of these programs.
Comprehensive School Reform (CSR) (2007 CR level: $10.1 million) supports research-based reform
models that address multiple aspects of schools and instruction, particularly in low-performing schools.
In 2004, the Department of Education and the Office of Management and Budget (OMB) used the PART
to assess the program and found it to be duplicative of several aspects of Title I Grants to Local
Educational Agencies, the largest ESEA program. For example, the current Title I authorization allows
significantly more schools than under the prior law to use Title I funds to carry out the kinds of whole-
school reforms supported by the CSR program. In addition, within Title I funding, there is a set-aside of
over $500 million specifically for improvement activities in low-performing schools, the same group of
schools that are the highest priority grant recipients in the CSR program. Data indicate that CSR is
unnecessary as a catalyst for change. In the 2000-2001 school year, about 30,000 schools were
31
implementing research-based school reform models, yet fewer than 10 percent were using CSR funds to
do so. In 2006, the Congress reduced funding for this program by $197 million.
Javits Gifted and Talented Education (2007 CR level: $9.6 million) supports activities to help high
schools meet the educational needs of gifted and talented students. Current grants are not structured to
assess program effectiveness and identify successful intervention strategies that could have broad national
impact.
Education for Native Hawaiians (2007 CR level: $33.9 million) supports the provision of supplemental
education services to the Native Hawaiian population. School districts that wish to implement programs
and services tailored to the educational and cultural needs of Native Hawaiian students are able to use
funds provided under other Federal programs. For example, significant funds are provided to Native
Hawaiian students who receive services through Federal formula grant programs, such as Title I Grants to
Local Educational Agencies and Special Education State Grants program.
Alaska Native Educational Equity (2007 CR level: $33.9 million) supports the provision of supplemental
educational programs and services to Alaska Natives. The services provided to Alaska Native students
through this program are redundant of many of those provided through the Department's Indian Education
programs.
National Writing Project (2007 CR level: $21.5 million) provides a non-competitive grant to a nonprofit
educational organization that promotes kindergarten through college level teacher training programs in
writing. The 2006 PART assessment conducted by the Department of Education and OMB rated this
program as Results Not Demonstrated since it lacks long-term and annual performance measures, as well
as a rigorous evaluation of its effectiveness. Funds for training teachers in all academic subjects are
provided under the Teacher Quality State Grants program.
School Leadership (2007 CR level: $14.7 million) supports recruiting, training, and retaining principals
and assistant principals. The activities funded under this program can be funded under other authorities,
including Teacher Quality State Grants.
Advanced Credentialing (2007 CR level: $16.7 million) supports the development of advanced
credentials based on the content experience of master teachers. Funds also support related activities to
encourage and support teachers seeking advanced credentials. Federal support for this program is no
longer needed because the development and implementation of advanced credentialing systems through
the National Board for Professional Teaching Standards and the American Board for the Certification of
Teacher Excellence is complete. In addition, the Administration does not believe that additional funding
for outreach, recruitment, or candidate subsidies is warranted without conclusive evidence that advancing
credentialing increases student achievement.
School Dropout Prevention (2007 CR level: $4.9 million) supports dropout prevention programs in
schools and districts with above-average dropout rates. Districts wishing to implement drop-out
prevention programs may use funds from Title I Grants to Local Educational Agencies (LEAs). The 2008
Budget is proposing a significant increase for Title I, which will devote new funds to high schools in
proportion to the number of low-income students they educate.
Close-Up Fellowships (2007 CR level: $1.5 million) provides a non-competitive grant to the Close-Up
Foundation to provide fellowships to low-income students and their teachers to finance their participation
in one-week Washington, D.C. seminar programs to learn about the Federal Government. In 1997, the
Congress requested that the Close-Up Foundation provide a plan to continue its fellowships without
Federal funding. In the succeeding years, the foundation surpassed its private sector fundraising goals.
32
Given the popularity of this program and its successful private fundraising, the Administration believes
this program would continue without Federal support.
Academies for American History and Civics (2007 CR level: $2.0 million) supports intensive workshops
for teachers and students in the areas of history and civics. The activities funded under this program can
be funded under other authorities, including Teacher Quality State Grants and Teaching American
History.
Star Schools (2007 CR level: $14.8 million) supports a variety of telecommunications partnerships that
utilize technology to deliver educational content electronically (commonly referred to as distance
education). An evaluation was initiated in 1999 but yielded no reliable findings of program effectiveness
and was never completed. The activities funded under this program can be funded under other
authorities, such as the Improving Teacher Quality State Grants program.
Ready to Teach (2007 CR level: $10.9 million) supports competitive grants to nonprofit
telecommunications entities to carry out programs to improve teaching in core curriculum areas and to
develop and distribute innovative educational and instructional video programming. Resources are
already available through the Teacher Quality State Grants program.
Exchanges with Historic Whaling and Trading Partners (2007 CR level: $8.9 million) provides non-
competitive grants to support culturally based educational activities for Alaska Natives, Native
Hawaiians, children and families of Massachusetts, and (as amended by Public Law 109-149) any
federally-recognized Indian tribe in Mississippi. The program earmarks funds for specific entities serving
these populations.
Excellence in Economic Education (2007 CR level: $1.5 million) supports a competitive grant to a single
non-profit educational organization to promote economic and financial literacy for kindergarten through
12th grade (K-12) students. The activities funded under this program can be funded under other
authorities and private sector outreach.
Mental Health Integration in Schools (2007 CR level: $4.9 million), first funded in 2005, provides grants
to States and school districts to support collaborative efforts between school systems and mental health
systems. The activities funded under this program can be funded under other authorities, including
through the Safe Schools/Healthy Students initiative within Safe and Drug-Free Schools National
Programs.
Foundations for Learning (2007 CR level: $1.0 million), first funded in 2003, provides grants for
comprehensive services to help children under seven who have multiple at-risk characteristics – including
exposure to violence or abuse, low birth weight, and cognitive deficits – be prepared to enter school.
Since IDEA, Head Start, and Title I all help at-risk pre-school children enter school ready to learn, a
separate program for this purpose is not necessary.
Arts in Education (2007 CR level: $35.3 million) makes non-competitive awards to VSA Arts and the
John F. Kennedy Center for the Performing Arts as well as competitive awards for demonstration projects
and leadership activities to encourage the integration of arts into the school curriculum. Districts desiring
to implement arts education activities can use funds provided under other Federal programs. Further, the
Kennedy Center and VSA Arts have a long history of obtaining financial support from the private sector,
individual donors, and other non-Federal sources, which can be expected to continue.
Parental Information and Resource Centers (2007 CR level: $39.6 million) provide training, information,
and support to State and local educational agencies and other organizations that carry out parent education
33
and family involvement programs. Since parent education and support activities are required and funded
under other NCLB programs such as Title I, a separate program for this purpose is not necessary.
Women's Educational Equity (2007 CR level: $2.9 million) supports activities promoting educational
equity of girls and women. Since the enactment of the Women's Educational Equity Act in 1974, the
need for a program focused on eliminating the educational gap for girls and women has diminished
greatly, as women have made educational gains that match or exceed those of their male peers.
Alcohol Abuse Reduction (2007 CR level: $32.4 million) supports programs to reduce alcohol abuse in
secondary schools. These activities are already supported by the Safe Schools/Healthy Students
program, an initiative under Safe and Drug-Free Schools National Programs, and could be supported by
the $60 million in Safe and Drug-Free School National Activities funding in the 2008 Budget that is
dedicated to research-based alcohol and drug use and violence prevention programs.
Mentoring (2007 CR level; $19 million) supports mentoring programs and activities for children who are
at risk of educational failure, dropping out of school, involvement in criminal or delinquent activities, or
who lack strong, positive role models. In 2007, the program was in its last year of a three-year phase out.
Mentoring activities are supported by many other Federal programs—the White House Task Force on
Disadvantaged Youth identified over 100 youth programs which support mentoring in 13 agencies.
Elementary and Secondary School Counseling (2007 CR level: $34.7 million) makes grants to support
elementary and secondary school counseling programs. Current statute requires all appropriations below
$40 million [must] be used for elementary school counseling. School counselors are primarily supported
with non-Federal funds, and a small Federal categorical program can have, at best, a marginal impact on
the number of counselors employed in schools or the availability of counseling for students, much less on
the quality of the counseling provided. In addition, the 2008 Budget requests support for Research-Based
Grants to LEAs for drug and violence prevention programs within the Safe and Drug-Free Schools
National Programs and for Safe Schools/Healthy Students projects, which districts may use to fund
counseling as part of a comprehensive, research-based focus on the school environment.
Physical Education (2007 CR level: $72.7 million) supports physical education programs (including
after-school programs) for students in K-12. The Department of Education and OMB assessed the
program in 2005 using the PART and the program received a rating of Results Not Demonstrated because
it had not been able to demonstrate results. Physical Education programs have historically been supported
by States and LEAs. In addition, the 2008 Budget includes $17 million in the Department of Health and
Human Services to support technical assistance and implementation of science-based curriculum tools to
encourage physical education and healthy eating.
Civic Education (2007 CR level: $29.1 million) supports several non-competitive grants to organizations
that promotes civic responsibility through teacher training and instructional materials, and educational
exchanges with developing democracies. The program's contribution to the Department's mission is
marginal, and given the popularity of this program and its successful private fundraising, the
Administration believes this program would continue without Federal support.
34
Supplemental Educational Opportunity Grants
Funding Summary
2007 2008 Change

In 2008, the Administration proposes to terminate this poorly targeted program that is duplicative of the
larger and more targeted Federal Pell Grant program. The savings from this termination, and other
student aid reforms, will be redirected to better-targeted programs. The Budget is proposing significant
increases in need-based aid broadly available to all eligible students, regardless of the institutions they
attend, through Pell Grants and Academic Competitiveness Grants (see Reforming Student Aid in the
Mandatory Program Reforms section of this volume). This reallocation addresses the findings and
recommendations of the Secretary’s Commission on the Future of Higher Education, which called for
increasing need-based grant aid and simplifying the student aid programs.
Background
The Supplemental Educational Opportunity Grant (SEOG) program provides grant assistance to students
through institutions of higher education, which provide 25 percent in matching funds. Only about seven
percent of postsecondary students receive funding under SEOG, compared to the nearly one-quarter who
receive Pell Grants. The amount of Federal matching funds provided to institutions varies widely and is
determined by a statutory formula that benefits more established institutions. This antiquated allocation
formula means that proportionately less SEOG funding goes to institutions that educate the largest
proportion of low-income students. In 2005 for instance, while nearly 70 percent of Pell Grant recipients
enrolled in public institutions of higher education, these institutions only received 46 percent of SEOG
funds to provide to needy students.
Additionally, SEOG awards are not optimally allocated based on financial need. Though institutions are
required by statute to give “priority” in awarding SEOG funds to Pell-eligible students, there is no
requirement that the size of these awards be tied to a student’s need, and institutions have discretion to
provide larger SEOG awards to students without the highest need.
Compared to Pell Grants, a higher proportion of SEOG funds support administrative costs and a lower
proportion goes to students at institutions of higher education. While only 0.2 percent of Pell Grant
funding is available to institutions to pay for administrative costs, five percent of SEOG funding is used
for this purpose.
In a 2003 PART assessment, SEOG was found to be duplicative of other programs, was not effectively
targeted, and was unable to demonstrate results.
35
Tech-Prep Education State Grants
Funding Summary
2007 2008 Change

In 2008, the Administration proposes to terminate Tech-Prep State grants since the populations served
and services provided under this program are duplicative of the much larger Career and Technical
Education State grants. In addition, the Administration's No Child Left Behind reauthorization proposal
will support linkages between secondary schools and postsecondary institutions.
Background
The Tech Prep State Grants program supports partnerships that develop structural links between
secondary schools and postsecondary institutions to integrate academic and vocational education. About
two-thirds of the funds support high school activities. The Department of Education and the Office of
Management and Budget assessed the program using the PART and found that the program could not
demonstrate results based on a series of national evaluations indicating that the program provides no
measurable advantage for high school students in terms of high school completion, postsecondary
enrollment, and academic achievement.
36
Smaller Learning Communities
Funding Summary
2007 2008 Change

In 2008, the Administration proposes to terminate the Smaller Learning Communities program because of
its narrow focus and lack of evidence of effectiveness. The populations served and services provided
under this program, are duplicative of Title I Grants to Local Educational Agencies. In addition, the
Administration's No Child Left Behind reauthorization proposal will more effectively target funds to high
schools with the most need.
Background
The Smaller Learning Communities program makes competitive grants to support the creation or
expansion of smaller learning communities in large high schools. In 2005, the Department of Education
and the Office of Management and Budget assessed the program using the PART and rated it as Results
Not Demonstrated. The PART findings noted the lack of rigorous evaluation data about the effects of
smaller schools on performance and called attention to the diminished need for a specific Federal program
to support the creation of smaller learning communities. Since 2000, non-Federal funds have become
available through the Carnegie Corporation of New York and the Bill and Melinda Gates Foundation,
among others, to support multi-year high school reform initiatives that focus, in part, on creating smaller
learning communities. In addition, records on the 2005 competition indicate that the grant awards were
sharply concentrated geographically, with local educational agencies in two States (California and
Florida) receiving 30 percent of the available funds. Interest in the program thus appears to be narrowly
concentrated.
37
Teacher Quality Enhancement Program
Funding Summary
2007 2008 Change

The Administration proposes to eliminate funding for the Teacher Quality Enhancement program, as the
program has failed to demonstrate results and many of its activities can be supported under a number of
other programs within the Department of Education, including the Improving Teacher Quality State
Grants program. The Budget includes funding for other activities designed to improve teacher quality,
including a $90 million increase for the Advanced Placement program, which would expand training for
teachers to lead Advanced Placement and International Baccalaureate courses. The Budget also continues
support for Transition to Teaching and Troops to Teachers and re-proposes an Adjunct Teacher Corps
initiative to bring more qualified mid-career professionals into the classroom.
Background
The Teacher Quality Enhancement program, first funded in 1998, provides support for multiple types of
activities, including Recruitment and Partnership Grants that support collaboration between schools of
education and local school districts to recruit and train teachers to serve in high-need schools, and Grants
to States for reforming their teacher preparation and accreditation systems.
In 2004, the Department of Education and the Office of Management and Budget completed a PART
review of this program and gave it a rating of Results Not Demonstrated due to its lack of performance
information and program management deficiencies.
The Congress has reduced funding for this program by $29 million over the prior three years, from $89
million in 2004 to $60 million in 2006.
38
Small Higher Education Programs
Funding Summary
2007 2008 Change

The Administration proposes to terminate funding in 2008 because these two small higher
education grant programs support activities that may be carried out under other Higher Education
Act (HEA) programs or have accomplished their intended missions and no longer require
additional Federal investment.
Background
These two programs provide support to certain postsecondary institutions for highly specialized
purposes. These programs have either served their mission or do not have a significant national
impact.
Strengthening Alaska Native and Native Hawaiian-serving Institutions (2007 CR level: $11.8
million) supports Alaska Native and Native Hawaiian-serving Institutions to enable them to
improve and expand their capacity to serve Alaska Native and Native Hawaiian students. The
types of activities supported by this program may be carried out under the HEA Title III
Strengthening Institutions program.
Demonstration Projects to Ensure Quality Higher Education for Students with Disabilities (2007
CR level: $6.9 million) funds technical assistance and professional development activities for
faculty and administrators in institutions of higher education in order to improve the quality of
education for students with disabilities. This program has achieved its primary goal of funding
model demonstration projects. Similar projects can and do receive funding under the Fund for
the Improvement of Postsecondary Education.
39
State Grants for Incarcerated Youth Offenders
Funding Summary
2007 2008 Change

The Administration proposes to terminate this small, narrow-purpose program that has not demonstrated
results. While the program is intended to support laudable purposes, it has not been evaluated and does
not have strong administrative mechanisms for holding grantees accountable for outcomes. In addition,
States may use up to one percent of the funds they receive from the Department of Education under the
Carl D. Perkins Career, Technical, and Adult Education State Grants program to serve individuals in State
institutions, including State correctional institutions.
Moreover, the Reintegration of Ex-Offenders (REO) program at the Department of Labor (DOL) can
serve many of the needs of this population. REO offers a range of job training, housing, and mentoring
services for juveniles and adults. For juvenile offenders, REO provides a greater focus on building basic
literacy and numeracy skills and the completion of secondary education through alternative education
pathways, leading to career opportunities through postsecondary credentialing programs or pre-
apprenticeship and apprenticeship programs. In total, the 2008 Budget includes $39.6 million in DOL
and $25 million in the Department of Housing and Urban Development for ex-offender activities to
address the problems faced by ex-offenders in a more effective and coordinated way.
Background
The State Grants for Incarcerated Youth Offenders program provides formula grants to State correctional
agencies intended to assist and encourage incarcerated youth to acquire functional literacy and life and
job skills.
40
Small Postsecondary Student Financial Assistance Programs
Funding Summary
2007 2008 Change

In 2008, the Administration proposes to terminate five small postsecondary student financial assistance
programs that have either achieved their purpose or are duplicative of the more than $90 billion in grants,
loans, and work study made available by the Department of Education each year.
The savings from these terminations and other student aid reforms will be redirected to other priorities.
The Budget is proposing significant increases in need-based aid broadly available to all eligible students,
regardless of the institutions they attend, through Pell Grants and Academic Competitiveness Grants (see
Reforming Student Aid in the Mandatory Reforms section of this volume). This reallocation addresses
the findings and recommendations of the Secretary's Commission on the Future of Higher Education,
which called for increasing need-based grant aid and simplifying the student aid programs.
Background
The following five programs provide financial assistance to selected groups of postsecondary students.
These programs have either served their mission or are duplicative of other Federal, State, local, or non-
profit activities.
Leveraging Educational Assistance Program (LEAP) (2007 CR level: $64.5 million) has accomplished its
original objective of stimulating all States to establish need-based postsecondary student grant programs.
However, beyond the establishment of these programs LEAP does little to encourage States to increase
their investment in grant aid for their neediest students, or effectively target this aid to the students who
could most benefit from it. The Department of Education and the Office of Management and Budget
assessed the program using the PART and rated it Results Not Demonstrated. The PART assessment also
identified structural problems with LEAP that limited the program's effectiveness.
Perkins Loan Cancellations (2007 CR level: $65.5 million) provide loan forgiveness to certain Perkins
Loan borrowers in exchange for undertaking certain public service employment, such as teaching in Head
Start programs, full-time law enforcement, or nursing. In 2007, the $65.5 million Federal appropriation
reimburses institutional revolving funds for these loan cancellations. The PART analysis conducted in
2004 rated the Perkins Loan program as Ineffective. It found that this program is duplicative of the direct
and guaranteed student loan programs and is not well targeted to the neediest students. Eligible Perkins
loans would continue to be cancelled but no appropriations would be made to replenish the institutional
revolving funds. This program termination is coupled with the Budget's proposal to eliminate the Perkins
loan program and recall the Federal portion of these revolving funds.
Byrd Scholarships (2007 CR level: $40.6 million) are intended to promote academic excellence through
grants to States that support scholarship assistance for up to four years to high-performing high school
41
students entering an undergraduate course of study. The program received a PART rating of Results Not
Demonstrated because it lacks performance data and does not have a need-based component unlike other
ED postsecondary aid programs.
Thurgood Marshall Legal Educational Opportunity (2007 CR level: $2.9 million) provides minority, low-
income, or disadvantaged college students with information, preparation, and financial assistance to help
them gain access to and complete law school. This program is largely duplicative of similar assistance
that is available through the Department's traditional postsecondary student financial aid programs.
B.J. Stupak Olympic Scholarships (2007 CR level: $1.0 million) provide financial assistance to athletes
who are training at Olympic Training centers and who are pursuing a postsecondary education. This
program lacks performance data to show progress toward meeting its goals and therefore received a
PART rating of Results Not Demonstrated. Athletes may still receive grant, work-study, and loan
assistance through the Department's traditional postsecondary student aid programs.
42
Small Vocational Rehabilitation Programs
Funding Summary
2007 2008 Change

In 2008, the Administration proposes to terminate the small Vocational Rehabilitation (VR) Migrant and
Seasonal Farmworkers, Projects with Industry, and Supported Employment programs, since these
programs serve the same populations and provide the same services as VR State Grants. In addition, the
Administration proposes to terminate the VR Recreational program because the activities are more
appropriately supported by State, local, and private entities.
Background
The following programs provide life skills or job training services to individuals with disabilities. Most
are duplicative of the $2.7 billion Vocational Rehabilitation (VR) State grant program.
Supported Employment (2007 CR Level: $29.7 million) was created in 1986 to encourage VR agencies to
provide supported employment services to individuals with significant disabilities. At the time, supported
employment was a new practice to employ individuals who traditionally would not be employed in
integrated settings. Today, VR agencies recognize and utilize supported employment practices as an
effective strategy to help individuals with significant disabilities obtain jobs. The Supported Employment
program has achieved its original purpose.
In 2006, Congress reduced funding for Supported Employment programs from $37.4 million to $29.7
million.
Projects with Industry (PWI) (2007 CR Level: $19.5 million) help individuals with disabilities obtain
employment and advance their career in the competitive labor market. PWI is duplicative because the VR
State Grants program provides the same services to the same target populations.
VR Recreational Programs (2007 CR Level: $2.5 million) supports projects that provide recreation and
related activities for individuals with disabilities to aid in their employment, mobility, independence,
socialization, and community integration. The program has limited impact, and State and local agencies
and the private sector can more appropriately provide these services.
VR Migrant and Seasonal Farmworkers (2007 CR Level: $2.3 million) supports rehabilitation services to
migratory workers with disabilities. Originally established as a demonstration program in the mid-1970s,
the program no longer needs to demonstrate the benefits of serving migratory workers. The much larger
VR State grants program serves the same population.
43
Department of Energy: Discretionary Proposal
University Nuclear Energy Program
Funding Summary
2007 2008 Change

The University Nuclear Energy Program assists universities in maintaining research and education
reactors, as well as providing earmarked fellowships for students studying nuclear engineering. The
fellowship came about in response to low enrollment. Enrollment target levels of the program have
already been met and students no longer need to be encouraged to enter into nuclear-related disciplines.
The number of universities offering nuclear-related programs also has increased. In addition, the Nuclear
Regulatory Commission expects to receive from the nuclear industry approximately 20 combined
construction and operating licenses for upward of 30 new nuclear power reactors. These trends reflect
renewed interest in nuclear power. Students will continue to be drawn into this course of study;
universities, along with nuclear industry societies and utilities, will continue to invest in university
research reactors, students, and faculty members. In addition, the 2008 Budget proposes $3 million to
support fuel and other services for universities elsewhere under the Research Reactor Infrastructure
program.
Consequently, Federal assistance is no longer necessary, and the 2008 Budget proposes termination of the
University Nuclear Energy Program. This termination is also supported by the fact that the program was
unable to demonstrate results from its activities when reviewed using the PART since it lacks long-term
performance goals and data.
Background
The University Nuclear Energy Program was designed to address declining enrollment levels among U.S.
nuclear engineering programs. Since the late 1990s, enrollment levels in nuclear education programs
have tripled, although the University Nuclear Energy Program is not able to demonstrate that its actions
caused these results. Additionally, the program projected that U.S. enrollment levels reaching upward of
1,500 students would be needed by the year 2015 – with enrollments having reached this level in 2005,
there is no longer a need for this program.
44
Oil and Gas Research and Development Programs
Funding Summary
2007 2008 Change

The 2008 Budget provides for the orderly termination of the Oil and Gas Research and Development
(R&D) programs. These R&D activities typically fund development of technologies that can be
commercialized quickly, like improved drill motors. As such, they are more appropriate for the private-
sector oil and gas industry to perform. In addition, the programs have not demonstrated results, as
identified in the 2003 PART review and updated annually. The industry has the financial incentives and
resources to develop new ways to extract oil and gas from the ground more inexpensively and safely. The
termination of the programs will be structured in an orderly manner so as to avoid disruption to the
Federal workforce, respect existing contractual obligations, and minimize new contractual obligations in
2008.
Background
The Oil and Gas R&D programs develop technologies that industry can use to reduce the cost of
exploration and production of oil and natural gas reserves. On April 25, 2006, President Bush stated,
"…energy companies don't need unnecessary tax breaks like the write-offs of certain geological and
geophysical expenditures, or the use of taxpayers' money to subsidize energy companies' research into
deep water drilling."
The programs focus on incremental and evolutionary technology advances that oil and gas companies
have the resources and incentives to conduct, which is not in accord with the Administration's R&D
Investment Criteria. The Oil and Gas R&D programs were rated as Ineffective in the PART analysis of
program performance, based largely on their inability to demonstrate clear results of the research efforts.
45
Geothermal Technology Program
Funding Summary
2007 2008 Change

The 2008 Budget proposes to terminate the Geothermal Technology Program, which funds research to
reduce the cost of energy derived from geothermal sources. Provisions in the 2005 Energy Policy Act
(EPAct) should spur commercial development of geothermal resources, including research by the private
sector, obviating the need for federally-subsidized research.
Background
Research supported by the Geothermal Technology Program has contributed to reduced cost of
geothermal power to the point that it is now a mature technology. The 2005 EPAct amended the
Geothermal Steam Act of 1970 in ways that should spur development of geothermal resources without the
need for additional federally-subsidized research to further reduce costs. Specifically, EPAct changed the
royalty structure for leasing on Federal land from a 50/50 State/Federal split to a 50/25/25 split for
State/Federal/local governments, providing an incentive for local governments to attract geothermal
resource developers. EPAct also streamlined leasing requirements, which lowers costs for potential
developers. In addition, EPAct mandated that the U.S. Geologic Survey conduct a detailed resource
assessment, since the last assessment was conducted in 1971. Resource mapping technology has greatly
improved and should enable developers to more accurately identify areas for potential geothermal
resource development. This should lower geothermal power costs because exploration is a major cost
factor. In addition, EPAct extended from 2006 to 2008 the production tax credit (1.5 cents per kilowatt-
hour, indexed for inflation) for electricity produced from geothermal resources. Geothermal power
facilities in place before January 1, 2008, may claim the credit for 10 years thereafter. The Tax Relief and
Health Care Act of 2006 extended eligibility to geothermal facilities placed in service before January 1,
2009.
46
Department of Health and Human Services: Discretionary Proposal
Alzheimer's Demonstration Projects
Funding Summary
2007 2008 Change

The 2008 Budget proposes to eliminate the Alzheimer's Demonstration Projects. Over the past 15 years,
this program has provided grants to all States to seek out innovative practices in caring for people with
Alzheimer's disease. Tax dollars can better be used by focusing on disseminating information on
successful, replicable, and innovative Alzheimer's care programs.
Background
The Alzheimer's Demonstration Projects program provides grants to States to develop innovative
approaches in caring for individuals with Alzheimer's disease and supporting families and caregivers of
Alzheimer's patients. Examples of previously supported innovations include increasing awareness of
dementia in African-American communities through local churches; providing a safe and stimulating
environment for Alzheimer's patients in adult care; and targeting low-income, rural, and ethnic
communities through local outreach. Since the demonstration project was first created in 1992, all States
have received funding. Also, of the 38 States that received funding in 2005, all are former grantees with a
quarter of these States having received funding since 1992.
47
Preventive Health Services
Funding Summary
2007 2008 Change

The 2008 Budget proposes to terminate the Administration on Aging's (AoA) Preventive Health Services
program because it is duplicative of services that States can provide through AoA's Community-Based
Supportive Services program. Also, AoA envisions integrating prevention as an underlying principle in
its core programs and advocating use of evidence-based programs to better address preventive health
needs versus the current mechanism of providing a small funding stream of unfocused seed money
through the Preventive Health Services program.
Background
The Preventive Health Services program supports activities that educate and promote healthy behavior
that can help to prevent or delay chronic disease and disability among older Americans. Examples of
activities that take place in multi-purpose senior center and other community-based settings include
medication management classes; alcohol and substance abuse prevention and smoking cessation
programs; physical fitness classes; and health screenings and risk assessments for conditions such as
hypertension, diabetes, cholesterol, hearing, vision, and glaucoma. All of these services can be supported
by AoA's Community-Based Supportive Services program.
48
Community Services Block Grant
Funding Summary
2007 2008 Change

The 2008 Budget proposes to terminate the Community Services Block Grant (CSBG) because it lacks
appropriate performance measures and lacks competition as evidenced by the same grantees receiving
funding year after year. For example, over 1,000 Community Action Agencies (CAAs) that receive
CSBG funding have little incentive to improve their performance since they are not held to minimum
performance standards as a condition for continued grant awards. The Budget also proposes to terminate
CSBG because key services provided with program dollars are duplicative of other Federal programs
benefiting low-income populations. Further, these other Federal programs are larger and may better
address the needs of the poor by focusing resources on a specific service instead of providing for a wide
range of services with diffuse CSBG funding.
Background
CSBG was created in 1981 to reduce poverty, revitalize low-income communities and empower low-
income families and individuals to be self-sufficient. This flexible funding reaches almost every county
in the Nation through State-administered networks of local CAAs to promote activities that reduce the
incidence and severity of poverty. Services categories include employment, education, housing, nutrition,
income management, and health, which are targeted to low-income individuals with a special focus on
Temporary Assistance to Needy Families, homeless, migrant farm workers, and low-income elderly.
The program does not have appropriate performance measures and has a program purpose that is too
broad and duplicative of other anti-poverty programs. The Administration first proposed CSBG for
termination in 2006. The 2006 House-passed appropriations bill reduced the program's funding to $320
million, and in 2007, the House Appropriations Committee reduced funding to $449 million.
49
ACF Other Community Service Programs
Funding Summary
2007 2008 Change
Budget Authority:
Community Economic Development. 27 --- -27
Rural Community Facilities……...... 6 --- -6
Job Opportunities for Low-Income
Individuals…………………….... 7 --- -7
Total…………...…………................ 40 --- -40

The 2008 Budget proposes to eliminate three community services programs in the Administration for
Children and Families (ACF): 1) Community Economic Development; 2) Rural Community Facilities;
and 3) Job Opportunities for Low-Income Individuals. These programs do not have performance
standards to assess their impact, are too narrowly focused to have a major benefit, duplicate other Federal
programs, and award grants on a noncompetitive basis. The Budget focuses resources on other, higher
priority programs.
Background
The Community Economic Development program was created in 1981 to award grants to private and non-
profit organizations to create new employment and business opportunities for low-income individuals.
Projects include business start-ups, expansions, development of new products and services, and other
physical and commercial improvements. The targeted population includes the unemployed, public
assistance recipients, residents of public housing, the homeless, and individuals transitioning from
incarceration into the community. The program also duplicates the efforts of existing Federal programs
such as Temporary Assistance for Needy Families. Forty-six grants were awarded with $27 million in
2006.
The Rural Community Facilities program, created in 1981, awards grants to non-profits, and State and
local governments to develop affordable, safe water and waste water treatment facilities. Funding is used
to provide training and technical assistance in developing and managing water facilities; improve
coordination of Federal, State, and local agencies with waste and water management; and distribute
information to local communities on available Federal resources. The program is duplicative of other
Federal entities such as the Bureau of Reclamation's Rural Water Program, which is responsible for water
and waste water treatment facilities. Eight grants were awarded with $7.3 million in 2006.
The Job Opportunities for Low-Income Individuals program was authorized in 1988 to award grants to
non-profit organizations to create new full-time, permanent employment opportunities for low-income
individuals. Examples of job creation projects include expansion of existing businesses and self-
employment/micro-enterprises. Local communities may provide similar services targeted to low-income
individuals with funding from the Community Development Block Grant program in the Commerce
Department. Ten grants were awarded with $5.4 million in 2006.
50
CDC Preventive Health and Health Services Block Grant
Funding Summary
2007 2008 Change

The 2008 Budget proposes no funding for the Preventive Health and Health Services Block Grant
(PHHSBG). The 2008 Budget continues to make substantial investments in the public health system
through State and local bioterrorism preparedness grants and increases for pandemic influenza
preparedness.
Background
PHHSBG was authorized in 1981 through the consolidation of multiple categorical programs. The main
uses of PHHSBG are chronic disease prevention, public health infrastructure, access to healthcare, injury
reduction, prevention and services for sex offenses, immunizations and infectious diseases, and other
activities. In 2006, the average award to States/Territories was approximately $2 million.
PHHSBG lacks national level performance outcome information and overlaps with categorical funding.
The block grant was created through the consolidation of multiple categorical grants. Since the
establishment of PHHSBG, categorical grants have reemerged that cover many of the same areas. In the
main areas covered by the block grant, Centers for Disease Control and Prevention categorical programs
have grown to more than $800 million a year.
51
Bioterrorism Curriculum and Training Development Program
Funding Summary
2007 2008 Change

The 2008 Budget proposes to subsume the Bioterrorism Curriculum and Training Development Program
into other Department of Health and Human Services (HHS) homeland security preparedness activities.
The future implementation of these activities is more appropriately supported at the State and local level
so that training of health care workers can be integrated into preparedness planning and exercises. In
addition, continuing education of health professionals is a multi-billion dollar industry funded primarily
through unrestricted grants from private industry.
Background
The purpose of the Bioterrorism Curriculum and Training Development Program is to improve the
capability of the Nation's healthcare workforce to respond to bioterrorism and other public health
emergencies. Since its 2002 inception, 225,000 healthcare workers have participated in program
supported training. HHS has worked to align training efforts with other preparedness activities in
accordance with the national vision established through the efforts of the Department of Homeland
Security in developing the National Preparedness Goal. The 2007 Budget proposed to decrease funding
for these activities from $21 million to $12 million.
52
Maternal and Child Health Small Categorical Grants
Funding Summary
2007 2008 Change

Budget Authority…....................... 39 -- -39
The 2008 Budget proposes no funding for Health Resources and Services Administration's (HRSA)
Maternal and Child Health small categorical grants (Universal Newborn Hearing Screening, Traumatic
Brain Injury, and Emergency Medical Services for Children). In 2004, the Traumatic Brain Injury and
Emergency Medical Services programs both received ratings of Results not Demonstrated when the
Department of Health and Human Services and the Office of Management and Budget assessed them
using the PART. Both programs lack performance goals and data to report on their health impacts. A
2005 PART evaluation of the Universal Newborn Hearing Screening Program determined that the
program had completed its intended objective of helping States to implement universal newborn hearing
screening.
Background
The activities funded by these small grant programs can continue to be conducted by States through their
Maternal and Child Health Block Grant and other sources. The Maternal and Child Health Block Grant at
HRSA allocates $693 million to States to fund activities for mothers, children, and their families. These
terminations were also proposed in the 2006 and 2007 Budgets.
53
Urban Indian Health
Funding Summary
2007 2008 Change

The 2008 Budget reproposes the 2007 Budget policy to phase out Urban Indian Health funding and target
funds to health care services for American Indians and Alaska Natives living on or near reservations. It is
expected that some Urban Indian Clinics will continue to deliver services using funding from other
sources. American Indians and Alaska Natives residing in urban areas will have access to health care
services through other public and private health insurance and other sources of care.
Background
The Urban Indian Health Program, established in 1976, finances grants and contracts for primary,
preventive, and behavioral health care, as well as outreach and referral services, for the 60 percent of
American Indians and Alaska Natives that live in urban areas. A PART assessment conducted by the
Department of Health and Human Services and the Office of Management and Budget rated the program
Adequate but identified flaws, such as the lack of independent evaluations of service delivery and
effectiveness. Approximately 60 percent of the operating budgets for providers that receive Urban Indian
Health funding come from other public and private sources. Unlike many American Indians and Alaska
Natives who live in rural areas and on reservations, urban Indians can readily access publicly and
privately financed health care services.
54
Department of Housing and Urban Development: Discretionary Proposal
HOPE VI
Funding Summary
2007 2008 Change

Budget Authority…....................... 183 -99 -282
The 2008 Budget again proposes no new funding for the Revitalization of Severely Distressed Public
Housing (HOPE VI) program. The program has surpassed its primary goal to demolish 100,000 severely
distressed public housing units by 2003. While the program has achieved success in removing dangerous
public housing, the 2005 PART analysis and a Government Accountability Office (GAO) report showed
the program to be slow at completing construction and more costly than other programs that serve the
same population. The Budget also proposes to cancel the 2007 funding for this program, which is
estimated at $99 million. The Budget includes funding increases for more cost-effective alternatives,
such as the HOME block grant and Section 8 Tenant-based Assistance.
Background
In 1992, the Congress established the HOPE VI program to address 100,000 of the most severely
distressed public housing units in the Nation's urban neighborhoods. Through competitive grants, HOPE
VI has awarded local public housing authorities over $6 billion to demolish, rehabilitate, and replace
obsolete public housing with mixed-income communities, as well as provide social services to residents.
The program was originally designed with a discrete target – demolish 100,000 dangerous and dilapidated
public housing units by the end of 2003. Today, that goal has been exceeded by more than 50,000 units
and additional units will be demolished and replaced with less dense units as the program's $1.8 billion in
balances are expended over the next several years. GAO found the housing-related costs of a HOPE VI
unit were more than 25-percent higher than a housing voucher and more than 40-percent higher when
non-housing costs were included. The program has been slow to produce results; typically seven years
pass between the time a HOPE VI award is made and when a new unit is occupied. In contrast, other
Federal programs, such as HOME block grants, produce new housing units more expeditiously.
Given the program has exceeded its primary objective, has higher per-unit costs than other alternatives,
and has had extensive delays, HOPE IV is not the most productive way to address capital needs in public
housing.
55
Rural Housing and Economic Development Program
Funding Summary
2007 2008 Change

The 2008 Budget proposes to terminate the Rural Housing and Economic Development (RHED) Program
in the Department of Housing and Urban Development (HUD). RHED is duplicative, particularly with
programs provided through the Department of Agriculture, which manages a portfolio of rural housing
and economic development grant programs that vastly exceed HUD's RHED in terms of programs and
services, budget, loan, staffing, and expertise.
Background
RHED was first authorized in 1989 to encourage different approaches to serve the housing and economic
development needs of the Nation's rural communities. In 2004, the Administration's cross-cutting review
of Federal community and economic development programs found that many of these programs,
including RHED, had unclear objectives, did not coordinate effectively, were duplicative, and were
unable to demonstrate measurable and sustained economic gains for communities. The PART assessment
conducted by HUD and the Office of Management and Budget rated RHED as Ineffective. Its major
problems include its lack of annual and long-term outcome measures, duplicative mission, and inability to
produce transparent information on results.
56
Section 108 Loan Guarantee Program
Funding Summary
2007 2008 Change

The 2008 Budget proposes to terminate the Department of Housing and Urban Development's Section
108 Loan Guarantee Program. Other programs and more attractive financing options are available to fund
the program's projects and address its objectives. Communities do not commonly utilize the loan
program because they have to pledge their current and potential future Community Development Block
Grant (CDBG) funds as the principal security for the loan guarantee, as well as any additional security
that may be determined necessary.
Background
Section 108 is the loan guarantee provision of the CDBG program, which became an active program in
1979. The program offers communities a source of financing for economic development, housing
rehabilitation, public facilities, and large-scale physical development projects. In 2004, a cross-cutting
review of Federal community and economic development programs found that many of these programs,
including the Section 108 Loan Guarantee Program, had unclear objectives, did not coordinate
effectively, were duplicative, and were unable to demonstrate measurable and sustained economic gains
for communities.
57
Department of the Interior: Discretionary Proposal
Bureau of Indian Affairs Housing Improvement Program
Funding Summary
2007 2008 Change

The 2008 Budget proposes to terminate funding for the Bureau of Indian Affairs' Housing Improvement
Program (HIP). A 2004 PART analysis found that the program was duplicative with the Department of
Housing and Urban Development's (HUD's) Native American Housing Assistance and Self-
Determination Program. HUD allows the Tribes to determine and address low-income housing needs
through a block grant program. Often the Tribe requires recipients to repay some portion of the cost
provided under the HUD program as a stipulation for receiving funding. The HIP program does not
require recipients to repay; however, nothing in the law or HUD's regulations would prevent the Tribe
from including these individuals under the HUD grant.
Background
The HIP program provides funding to eligible Tribes for renovations of existing homes or for
construction of a house for tribal members who do not own a home but own sufficient land suitable for
housing on or near a reservation. Funds are provided to the Tribes through grants. Applicants must go
through a ranking process each year based on income, age, disability, and dependent children. The HIP
program provides funding to approximately 375 recipients each year out of nearly 7,000 applicants.
58
Bureau of Indian Affairs Johnson-O'Malley Assistance Grants
Funding Summary
2007 2008 Change

The 2008 Budget proposes to eliminate funding for the Johnson-O'Malley Assistance Grants. The Bureau
of Indian Affairs' (BIA) core responsibility is to provide a basic education program for the Native
American children attending BIA schools. The State public schools have other sources of funding for
activities funded by the Johnson-O'Malley grants. These schools would be encouraged to apply for
supplemental education funding from other State and Federal agencies; for example, the Department of
Education's Indian Education Grants to Local Education Agencies and its Special Programs for Indian
Children.
Background
Johnson-O'Malley grants are given to federally-recognized Tribes for the Tribes to distribute to local
public elementary and secondary schools. About 93 percent of Native American children attend State
public elementary and secondary schools across the Nation. This supplemental financial assistance to
public schools is provided for these schools to include culturally-related education for Indian students. In
addition, the grants allow for tutoring and counseling. The 2007 Budget also proposed to terminate the
program.
59
U.S. Fish and Wildlife Service Landowner Incentive Grant Program
Funding Summary
2007 2008 Change

The 2008 Budget proposes to terminate the U.S. Fish and Wildlife Service's Landowner Incentive Grant
Program (LIP). LIP provides funds to States so that they may in turn give money to private landowners
for activities that protect and restore habitats on private lands to benefit at-risk species. The program is
largely duplicative of other Department of the Interior programs that may provide funds to private
landowners to benefit at-risk species on private lands, including the Partners for Fish and Wildlife ($48
million), State Wildlife Grants ($69 million), and Cooperative Endangered Species Conservation Fund
grant ($80 million) programs.
Background
LIP provides grants to States to establish or supplement existing State programs that provide funds to
private landowners to restore habitats of listed, proposed, candidate, or other species at risk on private
lands. LIP, which was first proposed by the Administration in the 2002 Budget, has been slow to obligate
funds, and, in 2003, the Congress rescinded all unobligated balances ($40 million) because of the
slowness in establishing the program. Moreover, the Congress has not met the Administration's funding
requests. For example, the 2007 President's Budget request of $24 million was reduced by 59 percent to
only $10 million in the Senate and cut by over $9 million (39 percent) in the House ($15 million). LIP is
one of a number of programs that provide funds to conserve imperiled species on private lands. Programs
such as the Fish and Wildlife Service's Partners for Fish and Wildlife, State Wildlife Grant program, and
the Cooperative Endangered Species Conservation Fund can provide technical and financial assistance to
benefit imperiled species.
60
U.S. Fish and Wildlife Service Private Stewardship Grant Program
Funding Summary
2007 2008 Change

The 2008 Budget proposes to terminate the U.S. Fish and Wildlife Service's Private Stewardship Grant
Program (PSG). The program provides competitive grants to individuals and groups to carry out
voluntary conservation actions on private lands to benefit at-risk species. This program largely duplicates
other Department of the Interior programs, including the Partners for Fish and Wildlife ($48 million),
State Wildlife Grants ($69 million), and Cooperative Endangered Species Conservation Fund grant
($80 million) programs.
Background
PSG provides funds for conservation actions to help imperiled species on private lands. Individuals and
groups may compete for funds to implement conservation actions on private lands to benefit threatened,
endangered, or other at-risk species including those that are proposed to be listed under the Endangered
Species Act (ESA) or identified as candidates to be listed under ESA. The U.S. Fish and Wildlife Service
administers the program and requires a minimum of 10 percent non-Federal cost-share. The program,
which was first proposed by the Administration in the 2002 Budget, has been slow to obligate funds, and,
in 2003, the Congress rescinded all unobligated balances ($10 million) because of the slowness in
establishing the program. The Congress has not met Administration funding requests for this program.
For example, the 2007 President's Budget request of $9.4 million was cut by more than 25 percent in the
House ($7.0 million) and more than 22 percent in the Senate ($7.3 million). PSG is one of a number of
programs that provide funds to conserve imperiled species on private lands. Programs such as the Fish
and Wildlife Service's Partners for Fish and Wildlife, State Wildlife Grant program, and the Cooperative
Endangered Species Conservation Fund can provide technical and financial assistance to benefit
imperiled species.
61
Land and Water Conservation Fund State Recreation Grants
Funding Summary
2007 2008 Change

Budget Authority…....................... 28* --- -28
*In 2006, the program activity was funded at $28 million. The 2007 House appropriations bill did not provide funding,
consistent with the 2007 President's Budget. The Senate Committee proposed funding at $28 million.
The 2008 Budget proposes to terminate Land and Water Conservation Fund (LWCF) State recreation
grants. These grants pay for improvements to State and local parks, which are decisions better left to
State and local taxpayers than to Federal taxpayers. Federal funding for local parks and recreation
programs is not a national priority.
In addition, a PART review conducted by the Department of the Interior and the Office of Management
and Budget found that this program had not been able to measure performance or demonstrate results.
Background
LWCF State recreation grants, first authorized in 1965, provide matching Federal funds for State and
local governments to acquire lands or make improvements to State and local parks.
Annual funding for LWCF State recreation grants recently has ranged from zero in 1996-1999 to
$140 million in 2002. No funding has been requested in the past three years. LWCF State recreation
grants are distinct from LWCF Federal land acquisition programs at the National Park Service, Fish and
Wildlife Service, Bureau of Land Management, and the Department of Agriculture's Forest Service.
The Gulf of Mexico Energy Security Act (P.L. 109-432, Division C, Title I) enacted in 2006 allocates
12.5 percent of receipts from new oil and gas leases in the Gulf of Mexico to fund this program as a
mandatory program. This mandatory funding could provide up to $10 million a year over the next few
years and over $150 million a year in the outyears for LWCF State recreation grants.
The House-passed 2007 Interior Appropriations bill terminated this program.
62
National Park Service Statutory Aid
Funding Summary
2007 2008 Change

*In 2006, the program activity was funded at $7 million. The 2007 House appropriations bill did not provide funding, consistent
with the 2007 President's Budget. The Senate Committee proposed funding at $5 million.
The 2008 Budget terminates National Park Service (NPS) "statutory aid" grants to various non-Federal
entities that conduct historical or recreational activities, such as the Mississippi Delta Interpretive Center
and a Native Hawaiian Culture and Arts program. These activities are secondary to the NPS mission and
are not a Federal responsibility. They also have no performance requirements and have not demonstrated
results.
Background
The NPS statutory aid program consists of a variety of small earmarks to different groups that have some
connection to conservation, historic preservation, or outdoor recreation.
The Executive Branch historically has sought to limit the number of these grants, because they are not
subject to a competitive merit-based process and generally do not fund national priorities. There are no
performance requirements for this "pass-through" funding.
Starting with the 2005 Budget, the Administration has proposed to completely eliminate these grants in
order to concentrate resources on higher Federal priorities, such as maintaining national parks. As a
result, funding for statutory aid has dropped from $14 million in 2001 to $7 million in 2006.
The House-passed 2007 Interior Appropriations bill terminated this program.
63
Rural Fire Assistance Program
Funding Summary
2007 2008 Change

*In 2006, the program activity was funded at $10 million. The 2007 House appropriations bill did not provide funding,
consistent with the 2007 President's Budget. The Senate Committee proposed funding at $5 million.
The 2008 Budget proposes to terminate the Rural Fire Assistance program. The program is duplicative
of other fire assistance grant programs. The items and activities funded by these grants, such as basic
wildland fire safety equipment and tools, communication devices, wildland fire training, and community
wildfire prevention and education activities, could be funded with existing Department of Homeland
Security (DHS) and Department of Agriculture (USDA) Forest Service grant funding. In lieu of these
grants, the Department of the Interior (DOI) will focus more of its fire preparedness resources on training
and certification of local firefighters so that they are qualified to assist on Federal fires. The classification
of fires as Federal or State is typically based on the origination point. Federal fires start on Federal land,
while State fires generally begin on State land. The 2008 Budget provides $838 million in funding for
DOI's and USDA's preparedness activities and wildland firefighters.
Background
Begun as a pilot program in 2001, DOI's Rural Fire Assistance program provides grants to rural fire
protection districts that serve communities of less than 10,000. The grants require a 10-percent local cost
share and are largely used for the purchase of fire engines and other firefighting equipment, but can also
be used for firefighter training and other related support. DHS and USDA's Forest Service both operate
grant programs that provide similar services to rural fire departments across the country. The Forest
Service 2008 budget for this purpose is $85 million. The proposed termination is consistent with the
President's 2006 and 2007 Budgets. The House-passed 2007 Interior and Related Agencies
Appropriations bill eliminated the program.
64
Department of Justice: Discretionary Proposal
National Drug Intelligence Center
Funding Summary
2007 2008 Change

Budget Authority…...................... 39 16 -23
The Budget proposes to terminate the National Drug Intelligence Center (NDIC). The NDIC is one of
several Federal drug intelligence centers, and it has been slow to delineate a unique and useful role within
the larger drug intelligence community. The Budget concentrates resources on intelligence providers with
a better defined and more useful role in the drug intelligence community. The 2008 Budget requests the
necessary funding to ensure NDIC shutdown activities occur in a timely and orderly manner.
Background
NDIC was established in 1993 to support Federal, State, and local drug enforcement efforts through
intelligence reports, technical assistance and national, regional and State drug threat assessments. The
NDIC is currently funded through the Department of Defense but is managed by the Department of
Justice. NDIC has experienced problems with duplication of effort and lack of coordination with other
intelligence providers and consumers. Focusing resources on a smaller number of intelligence providers
would increase the impact of those resources.
65
Department of Justice: Discretionary Proposal
State Criminal Alien Assistance Program
Funding Summary
2007 2008 Change

The 2008 Budget proposes to terminate the State Criminal Alien Assistance Program (SCAAP). SCAAP
functions as a form of revenue sharing, because the program does not require that States and localities use
funding to address local crime or correctional issues. In addition, a PART analysis conducted by the
Department of Justice (DOJ) and the Office of Management and Budget (OMB) found that the program
lacked goals and performance measures, and could not demonstrate results. The Budget proposes to
cancel funding for this program and redirect the dollars to other higher priority programs.
Background
DOJ makes payments through SCAAP to State and local governments to help defray the cost of
incarcerating undocumented criminal aliens convicted of state or local felonies. The program was
authorized by the Violent Crime Control and Law Enforcement Act of 1994.
The Administration is committed to protecting our borders and enforcing immigration laws. The 2008
Budget reflects this commitment by proposing a 19 percent increase in Government-wide immigration
enforcement (a 118 percent increase since 2001). These increases will support 3,000 new Border Patrol
agents, as well as 950 new detention beds. Enhancing immigration enforcement addresses the root causes
of incarcerated criminal aliens in State/local detention facilities.
In the 2005 Budget, OMB examined the design and performance of SCAAP and found that program
design does not ensure that SCAAP funds are used to address crime or correctional purposes. Further,
without performance data, the program has not been able to demonstrate results.
66
Department of Labor: Discretionary Proposal
Denali Commission Job Training Earmark
Funding Summary
2007 2008 Change

The 2008 Budget proposes to terminate direct funding for the Denali Commission Job Training Earmark–
dedicated funding for job training is unnecessary and duplicative. The 2008 Budget requests $6 million
($2 million in the Energy and Water appropriations bill, and $4 million in a trust fund) for the Denali
Commission, which will allow it to continue the constructive role the Commission plays as a regional
planner and coordinator of other Federal investments in Alaska. Alaska will receive Federal support for
job training and employment services through Workforce Investment Act (WIA) formula grants, Native
Americans training grants, and a Job Corps center.
Background
Established in 1998, the Denali Commission is a Federal partnership with Alaska to provide utilities,
infrastructure, and economic support to distressed rural communities. Since 2004, the Congress has
provided an earmark in the Department of Labor's (DOL) appropriations for job training activities
associated with Denali Commission projects. For 2004, this unrequested funding was $5 million, and for
each of the years 2005 through 2007, it was $7 million. In addition to this earmark, the Denali
Commission received appropriations totaling $130 million in 2006.
This earmark is duplicative of several related DOL programs. Alaska and its citizens receive millions of
dollars from the Federal Government for job training and employment services through DOL's WIA
programs. For instance, in program year 2006, Alaska received formula grants totaling $10.6 million to
provide job training and employment services to adults and youth. Further, certain Alaskan Tribes
receive funding from the WIA Native American program. During the last round of grant awards, Alaskan
tribes and other entities serving Native Americans received $2.8 million for job training and employment
activities. Alaska also has a federally-funded Job Corps center in Palmer.
In addition, recent DOL research indicates that Alaska carries unexpended balances in their WIA
accounts. If the State has not exhausted its regular WIA appropriations, there is little reason to continue
providing even more funds through this earmark.
67
Migrant and Seasonal Farmworkers Training Program
Funding Summary
2007 2008 Change

The 2008 Budget proposes to terminate the Department of Labor's (DOL's) Migrant and Seasonal
Farmworker program, which provides grants to organizations to provide training, employment, and other
services to farmworkers. Program participants could be better served through the nationwide system of
more than 3,500 One-Stop Career Centers and other Federal programs. DOL has taken a number of steps
to better integrate farmworkers into the broader workforce system, such as holding forums to inform
agricultural employers about the workforce system; allowing workforce boards, which operate One-Stop
Career Centers, to be eligible grantees to provide services to farmworkers; and overseeing a project
designed to demonstrate the feasibility of local workforce boards providing year-round services to
farmworkers.
Background
This program is intended to provide job training, employment assistance, and other services to help
economically disadvantaged farmworkers and their families achieve economic self-sufficiency by
strengthening their ability to gain stable employment. A PART assessment conducted by DOL and the
Office of Management and Budget found that the program is ineffective in achieving these goals and that
the program's services duplicate those provided by other Federal programs.
In addition, the program does not focus enough on job training and employment. The program is
supposed to help participants pursue job training and employment assistance that will help them to gain
stable, year-round employment. Despite this, fewer than 40 percent of program participants receive job
training, and only 26 percent enter unsubsidized employment. Each year, more than 50 percent of the
approximately 30,000 participants receive only supportive services like emergency cash assistance.
Although supportive services are important to these workers, several other Federal programs provide
resources for these services.
The grants are competitively awarded, but because there have been so few applicants there has not always
been adequate competition. For example, all grantees in 1999 received continuation grants in 2001 even
though many of them had consistently performed poorly.
68
Susan Harwood Training Grants
Funding Summary
2007 2008 Change

The 2008 Budget proposes to terminate the Susan Harwood Training Grant program and redirect these
funds toward compliance assistance activities such as web-based tools, which are a more cost-effective
strategy for disseminating safety and health information. Terminating this program would not
compromise the Occupational Safety and Health Administration's (OSHA's) delivery of compliance
assistance, outreach, and training to employers and workers.
Background
OSHA's Susan Harwood Training Grant program was established in 1978 to provide one- to five-year
competitive grants to nonprofit organizations to develop or conduct training programs in selected safety
and health topics.
Beginning in 2003 and in each year thereafter, the Administration has proposed terminating the Harwood
Training Grant program for three main reasons: 1) it duplicates other, more cost-effective OSHA safety
education activities; 2) there are no data to suggest that the program is successful or serves an unmet
need; and 3) grantees have experienced difficulties recruiting employers and employees to attend the
Harwood training programs.
69
Work Incentive Grants
Funding Summary
2007 2008 Change

The 2008 Budget re-proposes to terminate funding for Work Incentive Grants, a pilot program that has
accomplished its mission of demonstrating new approaches to improving the accessibility of One-Stop
services for job seekers with disabilities. States and localities can now implement these approaches as
part of their regular support for these community-based employment and training centers.
Ending this program will not have a detrimental effect on One-Stop accessibility for job-seekers with
disabilities. The Department of Education's Vocational Rehabilitation State Grants program will continue
to provide technical assistance to One-Stop Centers on program accessibility. More importantly, Section
504 of the Rehabilitation Act mandates that organizations that receive Federal funds be accessible to
people with disabilities.
Background
The Work Incentive Grants program was created in 2000 as a pilot program to strengthen the capacity of
the One-Stop Career Centers, which are centers that link job seekers and workers with job opportunities,
training, and other services, to serve people with disabilities. The program provides competitive grants to
State and local entities to demonstrate innovative approaches to improving One-Stop services for job
seekers with disabilities. Most recently, the program has worked with the Social Security Administration
to fund "disability program navigators," or advocates who are responsible for bringing greater awareness
of disability-related workforce issues to One-Stop staff. Work Incentive Grants have supported system
and capacity building and improved the physical accessibility of One-Stops, but do not finance direct
services to job seekers with disabilities.
When the Department of Labor and the Office of Management and Budget assessed this program using
the PART it received a rating of Adequate. Grantees have tried varied approaches to improve One-Stop
services to job seekers with disabilities, but have not demonstrated sufficient accountability for improving
employment outcomes.
70
Environmental Protection Agency: Discretionary Proposal
Unrequested Water Infrastructure Projects
Funding Summary
2007 2008 Change

The Budget proposes to eliminate the funds that the Congress has traditionally earmarked for specific
water infrastructure projects in the Environmental Protection Agency's (EPA's) State and Tribal
Assistance Grants (STAG) account. Earmarking funds for specific projects circumvents the normal
allocation and State priority setting processes and diverts funding from other higher priority projects.
Background
These earmarks are targeted for wastewater or drinking water infrastructure projects in EPA's STAG
account. They are not subject to the State priority setting that typically ensures cost-effective and higher
priority activities are funded first. These earmarks require even more oversight and technical assistance
from EPA than standard grants because many recipients are unprepared to spend or manage the funds.
Earmark projects also generally take several years to complete, requiring EPA resources for an extended
period of time. The 2008 Budget provides $2.7 billion within the STAG account for grants that are not
earmarks.
71
Targeted Watersheds Grants
Funding Summary
2007 2008 Change

The 2008 Budget proposes to terminate the Environmental Protection Agency's (EPA's) Targeted
Watersheds Grants program to improve efficiency of EPA water quality programs. These grants are not
necessary since EPA can provide watershed restoration funds more efficiently through core water quality
programs.
Background
The Targeted Watersheds Grants program provides competitive grants to State, local, and tribal
governments and non-governmental organizations for community-based watershed restoration. The
program was established in the President's 2003 Budget and to date, has provided funding to 46
organizations for projects that implement watershed restoration and build capacity in communities. In the
recent past, appropriations report language carved out Target Watersheds funding to specific geographic
regions, contradicting the intended competitive nature of the program. EPA can more efficiently fund
watershed restoration through its core water quality programs.
72
National Aeronautics and Space Administration: Discretionary Proposal
Red Planet Capital Venture Capital Fund
Funding Summary
2007 2008 Change

Government-sponsored venture capital funds provide a mechanism for Government agencies to indirectly
take equity stakes in private firms, which potentially creates significant conflicts of interest and market
distortions. The Administration believes that this mechanism poses difficult challenges to Government
oversight and should only be used in exceptional situations. The 2008 Budget proposes to cancel funding
for the Red Planet Capital Venture Capital Fund and redirect the dollars to other high-priority NASA
programs.
Background
In 2006, NASA signed a Space Act Agreement with Red Planet Capital, Inc. to help the agency gain
access to new and innovative technologies through the venture capital community. Red Planet Capital, a
nonprofit organization, established a strategic venture capital fund for NASA. The purpose of the fund
was to provide NASA earlier and broader exposure to emerging technologies and to promote the future
availability of technologies with both Government and commercial applications that could meet NASA's
mission needs.
The Administration further evaluated the fund and determined that, for NASA, these funds are better
directed towards current priorities that will produce cost-effective, ascertainable outcomes.
73
National Veterans Business Development Corporation:
Discretionary Proposal
Funding Summary
2007 2008 Change

The 2008 Budget proposes to terminate the National Veterans Business Development Corporation
(NVBDC). This program has not been an effective or necessary supplement to existing Federal business
development and training programs that are available to veterans through the Small Business
Administration and the Department of Veterans Affairs.
Background
NVBDC was created in Public Law 106-50 in 1999 with the mandate to assist veterans through
educational opportunities and access to business opportunities. The law specified that NVBDC should
become financially self-sufficient by 2004. The program has not become self-sufficient or demonstrated
that it is effective or necessary given other veterans' assistance and business development programs.
74
Postal Service: Discretionary Proposal
Forgone Revenue Appropriation
Funding Summary
2007 2008 Change

The 2008 Budget proposes to terminate the $29 million annual appropriation to reimburse the Postal
Service (USPS) for revenue forgone for reduced rate mail. In 2003, the Administration worked with the
Congress to re-estimate the pension costs of USPS, and the Congress enacted significant pension reforms.
USPS benefited from pension savings of approximately $3 billion per year from 2003 through 2005 as a
result of that legislation. In addition, postal reform legislation enacted in 2006 shifted the responsibility
for funding the costs of military service pension credits from USPS to the Department of the Treasury and
provided USPS greater pricing flexibility. The benefits of these reforms more than compensate USPS for
the loss of this small forgone revenue appropriation.
Background
This program reimburses USPS for its prior years' lost revenue from legislatively mandated reduced rates
for non-profit mailers. In 1994, the Congress authorized $1.2 billion to be appropriated to USPS in $29
million increments over a 42-year period. As of the end of 2006, USPS has been reimbursed $377
million. The 2005, 2006, and 2007 Budgets proposed to discontinue this reimbursement.
75
Commission of Fine Arts: Discretionary Proposal
National Capital Arts and Cultural Affairs Program
Funding Summary
2007 2008 Change

The 2008 Budget proposes to terminate the Commission of Fine Arts' (CFA's) National Capital Arts and
Cultural Affairs (NCACA) grant program. NCACA is a non-competitive grant program that earmarks
funds for Washington, D.C. organizations that can and should receive equivalent contributions from non-
Federal sources. Affected institutions are also able to apply for Federal funding from other national
competitive grant programs. The Budget proposes to eliminate funding for this program and to redirect
the dollars to other higher priority programs while continuing to fund the core functions of CFA.
Background
NCACA, established by the Congress in 1986, is a non-competitive Federal grant program that provides
funding to local D.C. arts institutions. It was transferred to CFA in 1988 from the National Endowment
for the Humanities because of its "local" (non-State) nature. Rather than allocating funds based on
performance or need, NCACA funds are allocated to 21 specific organizations based on a formula. The
formula provides the largest amount of funds to those recipients with the highest annual income.
76
MAJOR PROGRAM REDUCTIONS
77
Discretionary Major Program Reductions in the 2008 Budget
before? 2007 CR 2008 less
2005 2006 2007 Request Level Request 2007 CR
Major Reductions
Department of Agriculture
Farm Labor Housing Program....................................................................... N N N 34 27 10 -17
In-House Research........................................................................................ Y Y Y 1,001 1,058 1,022 -36
National Forest System................................................................................. N N N 1,398 1,449 1,344 -105
Resource Conservation & Development Program......................................... N Y Y 26 51 15 -36
Self-Help Housing Grants.............................................................................. N N N 38 34 10 -24
Watershed Rehabilitation Program................................................................ Y Y Y 15 29 6 -23
Mandatory Reductions Providing Discretionary Offsets …………………………
Environmental Quality Incentives Program……………………………………… Y Y Y -270 -253 -270 -17
Commodity Credit Corporation Cotton Storage Credits……………………… N N N --- --- -87 -87
Conservation Security Program……............................................................. Y Y N --- -83 -80 3
Funds for Strengthening Markets, Income and Supply……………….……… N N N --- --- -65 -65
Rural Economic Development Grants…………………………………..……… N N Y -81 -79 -34 45
Agricultural Management Assistance…………………………………………… N Y Y -14 -14 -10 4
Total, Agriculture Major Reductions......................................................................................................... 2,147 2,219 1,861 -358
Department of Commerce
Economic Development Administration Grants............................................. N N N 297 231 170 -61
Manufacturing Extension Partnership............................................................ Y Y Y 46 52 46 -6
Total, Commerce Major Reductions......................................................................................................... 343 283 216 -67
Department of Education
Teaching American History........................................................................... N N Y 50 120 50 -70
Safe and Drug-Free Schools State Grants.................................................... N Y Y --- 352 100 -252
Career and Technical Education State Grants.............................................. N Y Y --- 1,182 600 -582
Total, Education Major Reductions.......................................................................................................... 50 1,654 750 -904
Department of Energy
Weatherization Assistance Program............................................................. N N Y 164 248 144 -104
Total, Energy Major Reductions................................................................................................................ 164 248 144 -104
Department of Health & Human Services (HHS)
ACF- Social Services Block Grant……………………………………………… N N Y 1,200 1,700 1,200 -500
CMS- Real Choice Systems Change Grants.............................................. N N N 25 25 10 -15
OS/CDC- State, Local and Hospital Preparedness Grants........................ N/A N/A N 1,236 1,298 1,112 -186
HRSA- Childrens Hospital Graduate Medical Education Payment ............ N Y Y 99 297 110 -187
HRSA- Health Professions Grants.............................................................. Y Y Y 159 295 115 -180
HRSA- Poison Control Centers.................................................................. Y Y Y 13 23 10 -13
HRSA- Rural Health.................................................................................... Y Y Y 35 168 25 -143
SAMSHA- Mental Health Pgms. of Regional & Natl. Significance.............. N/A Y Y 228 263 186 -77
SAMHSA- Substance Abuse Pgms. of Regional & Natl. Significance........ N Y Y 551 588 504 -84
Total, HHS Major Reductions.................................................................................................................... 3,546 4,657 3,272 -1,385
Department of Housing and Urban Development (HUD)
Public Housing Capital Fund......................................................................... N Y Y 2,178 2,208 2,024 -184
Community Development Block Grant (Including Cancellation).................... N Y Y 3,032 4,215 2,681 -1,534
Total, HUD Major Reductions.................................................................................................................... 5,210 6,423 4,705 -1,718
Department of the Interior
Indian Land Consolidation Program.............................................................. N N N 59 31 10 -21
Payments in Lieu of Taxes............................................................................ N Y Y 198 233 190 -43
USGS- Mineral Resources Program.............................................................. Y Y Y 31 53 30 -23
Total, Interior Major Reductions............................................................................................................... 288 317 230 -87
Department of Labor
H-1B Fraud Prevention (Unobligated Balances Cancellation)………………… N N N --- --- -50 -50
Indian and Native Americans Training Program............................................ N N N 51 53 45 -8
International Labor Affairs Bureau................................................................. Y Y Y 12 73 14 -59
Job Training Grants Consolidation................................................................ Y Y Y 3,413 3,895 3,413 -482
Office of Disability Employment Policy.......................................................... N Y Y 20 28 19 -9
Pilots, Demonstrations and Research........................................................... N N N 18 88 13 -75
Senior Community Service Employment....................................................... N N N 397 432 350 -82
Cancellation of Unexpended Job Training Balances…………………………… N N N --- --- -335 -335
Total, Labor Major Reductions.................................................................................................................. 3,911 4,569 3,469 -1,100
Department of Transportation
Airport Improvement Grants (ob lim)............................................................. Y Y Y 2,750 3,514 2,750 -764
Intercity Passenger Rail................................................................................. Y Y Y 900 1,114 900 -214
Essential Air Service...................................................................................... Y Y Y --- 57 --- -57
Railroad Rehab. And Improvement Financing Loan Program....................... N Y Y --- --- --- ---
Total, Transportation Major Reductions.................................................................................................. 3,650 4,685 3,650 -1,035
Environmental Protection Agency (EPA)
Infrastructure Assistance: Mexico Border...................................................... N N N 25 25 10 -15
State & Local Air Quality Grants.................................................................... N N N 185 220 185 -35
Total, EPA Major Reductions.................................................................................................................... 210 245 195 -50
Small Business Administration (SBA)
Small Business Administration Microloan Program....................................... Y Y Y --- 11 --- -11
Total, Energy Major Reductions................................................................................................................ --- 11 --- -11
Other Agencies
Corporation for Public Broadcasting.............................................................. N N Y 346 464 350 -114
Denali Commission Direct Grant-Making....................................................... Y Y Y 6 12 6 -6
NARA National Historical Publications and Records Commission................ N Y Y --- 7 --- -7
Total, Other Agencies Major Reductions................................................................................................. 352 483 356 -127
Total, Major Discretionary Program Reductions........................................................................................... 19,871 25,783 18,848 -6,935
79
Farm Labor Housing Program
Funding Summary
2007 2008 Change

Grant BA plus loan level……...... 45 18 -27
The 2008 Budget includes $10 million for the Farm Labor Housing Program, a $17 million reduction
from the 2007 CR level. The Farm Labor Housing Program, like the Department of Agriculture
(USDA's) other direct loan multifamily housing program, needs program changes in order to ensure that
projects are adequately maintained. Additional funding should not be provided until these changes are
made. At the proposed funding level, USDA will be able to provide rehabilitation and construction
financing assistance to only the highest priority farm labor housing projects, leaving much of the demand
unfunded.
Background
The Farm Labor Housing Loan and Grant program, authorized in the Housing Act of 1949, provides
capital financing for the development of housing for domestic farm laborers. A direct loan/grant
combination is provided to construct, rehabilitate, and/or repair multi-family rural rental housing for very
low- and low-income migrant farm laborers. To help achieve affordable rents, the interest rate is
subsidized to one percent.
The multifamily housing direct loan program has not been funded in recent years due to the need to fund
the revitalization of the current multifamily housing portfolio. Much of the current portfolio has become
dilapidated because the original loans did not require adequate reserves. While the problem of
dilapidation is not as severe for farm labor housing properties, the lack of adequate reserves affects all the
multifamily housing programs within USDA not just specifically the multifamily housing direct loan
program. Therefore, until USDA addresses the flaws in the program going forward by changing their
regulation, it is prudent to reduce funding in the farm labor direct program.
80
Federal (In-House) Research
Funding Summary
2007 2008 Change

Budget Authority…...................... 1,058 1,022 -36
The Budget reduces funding for research by eliminating an amount based on what the Congress has
traditionally earmarked, while increasing funding for high priority programs, including human nutrition,
Bioenergy, and homeland security including emerging and exotic diseases and food safety. Funds are
reduced for projects that do not represent the highest priority national research and avoid the competitive
process.
Background
This program provides funding for in-house work by Federal scientists on agricultural issues in areas such
as agricultural productivity, rural development, agriculture and food safety, human nutrition and
environmental stewardship. This program funds over 1,000 projects by about 2,350 Department of
Agriculture scientists at 107 locations. The Congress has consistently underfunded research for priority
needs, while continuing lower priority projects through earmarks.
81
National Forest System
Funding Summary
2007 2008 Change

Budget Authority…...................... 1,449 1,344 -105
The 2008 Budget proposes to reduce funding for the National Forest System (NFS). The reduction
reflects organizational improvements that permit the Forest Service to become a more effective, efficient,
and integrated operation. The Budget improves performance and increases the percentage of total
available budgetary resources provided to "on-the-ground" foresters, even as top line budget authority is
constrained, by reducing overhead, streamlining decision-making, and using a new forest planning
process. Savings will be realized through reductions in travel, a realignment of administrative functions,
and a 10-percent reduction in staff years through attrition and a "soft freeze" on hiring that will not
require reductions-in-force.
Background
NFS covers 193 million acres of land, an area equivalent to the size of Texas. The NFS account funds
155 National Forests and 20 National Grasslands managed under multiple-use and sustained-yield
principles. Large overhead and indirect costs associated with national headquarters and regional offices
have impeded performance and reduced funding available for managing the resources of the National
Forests. The Forest Service has made a goal of reducing its indirect costs, and the Budget builds on this
effort by increasing Forest Service administrative efficiencies and allowing the Forest Service to direct its
work in a manner that is more integrated with its on-the-ground mission responsibilities.
82
Resource Conservation and Development Program
Funding Summary
2007 2008 Change

The 2008 Budget proposes to consolidate the Resource Conservation and Development (RC&D)
Coordinator functions at the State level, reducing the number of RC&D Coordinators from the current
number of 375 to about 50. The Budget would maintain the current number of authorized RC&D areas
nationwide without any decreases, substitutions, or consolidations. However, the responsibilities and
duties of the RC&D Coordinator position would be modified to provide more programmatic oversight
instead of hands-on day-to-day activities. The local RC&D Councils would be responsible for operation
of their non-profit corporations without a Natural Resources Conservation Service employee being
involved in day-to-day activities.
Background
The RC&D program provides assistance to local communities to develop strategic plans that address their
locally identified natural resource and economic development concerns. The program's long-term goal is
to improve the capability of local communities to plan and deliver improvement projects.
A PART review conducted by the Department of Agriculture (USDA) and Office of Management and
Budget for the 2008 Budget found that the RC&D Program was duplicative of other USDA and Federal
resource conservation and rural development efforts.
83
Self-Help Housing Grants
Funding Summary
2007 2008 Change

The Administration proposes to fund Self-Help Housing Grants at $10 million, a reduction of $24 million
from 2007. Demand for the program relies heavily on the funding of the Department of Agriculture's
(USDA) single family housing program, for which the Administration is requesting no funds in 2008.
Approximately 98 percent of the self-help grant beneficiaries currently qualify and get single family
direct loans from USDA. The elimination of the single family housing direct loan program will
significantly reduce the demand for the self-help grant program. Providing a minimal level of funding
will cover those borrowers who will have already secured a single family housing loan from USDA in
2007 or from other sources.
Background
These grants, authorized in the Housing Act of 1949, provide financial assistance to non-profit
organizations that provide technical assistance to low- and very low-income households to build their own
homes in a rural area. Funds may be used to pay salaries, rent, and office expenses of the non-profit
organization. Nearly all beneficiaries obtain USDA direct single family housing loans.
84
Watershed Rehabilitation Program
Funding Summary
2007 2008 Change

The 2008 Budget proposes to reduce funding for the Watershed Rehabilitation Program. This reduction
reflects the Administration's position that the maintenance, repair, and operation of certain dams are
primarily a local responsibility since program benefits are highly localized. The Budget provides a
reduced level of funding to address dams with the greatest risk of catastrophic failure.
Background
The Watershed Rehabilitation Program provides technical and financial assistance to communities to
perform major retrofit and rehabilitation work on aging flood control infrastructure. The Natural
Resources Conservation Service identifies dams that are both most at-risk of failure and pose the greatest
risk to public safety and property. The agency then prioritizes rehabilitation funding for projects most in
need.
85
Mandatory Reductions Providing Discretionary Offsets
Funding Summary
2007 2008 Change

Environmental Quality Incentives
Program………………………….. -253 -270 -17
Commodity Credit Corporation
Cotton Storage Credits…..…….… --- -87 -87
Conservation Security Program…… -83 -80 +3
Funds for Strengthening Markets,
Income and Supply…………….... --- -65 -65
Rural Economic Development
Grants………………………….… -79 -34 +45
Agricultural Management
Assistance……………………….…. -14 -10 +4
Total, BA Offsets………………..... -429 -546 -117
Notes: This table does not include mandatory cost proposals.
Upon enactment, discretionary proposals to limit mandatory spending are "re-based" thereby reducing the funding of the
underlying mandatory program.
The 2008 Budget proposes to cancel unneeded funding, and funding for lower-priority and duplicative
programs authorized by farm legislation, including the 2002 Farm Bill. The proposed mandatory funding
cancellations (listed in order of savings) would affect the programs listed below. In the past the
Administration has proposed and the Congress has adopted similar savings indicated by an asterisk (*):
• Environmental Quality Incentives Program*– This program provides financial and technical
assistance to farmers and ranchers to install conservation measures on working lands to address a
variety of natural resource concerns, including air, soil, and water quality. The Budget proposes
to cancel $270 million of $1.27 billion available in 2008.
• Commodity Credit Corporation Cotton Storage Credits – USDA provides storage credits to the
producers of cotton to offset storage costs for the period the commodity is under a marketing
loan. The Budget proposes to cancel $87 million in 2008.
• Conservation Security Program – This program provides financial rewards to good conservation
stewards and also provides additional incentives for the program participants to achieve higher
levels of environmental performance. The Budget proposes to cancel $80 million of $396 million
made available in 2008.
• Funds for Strengthening Markets, Income and Supply – This program aims to increase the
domestic consumption of agricultural commodities through the purchase and donation of surplus
fruits and vegetables. Program funds have also been used to provide disaster assistance to
producers suffering from natural disasters. The Budget proposes to cancel $65 million available
in 2008.
• Rural Economic Development Grants* – This program assists electric and telephone utilities to
promote sustainable rural economic development and job creation projects. The Budget proposes
86
to cancel a total of $34 million available in 2008.
• Agricultural Management Assistance – The program provides assistance to agricultural producers
to mitigate financial risk by using conservation measures to reduce soil erosion and improve
water quality. The Budget proposes to cancel $10 million available in 2008.
Background
Over the last several years, during the appropriations process, the Congress has routinely deferred funding
for mandatory agriculture and conservation programs to offset increased discretionary spending. By
deferring – rather than canceling – the funds, the Congress is able to claim an offset or “mandatory
savings” for the same programs year after year. Similar to previous Administration proposals, the 2008
Budget again includes proposals to permanently cancel mandatory funds that provide a discretionary
offset. Many of these programs are more appropriately funded with discretionary resources.
87
Economic Development Administration
Funding Summary
2007 2008 Change

Budget Authority…....................... 231 170 -61
The 2008 Budget proposes to reduce Economic Development Administration's (EDA's) grant funding to
$170 million, $61 million below the 2007 level. EDA's grant-making is duplicative of other Federal grant
programs, most notably the Department of Housing and Urban Development's Community Development
Block Grant (CDBG) program. The proposed funding level will allow EDA to focus and prioritize
funding to the Nation's most severely distressed communities.
Background
Created in 1965, EDA's mission is to competitively award grants to regions experiencing economic
distress or sudden economic downturns (e.g., due to plant or base closings). EDA invests in economic
development projects focused on creating jobs and spurring private-sector investment.
A cross-cutting review of community and economic development programs using the PART found that
many had unclear objectives, did not coordinate effectively, and were unable to demonstrate measurable
and sustained economic gains for communities. As a result, the Administration has proposed substantial
reforms to Federal economic development efforts, in both the 2006 and 2007 Budgets, under the
Strengthening America's Communities Initiative. The 2008 Budget proposes major reforms to CDBG to
better target resources to the most distressed communities and reduce or eliminate other duplicative
development programs.
88
Manufacturing Extension Partnership
Funding Summary
2007 2008 Change

Budget Authority…....................... 52* 46 -6
*The 2007 House appropriations bill provides the Manufacturing Extension Partnership (MEP) $92 million; however, the
Advanced Technology Program (ATP) is funded in the same account, and OMB has allocated this funding to MEP ($52 million)
and ATP ($40 million) to avoid any potential for terminating ATP, consistent with the 2007 Continuing Resolution (CR)
provision blocking program terminations under the CR.
The 2008 Budget funds the Manufacturing Extension Partnership (MEP) at $46 million, a 50-percent
reduction from the 2007 grant level. This will maintain a strong network of centers while focusing
funding based on centers' performance and needs. MEP centers provide manufacturing firms consulting
services that are also provided by private entities. Given the reported benefits MEP clients receive from
the program, they have the profit incentive and means to cover the costs of these services through
modestly increased fees. Some centers spend significant funds to market their services, and reducing
these expenditures is one way they can absorb the proposed reduction. Although intended to benefit
small firms, MEP centers also assist larger firms. MEP reports that almost one-fifth of its clients have
more than 250 employees. These firms often use outside providers of legal, accounting, and other
services and should not require federally subsidized management consulting services. The 2008 Budget
proposes to have MEP clients cover more of the cost of the services through modestly increased fees,
requiring less reliance on direct appropriations.
Background
The MEP program was established in 1988 to provide business and technical assistance services to small-
and medium-sized manufacturers. MEP's original legislated design called for a phase-out of Federal
funds to each center after six years of funding, with the goal of making each center self sufficient. While
this requirement was removed in 1998, all centers are now more than six years old and the average center
is 12 years old. Currently, fees charged to recipients generally cover one-third of the centers' costs; the
Federal Government and State/local matching grants together cover the remaining two-thirds of the costs.
89
Teaching American History
Funding Summary
2007 2008 Change

The Budget requests $50 million for the Teaching American History program, $70 million below the
2007 level. The number of quality applications for assistance under this program has been insufficient to
justify continuing the current level of funding. The request should be sufficient to fund all high-scoring
applicants, ensuring that the program effectively supports projects that have well-conceived strategies for
increasing teacher knowledge and student achievement and a strong management plan for achieving that
goal.
Background
The Teaching American History program supports competitive three-year grants to local educational
agencies to promote the teaching of American history in elementary and secondary schools as a separate
academic subject. Grants are used to improve the quality of history instruction by supporting training for
teachers of American history (including elementary school teachers who teach the general curriculum).
The number of quality applications for assistance has been insufficient to justify continuing the current
level of funding. For example, in 2005 and 2006 almost 50 percent of funded Teaching American History
grant applications earned a score below the usual Department of Education standard for competitive
grants. As a result, the Department has had to fund many lower-quality grant applications.
90
Safe and Drug-Free Schools State Grants
Funding Summary
2007 2008 Change

The Budget requests $100 million for the Safe and Drug-Free Schools (SDFS) State Grants program,
$252 million below the 2007 CR level. The Administration, as part of No Child Left Behind
reauthorization, is proposing legislative reforms to significantly change the structure of this program to
focus resources on building State capacity to assist school districts in creating safe, drug-free schools, and
secure school environments. Under the Administration's reauthorization proposal, the Department of
Education would allocate SDFS State Grant funds by formula to State Educational Agencies, which
would use the funds to provide school districts support for the implementation of effective models that
reflect scientifically based research.
Background
The SDFS State Grants program as currently structured provides formula grants to States and school
districts for an array of activities intended to reduce youth crime and drug-abuse. Even though the State
grant program is more than 20 years old, it cannot demonstrate it has had a positive impact on reducing
drug use and violence. A 2001 RAND study determined that the structure of the program is
fundamentally flawed. It concluded that SDFS State Grants, which distributes funds according to a
formula, are spread too thinly to support quality interventions. SDFS State Grants provide about
64 percent of local educational agencies with allocations of less than $10,000 (amounts typically too
small to mount comprehensive and effective drug and school safety programs). The Department of
Education and the Office of Management and Budget first assessed the program using PART in 2004 and
reassessed the program in 2006. The most recent PART assessment found the program was unable to
demonstrate results. This program received its first significant reduction in 2004 (-$28 million) and was
further reduced in 2006 (-$90 million).
91
Career and Technical Education State Grants
Funding Summary
2007 2008 Change

Budget Authority…................... 1,182 600 -582
The Budget requests $600 million for the Career and Technical Education (CTE) State Grants program,
$582 million less than the 2007 CR level, but $600 million more than the 2007 Budget. The
Administration had not sought funding for this program in the past few budgets due to poor performance.
Using the flexibility provided by the Congress in the 2006 reauthorization of CTE (formerly known as
Vocational Education), the Department of Education will use regulatory and other administrative actions
to strengthen CTE’s accountability provisions with the aim of improving academic achievement for CTE
students.
Along with this CTE reduction, the Administration proposes a $1.2 billion increase for Title I, with a
significant portion going to high schools. These additional funds will help improve academic
achievement and graduation rates for at-risk high school students – many of whom are CTE students. The
Administration’s No Child Left Behind reauthorization proposal will also seek to close the achievement
gap in middle and high schools through high standards and accountability, and to increase the rigor of
coursework offered to middle and high school students to better prepare them for postsecondary education
or the workforce.
Background
CTE State Grants program provides grants to States to support high school and community college
activities related to vocational and technical education. About two-thirds of the funding supports high
school activities and the remainder support postsecondary technical training. In its 2004 Final Report to
the Congress, the National Assessment of Vocational Education found no evidence that high school
vocational courses themselves contribute to academic achievement or college enrollment. The
Department of Education and the Office of Management and Budget assessed the program using the
PART in 2002. The PART rated Vocational Education State Grants as "Ineffective" because the program
produced little evidence of improved outcomes for students despite decades of Federal investment.
Congress did not adopt significant reforms in its 2006 reauthorization, but did require more rigorous
programs, improved State and local accountability, and increased State flexibility. The Department of
Education will use administrative actions, such as revising information collections, issuing guidance, and
promulgating regulations to build on the changes made to the Act.
92
Weatherization Assistance Program
Funding Summary
2007 2008 Change

The 2008 Budget proposes to reduce funding for the Weatherization Assistance program and focus
Department of Energy (DOE) funds on research and development efforts with the potential to provide
significant energy and economic benefits to all Americans. The President's Advanced Energy Initiative
invests in clean and alternative energy sources to help change the way America powers homes,
businesses, and vehicles, and can help reduce the Nation's dependence on oil.
Background
The Weatherization Assistance Program provides formula grants to States to improve the home energy
efficiency (e.g., by insulating walls and attics) of low-income families, thus reducing their energy bills. A
comprehensive external assessment of program benefits and costs is underway.
The 2002 Budget proposed to significantly increase funding for this program, resulting in an increase in
appropriations of more than $75 million in 2002 to $230 million. The Congress provided similar funding
levels through 2006, resulting in a cumulative funding increase of $387 million since 2001. The 2007
Budget refocused resources on the President's Advanced Energy Initiative. The 2008 Budget re-proposes
this funding shift.
93
Social Services Block Grant
Funding Summary
2007 2008 Change

Budget Authority…....................... 1,700 1,200 -500
The 2008 Budget proposes to reduce funding for the Social Services Block Grant (SSBG) by $500
million, to $1.2 billion, through appropriations for 2008, and by reducing the authorization in 2009 and
beyond. Federal support for social services will continue through other funding streams.
Background
SSBG was established in 1981 to help States provide a broad range of social services to help needy
families achieve economic self-sufficiency, to prevent or remedy neglect or abuse, and secure institutional
care, when appropriate. States receive a capped block grant with few Federal requirements. While this
approach maximizes State flexibility to determine what services to provide and whom to serve, it does not
ensure that funds are directed most effectively. The program lacks performance measures or other means
to demonstrate that activities supported by SSBG funds are producing results. SSBG overlaps with other
Federal social service programs that serve low-income and needy families including Federal child care
and child welfare programs, Temporary Assistance for Needy Families, and programs that provide
services to the elderly.
94
Real Choice Systems Change Grants
Funding Summary
2007 2008 Change

The 2008 Budget proposes a reduced amount for this Centers for Medicare and Medicaid Services
transition grant. Real Choice Systems Change Grants encourage States to develop the infrastructure to
move more disabled individuals from institutions into home- and community-based care. After six years,
these grants have helped States develop a better understanding of how to improve their home- and
community-based support and provide these services more effectively. Starting in 2007, the Deficit
Reduction Act of 2005 provides over $1 billion in new mandatory funding over five years for States to
support these types of activities, including the Money Follows the Person demonstration project.
Background
The Real Choice Systems Change Grants have been funded since 2001. These grants were established to
help States provide community-based support for individuals with disabilities. These grants have
encouraged States to deliver more home- and community-based services, a goal supported by other
programs such as the Money Follows the Person demonstration project included in the Deficit Reduction
Act of 2005.
95
State, Local and Hospital Preparedness Grants
Funding Summary
2007 2008 Change

The 2008 Budget continues to invest substantially in assistance for State, local, and hospital emergency
preparedness, requesting $1.1 billion. While this is a reduction of $186 million, it would bring the total
investment in this area since 2001 to over $9 billion. There continues to be insufficient information
regarding what progress has been made, or where States and localities stand in the continuing effort to
become prepared. This reduction also reflects the continuing need to focus investments to expand Federal
response capabilities to support effective localities during a public health emergency.
Background
State, local, and hospital preparedness grants are awarded directly to the States to support improvements
to public health and hospital systems that will increase preparedness against a bioterrorist attack or other
public health emergency. In 2001, this program was funded at $67 million. By 2003, funding exceeded
$1.5 billion. However, this growth was based on the clear need to improve preparedness following the
events of September 11, 2001 and the anthrax attacks of that fall. During 2006, States have received an
additional $600 million for similar activities related to pandemic influenza preparedness.
96
Children's Hospital Graduate Medical Education Payment Program
Funding Summary
2007 2008 Change

The Budget proposes to reduce the payment for the Children's Hospital Graduate Medical Education
Payment Program. Specifically, this proposal would reduce the average annual payment received by 61
free-standing children's hospitals from approximately $5 million to below $2 million.
Background
The Children's Hospitals Graduate Medical Education Payment Program (which began in 2000 and was
initially funded at $40 million) finances payments to free-standing children's hospitals that support
graduate medical education. This payment activity was created because these hospitals receive little or no
Medicare Graduate Medical Education funding. These payments are provided via a statutory formula that
incorporates the number of residents, number of discharges, number of beds, and the hospital's case-mix.
This payment activity does not purchase services – it awards a general financial subsidy to children's
hospitals that can be used for any purpose. A PART assessment conducted by the Department of Health
and Human Services and the Office of Management and Budget concluded there is not a demonstrated
need for this formula-driven subsidy as children's hospitals are more likely to have positive profit margins
than other hospitals. In addition, children's hospitals receive some payments from other public and
private sources. The Administration proposed reduced funding for this activity in both the 2006 and 2007
Budgets.
97
Health Resources and Services Administration Health Professions Grants
Funding Summary
2007 2008 Change

The 2008 Budget requests $115 million for health professions training, phasing out most health
profession grants, and directs resources to activities that are more effective in placing health care
providers in medically-underserved communities. The Budget focuses investments on activities with a
demonstrated impact on placing health professionals in underserved areas. Continuing subsidies to
persuade individuals to enter well-paid medical careers is not the best use of Federal funds, particularly
when there is no documented national shortage of physicians. While there are regions and pockets of the
Nation that face shortages, only two of every ten providers who benefit from these training grants enter
shortage areas. The Budget invests $105 million for the education and training of registered nurses,
including scholarships and loan repayments in exchange for a service commitment in an underserved
community.
Background
The Health Professions training grants assist academic institutions to help meet the costs of training and
educating students to become nurses, doctors, dentists, and other health professionals. These grants were
authorized in the early 1960s, partially in response to an anticipated national shortage of physicians that
does not exist today. Between 1992 and 2004, the U.S. physician population increased by 36 percent,
over twice the rate of growth of the total population. Evaluations have not linked the Health Professions
training grants to changes in supply, distribution, and minority representation of physicians and other
health professionals. These finding are documented in the PART assessment that the Department of
Health and Human Services and the Office of Management and Budget completed. Health Professions
training grants received an Ineffective PART rating.
98
Poison Control Centers
Funding Summary
2007 2008 Change

The 2008 Budget requests $10 million for the Poison Control Centers (PCC). In recent years, PCCs have
stabilized their funding for basic operations and many have partnered with public health and health
agencies. Ninety percent of PCCs are now certified, up from 70 percent in 2000. The Department of
Health and Human Services funding represents only seven percent of total financing for PCC operations,
compared with 15 percent in recent years. Because PCCs have become largely self-sufficient and depend
less on the Federal financing for their operations, the 2008 Budget proposes to reduce the Federal subsidy.
The Budget level will continue to assist centers to improve their operations and achieve certification and
self-sufficiency.
Background
Funding for PCCs supports access to poison control services, and encourages the enhancement and
improvement of poison education, prevention, and treatment. The Poison Control Center Enhancement
and Awareness Act (P.L. 106-174) was enacted in February 2000 and reauthorized in December 2003
(P.L. 108-194). The activities authorized under these Acts have largely accomplished their original intent
to stabilize these centers and improve poison education, prevention, and treatment nationwide.
99
Rural Health
Funding Summary
2007 2008 Change

The 2008 Budget requests $25 million for the Health Resources and Services Administration's Rural
Health activities. Consistent with previous Budgets, funding is eliminated for activities that no longer
support a continuing need or that duplicate other Department of Health and Human Services (HHS) and
Federal agencies' programs. The Budget continues to support State rural health offices and furthers rural
health policy research. Funding is also included for radiological and black lung diseases that
disproportionately affect rural areas. In addition, the Budget proposes nearly $2 billion for Health
Centers. More than 50 percent of Health Centers sites are located in rural areas and seven million low-
income and underserved individuals will receive health care from these sites in 2008. In addition,
Medicare, through the Critical Access Hospital (CAH) program, finances payments that improve the
profitability of many rural hospitals and ensure beneficiary access to care.
Background
Health Resources and Services Administration's Rural Health activities fund a variety of grants designed
to improve health care in rural areas. Many of these grant activities no longer support an existing and/or
specific purpose. For instance, the Budget proposes to eliminate funding for Rural Health Hospital
Flexibility Grants that are designed to help States determine if rural hospitals might benefit from
conversion to CAH Status. The majority of these conversions have already taken place. Also proposed
for elimination is funding to help communities purchase defibrillators, as much of the demand for these
medical devices has been met through prior grants. The Denali Commission, which funds construction of
primary health facilities in Alaska, is also proposed for elimination. This activity has received
$171 million in funding since 2000. In addition, the Budget eliminates funding for rural health outreach
grants, as many other activities support rural health. A study found that HHS administers 225 health and
social services programs that provide resources to rural areas. The Medicare Modernization Act (MMA)
contained several provisions to support rural health, for example, increasing Medicare CAH payments to
101 percent of costs and broadening eligibility criteria for CAHs. The number of CAHs receiving
enhanced Medicare payments has grown significantly since the passage of MMA.
100
Mental Health Programs of Regional and National Significance
Funding Summary
2007 2008 Change

The 2008 Budget reduces funding of the Mental Health Programs of Regional and National Significance
(PRNS) by focusing resources on activities that directly demonstrate improvements in mental health
outcomes and increase mental health capacity. Within the Mental Health PRNS, the 2008 Budget
eliminates eight less effective or redundant grant activities and increases funding for suicide prevention
activities.
Background
PRNS funds a diverse array of grant activities in the areas of mental health. These grants focus on suicide
and HIV/AIDS by disseminating information on effective strategies for treatment and prevention through
the National Registry of Evidence Based Programs and Practices. A 2005 PART assessment completed
by the Department of Health and Human Services and the Office of Management and Budget found that
not all Mental Health PRNS activities were effective or efficient at improving mental health services.
The Budget has proposed reductions to this portfolio in the past.
101
Substance Abuse Prevention and Treatment Programs of Regional and
National Significance
Funding Summary
2007 2008 Change

The 2008 Budget reduces funding by focusing resources on areas that directly expand access to drug
treatment and prevention activities within the Prevention and Treatment Programs of Regional and
National Significance (PRNS). As a result, the Budget eliminates 15 less effective or redundant grant
activities and increases funding for activities that have demonstrated improvements in health outcomes.
Within the Treatment and Prevention PRNS, the 2008 Budget proposes to increase funding for drug court
grants, screening, brief intervention, referral, and treatment activities, and the National Registry of
Evidence-Based Program and Practices. The 2008 Budget also maintains funding for Access to
Recovery, which has demonstrated success in expanding access to treatment and recovery support
services and providers.
Background
PRNS funds a diverse array of activities in the areas of substance abuse and prevention. These activities
range from providing direct services to disseminating information on effective strategies for treatment and
prevention of substance abuse. The Budget has proposed reductions to this portfolio in the past.
102
Public Housing Capital Fund
Funding Summary
2007 2008 Change

The Budget proposes to reduce funding for public housing modernization and renovation by eight percent
from the 2007 level. The 2008 Budget level continues to cover the annual accrual of new capital needs,
and public housing authorities are able to fund additional capital needs by leveraging non-Federal
investment dollars with their Capital Fund allocations.
Background
Since the 1930s, the Federal Government has supported the provision of housing assistance to low-
income households through the construction and operation of public housing. Although the housing is
owned by local public housing authorities, Federal funds pay most operating costs as well as capital
improvements. This arrangement often requires assisted households to live in less desirable locations and
units in order to receive the housing subsidy. In contrast, other alternatives, such as the Department of
Housing and Urban Development's (HUD’s) Section 8 Tenant-based Assistance that the Budget proposes
to increase and improve, allow families to select housing in neighborhoods with lower poverty and crime
rates as well as better schools, and can also be used for homeownership.
The Public Housing Capital Fund currently pays for the annual and long-term modernization needs of
1.2 million public housing units. Public housing capital needs are estimated to accrue at a rate of about
$2 billion a year.
The condition of public housing units in general has improved through modernization and, in other cases,
demolition of units in the worst condition. Today, almost 86 percent of public housing units meet HUD's
physical standards, compared to 82 percent in 2001. Since 1998, in order to pay for more comprehensive
capital improvements, public housing authorities have been exercising flexible authority to use their
Capital Fund dollars to leverage additional private bond or mortgage financing, repaid from capital funds.
The use of such borrowing for capital needs has grown to over $2.9 billion.
103
Community Development Block Grant
Funding Summary
2007 2008 Change

CDBG….......................…............. 4,215 3,037 -1,178
Cancelled unobligated balances.. --- -356 -356
Budget Authority…....................... 4,215 2,681 -1,534

The 2008 Budget proposes to fund the Community Development Block Grant (CDBG) program at
$3.0 billion, equal to the 2007 Budget. This funding level is $1.2 billion below the 2007 CR amount.
Also, $356 million of prior year unobligated Economic Development Initiative and Neighborhood
Initiative funds are proposed to be cancelled. The current CDBG program is not well-targeted and the
results of its assistance have not been adequately demonstrated or reported. The Administration continues
to support CDBG legislative reforms, similar to the CDBG Reform Act, which was transmitted to the
Congress in May 2006. The reform legislation updates an outdated allocation formula that is almost 30
years old, and adds components that would improve the CDBG program. An improved CDBG formula
would better target assistance to communities and regions experiencing greater economic distress and
reduce or eliminate funding to more affluent communities. The proposed Challenge Grant fund would
reward communities that take extra steps to create conditions for community and economic progress. In
addition, the Department of Housing and Urban Development (HUD) would establish ambitious
performance measures and accountability standards for grantees that receive funds under the CDBG
formula.
Background
The CDBG program was established in 1974 to provide flexible annual assistance to States and local
governments to fund a wide range of community and economic development activities that principally
benefit low- to moderate-income persons, eliminate slums and blight, and address urgent needs. The
Administration's CDBG reform proposal was motivated by a cross-cutting review of Federal community
and economic development programs in 2004. This review found that many of these programs had
unclear objectives, did not coordinate effectively, were duplicative, and were unable to demonstrate
measurable and sustained economic gains for communities. A HUD and Office of Management and
Budget analysis also found that CDBG is ineffective and that its major problems include the lack of a
clear purpose and annual and long-term outcome measures; weak targeting of funds to areas of greatest
need; and the inability to produce transparent information on results.
The 2007 Budget included the Strengthening America's Communities Initiative (SACI), which
consolidated 17 Federal economic and community development programs within HUD and Economic
Development Administration. This proposal was strongly opposed by the Congress and other
stakeholders. Although the 2008 Budget does not re-propose SACI, the reform objectives have been
incorporated into the CDBG Reform Act of 2006, and HUD will continue to administer the CDBG
program, and seek legislative reforms.
104
Indian Land Consolidation Program
Funding Summary
2007 2008 Change

The Indian Land Consolidation Program (ILCP) purchases small, fractional interests in tracts of lands
held in trust and managed by the Federal Government for individual Indians in order to consolidate
ownership of the tracts to a point where they can be effectively managed and put to productive use. The
2008 Budget proposes to reduce funding for the program because the program is changing its strategy for
achieving its goals. In the past, the program's strategy has ranged from purchasing interests on a first-
come/first-served basis from any willing seller to concentrating on tracts with 200 or more owners. In
addition, new provisions in the American Indian Probate Reform Act of 2004, which became effective in
June 2006, should substantially reduce the rate of fractionation and have a corresponding impact on the
future direction of the program. The Administration is interested in working with the Congress and
Tribes to shift the responsibilities for land management to tribal and individual Indian owners under a
revised land consolidation program.
Background
There are some 3.6 million interests on over 128,000 tracts of land, totaling between 10 million and 13
million acres, held in trust by the Federal Government on behalf of individual Indians. It costs millions of
dollars to track and manage these tracts and fractional interests, which is not cost effective relative to the
amount of income generated from leases on the lands or the possibility of lawsuits, such as Cobell vs.
Kempthorne. Since 1999, ILCP has spent nearly $130 million to purchase approximately 262,000 of
these interests and consolidated about 230 tracts. The $10 million should be sufficient to allow the
program to continue without disruption to its infrastructure.
105
Payments in Lieu of Taxes
Funding Summary
2007 2008 Change

The 2008 Budget reduces funding for the Department of the Interior's (DOI) Payments in Lieu of Taxes
(PILT) program by $43 million compared to the 2007 CR level; however, the 2008 level is only $8
million below the President’s 2007 Budget request. The request remains high by historic standards, and
the Administration continues to support higher funding for PILT than previous Administrations.
PILT is a subsidy to States, with no strings attached, particularly popular with western States. However,
States and local governments receive many benefits from Federal lands within their borders, including: 1)
direct payments to State and local governments from economic uses of the public lands (e.g., mineral
revenue payments); 2) jobs and other economic benefits from recreation and tourism, hunting and fishing,
grazing, and other public land uses; and 3) the Federal Government’s bearing of many of the costs to
manage these lands.
Mineral revenue payments, in particular, have dramatically increased in recent years, with some of the
largest revenue increases going to States receiving the largest PILT payments. For example, mineral
payments to the State of Wyoming have roughly quadrupled since 1999, to a payment level that in 2006
was $1.07 billion, which is over 70 times the total annual PILT payments received by Wyoming.
Moreover, the vast majority of States are now reporting budget surpluses.
Background
Initiated with passage of the Payment in Lieu of Taxes (PILT) Act in 1976, PILT provides payments to
local governments in counties where certain Federal lands are located within their boundaries. PILT is
based on the concept that these local governments incur costs associated with maintaining infrastructure
on Federal lands within their boundaries but are unable to collect taxes on these lands. Payments are
based on a formula established in the PILT Act and are in addition to other Federal land receipts shared
with local governments.
The PILT program was funded at roughly $100 million per year through much of the 1990s, increasing to
$125 million in 1999. The program received a 48-percent increase (to $200 million) in 2001 during a
time of Federal surpluses and State budget troubles, and funding has continued to increase each year
since. The Administration proposes reduced funding levels for PILT in order to fund DOI's higher
priorities.
106
United States Geological Survey Mineral Resources Program
Funding Summary
2007 2008 Change

The 2008 Budget reduces the Mineral Resources Program (MRP) work on national and international
mineral assessment products and basic research that benefit States, local governments, industry, and
academia. State and local governments, industry, and universities could fund their own mineral
assessments and basic research if they consider these products a priority. Remaining funds will be
focused on mineral surveys, studies, and commodity reports that are relevant to ongoing Federal land
management, regulatory, and remediation activities.
Background
MRP maintains national databases and provides information on the location and quantity of minerals,
formation of minerals, and the impact of mining on the environment. MRP annually produces one or two
systematic analyses, about 650 mineral commodity reports, and maintains five national geologic,
geochemical, geophysical databases. Many of the products are directed to the interests of States, local
governments, industry, and academia rather than the Federal Government.
107
Cancellation of H1-B Fraud Prevention and Detection Balances
Funding Summary
2007 2008 Change

Budget Authority…....................... --- -50 -50
The 2008 Budget proposes to cancel $50 million in unobligated balances in the Department of Labor's
(DOL’s) H-1B Fraud Prevention and Detection account. Given strict statutory limits on the use of these
funds, DOL has been unable to spend more than $5 million in any single year and began 2007 with more
than $60 million in unobligated balances. To remedy this problem and strengthen DOL's enforcement
capabilities, the 2008 Budget proposes legislation to expand the allowable uses of these funds. This
cancellation would not have a negative programmatic impact.
Background
Under the Immigration and Nationality Act, DOL receives a portion of H1-B fee revenue for the
investigation of fraud in the filing of employer certification applications for H-1B visas. The funds must
be used strictly for investigation of filing fraud. DOL began 2006 with $28 million in balances, received
an additional $35 million in new fee revenue, and given the strict limitations on the use of funds, spent
just $5 million in that year. The Administration will also propose legislation to expand the permissible
uses of the funds to strengthen enforcement of wage and hour laws in low-wage, immigrant-heavy
industries. The resources remaining in this account after the cancellation would be adequate to support
the broader set of proposed allowable uses.
108
Indian and Native Americans Training Program
Funding Summary
2007 2008 Change

The 2008 Budget proposes to reduce funding for the Department of Labor's (DOL’s) Indian and Native
Americans Program, which funds competitive grants to federally-recognized tribes and other eligible
entities to provide academic, literacy, and occupational training. Recent program management initiatives
such as the implementation of common performance measures, improvements to program reporting,
enhanced review of grantees' financial management to ensure the efficient use of funds, and the use of
technology to deliver services should lead to more effective results less funding.
Background
Section 166 of the Workforce Investment Act (WIA) makes funds available to Indian tribes, tribal
organizations, Alaska native entities, Indian controlled organizations serving Indians, or Native Hawaiian
organizations to support employment and training activities for Indian, Alaska Native, or Native
Hawaiian individuals.
A PART assessment conducted by DOL and the Office of Management and Budget found the program to
be adequate, but noted several areas for improvement. In addition to implementing common performance
measures, strengthening grantee reporting requirements, and using technology to deliver services, DOL
needs to ensure that this program is aligned and works collaboratively with the numerous other Federal
and State agencies and programs that assist Indian and Native Americans with employment, training, and
other related services. The Administration is exploring opportunities to reduce program duplication
between the WIA Indian and Native American program and similar programs in other agencies.
109
International Labor Affairs Bureau
Funding Summary
2007 2008 Change

The 2008 Budget proposes $14 million for the International Labor Affairs Bureau (ILAB), moving the
agency closer to its core mission of research and policy analysis. In 2008, ILAB will continue to focus on
administering over $530 million in projects that were launched in previous years, including in the field of
child labor. In addition, the Budget includes $1.5 million to support child labor activities related to the
Trafficking Victims Protection Reauthorization Act.
Background
The 2008 Budget seeks to restore ILAB to its original mission of research and advocacy by eliminating its
grant making activities. Between 1996 and 2001, ILAB's funding rose by 1,500 percent, when the agency
embarked on an expansive grant-making mission intended to combat international child labor, develop
and disseminate AIDS prevention information in the international workplace, support core labor standards
development, and provide bilateral technical assistance.
Grant making activities are appropriately financed through the Department of State, U.S. Agency for
International Development, and other international agencies. For example, the 2008 Budget includes
$3 billion to continue international assistance activities in developing countries through the Millennium
Challenge Account (MCA). The Administration created MCA to provide targeted, accountable
international development assistance to poor countries with a demonstrated commitment to ruling justly,
investing in people, and encouraging economic growth.
110
Job Training Grant Consolidation
Funding Summary
2007 2008 Change

The 2008 Budget proposes reforms to the Workforce Investment Act (WIA) that will provide training
opportunities to more workers, provide States more flexibility to deliver services, and increase individual
choice. The President's reforms would maintain the existing nationwide system of One-Stop Career
Centers, but reduce duplication by consolidating several similar funding streams into one large State grant
program, limiting the amount of funds that could be spent on overhead, cutting Federal red tape, and
creating Career Advancement Accounts – worker-directed vouchers to give individuals the resources
necessary to increase their skills and better compete for jobs. Through these reforms, the Budget proposal
will save almost $0.5 billion in taxpayer dollars while significantly increasing the number of workers who
have access to training opportunities.
Background
WIA authorizes formula grants to States and localities to provide job training and employment-related
services to adults, dislocated workers, and disadvantaged youth. Services are provided primarily through
a nationwide network of One Stop Career Centers.
Currently, under WIA, too few workers are trained and duplicative programs produce excessive overhead
costs and administrative complexity. As a result, not enough of the nearly $4 billion invested in the
following Department of Labor programs goes to train workers: Dislocated Worker Assistance; Adult
Employment and Training Activities; Youth Activities; Wagner-Peyser Employment Service State grants;
Labor-Market Information funding; and State grants to administer the Work Opportunity and Welfare-to-
Work tax credits. For example, a recent Government Accountability Office study found that less than 40
percent of funding provided to local workforce investment boards was used to provide job training.
WIA's authorization expired in 2003. This reform builds on previous Administration proposals to reform
and reauthorize WIA.
111
Office of Disability Employment Policy
Funding Summary
2007 2008 Change

The 2008 Budget proposes $19 million, returning the Office of Disability Employment Policy (ODEP)
closer to its core mission of policy analysis, technical assistance, and dissemination of effective practices
to increase the employment opportunities for people with disabilities. In 2008, ODEP will focus its
efforts on developing and implementing disability employment policy to increase the recruitment,
retention, and promotion of people with disabilities, and eliminate duplicative grantmaking activities.
Staff will be reduced to reflect the diminution of ODEP's grant making functions, which duplicate
activities in other Federal agencies.
Background
The Congress created ODEP in 2001 to bring a heightened focus within the Department of Labor (DOL)
on disability employment through policy evaluation, technical assistance and development of best
practices. ODEP succeeded the President's Task Force on Employment of Adults with Disabilities that
was terminated in 2002 after submitting its final report.
ODEP was tasked with implementing a sustained, coordinated, and aggressive employment strategy to
eliminate job barriers for people with disabilities. However, between 2001 and 2005, ODEP expanded its
responsibilities to include a $26 million grant program that included homelessness, mental health,
international disability, veterans, and homeland security issues – activities that were well beyond ODEP's
original mission and duplicative of activities undertaken by other Federal agencies, like the Department of
Education and Social Security Administration. A PART assessment conducted by DOL and the Office of
Management and Budget rated ODEP Results Not Demonstrated due to limited performance outcomes
and insufficient evaluation data that could help assess the impact and effectiveness of ODEP's policy and
coordination efforts.
112
Pilots, Demonstrations, and Research
Funding Summary
2007 2008 Change

The 2008 Budget proposes funding slightly below the 2007 Budget request for Workforce Investment Act
(WIA) Pilots, Demonstrations, and Research. The proposed level eliminates unrequested funding that has
been added in recent years for numerous narrow-purpose projects that duplicate existing Labor
Department programs and have little accountability for performance outcomes. In addition, the 2008
Budget redirects some funding to conduct an impact evaluation of the Workforce Investment Act's
Adults, Dislocated Worker, and Youth State grant programs.
Background
Section 171(b) of the Workforce Investment Act of 1998 authorizes the Secretary of Labor to carry out
pilots, demonstrations, and research projects for the purpose of developing and implementing approaches
and demonstrating the effectiveness of special methods in addressing training and employment needs.
WIA stipulates that grants or contracts awarded for carrying out such projects should be awarded on a
competitive basis.
The Congress has traditionally included earmarks and unrequested funding in the WIA Pilots,
Demonstrations, and Research account. The 2005 appropriation included a total of $55 million in
unrequested funding. The 2007 House and Senate Committee Reports provided over $25 million in
funding for specific earmarks. Congressional earmarks are awarded without competition and insufficient
accountability. Further, the activities funded through the earmarks are not coordinated with existing
Department efforts and often duplicate programs that are supported through the regular WIA State grant
programs.
113
Senior Community Service Employment Program
Funding Summary
2007 2008 Change

The 2008 Budget proposes $350 million for the Senior Community Service Employment Program
(SCSEP), $82 million (19 percent) below the 2007 CR level. This program was rated Ineffective when
assessed by the Department of Labor and the Office of Management and Budget, largely due to
inadequate competition in the grants process, lack of data on program performance and impact, and
duplication with other Federal programs. In addition, the Older Americans Act of 2006 allows the
Department of Labor to train and serve workers more efficiently than possible under prior law. The
Budget reduces funding for SCSEP, which will support approximately 59,000 participants in 2008, and
redirects dollars to other higher priority and more effective programs.
Background
SCSEP distributes grants to States and public and private non-profit organizations to provide part-time
work experience in community service activities to unemployed low-income persons ages 55 and over to
perform community service. In 2008, SCSEP will increase the program's focus on training, and related
employment-related services. It will also continue to introduce more competition to the grant process,
and collect data that measures participants' employment, job retention, and earnings outcomes.
114
Cancellation of Unexpended Job Training Balances
Funding Summary
2007 2008 Change

Budget Authority…....................... --- -335 -335
The 2008 Budget proposes to cancel $335 million in unexpended carry-over balances for the major
Workforce Investment Act (WIA) State grant programs: Dislocated Worker Assistance, Adult
Employment and Training, and Youth Activities. At the end of program years 2005 and 2006, the States
had over $1 billion in unexpended WIA balances. The 2008 Budget also proposes to reduce from three
years to two years the period of time that States have to spend their funding, providing a stronger
incentive for States and local areas to better monitor and manage their funds.
Background
Under WIA, the Department of Labor provides job training grants to States, which then provide a portion
of the funding to local areas. Each year, States combine current program year funds with unexpended
funds carried over from the previous two program years. Despite regulations encouraging local areas to
expend funds within two years and requiring States to use funds within three years, there are usually
significant amounts of unexpended balances. States ended both program years 2005 and 2006 with over
$1 billion in unexpended carryover balances.
115
Department of Transportation: Discretionary Proposal
Airport Improvement Program
Funding Summary
2007 2008 Change

The 2008 Budget proposes a funding level of $2,750 million for the Airport Improvement Program (AIP)
– a $764 million reduction from 2007. This level of funding is robust by historical standards. AIP was
funded at just $1,900 million as recently as 2000 ($2,200 million adjusted for inflation). From 2007 to
2010, seven airports will commission nine airfield projects, providing these airports with the potential to
accommodate more than 300,000 additional annual operations.
Restraining the growth of AIP will encourage airports to make greater use of revenues generated from
passenger facility charges (PFC), which funds projects at an airport from the passengers of that airport.
Many airports do not take full advantage of this legal authority, which the Federal Aviation
Administration (FAA) estimates could produce an additional $300 million annually for airport
development needs. FAA's reauthorization proposal will provide financially strong and sophisticated
airports with additional authority to increase – and flexibility to utilize – PFC revenue.
Background
AIP, which includes formula and discretionary grants, is used to improve airport capacity through the
rehabilitation and construction of new and existing runways, taxiways, and facilities. In 1946, the
Federal-Aid Airport Program was authorized to promote the development of a system of airports around
the country. The current program, now renamed as AIP, was established by the Airport and Airway
Improvement Act of 1982. AIP funding is drawn from the Airport and Airway Trust fund, which is
supported by user fees, a passenger ticket tax, fuel taxes, and other revenue sources. Funds are also used
to improve airport safety and address noise and environmental concerns.
A PART review of the program conducted by the Department of Transportation and the Office of
Management and Budget found the program to be Moderately Effective. However, as large airports are
less dependent on Federal funds because of their ability to access different revenue sources, such as
landing fees, rental and leasing of space, retail concessions, and passenger facility charges, the
Administration is proposing reforms to eliminate taxpayer subsidies to those large airports that are
capable of financial self-sufficiency.
116
Intercity Passenger Rail
Funding Summary
2007 2008 Change

Budget Authority…....................... 1,114 900 -214
The Budget proposes $900 million for intercity passenger rail, largely for Amtrak, which is $214 million
less than the 2007 CR level. The 2008 request is part of a multi-year effort by the Administration to
reduce, and eventually eliminate, Amtrak's reliance on Federal operating assistance. This reflects the
long-standing Administration principle to create an intercity passenger system driven by sound
economics. Of the $900 million request, only $800 million is for Amtrak directly, including $300 million
for operating costs. That amount would create a very tight operating budget, but it would also force the
railroad to make hard but necessary choices about which services to provide. The Budget includes $500
million for Amtrak's capital budget, which would support its ongoing efforts to rehabilitate the Northeast
Corridor between Washington, D.C. and Boston. The Budget also proposes $100 million for capital
matching grants to States for intercity passenger rail projects. This would be a new program to enable
States and localities, rather than Amtrak, to direct capital investment in the system.
Background
Amtrak is the federally-subsidized monopoly provider intercity passenger rail service. Created in 1971, it
connects all but four States, and in 2006 it carried 24 million riders. The Administration has sought to
reform the railroad because it has consistently suffered major financial losses, provided inferior service,
and has failed to prioritize its limited resources. For example, the Government Accountability Office
recently concluded that Amtrak's long-distance trains, "show limited public benefits for dollars
expended," and that, "these routes account for 15 percent of riders but 80 percent of financial losses."
These same long distance trains had an on-time performance rate of 30 percent in 2006. For the 2007
Budget, the Department of Transportation and the Office of Management and Budget assessed the
performance of Amtrak and found that is purpose was ambiguous and that Amtrak's flawed design
contributes to its poor performance.
117
Essential Air Service
Funding Summary
2007 2008 Change

Budget Authority…....................... 57* ---* -57
*
Does not include a mandatory $50 million appropriation for this program from overflight fees. The Administration is proposing
to continue the $50 million mandatory appropriation in 2008, which is sufficient to fund Essential Air Service to the neediest and
most-isolated communities.
The Essential Air Service (EAS) is statutorily funded by a mandatory appropriation of $50 million from
overflight fees that has historically been supplemented with a discretionary general fund appropriation.
The Administration proposes no discretionary appropriation for this program, along with other reforms.
The $50 million is sufficient to subsidize air service to communities that are truly needy of subsidized air
service to maintain transportation connectivity with the rest of the country. Additionally, the
Administration proposes revising the criteria to limit eligibility for EAS subsidies to those communities
that need them, as well as reforms to permit the program to use the most cost-effective solutions to
connect rural communities to the air transportation network, including the use of ground transportation,
where appropriate.
Background
The EAS program was established concomitant with airline deregulation in 1978 to mitigate anticipated
service reductions at small rural airports resulting from deregulation. For airports with scheduled service
prior to 1978, and meeting certain other standards of eligibility based on distance from other airports,
EAS subsidizes flights from that airport to a larger airport. Originally anticipated to last for 10 years, the
program was first extended for an additional 10 years, and then made permanent.
EAS, however, has been made obsolete over time, particularly by the growth in surface transportation.
Consumers in many rural areas now regularly travel the distances required to take advantage of shopping
and other services in larger, relatively nearby urban areas, including air transportation services. In some
cases, EAS-subsidized flights are averaging less than three passengers at a time, as consumers opt for the
price and convenience of ground travel to the nearest large airport, rather than using the EAS-subsidized
flight. The program assessment conducted by the Department of Transportation and the Office of
Management and Budget showed the program did not use annual and long-term goals to manage the
program and it received a rating of Results not Demonstrated.
118
Railroad Rehabilitation and Improvement Financing Loan Program
Funding Summary
2007 2008 Change

Budget Authority…....................... --- --- ---
The 2008 Budget introduces the Administration’s plan to reform the Railroad Rehabilitation and
Improvement Financing Loan Program (RRIF) with the aim of better defining the program’s purpose.
Following the Budget submission, the Administration will transmit authorizing language to the Congress
that would ensure the RRIF program makes loans only to those railroads that are in need of Government
assistance. For example, the Administration proposes that eligible RRIF applicants demonstrate that their
Government loan would address public, not simply private, interest. The Administration also proposes
targeting assistance to small and regional railroads and significantly reducing the program’s size. The
Budget recommends an annual loan limitation of $700 million for 2008, reflecting a more realistic level
of demand for credit assistance from small railroads. Moreover, the Department of Transportation (DOT)
plans to work with the private lending community to develop new opportunities for railroads to obtain
private credit including promoting private loans guaranteed by the RRIF program.
Background
The RRIF program, created in 1998, offers low-cost loans to railroads for infrastructure improvement
projects or refinancing debt. The latest highway reauthorization bill, the Safe, Accountable, Flexible,
Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU), substantially expanded the
scope of the program, particularly by increasing its size from $3.5 billion to $35 billion. In the previous
two budgets, the Administration has recommended terminating the program because it lacks a clear
purpose and an adequate justification for subsidizing private rail companies. According to the law,
project eligibility is virtually open-ended and there are few limits on which companies may apply.
Consequently, instead of assisting struggling small railroads as the program was first envisioned, DOT
has provided RRIF loans to a range of applicants some which have substantial projected revenues.
RRIF is a zero subsidy loan program, meaning it does not receive appropriated funds to make loans.
However, the program exposes the Government to the risk of loan defaults, which is captured in the
annual credit subsidy reestimate process.
119
Infrastructure Assistance – Mexico Border
Funding Summary
2007 2008 Change

The 2008 Budget proposes to reduce Mexico Border Infrastructure Assistance funding for water
infrastructure projects in the border region in both the United States and Mexico. In 2004, the
Environmental Protection Agency and the Office of Management and Budget completed a PART
assessment of the Mexico Border Infrastructure Assistance Program, which identified the need to
improve project completion rates to reduce unobligated balances. Over $880 million has been
appropriated for the Mexico Border Infrastructure Assistance Program; however, funds have not been
dispersed in a timely manner and over $300 million has accumulated in unobligated balances. Currently
approved construction projects for this program can be completed utilizing the requested funding and
unobligated balances.
Background
The Mexico Border Infrastructure Assistance program is one of the components of the Border 2012
Program. The Border 2012 Program was established in 2002 as a result of the signing of the 1983
Agreement on Cooperation for the Protection and Improvement of the Environment in the Border Area,
also known as the La Paz Agreement. One objective of the Border 2012 Program is to provide access to
drinking water to reduce health risks to residents as well as basic sanitation services with the goal of
restoring the quality of impaired transboundary surface waters in the border region.
120
State and Local Air Quality Grants
Funding Summary
2007 2008 Change

The 2008 Budget continues air quality grant funding reductions proposed in the 2007 Budget. Several
components of the program can be reduced reflecting attainment of air quality standards, completion of
analyses, and funding certain air monitoring efforts through cost-shared grants.
Background
As in the 2007 Budget, the 2008 Budget provides $185 million, $35 million less than the 2007 CR level
for Air State Grants. This decrease comprises three elements: a reduction to reflect attainment of carbon
monoxide (CO) and lead national ambient air quality standards in the majority of the Nation
(-$15.5 million); a reduction to reflect the completion of analyses by Regional Planning Organizations
(-$2.5 million); and a reduction that results from shifting funding for fine particulate matter monitoring
from a grant program that does not have a recipient cost-share requirement to grants that do require the
beneficiary to cover a portion of the costs (-$17 million).
121
Small Business Administration: Discretionary Proposal
Microloan Program
Funding Summary
2007 2008 Change

The 2008 Budget proposes to eliminate direct loan subsidy costs and technical assistance funding for the
Microloan program and operate the program at no cost to the taxpayer. This builds upon the significant
success of similar changes made to the Small Business Administration's (SBA) 7(a) guaranteed loan
program. With modest appropriate reforms, the Microloan program can operate without a need for
appropriations, potentially expanding the amount of assistance it can provide.
Background
The Microloan program provides small loans to start-up and growing small businesses through
intermediaries, which also receive SBA technical assistance. Under this program, SBA makes funds
available to nonprofit community-based lenders (intermediaries) that, in turn, make loans to eligible
borrowers up to a maximum of $35,000.
Between loan subsidy and technical assistance, the program costs taxpayers nearly $1 for every $1 lent.
Taxpayer-funded credit subsidy costs can be eliminated with only marginally increased (but still below-
market) interest rates charged to loan intermediaries. Further, intermediaries can absorb technical
assistance costs under existing interest rate formulas and funding from other sources.
122
Corporation for Public Broadcasting: Discretionary Proposal
Funding Summary
2007 2008 Change

The 2008 Budget proposes to cancel $50 million of the Corporation for Public Broadcasting's (CPB’s)
enacted 2008 advance appropriation and to permit CPB to use a portion of the remaining funding on
digital television transition and broadcasting system interconnection activities. This proposal reflects the
changing television market, as well as the public broadcasting system's diverse funding sources that the
Administration believes should be further emphasized going forward. To ensure Federal funding
provides the greatest benefit, CPB, in consultation with public broadcasting licensees, will continue to
explore more effective means for targeting resources to areas of most need.
Background
The Public Broadcasting Act of 1967 established the Corporation for Public Broadcasting (CPB) as an
independent non-profit corporation charged with encouraging educational, cultural, and community-based
broadcasting, and the distribution of such services to all citizens. At the time of its establishment, there
were approximately four million cable subscribers and only three television networks. Currently, over 94
million (86 percent of all U.S.) households receive television through cable or satellite and may choose
among hundreds of channels.
CPB typically receives appropriations two years in advance, and its funds make up only about 15 percent
of public broadcasting revenue. Under the Public Broadcasting Act, CPB is required to allocate Federal
funds in part with the intent of stimulating non-Federal support of the system. CPB, following
consultation with public broadcasting licensees, allocates much of the funding by formula based on the
size of non-Federal funding each station receives, with the result that the largest stations tend to receive
the largest Federal contribution. Donations from individuals, businesses, foundations, universities, and
State and local governments provide the balance of public broadcasting revenue.
123
Denali Commission: Discretionary Proposal
Direct Grant-Making
Funding Summary
2007 2008 Change

The 2008 Budget requests $6 million for the Denali Commission, which will end the Commission's direct
grant-making, but will allow it to continue its constructive role as a regional planner and coordinator of
other Federal investments in Alaska. Alaska will continue to receive funding for economic development,
health care, and job training through other Federal sources, and the Denali Commission will assist
distressed communities and Federal agencies in developing and carrying out development projects and
strategies.
Background
The Denali Commission, established in the Omnibus Consolidated and Emergency Supplemental
Appropriations Act of 1999, is a Federal partnership with Alaska to fund utilities, infrastructure, and other
assistance to distressed rural communities in Alaska. While Alaska faces some unique development
challenges, the Commission's grant-making is duplicative of other Federal investments in the State.
Community and economic development, infrastructure development, and training activities are also
supported by several other Federal agencies, including the Departments of Agriculture, Commerce,
Health and Human Services, Housing and Urban Development, Labor, and Transportation. In addition,
the PART assessment of the Commission found that it has challenges evaluating the performance and
results achieved with its funds. While the Commission has established long-term performance goals, the
extent to which its investments are having an impact on economic development in rural Alaskan
communities is unclear.
124
National Archives and Records Administration: Discretionary Proposal
National Historical Publications and Records Commission
Funding Summary
2007 2008 Change

The Administration proposes no new funding for grants for the National Historical Publications and
Records Commission (NHPRC) in order to fund higher priority areas within the National Archives and
Records Administration, such as management of electronic records. The Commission itself would retain
all other authorized functions, such as its advisory roles.
Background
NHPRC provides grants to States, local governments, universities, and other institutions for projects to
preserve and publish non-Federal records. Other Federal agencies, such as the National Endowment for
the Humanities, also provide grants for which many NHPRC recipients would be eligible to apply.
125
DEPARTMENT OF DEFENSE
RESTRUCTURING
127
Department of Defense Restructuring Proposals
(In millons of dollars)
2008 2009 2010 2011 2012 2013 2008-2013
Savings from Restructuring
Reduction in Missile Defense Deployment Funding ......................... -471 -462 -489 -236 -491 -491 -2,640
Restructured Future Combat System ............................................... -109 -238 -846 -2,227 -1,470 1,529 -3,361
Reduction in Science and Technology Growth ................................ -434 -781 -342 -538 -409 -159 -2,663
Air Force Organizational Restructure and Process Efficiencies ....... -283 -1,255 -1,939 -2,062 -2,163 -2,281 -9,983
Navy Military Manpower Reductions................................................. -473 -1,106 -1,326 -1,427 -1,491 -1,622 -7,445
New Defense Health User Fees........................................................ -1,862 -2,322 -2,815 -3,424 -4,061 -4,796 -19,280
Total Savings................................................................................... -3,632 -6,164 -7,757 -9,914 -10,085 -7,820 -45,371
129
Department of Defense: Restructuring Proposal
Missile Defense Agency
Funding Summary
Change
2007 2008 2008 From 2008 2008 to 2013
Enacted Old Plan Proposed Old Plan Savings
Budget Authority ……….. 9,389 9,370 8,899 -471 -2,640
Proposal Description
The Missile Defense Agency (MDA) is developing a multi-layered, global defensive system against
ballistic missiles. The first increment of this capability provides a limited defense against long-range
missiles from North Korea. In addition, MDA is developing a range of defensive systems to protect U.S.
deployed troops and their allies in theaters around the world. MDA continues to improve its capabilities
by adding interceptor missiles, new radars, and support equipment. However, most of the missile defense
systems still require considerable testing to improve their reliability and reach full operational maturity.
The Budget reduces the MDA research and development program by approximately $500 million each
year, for a total of $2.6 billion through 2013.
Proposal Impact
MDA has adopted a very flexible acquisition strategy that allows for rapid adjustments to program plans
based on ballistic missile threats, technology, and system maturity, among other factors. The Department
of Defense continually reviews its missile defense needs and makes adjustments; fielding systems that are
mature; slowing down those with high-risk; and redirecting resources as needed.
MDA has experienced delays in testing for the Ground-based Midcourse Defense element, Navy sea-
based systems, the Airborne Laser, and other components such as the Sea-Based X-Band radar. The
funding reduction reflects a slow-down in future, follow-on system development as MDA focuses on
testing these systems and completing their integration into the overall defensive architecture.
130
Future Combat System
Funding Summary
Change
2007 2008 2008 From 2008 2008 to 2013
Budget Authority ………….. 3,426 3,845 3,736 -109 -3,361
The Future Combat System (FCS) is the Army's next generation of manned and unmanned combat
vehicles, aircraft, artillery, and sensors that are designed to be linked together by an advanced
communications network into an integrated "system of systems." This proposal would terminate four of
the eighteen planned FCS systems in order to maintain the affordability of the entire FCS program. The
four systems to be terminated are the Class II and Class III Unmanned Aerial Vehicles, the Intelligent
Munitions System, and the Armed Robotic Vehicle. Existing systems, many of them newly acquired to
support the Army transition to modular combat brigades, will continue to be used with FCS in place of
the terminated systems.
Proposal Impact
The Department of Defense remains committed to the continued development and procurement of FCS to
ensure that the Army possesses the lethality, mobility, and situational awareness to decisively win future
conflicts. This restructuring will allow the Army to continue developing and acquiring critical FCS core
capabilities while addressing the significant costs of transforming the current force to a modular
configuration. Six year savings total $3.4 billion.
131
Science and Technology Programs
Funding Summary
Change
2007 2008 2008 From 2008 2008 to 2013
Budget Authority ……….. 13,329 11,206 10,772 -434 -2,663
Science and Technology (S&T) programs include early-stage research and development (R&D) efforts,
and the first stage of technology development prior to full scale development of weapons and supporting
systems.
The Budget cuts back slightly on planned S&T programs in order to increase funding for defenses against
chemical and biological weapons and other programs supporting the war on terrorism, and to address
higher priority needs of the Department of Defense.
Proposal Impact
In the 2002 Budget, the Administration proposed a goal of increasing R&D for new technologies by $20
billion over a five-year period. This goal was achieved within three years. As of the beginning of 2007,
the Department of Defense has invested about $128 billion in additional R&D funding (i.e., over what
projected in 2001) for new weapons and supporting technologies, including $19 billion more in S&T
alone.
As the fastest-maturing of these defense technologies are now being incorporated into new systems, it is
appropriate to concentrate more budgetary resources on the procurement and operation of the resulting
weapon systems and on technologies that could reduce current vulnerabilities of U.S. forces, than on
growth in underlying S&T. The 2008 proposed S&T funding level is still about 20 percent higher than
the Cold War average (in constant dollars). The 2007 enacted funding includes over $2 billion in
congressional earmarks that the Administration does not propose to extend and which detract from the
overall efficiency of the S&T investments. This accounts for almost all of the drop in funding from the
2007 enacted level to the 2008 Proposed level.
132
Air Force Organizational Restructure and Process Efficiencies
Funding Summary
Change 2008 to
2007 2008 2008 from 2008 2013
Enacted* Old Plan* Proposed* Old Plan* Savings*
Budget Authority …………………….. --- --- --- -283 -9,983
*Budget Authority for this savings proposal spans a wide variety of accounts and programs.
The Air Force proposes to realign resources so that it can transform to a smaller, more lethal, more agile,
streamlined force with an increased emphasis on supporting the warfighter. The Air Force restructuring
plans focus on three areas: organizational efficiencies; process efficiencies; and personnel reductions tied
to legacy force structure changes.
The Air Force will flatten organizational structures, eliminate functional overlaps, streamline and
centralize information technology, and reduce the number of contractors required. The majority of the
proposed savings will be generated through process efficiencies and associated active military manpower
reductions of about 13,000 in 2008.
Strength Profile 2006 2007 2008 2009 2010 2011 2012 2013
Active 348,953 334,200 328,600 313,300 311,900 311,800 311,600 311,100
Reserve 74,075 74,900 67,500 67,400 67,700 67,900 67,700 67,700
Total Air Force 423,028 409,100 396,100 380,700 379,600 379,700 379,300 378,800
Proposal Impact
The end-strength reductions are the planned result of process efficiencies. For example, the Air Force is
reviewing how to reduce the personnel and equipment associated with aircraft maintenance at bases to the
minimum needed to meet daily training missions, while at the same time maintaining an appropriate
deployment capability.
133
Navy Military Manpower Reductions
Funding Summary
Change
2007 2008 2008 from 2008 2008 to 2013
Enacted* Old Plan* Proposed* Old Plan* Savings*
Budget Authority ………………... --- --- --- -473 -7,445
*Budget Authority for this savings proposal spans a wide variety of accounts and programs.
The Navy is committed to properly sizing its active and reserve military end strength. It is in the process
of reducing the total force size by 11,797 end strength in 2007, and it will make a similar reduction of
12,700 in 2008. After 2007, the Navy will be very close to achieving a properly sized force.
Strength Profile 2006 2007 2008 2009 2010 2011 2012 2013
Active 350,197 337,600 328,400 325,700 324,200 323,800 323,700 322,200
Reserve 70,500 71,300 67,800 67,000 67,800 68,200 68,000 68,000
Total Navy 420,697 408,900 396,200 392,700 392,000 392,000 391,700 390,200
The Navy will achieve such reductions through many initiatives, including: decommissioning older,
manpower-intensive platforms; improving its training and employment processes; increasing its reliance
on technology to reduce shipboard manning and shorten training pipelines; and converting military
positions to lower-cost civilians or contractors.
Proposal Impact
The end strength reductions will not impact the Navy's ability to fight the Global War on Terror. The
reductions are intended to help the Navy achieve the right sized force so it can operate more effectively
and efficiently.
134
New Defense Health User Fees
Funding Summary
Change
2007 2008 2008 From 2008 2008 to 2013
Budget Authority ……….. --- --- -1,862 -1,862 -19,280
TRICARE is the Department of Defense's (DOD) health care program, which delivers care through
military treatment facilities, contracted civilian facilities, and private sector-care covered by an insurance
program. The proposal gives DOD the authority to increase enrollment fees and deductibles for military
retirees under age 65 and their families. These changes do not apply to active duty members and their
families. The new fees differ for officer and enlisted retirees and for those in different Tricare plans. The
proposal also includes increased retail pharmacy co-payments for military retirees and active duty family
members.
DOD will also take into account the cost saving recommendations of the Task Force on the Future of
Military Health Care before final implementation of its regulations to implement these new Tricare fees.
Proposal Impact
The 2008 Budget re-proposes the fees contained in the 2007 Budget for enrollment fees and prescription
drugs that were not enacted. The 2008 enrollment fee proposal, for retirees under age 65, eliminates the
two-year phase-in period contained in the 2007 Budget and moves directly to the second-year ultimate
rates that would be in effect if the proposal had been enacted in 2007. The new increased user fees and
drug co-pays more closely align with other public and private fees and co-pays. The total 2008 savings
for these proposals is estimated to be $1.9 billion.
135
SUMMARY OF PROPOSED TRICARE CHANGES
Annual Enrollment Fees (2008 Proposal)
Tricare Prime (managed care) Tricare Extra and Standard (fee-for-service)

Retirees under age 65
Enrollment fees Enrollment fees Deductible
Retired Officers (self/family)
Current Annual Fees $230/$460 $0 $150/$300
New Annual Fees* $700/$1,400 $280/$560 $280/$560
Senior Enlisted Retired (self/family) (E-7 to E-9)
New Annual Fees* $475/$950 $200/$400 $185/$370
Junior Enlisted Retired (self/family) (E-1 to E-6)
New Annual Fees* $325/$650 $140/$280 $185/$370
*Indexed each year thereafter for inflation
Pharmacy Co-pays
Applicable to all
except active duty Generic Brand Non-Formulary
members
Current Co-pays
Retail $3 $9 $22
Military Hospitals $0 $0 $0
Mail Order $3 $9 $22
New Co-pays in 2008 and thereafter
Retail $5 $15 $22
Military Hospitals $0 $0 $0
Mail Order $0 $9 $22
136
MANDATORY PROGRAM REFORMS
137
138
Mandatory Program Reforms
(Outlays in billions of dollars)
2008 2009 2010 2011 2012 2008-12 2008-17

Mandatory Proposals, Including Savings and Augmentations** :
Agriculture:
Reauthorize Food Stamp Program:
Restrict Food Stamp Categorical Eligibility....................................... -0.1 -0.1 -0.1 -0.1 -0.1 -0.6 -1.4
Exclude Retirement and Education Accounts from Asset Test............. * 0.1 0.1 0.1 0.1 0.6 1.3
Exclude Special Military Pay From Income Test................................. * * * * * * *
Net impact.......................................................................................... -* -* * * * -* -*
Food Safety and Inspection Service User Fees..................................... -0.1 -0.1 -0.1 -0.1 -0.1 -0.5 -1.1
Grain Inspection, Packers, and Stockyards Administration User Fees… -* -* -* -* -* -0.1 -0.2
Crop Insurance User Fee....................................................................... --- -* -* -* -* -0.1 -0.1
Animal Welfare Fee.............................................................................. -* -* -* -* -* -0.1 -0.1
Reauthorize Farm Bill........................................................................... 0.5 0.5 0.5 0.5 0.5 2.5 5.0
Defense:
Increase National Defense Strategic Materials Stockpile Sales……… -0.1 -0.1 -0.2 -0.1 -* -0.6 -0.6
Education:
Reform the Federal Student Aid Programs:
Reduce Lender Subsidy Payments by 50 basis points......................... -0.7 -2.2 -2.6 -2.8 -3.0 -11.2 -29.5
Increase Lender Risk Sharing and Improve Program Efficiency…… -0.8 -0.2 -0.2 -0.2 -0.2 -1.5 -2.7
Increase Lender Consolidation Fee..................................................... -0.1 -0.2 -0.2 -0.2 -0.2 -0.8 -2.3
Recall Federal Perkins Loan Revolving Funds ................................. -0.4 -0.5 -0.7 -0.8 -0.8 -3.2 -6.4
Adjust Guaranty Agency Default Retention Rates.............................. -1.4 -0.2 -0.2 -0.2 -0.2 -2.2 -3.5
Adopt Unit Cost Basis for Guaranty Agency Fees.............................. -1.0 -* -0.1 -0.1 -0.1 -1.2 -1.6
Other Student Loan Reforms .............................................................. * * -* -* -0.1 -0.1 -0.9
Increase the Pell Grant Maximum Award to $5,400 over
Five Years........................................................................................ 0.5 2.4 3.3 4.1 5.0 15.3 43.1
Increase Academic Competitveness Grant awards by 50 percent...... 0.1 0.3 0.4 0.3 * 1.1 1.1
Increase Aggregate Loan Limits and Annual Limits for
Undergraduate Third-Year and Beyond Students .......................... 0.1 0.2 0.2 0.2 0.3 0.9 2.5
Net impact......................................................................................... -3.7 -0.4 -0.1 0.4 0.8 -2.9 -0.1
Energy:
Repeal Oil and Gas Research and Development Program…………… -* -* -* -* -* -0.2 -0.5
Health and Human Services (HHS):
Adopt Medicare Reforms...................................................................... -4.7 -9.1 -13.1 -17.5 -21.7 -66.0 -252.4
Medicaid/State Children's Health Insurance Program (SCHIP):
Adopt Medicaid Reforms................................................................... -1.9 -2.2 -2.4 -2.7 -2.9 -12.0 -29.1
Augment Medicaid.............................................................................. 0.9 0.2 --- --- --- 1.1 1.1
Reauthorize SCHIP............................................................................ 0.7 1.1 0.6 0.9 0.8 4.2 9.7
Net impact......................................................................................... -0.3 -0.9 -1.8 -1.8 -2.0 -6.8 -18.3
Reduce Social Services Block Grant..................................................... --- -0.4 -0.5 -0.5 -0.5 -1.9 -4.4
Food and Drug Administration Re-Inspection and Export
Certification Fees.............................................................................. -* -* -* -* -* -0.1 -0.3
Temporary Assistance for Needy Families (TANF).............................. --- 0.2 0.3 0.3 0.3 1.2 2.8
Title V Abstinence Education Program................................................. * * * * * 0.2 0.5
Foster Care District of Columbia Federal Medical
Assistance Percentage (FMAP) Rate................................................ * * * * * * 0.1
Foster Care Child Welfare Program Option......................................... * * -* * -* * -*
Child Support Enforcement................................................................... * * * * -* * *
Housing and Urban Development (HUD):
Ginnie Mae Premium Increase.............................................................. -* -* -* -* -* -0.2 -0.5
Government-Sponsored Enterprises Oversight Fee.............................. -* -* -* -* -* -* -0.1
139
2008 2009 2010 2011 2012 2008-12 2008-17
Mandatory Proposals, Including Savings and Augmentations** :
Interior:
Arctic National Wildlife Refuge Lease Bonuses……………………… --- -3.5 -* -0.5 -* -4.0 -4.0
Return to Net Receipts Sharing............................................................. -* -* -* -* -* -0.2 -0.4
Amend Bureau of Land Management Federal Land Sale Authority…. -* -* -* -0.1 -* -0.2 -0.3
Repeal Energy Policy Act Fee Prohibition and Mandatory
Permit Funds .................................................................................... -* -* -* -* -* -0.2 -0.3
Recover Pick-Sloan Project Cost.......................................................... -* -* -* -* -* -0.1 -0.2
Eliminate BLM Range Improvement Fund........................................... -* -* -* -* -* -* -0.1
Require Up-front Payment of Coal Bonus Bids.................................... -* -0.1 -0.1 -0.1 -0.1 -0.4 *
Match National Park Centennial Challenge Fund Gift Receipts……… * 0.1 0.1 0.1 0.1 0.4 0.9
Implement Friant Settlement................................................................. * * * * * 0.1 0.2
Labor:
Reform Pension Benefit Guaranty Corporation Premiums................... --- -1.4 -1.4 -1.4 -1.3 -5.5 -10.6
Unemployment Insurance Integrity Proposal........................................ --- -0.5 -0.5 -0.4 -0.4 -1.7 -3.6
Reform Federal Employees' Compensation Act.................................... -* -* -* -* -* -0.1 -0.5
Reauthorize Trade Adjustment Assistance............................................ --- * * * * 0.1 0.1
Treasury:
Payment Transaction Integrity............................................................... -0.3 -0.3 -0.3 -0.3 -0.3 -1.4 -3.1
Debt Collection: Eliminate the 10-year Statute of Limitations
on Non-tax Debt owed to Federal Agencies..................................... -* -* -* -* -* -* -0.1
Debt Collection: Assessment of the Transaction Costs for the
Referral of Tax Debts from the IRS to the Financial Mangement
Service for Debt Collection Levy…………………………………… --- --- --- --- --- --- ---
Extend the Rum Carryover for Puerto Rico.......................................... 0.1 * --- --- --- 0.1 0.1
Veterans Affairs:
Pharmacy Co-Payments......................................................................... -0.3 -0.3 -0.3 -0.3 -0.3 -1.6 -3.4
Income-Based Medical Care Enrollment Fee........................................ --- -0.1 -0.1 -0.1 -0.1 -0.5 -1.1
Third-Party Insurance Co-Payment Offset............................................ -* -* -* -* -* -0.2 -0.4
Army Corps of Engineers:
Additional Recreation User Fees, Lease Receipts,
and Contributions (Net effect)........................................................... -* -* -* -* -* -* -*
Commodity Futures Trading Commission:
User Fees............................................................................................... -0.1 -0.1 -0.1 -0.1 -0.1 -0.5 -1.0
Environmental Protection Agency:
Pesticide and Pre-Manufacturing Notification Fees.............................. -0.1 -0.1 -0.1 -0.1 -0.1 -0.3 -0.7
Federal Communications Commission (FCC):
Spectrum License Fee Authority........................................................... -* -0.2 -0.3 -0.3 -0.4 -1.2 -3.6
Auction Prospective Ancillary Terrestrial Component Spectrum......... -0.2 -0.2 -0.2 -0.2 -0.2 -0.8 -1.5
Extend Spectrum Auction Authority..................................................... --- --- --- --- -0.2 -0.2 -1.2
Auction Domestic Satellite Spectrum................................................... -0.3 -0.1 -0.1 -0.1 -0.1 -0.6 -0.7
Eliminate Telecommunications Development Fund............................. -* -* -* -* -* -* -0.1
Office of Personnel Management (OPM):
Federal Employees Health Benefits Program Proposals....................... -* -0.1 -0.2 -0.3 -0.4 -1.1 -3.6
Improve Equity and Administration of Federal Retirement System...... * * * * * 0.1 0.2
Replace Non-Foreign Cost of Living Adjustment with Locality Pay… -* -* -* * * * 0.1
Social Security Administration:
Temporarily Extend Length of Time-Limited
Supplemental Security Income Eligibility for Refugees……………… 0.1 0.1 0.1 --- --- 0.2 0.2
Mandatory Proposals Resulting in Savings………………………… -12,722.7 -22,588.1 -24,381.7 -29,857.4 -34,232.4 -123,782.4 -378,108.0
Mandatory Program Augmentations……………………………… 3,022.9 5,192.2 5,608.7 6,751.8 7,292.1 27,867.7 68,774.2
Total, Mandatory Proposals, Including Savings and

Augmentations................................................................................... -9,699.8 -17,395.9 -18,773.0 -23,105.6 -26,940.4 -95,914.6 -309,333.8
* 50 million or less
** Descriptions of proposals resulting in savings follow in this document. Augmentations , shown as italicized non-adds on this table, are described elsewhere in
the Budget documents.
140
Department of Agriculture: Mandatory Proposal
Food Stamp Program Reauthorization
Funding Summary
2008 2009 2010 2011 2012 2008-12 2008-17

Baseline outlays...................................................... 34,900 35,859 36,650 37,498 38,294 183,201 388,032
Proposed change from current law:
Restrict Food Stamp Categorical Eligibility..... -63 -132 -136 -139 -141 -611 -1,360
Exclude retirement and education accounts
from asset test................................................. 44 89 138 141 144 556 1,323
Exclude special military pay from income test. 1 1 1 1 1 5 10
Net impact........................................................... -18 -42 3 3 4 -50 -27
The 2008 Budget proposes to limit Food Stamp categorical eligibility to households
receiving Supplemental Security Income (SSI) or Temporary Assistance for Needy
Families (TANF) cash benefits. Households receiving TANF-funded services, but not
cash, would no longer be automatically eligible for food stamps, but could apply under
regular program rules. This proposal conforms the program’s rules to their historical
intent, ensuring that Federal assistance is targeted to individuals who are most in need.
Only households with income or resources above the program’s eligibility requirements
would be affected by this proposal.
Other Proposals Included in the Budget: The description above focuses on the 2008
Budget’s Food Stamp program savings proposal and does not include Food Stamp
program enhancements in the Budget. The Budget proposes to exclude retirement and
education savings accounts from the Food Stamp program asset test, and to exclude
combat-related military pay from the Food Stamp program income test.
Background
The Food Stamp program provides eligible, low-income households with a voucher in the
form of an electronic debit card redeemable for food at retail stores. Eligibility is based
on income, expenses, assets and non-financial factors such as citizenship or legal
immigration status and fulfillment of applicable work requirements.
Historically, households which were determined eligible for comparable means-tested

benefits were deemed “categorically,” or automatically, eligible for food stamps. When
the Temporary Assistance for Needy Families (TANF) program was established,
categorical food stamp eligibility was extended to households receiving TANF cash
assistance as well as those only receiving TANF-funded services. However, in practice,
TANF-funded services are extremely diverse, and do not necessarily have eligibility
criteria that are comparable to the Food Stamp program. In some cases, States have
expanded categorical eligibility for food stamps to those who have received a pamphlet
141
published with TANF funds. As a result, in some States, households with income and
resources above the regular eligibility criteria are able to receive food stamps.
142
Food Safety and Inspection Service User Fees
Funding Summary
2008 2009 2010 2011 2012 2008-12 2008-17

Proposed change from
current law................................ -96 -98 -100 -102 -104 -500 -1,053
The 2008 Budget proposes two new user fees in the Food Safety and Inspection Services
(FSIS), a licensing fee and a performance fee. These two fees are different than those
proposed in recent budgets and do not try to completely offset a portion of the FSIS
operational expenses. These proposals shift funding for food safety inspection from the
general public to the slaughter and processing plants that directly benefit from federal
inspection. The recommended fees, saving $96 million in the first year, include:
o $92 million for a licensing fee scaled to the size of the operation.
o $4 million for a performance fee. Plants that have resampling and retesting due to
positive samples, recalls, or are linked to outbreaks would pay a fee to FSIS for
each incident.
Background
The primary objectives of the FSIS are to ensure that meat, poultry, and processed egg
products are wholesome, unadulterated, and properly labeled and packaged, as required
by the Federal Meat Inspection Act, the Poultry Products Inspection Act, and the Egg
Products Inspection Act.
143
Grain Inspection, Packers and Stockyards Administration User Fees
Funding Summary
2008 2009 2010 2011 2012 2008-12 2008-17

current law................................ -22 -22 -23 -23 -24 -115 -242
The Budget proposes to charge user fees to recover the cost of administering two
programs under the Grain Inspection, Packers and Stockyards Administration (GIPSA).
These proposals would enable GIPSA to charge fees for the development, review, and
maintenance of official U.S. grain standards and also for licensing fees to livestock
market agencies, dealers, stockyards, packers, and swine contractors. Current law
provides the agency with registration requirements for market agencies and dealers, but
there is no authority for licensing fees. Both of these proposals shift funding for
programs that benefit identifiable groups to user fees.
Background
GIPSA’s core function is to facilitate the marketing of livestock, poultry, meat, cereals,
oilseeds and other related agricultural products and to promote fair and competitive
trading practices for the overall benefit of consumers and agricultural producers. GIPSA
develops, reviews, and maintains official U.S. grain standards used by the entire grain
industry. In addition, GIPSA administers the Packers and Stockyards Act, which
prohibits deceptive and fraudulent trading practices by livestock market agencies, dealers,
stockyards, packers, and swine contractors.
144
Crop Insurance User Fee
Funding Summary
2008 2009 2010 2011 2012 2008-12 2008-17

current law...................... --- -15 -15 -15 -15 -60 -135
The 2008 Budget includes a proposal to implement a participation fee in the Federal crop
insurance program. The proposed participation fee would initially be used to fund
modernization of the existing information technology (IT) system and, subsequently,
would be shifted to maintenance. The participation fee would be charged to insurance
companies participating in the Federal crop insurance program. Based on a rate of about
one-half cent per dollar of premium sold, the fee is expected to be sufficient to generate
about $15 million annually beginning in 2009. This proposal shifts a portion of the
funding for the Risk Management Agency’s IT costs from the general public to the crop
insurance companies because it is these companies that will directly benefit from RMA’s
modern, up-to-date IT systems.
Background
Subsidized Federal crop insurance administered by USDA's Risk Management Agency

(RMA) assists farmers in managing yield and revenue shortfalls due to bad weather or
other natural disasters. The USDA crop insurance program is a cooperative effort
between the Federal Government and the private insurance industry. Private insurance
companies sell and service crop insurance policies. These companies rely on reinsurance
provided by the Federal Government and also by the commercial reinsurance market to
manage their individual risk portfolio. The Federal Government reimburses private
companies for the administrative expenses associated with providing crop insurance and
reinsures the private companies for excess insurance losses on all policies. The Federal
Government also subsidizes premiums for farmers.
The existing IT system is nearing the end of its useful life and recent years have seen
increases in “down-time” resulting from system failures. Over the years, numerous
changes have occurred in the Federal crop insurance program, including, the
development of revenue and livestock insurance which have greatly expanded the
program and taxed the IT system due to new requirements, such as daily pricing, which
were not envisioned when the existing IT system was designed. These new requirements
contribute to increased maintenance costs and limit RMA’s ability to comply with
Congressional mandates pertaining to data reconciliation with the Farm Service Agency.
The participation fee will alleviate these problems.
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Animal Welfare User Fee
Funding Summary
2008 2009 2010 2011 2012 2008-12 2008-17

current law...................... -9 -13 -13 -14 -14 -63 -142
The Budget proposes user fees to cover a portion of the cost of monitoring research
facilities, animal dealers and other covered entities. Funding this program through a fee
on those who are in the program would reduce the burden to the taxpayers. This proposal
shifts funding for a program that benefits a specific and identifiable group from the
general public to the benefiting group.
Background
The USDA Animal Welfare Program, operated by the Animal and Plant Health
Inspection Service, is responsible for the humane treatment of animals covered by the
Animal Welfare Act. This program has traditionally been funded entirely through
appropriations. This program monitors the humane treatment of animals through
inspections of research facilities, certain animal dealers, circuses, and carriers and
interstate handlers of covered animals, including the inspection of premises to ensure the
proper treatment of animals.
146
Department of Defense: Mandatory Proposal
Increase National Defense Strategic Materials Stockpile Sales
Funding Summary
2008 2009 2010 2011 2012 2008-12 2008-17

Baseline outlays............................. -162 -128 -104 -97 -92 -583 -718
current law.................................... -69 -145 -198 -145 -25 -582 -583
Administration Proposal
The Administration proposal would permit the sale of the remaining Government-owned
industrial commodities in the National Defense Stockpile that are not needed for national
defense requirements. This result would be accomplished by raising the authorized dollar
threshold for the sale of specific commodities. Absent this change, sales of specific
commodities would have to halt once the authorized dollar threshold for sales of those
commodities had been reached.
Receipts from these additional sales would be deposited in the general fund of the
Treasury. Estimates of sales receipts are subject to fluctuation based on future
commodity price changes.
Background
Created after World War II, the National Defense Stockpile program is managed under
the authority of the Strategic and Critical Materials Stockpiling Act. The purpose of the
Stockpile is to decrease or preclude U.S. dependence on foreign sources for supplies of
strategic and critical materials in times of national emergency. Since 1993, Congress has
authorized the sale of over 99 percent of the inventory as excess to national defense
requirements. Revenues from the sale of commodities that are not needed to operate the
Stockpile are transferred to the Treasury for specific congressionally mandated programs
or to reduce the deficit.
147
Department of Education: Mandatory Proposal
Reforming Student Aid
Funding Summary
2008 2009 2010 2011 2012 2008-12 2008-17

Baseline outlays.......................................................................... 4,518 5,119 5,783 5,641 4,989 26,050 54,099
Reduce Lender Subsidy Payments by 50 basis points.......... -688 -2,165 -2,558 -2,792 -2,986 -11,189 -29,494
Increase Lender Risk Sharing and Improve Program
Efficiency ......................................................................... -776 -160 -175 -189 -202 -1,502 -2,715
Increase Lender Consolidation Fee....................................... -56 -159 -186 -210 -234 -845 -2,309
Recall Federal Perkins Loan Revolving Funds ................... -419 -498 -713 -814 -779 -3,223 -6,358
Adjust Guaranty Agency Default Retention Rates............... -1,370 -173 -188 -205 -217 -2,153 -3,454
Adopt Unit Cost Basis for Guaranty Agency Fees............... -1,018 -37 -53 -58 -56 -1,222 -1,572
Other Student Loan Reforms ............................................... 2 3 -12 -22 -64 -93 -913
Increase the Pell Grant Maximum Award to $5,400 over
Five Years.......................................................................... 532 2,375 3,256 4,133 5,039 15,335 43,058
Increase Academic Competitveness Grant awards by 50% 72 308 373 317 8 1,078 1,078
Increase Aggregate Loan Limits and Annual Limits for
Undergraduate Third-Year and Beyond Students ............ 68 151 187 205 259 870 2,550
Net impact.............................................................................. -3,653 -355 -68 364 768 -2,944 -128
The 2008 Budget proposes legislative reforms to increase aid to low-income students in a
cost-neutral manner over the next 10 years. The cost of providing increased aid to
financially needy students is $17.3 billion over 5 years and $46.7 billion over 10 years.
These costs are more than offset by reforms to reduce unnecessary subsidies in the
student loan programs, primarily to lenders and guaranty agencies, which will save $20.2
billion over 5 years and $46.8 billion over 10 years.
The Federal Government currently provides subsidies that are higher than needed to
ensure lender participation in the Federal Family Education Loan (FFEL) program, and
that loans are available to all eligible students. Under the current structure, lenders and
other intermediaries are exposed to minimal financial risk. To address this, the
Administration proposes to increase risk-sharing with lenders and reduce lender subsidies
to capture efficiencies in the programs. The Administration also proposes to base
guaranty agency fees on a reasonable unit cost and bring Federal payments to guaranty
agencies for the defaulted loans they collect in line with the amounts the Department of
Education pays private collection agencies for collecting defaulted loans held by the
Federal Government. Savings from these proposals total $16.9 billion over 5 years.
With the savings achieved by these reforms, the President proposes to spend $15.3 billion
over 5 years to increase the $4,050 Pell Grant maximum award to $4,600 in 2008 and
$5,400 by 2012. In addition, the Budget will direct $1.1 billion to increase Academic
Competitiveness Grant awards by 50 percent to encourage Pell-eligible students to
complete a rigorous high school curriculum.
148
The Administration also proposes to eliminate the Perkins loan program and recall the
Federal portion of the revolving funds for a savings of $3.2 billion over 5 years. Most
Perkins Loans are offered by institutions with a long history of program participation;
many other institutions that enroll larger numbers of financially needy students receive
little or no Perkins Loan funding to offer to these students. To offset the impact of this
proposal on student borrowers, the Budget proposes higher loan limits in the FFEL and
Direct Loan programs, for which students are eligible regardless of the institutions they
attend.
Background
In 2008, the Federal Government will provide over $90 billion in new grants, loans, and
work-study assistance to help students pay for postsecondary education, including $73
billion in student loans and nearly $13 billion in Pell Grants. Federal student aid can be
used to pay for postsecondary education expenses, including tuition, fees, room, and
board.
The cornerstone of the Federal student aid programs is the $13 billion Federal Pell Grant
program, which provides grant aid to more than five million needy undergraduate
students each year, and are broadly available to students regardless of the institution they
attend. The PART found that Pell Grants are well targeted to low-income families and
help increase the college enrollment rates of historically underrepresented students. The
Department of Education also provides grant aid through the Supplemental Education
Opportunity Grant (SEOG) program, which is not as well targeted and the Budget
proposes to terminate (see the SEOG write-up under Discretionary Program Terminations
in this volume), and provides aid through Work Study.
The Deficit Reduction Act (DRA) of 2006 created the Academic Competitiveness Grants
program, which provides need-based grant aid to first- and second-year undergraduates
who completed a rigorous high school curriculum, and the National Science and
Mathematics Access to Retain Talent (SMART) Grants, which provides need-based grant
aid to third- and fourth-year undergraduates majoring in certain technical fields or foreign
languages deemed vital to national security.
The Department of Education administers two student loan programs with equal terms for
students: a bank-based program where loan capital is provided by private lenders and
guaranteed by the Federal Government (begun in 1965), and a direct lending program
where the Federal Government provides the capital (begun in 1994). The Department
also manages the Federal Perkins Loan program, where participating institutions make
loans to students with Federal revolving funds. The PART found Perkins Loans to be
duplicative of the larger direct and guaranteed student loan programs and not well
targeted to the neediest students.
The PART for the FFEL and Direct Loan programs found that the student loan programs
are not market sensitive. In particular, the statutorily set subsidy payments to banks and
other student loan lenders, and payments made to guaranty agencies, do not account for
149
changes in the industry, and are thus higher than necessary to ensure that all eligible
students will receive loans. The PART also found that disproportionate amount of
program benefits were provided to borrowers out of school versus those currently
attending school.
The 2008 Budget’s student aid reforms build upon the reforms included in the DRA,
which increased grant and loan aid to students while introducing some needed
efficiencies into the student aid programs.
150
Department of Energy: Mandatory Proposal
Oil and Gas Research and Development
Funding Summary
2008 2009 2010 2011 2012 2008-12 2008-17

Baseline outlays.............................. 40 50 50 50 50 240 490
current law.................................... -20 -40 -50 -50 -50 -210 -460
The 2008 Budget proposes to repeal provisions in the 2005 Energy Policy Act for the
mandatory oil and gas research and development (R&D) program. These R&D activities
typically fund development of technologies that can be commercialized quickly, like
improved drill motors. As such, they are more appropriate for the private-sector oil and
gas industry to perform, and similar discretionary programs have not demonstrated
results, as documented in the PART review conducted by the Department of Energy and
the Office of Management and Budget. The industry has the financial incentives and
resources to develop new ways to extract oil and gas from the ground more cheaply and
safely. Further, the program has not demonstrated that it is in accord with the
Administration’s R&D Investment Criteria, which state that programs must demonstrate
that industry investment is sub-optimal and avoid duplicating research in areas that are
receiving funding from the private sector, especially for evolutionary advances and
incremental improvements. The program is run through a private sector consortium, so
the termination does not impact the Federal workforce.
Background
The Energy Policy Act of 2005 established a new mandatory oil and gas research and
development (R&D) program funded from Federal revenues from oil and gas leases, to
be called the Ultra-Deepwater and Unconventional Natural Gas and Other Petroleum
Research program. This mandatory program is set to begin in 2007. It is similar to the
existing discretionary oil and gas R&D programs, also proposed for termination in the
2008 Budget. These programs develop technologies that industry can use to reduce the
cost of exploration and production of oil and natural gas reserves. On April 25, 2006, the
President said, “these energy companies don’t need…the use of taxpayers’ money to
subsidize…research into deep water drilling.”
151
Department of Health and Human Services: Mandatory Proposal
Medicare
Funding Summary
2008 2009 2010 2011 2012 2008-12 2008-17

Baseline outlays……………………..……......... 390,764 418,359 447,243 492,825 503,315 2,252,506 5,535,657
Increase Competition and Efficiency……… -2,670 -5,510 -8,160 -11,320 -14,260 -41,920 -170,980
Rationalize Payment Policy……………… -1,221 -1,884 -2,389 -2,814 -3,172 -11,480 -35,523
Improve Program Integrity……………… -230 -740 -1,550 -2,270 -3,080 -7,870 -28,370
Increase Beneficiary Awareness
and Responsibility……………………… -900 -1,701 -2,137 -2,569 -3,070 -10,377 -37,755
Improve Fiscal Sustainability…………… --- --- --- --- --- --- ---
Premium Interaction (Reduced beneficiary
premiums due to savings proposals)…… 325 722 1,159 1,510 1,888 5,605 20,197
Total……………………………………….. -4,696 -9,113 -13,077 -17,463 -21,695 -66,044 -252,432
The Budget includes proposals to slow the growth in the Medicare program. Over five
years, these proposals are estimated to produce a total of $66 billion in savings for the
taxpayers and about $5.6 billion in premium savings for beneficiaries.
Increase Competition and Efficiency: Medicare beneficiaries today benefit from

innovations that improve their quality of life as they age. These changes in the delivery
of care and advances in technology also enhance the health care system by improving
productivity and efficiency.
Medicare payments to fee-for-service providers are updated annually by an inflation

factor through the market basket update. These updates reflect changes in input prices,
and providers benefit from keeping cost growth low. However, current Medicare
payment updates do not consider improvements in provider productivity.
The 2008 Budget proposes to modernize the framework for Medicare payment updates to
ensure prudent use of taxpayer dollars and encourage quality and efficiency in Medicare
providers. The Budget proposes to adjust provider updates for expected productivity
gains to recognize and reward providers who strive to achieve efficiencies that restrain
costs.
Fee schedules have served as the basis of payment for most items and services covered
by Medicare. The Administration seeks to modernize Medicare by increasing competition
in the payment to providers for items and services rendered. Enhanced competition
encourages and facilitates higher quality of care and lower costs for beneficiaries.
Increased competition also creates a more transparent marketplace in the purchase of
152
medical items and services, thereby helping to rationalize the financing of the Medicare
program.
The Administration has taken steps to increase competition in Medicare. In 2006, the
Administration implemented a competitive bidding program for drugs and biologicals
covered under Medicare Part B. In 2007, it will begin to implement a similar program for
the acquisition and payment of durable medical equipment (DME) also covered by the
Part B benefit. In addition, Medicare will continue a reform that began in 2006 to
introduce competition into the awarding of contracts for beneficiary claims processing,
tying contractor payments to accuracy and efficiency of services. While the Medicare
Modernization Act (MMA) requires completion of contracting reform by 2011, the
Centers for Medicare and Medicaid Services is on schedule to complete this reform by
2009. The Medicare baseline assumes mandatory savings estimated at about $1.5 billion
from 2008-2012 from contractor reform.
The 2008 Budget proposes to build on Medicare competitive reforms by establishing a

national competitive bidding program for clinical laboratory services. Fee schedules,
initially established in 1984, currently serve as the basis for payment of clinical
laboratory services. The Budget assumes that payments would decrease by five percent if
a competitive bidding program replaced the current fee schedule for payment of these
services. Of note, the Inspector General of the Department of Health and Human
Services has pointed to the potential for excessive payment and utilization of clinical
laboratory services in the Medicare program.
The Administration will also work to improve efficiency and quality and better target
resources in the Quality Improvement Organization program.
Rationalize Medicare Payment Policy: About one-third of Medicare patients require

skilled nursing or rehabilitation care after receiving acute inpatient or outpatient care.
These services, referred to as post-acute care (PAC), are paid under the Medicare
prospective payment systems (PPS) in four different settings: home health services,
skilled nursing facilities (SNF), inpatient rehabilitation facilities (IRF), and long-term
care hospitals (LTCH). These divergent payment structures have created a splintered
system in which Medicare’s payment for similar or identical PAC services vary based on
the site of service. They also do not ensure that a patient is sent to the most clinically
appropriate and efficient site of care. An upcoming demonstration will collect cost and
quality data across PAC settings, to aid the development of a site-neutral payment
system.
The 2008 Budget proposes interim adjustments to payments for IRFs for five conditions
involving hip and knee replacements, hip fracture and pulmonary disease. These
conditions are commonly treated at both IRFs and SNFs, but cost significantly more
when treated in IRFs. For example, based on estimated 2007 average SNF and IRF
payments, the average payment to an IRF for chronic obstructive pulmonary disease
equals almost 2.5 times the average payment made to SNFs. The proposal would reduce
differences in payment for treatment of the specified conditions to limit inappropriate
153
financial incentives and encourage the provision of care in the most clinically appropriate
setting for the beneficiary. IRFs provide intensive inpatient rehabilitation care that may
not be needed for patients with relatively uncomplicated conditions whose care needs
could reasonably be expected to be met in a SNF.
The Budget proposes several other policies to improve the value of Medicare spending on
beneficiaries. The Budget proposes to streamline and modernize Medicare payments for
certain durable medical equipment such as powered wheelchairs. These steps will better
align rental payments and purchase requirements to more accurately reflect their costs
and use, producing savings for taxpayers, the Medicare program, and its beneficiaries.
The Budget also proposes to phase out a duplicate payment to teaching hospitals that is
made on behalf of certain beneficiaries.
The Budget builds upon the Administration’s efforts to improve the quality of care for
Medicare beneficiaries through transparency of quality and price information. First, the
Budget proposes to build upon existing law by requiring hospitals to report occurrences
of “never events” and adjusts payments accordingly. “Never Events” are preventable and
serious adverse events (e.g. surgery performed on the wrong body part). Second, the
Budget proposes to create a budget-neutral hospital value-based purchasing program that
would reward high-quality care and discourage low-quality care.
Last, Medicare beneficiaries often have supplemental medical insurance provided

through employers. This coverage could come from current beneficiary or spouse
employment, or through retiree coverage. The Medicare Secondary Payer (MSP)
program coordinates payment of benefits between private payers and Medicare. The
MSP program determines whether Medicare or the supplemental private insurance should
have responsibility for payment of a beneficiary’s health care claims. Under current MSP
provisions, Medicare has secondary payer status for beneficiaries with end-stage renal
disease (ESRD) during the first 30 months of care from the onset of the disease
regardless of employer size. The 2008 Budget proposes to extend the current 30 month
MSP status to five years for ESRD beneficiaries covered by health plans of large
employers (100 or more employees). The proposal would not alter current policy for
employer health plans covering firms with fewer than 100 employees.
Improve Program Integrity: Medicare seeks to ensure appropriate payment for services
rendered. To that end, the Medicare Secondary Payer (MSP) system coordinates
payment of benefits with private insurers who offer supplemental coverage to
beneficiaries and determines appropriate responsibility for payment of health care claims.
The Medicare Health Care Fraud and Abuse Control (HCFAC) program works to
eliminate fraud and abuse within the Medicare program. Finally, the Medicare bad debt
payment system currently reimburses providers for unpaid beneficiary cost-sharing.
The 2008 Budget proposes to strengthen the integrity of health benefit payments made by
the Federal Government. First, it proposes to establish a data clearinghouse that would
work to enhance current MSP practices. Participating Federal health programs would
send data to the clearinghouse, which in turn would properly coordinate payments, ensure
154
correct payment amounts, and recover mistaken payments. Federal health programs
benefiting from this data clearinghouse could include Medicare, Medicaid, the State
Children’s Health Insurance Program, the Veterans Health program, the Department of
Defense’s TRICARE program, the Federal Employees Health Benefits Program, and the
Indian Health Service.
The Budget also requests $183 million for efforts to protect the new Medicare
prescription drug benefit and the Medicare Advantage program against fraud, waste, and
payment error. These funds are part of a Government-wide Budget proposal to fund
program integrity activities through a three-year discretionary cap adjustment.
In addition, the Budget proposes to eliminate Medicare bad debt payment to providers for
unpaid beneficiary cost-sharing. The policy would encourage providers to take
responsibility for collecting co-payments and deductibles as they do with non-Medicare
patients. The Budget also proposes to limit provider ability to challenge adverse
Medicare decisions in the courts. This proposal would limit mandamus jurisdiction as a
basis for obtaining judicial review, and clarify the Secretary’s authority to resolve appeals
of Medicare determinations.
Increase Beneficiary Awareness/Responsibility for Health Care Costs - Part B Premium

Subsidies: Medicare beneficiaries voluntarily enroll in Part B, and pay monthly
premiums for Part B services, which represent approximately 25 percent of total Part B
costs. The Part B benefit covers physicians’ services, hospital outpatient services,
medical equipment and supplies, ambulatory surgical center services, laboratory tests,
and certain other items and services.
As required by the MMA, beginning in 2007 single beneficiaries with incomes higher
than $80,000 ($160,000 for couples) receive reduced Part B premium subsidies. In other
words, they will pay higher monthly premiums to receive Part B services. Thus, while
beneficiaries with incomes lower than these thresholds will continue to receive the
current 75 percent premium subsidy, the Part B subsidy will be 65 percent for those just
above the income thresholds decreasing to 20 percent for single beneficiaries with
incomes of $200,000 or more ($400,000 for couples). The reduced subsidies are phased
in over three years, as specified by the Deficit Reduction Act, and the income thresholds
are indexed annually to inflation.
The 2008 Budget proposes to cease annually indexing income thresholds when
determining eligibility for reduced Medicare Part B premium subsidies. Rather than
increasing the income threshold every year by inflation when assessing reduced subsidy
eligibility, single beneficiaries with incomes of $80,000 or higher and couples with
incomes of $160,000 will receive reduced Part B subsidies. This slowly increases the
number of beneficiaries eligible for reduced subsidies in later years. This proposal
encourages awareness of and increases responsibility for health care costs for higher
income beneficiaries.
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Increase Beneficiary Awareness/Responsibility for Health Care Costs - Part D Premium
Subsidies: Medicare beneficiaries voluntarily enroll in Part D, and pay monthly
premiums for Part D benefits, which amount to about 25 percent of Part D costs. The
2008 Budget proposes to similarly income-relate Part D premium subsidies using the
current law thresholds applied to the Part B income-related premium subsidies. Like the
proposal for Part B premiums, the Budget proposes to not annually index income
thresholds when determining beneficiary eligibility for reduced Part D premium
subsidies. This proposal fosters increased beneficiary awareness and responsibility for
health care costs.
Improve Fiscal Sustainability: Medicare is funded by a dedicated payroll tax (the

Hospital Insurance or HI trust fund) and out of general revenues (the Supplementary
Medical Insurance or SMI trust fund). Growth in Medicare spending exceeds the rate of
inflation, and Medicare is expected to account for 14 percent of total Federal outlays by
2010. Total Medicare expenditures are expected to be 3.3 percent of GDP in 2007,
climbing to 8.0 percent of GDP in 2040, and reaching almost 11 percent by 2080. The
Medicare Trustees estimate that the unfunded liability facing the Medicare program – the
gap between its estimated revenue needs and its resources – totals $32 trillion over the
next 75 years.
The Administration is committed to slowing Medicare’s rate of growth while also

promoting the delivery of high-quality care to program beneficiaries. Specifically, the
MMA created a “Combined Medicare Trust Fund Analysis” that requires the Trustees to
analyze Medicare general revenue funding as a percentage of total Medicare outlays as if
the Trust Funds were combined. If the Trustees determine that general revenue funding
exceeds a fixed threshold of 45 percent at any time within the current or next six years,
they must issue a finding of “excess general revenue Medicare funding”. In their 2006
report, the Trustees found that general revenue funding would first reach the 45 percent
level in fiscal year 2012, within the seven-year window. If a finding is present in two
consecutive Trustees’ reports, then a “Medicare funding warning” is triggered. This
warning requires the President to propose legislation to restore Medicare spending to
sustainable levels, but it does not mandate Congressional action.
The 2008 Budget proposes to strengthen the MMA’s solvency provision. If Congress
fails to act after the Trustee warnings, the Administration proposes to require a four-
tenths of one percent automatic across-the-board cut in Medicare beginning in the year
the 45 percent threshold is exceeded. The reduction would grow by increments of four-
tenths of one percent in each consecutive year the threshold is exceeded. These
reductions would serve as a fail-safe measure, only to be implemented if legislation to
address the Trustee warnings is not enacted. Under current Budget assumptions, the
Administration does not expect the 45 percent threshold to be exceeded within the ten-
year Budget window (2008-2017). As a result, there are no savings assumed from this
proposal within the 5-year (2008-2012) or 10-year (2008-2017) budget window.
156
Background
The Medicare program, established in 1965, offers health care services to individuals
aged 65 and older and certain people with disabilities. Medicare has traditionally
consisted of two parts: Hospital Insurance (HI), also known as Part A, and
Supplementary Medical Insurance (SMI), also known as Part B. A third part of Medicare,
sometimes known as Part C, is the Medicare Advantage program, which expands
beneficiaries’ options for participation in private-sector health care plans. The MMA
established a fourth part of Medicare: a new prescription drug benefit, also known as Part
D, which began in 2006. In 2006, over 43 million people were enrolled in the Medicare
program. As of December 2006, more than 8 million Medicare beneficiaries have
chosen to participate in a Medicare Advantage plan.
157
Medicaid
Funding Summary
2008 2009 2010 2011 2012 2008-12 2008-17

Baseline outlays............................................... 209,310 224,232 240,695 258,846 278,855 1,211,937 2,974,425
Medicaid Administrative Service Reforms -1,225 -1,325 -1,455 -1,510 -1,570 -7,085 -16,045
Medicaid Reimbursement Reforms……… -200 -210 -230 -410 -440 -1,490 -4,290
Medicaid Pharmacy Reforms……………… -355 -430 -460 -495 -540 -2,280 -5,570
Program Integrity Reforms……………… -75 -125 -150 -175 -200 -725 -2,055
Long Term Care Reforms………………… -70 -80 -90 -90 -100 -430 -1,130
Medicaid augmentations…………………… 885 205 --- --- --- 1,090 1,090
SCHIP reauthorization……………………… 710 1,095 620 890 845 4,160 9,680
Net impact………………………………… -330 -870 -1,765 -1,790 -2,005 -6,760 -18,320
Medicaid Administrative Services Reforms
Aligning Medicaid administrative reimbursement rates at 50 percent: The 2008 Budget

proposes to reimburse all administrative activities in Medicaid at 50 percent. While 50
percent is the normal match rate for most administrative costs, there are several
exceptions where Federal reimbursement is higher. This proposal would establish
consistency in Federal match rates across all administrative activities.
Cost Allocation: The 2008 Budget proposes to reduce duplicate Medicaid payments that
were improperly included in Temporary Assistance to Needy Families (TANF) block
grants. The 1996 welfare reform law capped Federal funding for administrative costs
under TANF and eliminated the open-ended matching structure for administrative costs
in Aid to Families with Dependent Children (AFDC). Under the AFDC structure, States
generally allocated most of the common eligibility determination costs for AFDC,
Medicaid, and Food Stamps to AFDC/TANF. Medicaid’s share of these expenses was
inappropriately included in the TANF block grant, and as a result, States received a
payment windfall. This proposal would correct these duplicate payments by reducing
Medicaid administrative funding to account for Medicaid costs that were assumed in the
TANF block grant.
Medicaid Reimbursement Reforms
Appropriate payment for Medicaid Targeted Case Management (TCM) services: The
2008 Budget proposes to align the Federal matching rate for targeted case management
services with the standard administrative matching rate of 50 percent. Targeted case
management is largely an administrative activity; therefore, it is appropriate to reimburse
it at 50 percent, similar to other Medicaid administrative activities. Some States have
158
inappropriately classified TCM services in order to secure a higher matching rate. This
proposal does not affect the amount of reimbursement that States will receive for other
Medicaid services to which an individual may be referred by a case manager. This
proposal only affects States whose Federal matching rate for medical services is above 50
percent.
Measuring Medicaid Performance: To improve Medicaid accountability, the 2008

Budget proposes to measure and link Federal grant awards to a State’s performance in
several areas of its Medicaid program. States that lag behind in selected performance
measures would be given some time to bring their programs up to standard. If a State
does not make progress within specified timeframes, then Federal funding would be
affected. The proposal encourages States to improve quality, efficiency, and program
integrity in Medicaid.
Medicaid Pharmacy Reforms
Rationalizing Pharmacy Reimbursement: In recent years, the Inspector General of the

Department of Health and Human Services has found that State Medicaid programs
overpay pharmacies for prescription drugs. The Deficit Reduction Act (DRA) of 2005
reduced these overpayments by creating a market-price based Federal upper limit (FUL)
reimbursement methodology for multiple source drugs. The 2008 Budget proposes
building on the FUL calculation changes in the DRA to further reduce these
overpayments. The Budget proposes amending the FUL to 150 percent of the average
manufacturers price (AMP) for multiple source drugs, adjusted from the 250 percent of
AMP as established by the DRA.
Medicaid Prescription Drug Managed Formularies: Under current law, States must
cover any drug for which the manufacturer has agreed to pay a statutorily defined rebate.
As a result, States are not able to manage formularies efficiently, as is done in Medicare.
The 2008 Budget proposes allowing States to use managed formularies, which are a
common cost-control tool for private insurers. With managed formularies, States will
have greater control over drug coverage and greater leverage to negotiate discounts with
drug manufacturers.
Tamper Resistant Prescription Pads: The 2008 Budget will require all States to use
tamper-resistant pads for all hand-written prescriptions. This requirement will help
prevent fraudulent prescriptions.
Program Integrity Reforms
Medicaid Asset Verification: The 2008 Budget proposes to expand a Social Security
Administration (SSA) pilot that uses electronic financial records to verify an applicant’s
assets and eligibility for the Supplemental Security Income program. State Medicaid
agencies would be required to establish pilots in the same locations as SSA for Medicaid
applicants.
159
Medicaid Third Party Liability: The 2008 Budget proposes to strengthen the third-party
liability statute in three ways that will increase the amount of reimbursement from third
parties to States and to the Federal Government. The first Budget proposal would amend
the statute so that States could only “pay and chase” for these services if a third party has
not paid within 90 days. After 90 days, States would continue to seek reimbursement for
the claim. The second Budget proposal applies to third-party claims involving medical
child support. Current law requires States to “pay and chase” these claims if third-party
payment has not been received within 30 days. The Budget proposes to extend this period
to 90 days. The third Budget proposal would enhance tort settlement recoveries. This
proposal would amend statute to expressly permit States to use liens against liability
settlements to recover Medicaid costs.
Long Term Care Reform
Long Term Care Home Equity Definition: With some exceptions, the Deficit Reduction
Act of 2005 does not permit individuals who have more than $500,000 in home equity to
be eligible for Medicaid long term care services. States have the option to increase the
limit to $750,000. The 2008 Budget proposes to remove this option and maintain the
limit at $500,000, which is consistent with Medicaid’s mission to serve low-income
individuals.
Medicaid Augmentations
The Budget proposes to continue covering individuals who qualify for benefits through
Transitional Medical Assistance or who qualify for Medicare Part B premium assistance
as a Qualified Individual, so that enrollment for current beneficiaries will not be
interrupted.
State Children’s Health Insurance Program (SCHIP) Reauthorization
The Budget proposes reauthorizing SCHIP for five years and increasing allotments by
approximately $5 billion over this period. The proposal would re-focus SCHIP on low-
income, uninsured children at or below 200 percent of the Federal poverty level and seek
authority to target SCHIP funds more efficiently to States with the greatest need.
Background
Created in 1965, Medicaid is an open-ended means-tested entitlement program that is

jointly financed by the Federal Government and the States. Created in 1997, the State
Children’s Health Insurance Program (SCHIP) is a capped means-tested health program
that targets health coverage to children with incomes up to 200 percent of the Federal
Poverty Level. States have more flexibility in designing and administering SCHIP,
including benefit packages, cost sharing, and health delivery systems. In 2008, Medicaid
and SCHIP are projected to provide health coverage and services to nearly 54 million
low-income children, pregnant women, elderly, and disabled individuals during the year.
160
Medicaid’s complexity and open-ended financing structure encourage efforts by States to
draw down Federal matching funds, sometimes inappropriately. These financing
practices undermine the Federal-State partnership and jeopardize the financial stability of
the Medicaid program. The 2008 Budget proposes to build on past efforts to ensure the
fiscal integrity of Medicaid and SCHIP, while still projecting a robust average annual
Medicaid growth rate of more than 7 percent.
161
Social Services Block Grant
Funding Summary
2008 2009 2010 2011 2012 2008-12 2008-17

Baseline outlays.......................... 1,706 1,700 1,700 1,700 1,700 8,506 17,006
current law................................ --- -425 -495 -500 -500 -1,920 -4,420
The 2008 Budget proposes to reduce funding for the Social Services Block Grant by $500
million, to $1.2 billion, through appropriations for 2008, and by permanently reducing the
authorization for 2009 and beyond. Federal support for social services will continue
through other funding streams that have clearly defined goals and measurable
performance objectives.
Background
The Social Services Block Grant was established in 1981 to help States provide a broad
range of social services to help needy families achieve economic self-sufficiency, to
prevent or remedy neglect or abuse, and secure institutional care, when appropriate.
States receive a capped block grant with few Federal requirements. While this approach
maximizes State flexibility to determine what services to provide and whom to serve, it
does not ensure that funds are directed most effectively. The program lacks performance
measures or other means to demonstrate that activities supported by SSBG funds are
producing results. SSBG overlaps with other Federal social service programs that serve
low-income and needy families including Federal child care and child welfare programs,
Temporary Assistance for Needy Families, and programs that provide services to the
elderly.
162
Food and Drug Administration (FDA)
Re-Inspection and Export Certification Fees
Funding Summary
2008 2009 2010 2011 2012 2008-12 2008-17

current law................................ -27 -28 -28 -29 -30 -142 -302
The 2008 Budget includes two new mandatory user fees that: 1) enable the Food and
Drug Administration (FDA) to assess and collect fees for follow-up re-inspections
(estimated collections of $23 million) required when violations of Good Manufacturing
Practices are found during initial inspections; 2) expand FDA’s current authority to
collect user fees for issuing export certificates for human drugs, animal drugs and devices
to also include food and animal feed (estimated collections of $4 million).
The proposed user fees will improve the overall management of FDA’s re-inspections of
manufacturing facilities and issuance of export certificates. A fee for repeat inspections
will serve as an incentive to industry to conform to Good Manufacturing Practices and
will more equitably share the financial burden of re-inspections between industry and the
public. Expanding the export certification fee to cover food and animal feed will
strengthen consistency across all FDA regulated products and eliminate the current
preferential treatment of the food and feed industry, which currently do not pay for
FDA’s export certificates.
Background
The FDA regulates the safety and effectiveness of human and animal drugs; medical
devices, vaccines, and animal feeds; and the safety of food. It accomplishes these tasks
through pre-market review of new products and continued safety surveillance of products
already available to consumers.
The FDA charges a variety of user fees for activities such as pre-market review of
prescription drugs, animal drugs, and medical devices, the issuance of export certificates
for human and animal drugs, and medical devices. FDA issues export certificates to
attest to the safety of the products it regulates. Currently, FDA issues export certificates
for food and animal feed but does not have authority to charge and collect a fee for
issuing export certificates for these products.
In addition, FDA conducts post-market inspections of food, human drug, biologic, animal
drug and feed, and medical device manufacturers (both domestic and foreign) to assess
163
their compliance with Good Manufacturing Practice requirements. Under current law,
FDA does not have the authority to assess and collect fees for follow-up inspections
required to ensure that manufacturers have addressed violations that were found during
the initial inspection.
164
Department of Housing and Urban Development: Mandatory Proposal
Ginnie Mae Premium Increase
Funding Summary
2008 2009 2010 2011 2012 2008-12 2008-17

current law................................ -46 -46 -46 -46 -46 -230 -460
The Budget proposes to charge issuers of new Ginnie Mae mortgage-backed securities an
up-front fee to offset the program’s administrative expenses. This proposal places the
funding of Ginnie Mae operations on businesses that use and benefit from the
Government guarantee. The Budget also proposes to consolidate all Ginnie Mae
administrative spending into discretionary spending under the control of annual
appropriations. These proposals will improve oversight of this spending. The fee would
be six basis points (six cents for every $100 of mortgages) and charged once, at the onset
of each new security guaranteed by Ginnie Mae. Due to its small size, the increase is
unlikely to have an effect on the price or availability of mortgage financing. It would not
apply to existing securities.
Background
The Government National Mortgage Association (Ginnie Mae) guarantees timely

payment of principal and interest to investors in Ginnie Mae securities that are backed by
pools of Federal Housing Administration, Veterans Administration, and other
Government-guaranteed mortgages. Issuers of Ginnie Mae mortgage-backed securities
receive better pricing from investors because of the Federal guarantee provided by Ginnie
Mae. Ginnie Mae also provides advances to issuers if an issuer is unable to meet its
obligations to investors in Ginnie Mae mortgage-backed securities, such as due to late
mortgage payments from homeowners.
Most of Ginnie Mae's administrative expenses have been funded from mandatory
spending sources and have not been controlled through the annual appropriations process
or included in discretionary spending totals, unlike nearly all Federal funding for agency
salaries and expenses activities.
165
Department of Housing and Urban Development: Mandatory Proposal
Government-Sponsored Enterprise Oversight Fee
Funding Summary
2008 2009 2010 2011 2012 2008-12 2008-17

current law................................ -6 -6 -6 -6 -6 -30 -60
The President’s Budget includes a proposal for a strengthened regulator for the housing
Government-Sponsored Enterprises (GSEs)—Fannie Mae, Freddie Mac, and the Federal
Home Loan Bank System. As part of this reform, the cost of HUD’s responsibilities
under the Federal Housing Enterprise Safety and Soundness Act of 1992 would be
assessed on Fannie Mae and Freddie Mac. The cost of these regulatory responsibilities is
currently in the HUD salaries and expenses account as a non-reimbursable expense. This
mandatory fee would reimburse the Federal Government for the cost of these
responsibilities, consistent with the GSEs’ current law reimbursement of their Federal
safety and soundness regulators’ expenses.
Background
HUD’s responsibilities regarding GSE oversight include the establishment and

enforcement of affordable housing goals for Fannie Mae and Freddie Mac, ensuring their
compliance with fair housing laws, and providing consultation to the safety and
soundness regulator on GSE activities.
166
Department of the Interior: Mandatory Proposal
Arctic National Wildlife Refuge Lease Bonuses
Funding Summary
2008 2009 2010 2011 2012 2008-12 2008-17

Baseline outlays.......................... -- -- -- -- -- -- --
current law................................ -- -3,502 -2 -503 -3 -4,010 -4,025
The 2008 Budget proposes to authorize exploration and, if resources are discovered,
environmentally-responsible oil and gas development in one of the most promising areas
for future domestic oil and gas development, the coastal plain of the Arctic National
Wildlife Refuge (ANWR). Technological advances have dramatically reduced the
environmental impact of new oil and gas production. As proposed, the development
footprint from production in ANWR would cover only about one-tenth of one percent of
the coastal plain (also referred to as the “1002 Area”).
The State of Alaska would receive half of the revenues from bonus bids, rents, and
royalties collected from oil and gas production in ANWR. The 2008 Budget supports the
necessary environmental reviews and other required activities to begin ANWR leasing in
2009.
Background
In 1980, Congress enacted the Alaska National Interest Lands Conservation Act
(ANILCA), which redesignated the Arctic Range as ANWR, and expanded its boundaries
to include an additional 9.2 million acres. ANILCA designated much of the original
Refuge as a wilderness area. However, the coastal plain continued to be considered for
possible resource development.
Reducing the Nation’s dependence on foreign energy sources is a top Administration

priority. The Department of the Interior estimates that the 1002 Area holds between 5.7
billion and 16 billion barrels of recoverable reserves, or, at peak production, up to 1
million barrels per day of new domestic oil supply. This daily production is equivalent to
nearly 10 percent of our Nation's current daily imports.
167
Return to Net Receipts Sharing for Energy Minerals
Funding Summary
2008 2009 2010 2011 2012 2008-12 2008-17

current law................................ -41 -47 -46 -44 -49 -227 -447
In order to partially cover the costs of administering the Federal mineral leasing program,
the 2008 Budget proposes to amend the Mineral Leasing Act (MLA) to allow MMS to
deduct two percent from the mineral leasing revenue payments made to States under the
50/50 Federal-State revenue sharing arrangement established by the Act. (This amounts
to a reallocation of one percent of the total MLA revenues.)
The Administration’s proposal would return to a form of net receipts sharing similar to
that which was in place during the 1990s. However, the proposal addresses many of the
concerns of critics of the original net receipt sharing process by simplifying how costs are
allocated. Instead of attempting to allocate program costs on a State-by-State basis, the
Budget proposes a simple two percent deduction from gross receipts prior to making
individual State allocations.
State payments from Federal mineral revenues have increased dramatically in the last few
years, so now is an appropriate time for establishing a more equitable Federal/State
revenue-sharing arrangement.
Background
States receive 50 percent of Federal revenues generated from mineral production

occurring on Federal lands within that State’s boundaries. During most of the 1990s, the
Minerals Management Service (MMS) was authorized to deduct a certain amount from
State mineral revenue payments based on an assessment of the Federal Government’s
costs to manage and oversee mineral leasing and production. This approach was often
referred to as “net receipts sharing”, or NRS, as it was based on the concept that because
States are equal partners in sharing in the revenues from Federal mineral production, they
should also share in the costs of managing that production.
In the late 1990s, there was considerable debate about the complex process for assigning
costs to a given State and the fairness of the end results. It also became costly and time
consuming for MMS to administer the process. The Mineral Revenue Payments
Clarification Act of 2000 (enacted as Title V of the Secure Rural Schools and
168
Community Self-Determination Act, P.L. 106-393) repealed NRS, thereby changing the
50/50 Federal-State revenue sharing arrangement for mineral leasing receipts to provide
payments to States from gross revenues (i.e., prior to the Federal agencies deducting their
costs of managing the program). This provided States with a windfall because they
receive an equal share of the revenues from Federal production, without sharing in the
costs of permitting that production.
169
Amend Bureau of Land Management Federal Land Sale Authority
Funding Summary
2008 2009 2010 2011 2012 2008-12 2008-17

Baseline outlays............................. -- -- -- -- -- -- --
current law................................... -5 -28 -40 -70 -44 -186 -334
The 2008 Budget proposes to amend the Federal Land Transaction Facilitation Act
(FLTFA) by expanding the set of lands that the Department of the Interior would be
authorized to sell under the Act and authorizing additional uses of the funds generated
from FLTFA land sales. Under the proposal, DOI would be able to retain 30 percent (plus
administrative costs) of the proceeds from the sale of Bureau of Land Management
(BLM) lands that have been identified for disposal in all BLM land use plans, and the
agency would be able to use a portion of the proceeds for restoration projects on BLM
lands (in addition to the traditional use for land acquisition).
The proposal also would return the remaining 70 percent of net proceeds to the Treasury,
exclusive of BLM’s administrative costs. In addition, 100 percent of revenues in excess
of $60 million per year would be returned to the Treasury. This proposal will allow BLM
more flexibility over which lands it sells, minimize the amount of Federal spending not
subject to regular oversight through the appropriations process, and ensure that taxpayers
benefit directly from these land sales.
Background
FLTFA was enacted by the Congress in 2000 to better rationalize BLM land ownership
patterns and encourage the sale of lands that do little to contribute to the agency’s
mission. The Act authorizes the sale of BLM lands that have been classified as suitable
for disposal under resource management plans in place at the time the Act was passed.
Further, it allows the Department of the Interior to retain the proceeds from these sales to
cover BLM’s administrative costs for conducting the sales and to acquire other high-
value non-Federal parcels within specially-designated areas such as national parks,
refuges, and monuments.
This policy proposal reflects the Administration’s objections to Federal land sale bills
that seek to retain the proceeds for State and local government use. The Administration
believes that all taxpayers should benefit from the sale of Federal lands.
170
Repeal Energy Policy Act Fee Prohibition
and Mandatory Permit Funds
Funding Summary
2008 2009 2010 2011 2012 2008-12 2008-17

current law................................ -36 -37 -38 -36 -37 -184 -309
To ensure the Government receives fair compensation for the use of the Nation’s land
and minerals, the Budget proposes to repeal a provision in the 2005 Energy Policy Act
(EPACT) that prohibited the Bureau of Land Management (BLM) from implementing
new user fees for oil and gas permit processing and instead diverted existing rental
receipts to make up for the lost program funding. This proposal would repeal these
changes and substitute new user fees for the mandatory funding provided by the Act. The
proposal would also repeal a mandatory geothermal program fund drawn from Federal
geothermal royalties and return to the traditional 50/50 Federal-State revenue sharing
arrangement for geothermal revenues.
This proposal supports the Administration's efforts to charge for Government services
where the direct beneficiary can be identified. It will shift these costs from taxpayers and
allow DOI to better process permit applications as demand increases. The proposed fees
are expected to generate at least $20 million per year beginning in 2008, thereby reducing
the cost to taxpayers for operating these programs. Additional savings will be generated
by discontinuing the Act’s mandatory spending provisions related to geothermal receipts.
Background
BLM’s Energy and Minerals program is responsible for managing the development of
federally-owned minerals such as oil, gas, coal, sand and gravel. A 1995 report from the
Department of the Interior’s Office of Inspector General found that the program did not
adequately charge users of the public lands for specific services performed on behalf of
those users. In 2004, the Administration began a new effort to address this shortcoming
and institute new fees in the program.
In 2005, BLM was on the verge of implementing a rulemaking to put the new fees in
place when EPACT prohibited the agency from doing so. The Act also diverted from the
Treasury the Federal share of geothermal leasing revenues; 25 percent of total receipts
are now deposited in a BLM geothermal fund and the remaining 25 percent is provided to
counties where geothermal production is occurring (in addition to the 50 percent already
171
provided to the States). This is inconsistent with the longstanding 50/50 Federal-State
revenue sharing arrangements under the Mineral Leasing Act.
172
Recover Pick-Sloan Project Cost
Funding Summary
2008 2009 2010 2011 2012 2008-12 2008-17

Baseline outlays.............................. -190 -188 -176 -191 -185 -940 -1,875
current law.................................... -23 -23 -23 -23 -23 -115 -230
The Budget proposes to re-allocate repayment of capital costs of the Pick-Sloan Missouri
Basin Program. Power customers will be responsible for repayment of all construction
from which they benefit, whereas to date they have only been responsible for a portion of
it. This proposal will not impact services, and will ensure taxpayer investments are being
repaid as intended, through a modest increase in power rates to the program’s
beneficiaries. This increase could be phased in gradually over time and phased out when
costs are repaid.
Background
This multipurpose, multi-agency (Reclamation, Corps of Engineers, and Western Area

Power Administration) irrigation, flood control, and power generation program serves
parts of ten States in the Midwest. Power customers have repaid the construction costs of
most of the project, and annually reimburse Reclamation for its operating and
maintenance (O&M) expenses on that portion of the project. However, several hundred
million dollars of the program’s hydropower and water storage capital costs were
allocated to irrigators, but because the irrigation was never developed, the capital and
O&M costs on this portion of the project are not being repaid to the Federal Government.
Meanwhile, power customers have been using, but not paying for, the dams and
reservoirs originally allocated to irrigation, and the price of the power has, therefore, been
subsidized.
The Government successfully took similar cost re-allocation action for part of this project
in the mid-1980s, with minimal impacts to power rates. Both the Government
Accountability Office and the Department of the Interior’s Office of the Inspector
General have raised concerns that these costs are not being paid, and suggested that costs
be re-allocated to power customers.
173
Eliminate Bureau of Land Management Range Improvement Fund
Funding Summary
2008 2009 2010 2011 2012 2008-12 2008-17

Baseline outlays.......................... 10 10 10 10 10 50 100
current law................................ -7 -10 -10 -10 -10 -47 -97
The 2008 Budget proposes to eliminate the Bureau of Land Management’s (BLM’s)
range improvement fund and to redirect the Federal share of grazing receipts to the
General fund of the Treasury. The mandatory nature of the funding does not allow
program managers to consider an array of spending options and shift funding toward
higher priorities. Under the Administration’s proposal, BLM would retain the ability to
fund range improvements to benefit wildlife within its appropriated budget.
In addition, BLM published new regulations in 2006 that will allow grazing permittees to
share title of range improvements with the U.S. Government, which will allow BLM and
grazing permittees to share ownership in proportion to each party’s contribution to the
initial cost of constructing an improvement. This should increase the level of private
investment, and will decrease the need for the Federal Government to fund these projects.
Background
BLM’s Range Improvement program is funded from a combination of money from both
appropriations and grazing fees received for allowing ranchers to graze livestock on
public lands. These grazing fees compensate the public for the use of Federal lands for
this purpose. Range improvements include vegetation projects, fencing, and livestock
watering troughs.
174
Require Up-front Payment of Coal Bonus Bids
Funding Summary
2008 2009 2010 2011 2012 2008-12 2008-17

current law................................ -2 -121 -115 -54 -134 -426 4
The 2008 Budget proposes to amend the Mineral Leasing Act (MLA) to change the
current practice of allowing bonus bid payments for coal lease sales to be made over a
five-year period, instead requiring the full payment to be made in the sale year.
As a general matter, bidders for coal leases have sufficient resources to pay the full
amount of a winning bid up front, and therefore, it is reasonable to provide the same
treatment as bidders for other mineral resources (e.g., oil and natural gas) governed by
the MLA. This proposal would increase near-term revenues, but would reduce revenues
in later years when deferred payments under the current system would otherwise be
collected.
Background
The Mineral Leasing Act lays out the general requirements for leasing coal on Federal
lands and requires, among other things, that the Bureau of Land Management hold
regular coal lease sales and that at least 50 percent of coal sale bonus bids be collected
under a deferred payment system. DOI has enacted regulations to implement the deferred
payment system by allowing companies to pay bonus bids over a period of five years.
175
Department of Labor: Mandatory Proposal
Pension Benefit Guaranty Corporation
Single Employer Defined Benefit Pension Reform
Funding Summary
2008 2009 2010 2011 2012 2008-12 2008-17

Baseline outlays............................. 1,114 -951 -1,012 -858 -915 -2,622 -1,792
current law.................................... --- -1,390 -1,387 -1,400 -1,295 -5,472 -10,569
The 2008 Budget improves the solvency of the Pension Benefit Guaranty Corporation
(PBGC) by increasing the insurance premiums paid by under-funded pension plans.
PBGC premiums are currently far lower than a private financial institution would charge
for insuring the same risk. Premium reforms will improve PBGC’s financial condition
and safeguard the future retirement benefits of American workers.
Background
PBGC insures the retirement incomes of the more than 44 million Americans in defined
benefit pension plans. When under-funded pension plans terminate, PBGC assumes
responsibility for paying the insured benefits, up to a guaranteed maximum. More than
600,000 workers and retirees in more than 3,200 plans now receive their benefits from
PBGC. The recent termination and anticipated terminations by U.S. businesses of large
pension plans have put a strain on the pension insurance system and impose an increasing
burden on employers who sponsor healthy pension plans.
In his 2007 Budget the President proposed comprehensive pension reform to strengthen
protections for the pensions upon which American workers rely. Many of the President’s
reforms were incorporated into the Deficit Reduction Act (DRA) of 2005, enacted in
February 2006, and the Pension Protection Act of 2006 (PPA), enacted in August 2006.
The legislation made significant structural changes to the retirement system, but further
reforms are needed to ultimately restore PBGC to solvency by addressing the $19 billion
gap that still exists between PBGC's liabilities and its assets. Although PBGC will be able
to pay benefits for some years to come, it is projected to be eventually unable to meet its
long-term obligations under current law. If there is not enough money in the system to
cover worker benefits, taxpayers are at risk for having to cover the shortfall.
176
Unemployment Insurance Integrity
Funding Summary
2008 2009 2010 2011 2012 2008-12 2008-17

Baseline outlays.......................... 34,238 36,099 38,288 40,075 41,683 190,383 431,697
current law................................ --- -484 -494 -351 -355 -1,684 -3,619
The 2008 Budget proposes legislation to strengthen the financial integrity of the
Unemployment Insurance (UI) system by reducing improper benefit payments and tax
avoidance. The Administration’s proposal will boost States’ ability to recover UI
overpayments and deter tax evasion schemes by permitting them to use a portion of
recovered funds to expand enforcement efforts in these areas and pay for private
collection agencies. It will permit collection of delinquent UI overpayments and
employer taxes through garnishment of Federal tax refunds. The proposal will also
improve the accuracy of hiring data in the National Directory of New Hires, which would
reduce overpayments. These efforts to strengthen the financial integrity of the UI system
will keep State UI taxes down and improve the solvency of the States’ unemployment
trust funds.
Background
The UI program was created in 1935 to provide temporary income support to workers
who have lost their jobs through no fault of their own. The program is a Federal-State
partnership. The States determine an unemployed worker’s eligibility for UI benefits and
pay the benefits with State-levied taxes on employers. The Federal Government provides
grants to States for the program’s administrative expenses, helps pay for extended
unemployment benefits during recessions, and provides interest-bearing loans to States
that run short of funds to pay UI benefits.
A top management challenge for the UI program is improper benefit payments and tax
avoidance. Benefit overpayments were more than $3 billion in 2006. These problems
undermine the financial integrity of the UI program. The Administration and the
Congress have worked together to give the States new tools to reduce overpayments and
decrease employer tax evasion. For example, the SUTA Dumping Prevention Act of
2004 addressed the practice by unscrupulous employers of manipulating their UI tax
rates, thereby shifting costs to other employers. That Act also gave State unemployment
agencies access to the National Directory of New Hires so that they have more timely
information to prevent UI claimants who have gone back to work from continuing to
collect weekly benefits.
177
Reform Federal Employees’ Compensation Act (FECA)
Funding Summary
2008 2009 2010 2011 2012 2008-12 2008-17

Baseline outlays.......................... 93 114 118 123 129 577 1,305
current law................................ -9 -23 -29 -33 -43 -137 -493
The 2008 Budget proposes legislation to update the FECA program’s benefit structure,
adopt best practices of State workers’ compensation systems, and strengthen return-to-
work incentives. The proposed legislation would amend FECA to convert prospectively
retirement-age beneficiaries to a retirement annuity-level benefit, impose an up-front
waiting period for benefits, as is done in State workers’ compensation systems,
streamline claims processing, permit DOL to recapture compensation costs from
responsible third parties, authorize DOL to cross-match FECA records with Social
Security records to reduce improper payments, and make other changes to improve and
update FECA. The program has not been substantially updated since 1974.
The table above reflects net savings to the FECA account, and does not include projected
reductions in Federal agencies’ payments for FECA benefits paid to their employees. On
a Government-wide basis, these reforms are expected to produce 10-year savings of $608
million.
Background
Administered by the Department of Labor (DOL), FECA covers nearly three million
Federal employees, providing wage-replacement and medical benefits to those workers
who suffer occupational injury or disease. FECA benefits are paid by the DOL, which is
then reimbursed by Federal agencies for benefits paid to their employees. FECA pays up
to 75 percent of the individual’s basic pay, adjusted annually based on the Consumer
Price Index. Under current law, individuals can receive FECA benefits indefinitely, as
long as their injury or illness diminishes their wage-earning capacity. FECA benefits
typically exceed Federal retirement benefits because they are tax free, which constitutes
an incentive for individuals to remain on FECA past when they would otherwise have
retired.
178
Department of the Treasury: Mandatory Proposal
Payment Transaction Integrity
Funding Summary
2008 2009 2010 2011 2012 2008-12 2008-17

Baseline outlays.............................. --- --- --- --- --- --- ---
current law.................................... -273 -281 -290 -298 -306 -1,448 -3,105
The Budget proposes to allow the Federal Government to trace and recover Federal
payments sent electronically to the wrong account. The proposal would revise an
existing exception to the Right to Financial Privacy Act of 1978 so that improper
electronic payments and improperly directed Treasury checks can be traced and
recovered. As examples, this proposal would allow for the disclosure of financial
information so that misdirected and/or improper electronic tax refunds, Thrift Savings
Plan withdrawals, and Office of Personnel Management annuity payments could be
traced and recovered, saving taxpayers from the cost of making payments to those not
entitled to receive them. This proposal would also require Treasury to take the
responsible step of verifying the ownership of a bank account before electronically
debiting the account to collect funds owed to the Government. This proposal is part of
the Administration’s Eliminating Improper Payments Initiative that thus far has reduced
improper payments by approximately $9 billion for the 30 programs that first reported in
2004.
Background
The Right to Financial Privacy Act of 1978 (the Act) generally prohibits financial
institutions from disclosing financial records to Federal agencies unless subpoenaed.
While the Act contains various exceptions to the prohibition (e.g., disclosure of financial
records is permitted to the Social Security Administration and the Railroad Retirement
Board for the proper administration of these programs), there is no exception that permits
disclosure of records to the Federal Government for purposes of tracing or recovering
improper payments and collections. For example, if a Federal payment has been issued
to the account of an ineligible recipient, the financial institution to which the payment
was issued is generally barred from disclosing the necessary information to recover the
payment.
179
Debt Collection Initiative - Eliminate the 10-year Statute-of-Limitations
on the Collection of Non-Tax Debt Owed to Federal Agencies
Funding Summary
2008 2009 2010 2011 2012 2008-12 2008-17

current law.................................... -11 -6 -6 -6 -6 -35 -65
This proposal, would eliminate the 10-year statute of limitations period applicable to the
offset of Federal non-tax payments. These Federal payments are offset in order to collect
debts owed to Federal agencies. Under current law, Federal payments made to payees
(e.g., vendors, beneficiaries) who are delinquent on their debt to the Federal Government
cannot be offset if the debt has been outstanding for more than 10 years. The proposal
would ensure that delinquent obligations to the Federal Government can be collected by
offset without regard to any Federal or State statutory, regulatory, or administrative
limitation on the period within which debts may be collected. The ability to pursue
collection indefinitely would be tempered by Government-wide regulations that set forth
standards for when it is and is not appropriate to continue collection. Such standards are
intended to ensure that the Federal Government’s debt collection efforts are directed
toward those with the ability to pay.
This year’s proposal will include language clarifying that this change applies to current
debts that are or become ten years delinquent and not just to debts that may still be
delinquent 10 years from the time this proposal is enacted.
Background
The Financial Management Service debt collection offset process collects delinquent
non-tax debts owed to Federal agencies by private entities by reducing tax refunds and
other Federal payments (e.g., benefits payments, vendor payments, and Federal wages
through garnishment) made to those entities. In 2006, the debt collection program
collected $3.04 billion in delinquent non-tax debt, and, in 2003, the Debt Collection
program received an Effective rating on an evaluation using OMB’s PART. As a result of
the PART analysis, the 2005 Budget proposed initiatives to increase opportunities to
collect delinquent debt owed to Federal agencies. Several of the proposals were enacted
into law.
180
Debt Collection Initiative - - Assessment of the Transaction Costs for
the Referral of Tax Debts from the IRS to the Financial Management
Service for Debt Collection Levy
Funding Summary
2008 2009 2010 2011 2012 2008-12 2008-17

current law *.................................... --- --- --- --- --- --- ---
* The proposal is deficit neutral.
Under current law, when the Internal Revenue Service (IRS) levies (i.e., garnishes) a
Federal payment to collect a delinquent tax debt under the Federal Payment Levy
Program operated by the Financial Management Service (FMS), the IRS pays a fee for
the transaction costs out of its annual appropriation to FMS. The Budget proposes to
instead have the debtor pay the transaction costs in addition to their original debt. This
would allow the IRS to fully utilize the FMS levy program, maximize revenue, and shift
the cost of enforcement to delinquent tax debtors.
Background
Treasury’s Financial Management Service (FMS) charges the IRS a fee for processing
levies on Federal payments to taxpayers (including Department of Defense payments,
Postal payments, as well as Social Security benefit payments) who owe tax debt to the
Federal Government. Under current law, the IRS pays this fee to FMS from its
discretionary appropriations. Over time, this fee has increased, and this cost has
constrained the IRS’s use of this levy process. Total fees collected through this proposal
are estimated to total $22 million in 2008. However, this proposal is deficit neutral
because the increased collections from the public (i.e., the debtors) offsets the increased
direct spending by FMS for the administration of the debt collection program, and the
savings to IRS appropriations do not count under current budget scoring conventions.
181
Department of Veterans Affairs: Mandatory Proposal
Medical Care
Funding Summary
2008 2009 2010 2011 2012 2008-12 2008-17

Pharmacy Co-payments……………………… -311 -304 -306 -307 -342 -1,570 -3,352
Income-Based Enrollment Fee……………… --- -138 -134 -129 -125 -526 -1,094
Third-party Insurance Co-payment Offset… -44 -44 -44 -43 -43 -218 -421
Total………………………………………… -355 -486 -484 -479 -510 -2,314 -4,867
The Budget includes mandatory receipt legislation to implement new or higher fees for
non-disabled higher-income veterans (PL 7/8) veterans. The new user fees refocus VA’s
resources on its core medical care mission of serving veterans returning from combat,
those with military disabilities, lower incomes, and special needs.
The three user fee proposals are:
o Pharmacy Co-Payment: Co-payments would increase from $8 to $15 for all PL 7/8
veterans, more closely aligning VA with other private and public health care plans.
o Income-based Enrollment Fee: PL 7/8 veterans would pay an annual enrollment fee
of $250 with households incomes from $50,000 to $74,999, $500 with incomes from
$75,000 to $99,999, and $750 with incomes equal to or greater than $100,000. The
past four President’s Budgets proposed an annual $250 enrollment fee to all PL7/8
veterans. Congress rejected the requests but expressed a willingness to explore an
income-based option, so this new proposal represents a compromise position.
o Insurance Co-Payment: Technical correction legislative language will ensure that

current co-pays are charged to all eligible veterans equally and not reduced if a
veteran has health insurance. (Note: no fees are ever charged for treating service-
related disabilities).
Background
The VA medical care program will provide care to nearly 5 million veterans, over
263,000 of which will be returning from combat in Operation Enduring Freedom and
Operation Iraqi Freedom.
182
Army Corps of Engineers (Civil Works): Mandatory Proposal
Recreation Modernization Initiative
Funding Summary
2008 2009 2010 2011 2012 2008-12 2008-17

Receipts………………...……… -7 -10 -13 -16 -19 -65 -192
Outlays…………...……………… --- 7 10 13 16 46 164
Net impact……………………… -7 -3 -3 -3 -3 -19 -28
The Administration is re-proposing a recreation modernization (RecMod) initiative that

would allow the Corps to collect entrance fees (not currently authorized) and create
public/private partnerships to maintain and upgrade the Corps recreation facilities. The
proposal would encourage local community leaders, property owners and environmental
groups to work with the Corps on this effort collaboratively, consistent with the approach
taken in the President’s cooperative conservation program. Ultimately, this proposal will
lead to better services for users of Corps recreation facilities.
Background
The Corps of Engineers manages 4,300 recreation areas at 465 Corps projects (mainly
lakes and reservoirs) on 12 million acres in 43 States. Millions of people each year enjoy
this popular program. Congress appropriates about $267 million annually to operate the
program. The agency collects some $37 million in user fees and lease payments that
offset part (14 percent) of the program’s costs. Many of the Corps’ existing recreation
facilities are 30 to 40 years old and need to be modernized.
183
Commodity Futures Trading Commission: Mandatory Proposal
Futures and Options Transaction Fee
Funding Summary
2008 2009 2010 2011 2012 2008-12 2008-17

current law................................ -86 -89 -92 -95 -99 -461 -1,009
The Administration proposes to collect a fee on all commodity futures and options
contracts traded on approved futures and options exchanges. The Commodity Futures
Trading Commission (CFTC) is the only Federal financial regulator that does not derive
its funding from the specialized entities it regulates. Since the CFTC's efforts to ensure
the transparency and resiliency of futures and options exchanges provide clear benefits to
market participants, it is appropriate for those participants to at least partially offset or
contribute toward the cost of providing those programs. The fees would be set at a level
to equal the costs to the taxpayer of funding CFTC's Market Oversight and Clearing &
Intermediary Oversight functions, about $86 million during 2008. Such fees are already
imposed on futures exchanges to fund the programs of the futures industry's self-
regulatory organization. The proceeds from the fees will be returned to the general fund
of the Treasury, to be used to offset the deficit impact of continuing to fund the CFTC’s
operations through direct appropriations.
Background
The CFTC ensures the integrity and effectiveness of the U.S. futures and options markets
through administration of the Commodity Exchange Act of 1936 (CEA), as amended.
Fees would facilitate increases in CFTC's proposed oversight activities, which have been
held generally constant by annual appropriations limitations while trading volume has
quadrupled over the last decade. The notional value of contracts under the regulatory
oversight of the CFTC is greater than $4 trillion per day.
184
Environmental Protection Agency: Mandatory Proposal
Pesticide User Fee
Funding Summary
2008 2009 2010 2011 2012 2008-12 2008-17

current law...................... -66 -57 -60 -66 -57 -306 -606
The Administration proposes to collect an additional $66 million in pesticide user fees,
which would cover approximately half of the costs of the Environmental Protection
Agency’s (EPA’s) pesticide activities in 2008. Under current law, less than one-fifth of
the costs of will be covered by fees. The 2008 Budget proposes to:
o Increase collections of currently authorized pesticide user fees.

o Eliminate the PRIA prohibition and collect the tolerance fee in 2008.
o Institute a new fee to recoup the costs of EPA’s Registration Review program.
The total cost of EPA’s pesticides programs in 2008 is estimated to be $160 million. Of
the total, $25 million (16 percent) will come from two fees currently charged to pesticide
registrants for registration and re-registration activities. The Administration has long
maintained that the bulk of the costs associated with EPA’s pesticide activities should be
covered by fees because pesticide registrants receive direct benefits from EPA’s services,
similar to the policy used at the Food and Drug Administration, which charges fees to
cover the cost of approving new drugs.
Background
EPA pesticides activities include the registration and re-registration of pesticides, the
establishment and reassessment of pesticide tolerances, and various field activities that
support the implementation of registered pesticides requirements. Registration, re-
registration, and tolerance work are complex, technically intense activities that involve
scientific risk assessments and evaluation of human health and environmental impacts.
EPA currently collects fees from entities seeking to register their pesticides and from
entities with existing pesticides registered for use in the United States, as authorized by
the Pesticide Registration Improvement Act (PRIA) of 2004. However PRIA also
prohibits EPA from collecting other statutorily authorized fees such as those for setting
tolerances.
185
Environmental Protection Agency: Mandatory Proposal
Pre-Manufacture Notification Fee
Funding Summary
2008 2009 2010 2011 2012 2008-12 2008-17

current law...................... -4 -8 -8 -8 -8 -36 -76
The Administration proposes to eliminate the $2,500 cap on the Pre-Manufacture

Notification (PMN) fee in Section 26(b) of TSCA to allow EPA to recover a greater
portion of the cost of the program. This proposal is consistent with Government-wide
efforts to appropriately align program costs to those who benefit directly from such
services.
Background
As required by the Toxic Substances Control Act (TSCA), EPA reviews new chemicals
and their intended uses to ensure that they are not harmful to human health and the
environment. Manufacturers must submit a pre-manufacture notice to EPA for these
chemicals. Since 1999, EPA has collected limited fees to defray part of the cost of
reviewing and processing these notices. Currently, the fees collected cover approximately
one-quarter of the program costs. TSCA currently limits the fee amount that can be
charged to manufacturers at a level which does not adequately cover the cost of the PMN
program.
186
Federal Communications Commission: Mandatory Proposal
Spectrum License Fee Authority
Funding Summary
2008 2009 2010 2011 2012 2008-12 2008-17

current law................................ -50 -150 -300 -300 -400 -1,200 -3,628
To continue to promote efficient spectrum use, the Administration proposes to provide

the Federal Communications Commission (FCC) with new authority to use other
economic mechanisms, such as fees, as a spectrum management tool. The Commission
would be authorized to set user fees on previously un-auctioned spectrum licenses based
on public-interest and spectrum-management principles. Fees would be phased in over
time as part of an ongoing rulemaking process to determine the appropriate application
and level for fees.
Background
FCC began auctioning communications spectrum licenses in 1994. While most

commercial spectrum licenses are assigned using auctions, fee authority would enable
FCC to ensure that the economic value of spectrum is reflected in the limited category of
commercial licenses that are issued non-competitively. This additional economic tool
would help to reduce market distortions by bringing greater parity to spectrum license
acquisition costs, thus promoting greater efficiency in the use of spectrum resources. In
addition, since FCC’s licensing activities benefit a specific identifiable group of
commercial firms, it is appropriate that these firms be charged for the rights to use
spectrum resources.
187
Prospective Ancillary Terrestrial Component Spectrum Auctions
Funding Summary
2008 2009 2010 2011 2012 2008-12 2008-17

current law.................................... -150 -150 -150 -150 -150 -750 -1,500
The Administration proposes to bring greater competition to the assignment of the land-
based component of hybrid terrestrial-satellite communications networks, such as the
Ancillary Terrestrial Component to Mobile Satellite Services, subject to technical
feasibility as determined by FCC. Currently, the authority to use the land-based
component of these hybrid networks is given away to companies that have received
licenses for the satellite component. The use of auctions to assign the land-based
component for any future licenses for these hybrid networks will help to ensure that the
radio spectrum is assigned efficiently and effectively, will prevent windfalls, and will
help to ensure fair competition.
Background
The FCC uses auctions to assign most new commercial licenses for use of the radio
spectrum. These spectrum license auctions have helped to promote new wireless
services, as well as competition and economic growth in the telecommunications
industry. However, auctions are prohibited as an assignment mechanism for certain
services, including international satellite communications services such as Mobile
Satellite Services (MSS), due to the multilateral coordination needed to secure consistent
orbital locations and spectrum across national boundaries.
The growing convergence of satellite and terrestrial communications gives rise to the
need to clarify which services are appropriate for auction. For example, in 2003, FCC
decided to permit MSS providers to apply for terrestrial authorization (i.e., service
relying on traditional cell towers) on the spectrum used for satellite services, which is
called an Ancillary Terrestrial Component (ATC). The FCC does not assign ATC
authorizations by auction, and does not permit competition in the assignment process.
This proposal would bring greater competition to the assignment of future licenses for
these hybrid networks, if such competition is determined to be technically feasible by
FCC.
188
Extend Spectrum Auction Authority
Funding Summary
2008 2009 2010 2011 2012 2008-12 2008-17

Baseline outlays.............................. -50 -100 -100 -100 -- -350 -350
current law.................................... --- --- --- --- -200 -200 -1,200
The Administration proposes to extend FCC’s auction authority indefinitely. Auction of

spectrum licenses has proved to be an efficient, fair, and transparent approach to
allocating this resource and has helped ensure that taxpayers receive fair market value.
Collections are estimated to be $200 million per year beginning in 2012.
Background
FCC began auctioning communications spectrum licenses in 1994. These auctions have
been widely recognized as an effective and successful approach to allocating licenses.
The Deficit Reduction Act of 2005 extended FCC’s authority to auction spectrum
licenses through fiscal year 2011.
189
Auction Domestic Satellite Spectrum
Funding Summary
2008 2009 2010 2011 2012 2008-12 2008-17

current law.................................... -252 -105 -100 -100 -75 -632 -690
The Administration proposes to ensure that spectrum licenses for predominantly domestic
satellite services are assigned efficiently and effectively through competitive bidding.
Services such as Direct Broadcast Satellite (satellite TV) and Satellite Digital Audio
Radio Services (satellite radio) were assigned by auction prior to a 2005 court decision
that questioned this practice on technical grounds. By clarifying through legislation that
auctions of licenses for these domestic satellite services are authorized, prior policy of
FCC will be restored, and taxpayers will avoid the giveaway of valuable spectrum assets.
Legislation is assumed to be enacted by the spring of 2007 due to FCC’s proposed
assignment of licenses around that period.
Background
The FCC uses auctions to assign most new commercial licenses for the use of the radio
spectrum. These spectrum license auctions have helped to promote new wireless
services, as well as competition and economic growth. However, FCC’s authority to
auction spectrum for DBS was recently limited by a U.S. Court of Appeals decision. If
FCC’s authority to auction such licenses is not clarified legislatively, FCC will be unable
to utilize this efficient market-based assignment mechanism, and will instead be required
to rely on a regulatory assignment process.
190
Telecommunications Development Fund Termination
Funding Summary
2008 2009 2010 2011 2012 2008-12 2008-17

Baseline outlays.............................. 5 6 7 7 7 32 67
current law.................................... -5 -6 -7 -7 -7 -32 -67
The 2008 Budget proposes to terminate the Telecommunications Development Fund

(TDF). The fund has had no demonstrated effect in meeting its statutory goals and has
cost taxpayers more to operate than the value of assistance it has provided. Eliminating
the fund would have no estimated impact on the telecommunications sector.
Background
The Telecommunications Fund was created by the Congress in 1996 with the mandate to
finance small businesses in the telecommunications sector, help develop new
technologies, and promote universal telecommunications service. It started operations in
1998 as an equity investment venture capital fund focusing on early-stage companies.
Over the years, the fund has been capitalized by the Federal Government by retaining the
interest earned on deposits made by bidders in Federal Communications Commission
spectrum auctions. Between 1998 and 2007, TDF will have received approximately $80
million in interest on these deposits.
Through the end of calendar year 2005, TDF had invested approximately $22 million in
14 companies. TDF estimated the value of these investments as about $8 million, a loss
of about two-thirds of the principal. Meanwhile, TDF spent approximately $14 million
on salaries and other administrative expenses during the same period.
191
Office of Personnel Management: Mandatory Proposal
Federal Employees Health Benefits Program (FEHBP)
Funding Summary
2008 2009 2010 2011 2012 2008-12 2008-17

Baseline outlays.............................. 36,436 39,158 42,171 45,346 48,666 211,777 516,784
current law.................................... -38 -140 -240 -318 -382 -1,118 -3,595
The Administration proposes two reforms to the FEHBP with the goals of providing
more choices, improving quality of care, increasing equity in benefits, and reducing costs
for FEHBP enrollees as well as the Federal Government. The first proposal would allow
the Service Benefit Plan (Blue Cross Blue Shield or BCBS) as well as the Indemnity
Benefit (IB) Plan to offer more than two levels of benefits to provide greater incentives to
both FEHBP enrollees and health plans to reduce costs and improve quality. The second
proposal would provide a graduated Government contribution toward FEHBP coverage
for annuitants with short-term Federal service to provide greater equity for long-term
Government employees. Both proposals would yield savings from the Government’s
lower payments to health plans and enrollees.
Background
Allowing the Service Benefit Plan (Blue Cross Blue Shield) as well as the IB Plan to
offer more than two levels of benefits would provide more options to enrollees and
advance the Administration’s goal of promoting High Deductible Health Plans and
Health Savings Accounts. At present, the Service Benefit Plan (BCBS) and the IB Plan
are limited by statute to offer two levels of benefits. Last year, the Administration
transmitted an amendment to allow BCBS to provide more than two levels of benefits;
Congress took no action. This new proposal would permit not only BCBS but also the IB
Plan to offer more than two levels of benefits. Although there is no IB Plan available at
present, OPM’s proposal would provide a level playing field to the IB Plan when there is
one.
The second proposal would provide greater equity to long-term employees. At present,
the Government pays approximately 72 percent of the cost of health care premiums for
all employees regardless of their length of service and for annuitants who worked for the
Federal Government at least five years immediately prior to their retirement. The
proposal would pro-rate the Government contribution for those employees who retire
with less than 10 years of service by decreasing the amount of the Government share to:
90 percent of the Government share for employees with nine or more but less than ten
192
years of service; 80 percent for those with eight or more but less than nine years of
service and so on. The proposal would affect about 500 to 600 retirees each year.
193
194
BUDGET ENFORCEMENT AND OTHER REFORMS
195
196
BUDGET ENFORCEMENT AND OTHER REFORMS
The budget process should be transparent, accountable, and orderly. The current budget process
needs major reforms to achieve these goals. No one change can fix the budget process, and
process alone cannot address important fiscal issues. Nevertheless, process changes can be a key
factor in the effort to control spending. Starting with A Blueprint for New Beginnings and
continuing with subsequent budgets, this Administration has consistently proposed changes to
the budget process, as well as an extension with changes to key provisions of the Budget
Enforcement Act (BEA) of 1990, as amended, that are designed to improve budget decisions and
outcomes. This section updates the Administration’s proposals and describes additional reforms
proposed by the Administration.
Controlling Entitlements and Other Mandatory Spending
Mandatory Spending Control—
The Administration proposes to require that all legislation that changes mandatory spending, in
total, does not increase the deficit. The five-year impact of any proposals affecting mandatory
spending would continue to be scored. Legislation that increases the current year and the budget
year deficit would trigger a sequester of direct spending programs. The proposal does not apply
to changes in taxes and does not permit mandatory spending increases to be offset by tax
increases. This proposal effectively applies a pay-as-you-go requirement to mandatory spending.
Long-Term Unfunded Obligations—
The Administration proposes new measures to address the long-term unfunded obligations of
Federal entitlement programs. As discussed in Chapter 13 of the Analytical Perspectives volume,
Stewardship, spending by the Government’s major entitlement programs, particularly Social
Security and Medicare, is projected to rise in the next few decades to levels that cannot be
sustained, either by those programs’ own dedicated financing or by general revenues. The
Administration’s proposed measures are designed to begin addressing these challenges.
In the Medicare Modernization Act (MMA) of 2003, the Congress provided for a more
comprehensive review of the Medicare program’s finances and required the Medicare trustees to
issue a warning when general revenue Medicare funding is projected to exceed 45 percent of
Medicare’s total expenditures. The President’s Budget proposes to build on this reform by
requiring an automatic reduction in the rate of Medicare growth if the MMA threshold is
exceeded. If a warning was issued and action was not taken over the next six years to keep this
threshold from being exceeded, the reduction would begin as a four-tenths of a percent reduction
to all payments to providers in the year the threshold is exceeded, and would grow by four-tenths
of a percent every year the shortfall continued to occur. This provision is designed to encourage
the President and the Congress to reach agreement on reforms to slow Medicare spending and
bring it back into line with the threshold established by the MMA.
Social Security’s Disability Insurance (DI) program provides disability insurance coverage and
benefits to America’s workers. Outlays for the DI program have grown as a percentage of all
197
Federal budget outlays from roughly 2.1 percent in 1989 to an estimated 3.6 percent in 2007.
The Budget projects DI outlays will continue to increase as a percentage of the Federal budget,
along with escalating annual cash deficits. The President’s Budget proposes a new "funding
warning" to highlight the escalating and persistent fiscal problems facing DI. If SSA’s actuaries
project a negative DI cash flow that is more than 10 percent of program cost for four consecutive
years in the upcoming 10 years, the Board of Trustees will issue the warning in the annual
Trustees Report. Issuance of a DI funding warning would require the President to propose
legislation to respond to the warning within 15 days after the date of the next Budget submission;
the Congress would then consider this legislation. The analysis of DI’s budgetary impact will
safeguard an important source of disability insurance while promoting sound fiscal policy.
In addition to this Medicare-specific control mechanism and DI funding warning, the President’s
Budget proposes to establish a broader enforcement measure to analyze the long-term impact of
legislation on the unfunded obligations of major entitlement programs and to make it more
difficult to enact legislation that would expand the unfunded obligations of these programs over
the long-run. These measures would highlight proposed legislative changes that appear to cost
little in the short-run but result in large increases in the spending burdens passed on to future
generations.
First, the Administration proposes a point of order against legislation that worsens the long-term
unfunded obligation of major entitlements. The specific programs covered would be those
programs with long term actuarial projections, including Social Security, Medicare, Federal
civilian and military retirement, veterans' disability compensation, and Supplemental Security
Income. Additional programs would be added once it becomes feasible to make long-term
actuarial estimates for those programs.
Second, the Administration proposes new reporting requirements to highlight legislative actions
worsening unfunded obligations. Under these requirements, the Administration would report on
any enacted legislation in the past year that worsens the unfunded obligations of the specified
programs.
Budget Discipline for Agency Administrative Actions—
A significant amount of Federal policy is made via administrative action, which can increase
Federal spending, often on the order of tens of billions of dollars in entitlement programs such as
Medicare or Medicaid. Although known costs are incorporated into the budget baselines of
various programs, agencies frequently initiate unplanned for and costly proposals. Often, these
costs are not reflected in the baseline or are not accompanied by other actions that would pay for
the proposed change. This results in increased spending and deficits.
Controlling these costs is integral to the Administration's commitment to reducing the deficit and
enforcing fiscal discipline. Toward that end, the Director of the Office of Management and
Budget issued on May 23, 2005 a memorandum to all Executive Branch agencies implementing
a budget-neutrality requirement on agency administrative actions affecting mandatory spending.
Discretionary administrative actions in entitlement programs, including regulations, program
memoranda, demonstrations, guidance to States or contractors, and other similar changes to
entitlement programs are generally required to be fully offset. This effectively establishes a pay-
as-you-go requirement for discretionary administrative actions involving mandatory spending
198
programs. Exceptions to this requirement are only provided in extraordinary or compelling
circumstances.
Controlling Discretionary Spending
Discretionary Cap—
The Administration proposes to set limits for 2007 through 2012 on net discretionary budget
authority and outlays equal to the levels proposed in the 2008 Budget. Legislation that exceeds
the discretionary caps would trigger a sequester of non-exempt discretionary programs. This
approach would put in place a budget framework for the next five years that ensures constrained,
but reasonable growth in discretionary programs. For 2007 through 2009, separate defense
(Function 050) and nondefense categories would be enforced. For 2010–2012, there would be a
single cap for all discretionary spending.
These discretionary levels do not reflect the Administration's proposal to replace aviation taxes
that are currently recorded as governmental receipts with FAA user fees that would be recorded
as offsetting collections. This budget-neutral reclassification lowers receipts and net budget
authority by an identical amount and does not affect gross discretionary budget authority
levels. If this proposal is enacted, the Administration would adjust discretionary spending
levels downward for 2009-2012 by the amount of the proposal. In addition, a separate category
for transportation outlays financed by dedicated revenues would be established for 2007 through
2009 at levels consistent with those enacted in the Safe, Accountable, Flexible, Efficient,
Transportation Equity Act: A Legacy for Users (SAFETEA–LU). The Administration would
support expanding the defense category to include all security programs and a corresponding
change to create a non-security category to ensure resources are devoted to security programs
and are not diverted for other purposes.
Program Integrity Cap Adjustment—
An improper payment occurs when Federal funds go to the wrong recipient, the recipient
receives an incorrect amount of funds, or the recipient uses the funds in an improper manner.
Approximately 80 percent of improper payments are overpayments. The Administration has
made the elimination of improper payments a major focus. Federal agencies have aggressively
reviewed Federal programs to evaluate the risk of improper payments and have developed
measures to assess the extent of improper payments. Processes and internal control
improvements have been initiated to enhance the accuracy and integrity of payments and to
report the results of these efforts, pursuant to the Improper Payments Information Act of 2002
(P.L. 107-300).
The results of the agencies’ assessments have been aggregated into a Government-wide report
entitled Improving the Accuracy and Integrity of Federal Payments. (The report can be found at:
www.whitehouse.gov/omb/financial/fia_improper.html.) In 2006, the agencies reported a total of
$40.5 billion in improper payments. This represents a 2.87 percent improper payment rate.
Nearly 70 percent of those improper payments are in four programs: Medicare, Earned Income
Tax Credit, Old-Age, Survivors, and Disability Insurance, and Unemployment Insurance. This
199
program integrity cap adjustment initiative also captures IRS efforts to improve tax compliance.
While not technically improper payments, the challenges of tax compliance are similar to those
of the improper payments programs.
In the context of the Administration’s efforts to eliminate improper payments, the Administration
is proposing adjustments for spending above a base level of funding within the discretionary
levels for several program integrity initiatives, specifically for continuing disability reviews
(CDRs) and redeterminations of eligibility in the Social Security Administration, Internal
Revenue Service tax enforcement, the Health Care Fraud and Abuse Control program (HCFAC)
in the Centers for Medicare and Medicaid Services, and Unemployment Insurance improper
payments in the Department of Labor. These cap adjustments provide an effective way to ensure
that limited resources are applied to activities that reduce errors and generate program savings.
In the past decade, there have been a variety of successful efforts to ensure dedicated resources
for program integrity efforts. These efforts include cap adjustment funding for Social Security
continuing disability reviews and integrity efforts associated with the Earned Income Tax Credit
(EITC). These initiatives have led to increased savings for the Social Security and Supplemental
Security Income programs and an increase in enforcement efforts in EITC. The Administration’s
proposed adjustments for program integrity activities will total $876 million in budget authority
in 2008; $1,310 million in budget authority in 2009; and $1,562 million in budget authority in
2010.
Transportation Category—
The Administration’s proposal for discretionary caps includes separate outlay categories for
spending on Federal Highway and Mass Transit programs. The transportation levels will be
financed by dedicated revenues through 2009. The proposed caps take into account the revenue
aligned budget authority (RABA) adjustment authorized in SAFETEA-LU. The RABA
adjustment is calculated based on changes in estimated Highway Trust Fund receipts and results
in either an increase or decrease in the Highway Category funding level enacted in SAFETEA-
LU. For 2008, the RABA adjustment authorized in SAFETEA-LU is a positive $631 million;
however, the Administration proposes not to provide this increase in funding in order to preserve
the solvency of the Highway Trust Fund.
Advance Appropriations—
An advance appropriation becomes available one or more years beyond the year for which its
appropriations act is passed. Budget authority is recorded in the year the funds become available
and not in the year of enactment. Too often, advance appropriations have been used to expand
spending levels by shifting budget authority from the budget year into the subsequent year and
then appropriating the budget authority freed up under the budget year discretionary cap to other
programs. The effect of these advance appropriations is to limit the amount of discretionary
budget authority available in subsequent years, thereby reducing future funding options available
to both the Congress and the President. From 1993 to 1998, an average of $2.3 billion in
discretionary budget authority was advance appropriated each year. In 1999, advance
appropriations totaled $8.9 billion and increased to $23.4 billion in 2000.
Because this budget practice distorts the debate over Government spending and misleads the
public about spending levels in specific accounts, the 2001 Congressional Budget Resolution and
200
this Administration’s budget proposals have capped advance appropriations at the amount
advanced in the previous year. By capping advance appropriations, increases in these and other
programs can be budgeted and reflected in the year of their enactment. For 2009, the
Administration proposes a cap on advance appropriations of $23,174 million.
In addition, the Administration proposes to score the second-year effect of appropriations

language that delays obligations of mandatory budget authority as advance appropriations that
count against the discretionary caps. Appropriations acts often include provisions that delay
obligations of mandatory BA from one year to the next. The first year is appropriately scored as
a discretionary savings because it is included in an appropriations act and it reduces spending in
that year. However, this is usually a temporary delay, and the funds become available for
spending in the second year. Under this proposal, the second-year impact would be treated as an
advance appropriation and scored against the discretionary caps. This would correct an
inconsistency in the current practice where savings are scored in the first year, but the second-
year impact is reclassified in the subsequent budget as mandatory and not scored against the
discretionary caps.
To enforce the level of advance appropriations, the discretionary cap proposal provides that total
funding for advance appropriations (including obligation delays) provided in an appropriations
act for 2009 that is in excess of the Administration's limit on advance appropriations of $23,174
million in 2009 will count against the discretionary cap in the year enacted, not against the year
the funds first become available.
Federal Pell Grants—

To ensure funding shortfalls do not accumulate in the Pell Grant program in future years, the
2006 Congressional Budget Resolution adopted the Administration's proposal to score
appropriations at the amount needed to fully fund the award level set in appropriations acts,
beginning with the 2006–2007 school year, if the amount appropriated is insufficient to fully
fund all awards. The Administration proposes to continue this scoring rule. Under this rule, the
amount scored would be increased to cover any cumulative funding shortfalls from previous
years and reduced by any surpluses carried over from previous years, beginning with any
shortfalls or surpluses from the 2006–2007 school year. If the amount appropriated exceeds the
estimated full cost, the amount appropriated would be scored against that year, and the surplus
would carry over as a credit against the following year's cost estimate. In the 2008 Budget, the
Department of Education estimates that a cumulative $235 million shortfall will be carried into
the 2008–2009 academic year. Because there is no final 2007 appropriation for this account, the
Budget assumes a 2007 enacted level of $12.607 billion for calculating this shortfall, which was
the CBO estimate of the 2007 Senate Subcommittee appropriation of a $4,050 maximum award
for the 2007-2008 award year. For scoring purposes, the funding needed to fully fund all awards
for 2008–2009 is increased by the amount of this shortfall.
Project BioShield Category—
The Administration proposes a separate BEA category for budget authority for Project
BioShield, which received an advance appropriation for 2009 of $2.2 billion in P.L. 108–90, the
2004 Department of Homeland Security Appropriations Act. Because the success of this
201
program in providing for the development of vaccines and medications for biodefense depends
on an assured funding availability, it is critical that this funding not be diverted to other purposes.
The Administration's proposal to create a separate category will help ensure that funding for this
program is not reduced and used as an offset for other discretionary spending.
Include Stricter Standard for Emergency Designation in the BEA
When the BEA was enacted in 1990, it provided a safety valve to ensure that the fiscal constraint
envisioned by the BEA would not prevent the enactment of legislation to respond to unforeseen
disasters and emergencies such as Operation Desert Storm, the terrorist attacks of September 11,
2001, or Hurricane Katrina. If the President and the Congress separately designated a spending
or tax item as an emergency requirement, the BEA held these items harmless from its
enforcement mechanisms. Initially, this safety valve was used judiciously, but in later years its
application was expanded to circumvent the discretionary caps by declaring spending for
ongoing programs as emergencies.
The Administration proposes to include in the BEA a definition of emergency requirement that
will ensure high standards are met before an event is deemed an emergency and therefore
exempt. This definition should include the following elements: the requirement is a necessary
expenditure that is sudden, urgent, unforeseen, and not permanent. These elements, all of which
would be used for defining something as an emergency, are defined as follows:
• necessary expenditure—an essential or vital expenditure, not one that is merely useful or
beneficial;
• sudden—quickly coming into being, not building up over time;
• urgent—pressing and compelling, requiring immediate action;
• unforeseen—not predictable or seen beforehand as a coming need (an emergency that is
part of the average annual level of disaster assistance funding would not be
"unforeseen"); and
• not permanent—the need is temporary in nature.
This definition codifies the criteria for an emergency that have been the standard for a number of
years. It is designed to preclude funds from being declared an emergency for events that occur
on an annual or recurring basis. For example, even though it is not possible to predict the
specific occurrence of fires, tornados, hurricanes, and other domestic disasters, it is reasonable to
assume that a combination of domestic disasters will occur in any given year that require funding
equal to a multi-year average for disaster relief. Funding at an average, therefore, should not be
considered an emergency under this definition. On the other hand, an average level of funding
for domestic disasters will not accommodate the level necessary to address a large and relatively
infrequent domestic disaster, such as Hurricane Katrina. Under this definition for emergencies,
spending for extraordinary events could be classified as emergency funding. In the end,
classification of certain spending as an emergency depends on common sense judgment, made on
a case-by-case basis, about whether the totality of facts and circumstances indicate a true
emergency.
202
In addition, the Administration proposes that the definition of an emergency requirement also
encompass contingency operations that are national security related. Contingency operations that
are national security related include both defense operations and foreign assistance. Military
operations and foreign aid with costs that are incurred regularly should be a part of base funding
and, as such, are not covered under this definition.
The Administration proposal also would require that the President and the Congress concur in
designating an emergency for each spending proposal covered by a designation. This would
protect against the bundling of non-emergency items with true emergency spending. If the
President determines that specific proposed emergency designations do not meet this definition,
he would not concur in the emergency designation and no discretionary cap adjustment or
mandatory spending control exemption would apply.
Baseline
The Administration supports the extension of section 257 of the BEA governing baseline
calculations with the following changes:
• Assume extension of all expiring tax provisions in the Economic Growth and Tax Relief
Reconciliation Act of 2001 and certain provisions in the Jobs and Growth Tax Relief
Reconciliation Act of 2003. This proposal is consistent with the BEA baseline rules for
expiring mandatory spending and for excise taxes dedicated to a trust fund. Except for a
few relatively small mandatory programs, the BEA assumes that mandatory spending and
excise taxes dedicated to a trust fund will be reauthorized and extends them in the
baseline. The 2001 Act and 2003 Act provisions were not intended to be temporary, and
not extending them in the baseline raises inappropriate procedural road blocks to
extending them at current rates.
• Add a provision to exclude discretionary funding for emergencies from the baseline.
Instead, the baseline would include emergency funding only for the year in which it was
enacted. The current requirement is for the discretionary baseline estimates for the budget
year and the outyears to assume the current year appropriated level, adjusted for inflation.
This is reasonable for ongoing programs, where the need is expected to continue into the
future. For emergencies, since the need should be for a short duration, the baseline rules
build unnecessary funding into the baseline estimates for the years after the need has been
addressed and passed. In effect, the current rule biases the baseline in favor of higher
discretionary spending.
• Correct the overcompensation of baseline budgetary resources for pay raise-related costs
due to the way in which these costs are inflated. The current requirement, which provides
a full year's funding for pay raises in the budget year and beyond, was written when
Federal pay raises were scheduled to take effect on October 1, at the start of each fiscal
year. However, this requirement is now inappropriate because the effective date for pay
raises is now permanently set by law as the first pay period in January. By treating pay
203
raises that begin on January 1 as if they take effect for the entire fiscal year, the baseline
overstates the cost of providing a constant level of services.
• Eliminate the adjustments for expiring housing contracts and social insurance
administrative expenses. Most multi-year housing contracts have expired or have been
addressed since the BEA was first enacted in 1990, so the adjustment is no longer
needed. The adjustment for social insurance administrative expenses is also inconsistent
with the baseline rules for other accounts that fund the costs of administration. These
programs should not be singled out for preferential treatment.
Earmark Reform
An earmark is a spending provision the Congress inserts in legislation. Frequently, these

provisions are not publicly disclosed during the legislative process and often they are special
interest projects. A number of organizations track earmarks. The Congressional Research
Service (CRS) and Citizens Against Government Waste (CAGW) have been tracking earmarks
for over a decade. While they do not use the same definition, their data show similar trends.
Earmarks have expanded dramatically in recent years with the numbers and costs of earmarks
more than tripling since the early 1990s. According to CAGW, the Congress added nearly 550
earmarks at a cost of $3 billion to the Budget in 1991. The number of earmarks peaked in 2005.
CAGW has estimated that earmarks grew to almost 14 thousand at a cost of $27 billion. CRS
data show a similar trend, with earmarks reaching more than 16 thousand in 2005 at a cost of $52
billion. OMB has also been tracking earmarks during recent years and estimates that the number
of earmarks grew to over 13 thousand at a cost of $18 billion. OMB is in the process of
developing the capability to track earmarks during the legislative process.
One major concern about earmarks is the lack of transparency. Most earmarks do not appear in
statutory language. Instead, they are included in committee reports that accompany legislation.
According to CRS, more than 90 percent of earmarks are in report language. This means that the
vast majority of earmarks do not appear in the statutory language that the Congress actually
votes on or that the President signs into law. Also, earmarks frequently surface in the last stage
of the legislative process, in conference committees between the House and the Senate.
The President has called on the Congress to fully disclose all earmarks to reduce the amount of
wasteful and unnecessary spending. Taxpayers should feel confident that their tax dollars are
being spent wisely. Unfortunately, the large number of earmarks and the lack of transparency in
the earmarking process make it difficult to assure the public that the Government is spending the
people’s money on the Nation’s highest priorities. The President has proposed that the Congress
provide justification for earmarks and identify the sponsor, costs, and recipients of each project.
In addition, the President has proposed that the Congress stop the practice of placing earmarks in
report language. Finally, he has called on the Congress to cut the number and cost of earmarks
by at least 50 percent.
204
Line-Item Veto
A perennial criticism of the Federal Government is that spending and tax legislation contain too
many provisions that are not fully justified, are a low priority, or are earmarked to avoid the
discipline of competitive or merit-based reviews. These special interest items would likely not
become law if considered as a stand-alone bill, and their persistence diverts resources from
higher priority programs and erodes the confidence of citizens in Government.
From the Nation's founding, Presidents have exercised the authority to not spend appropriated
sums. However, the Congress sought to curtail this authority in 1974 through the Impoundment
Control Act, which restricted the President's authority to decline to spend appropriated sums.
Although the Line Item Veto Act of 1996 attempted to give the President the authority to cancel
spending authority and special interest tax breaks, the U.S. Supreme Court found that law
unconstitutional.
Last year, the President asked that the Congress correct this state of affairs by providing him and
future Presidents with a line item veto that would withstand constitutional challenge, and the
President transmitted legislation to the Congress in March 2006 that accomplishes this purpose.
Under the President’s proposal, a President could propose legislation to rescind wasteful
spending, and the Congress would be obligated to vote quickly on that package of rescissions,
without amendment. All savings from the line-item veto would be used for deficit reduction;
they could not be applied to augment spending elsewhere.
The President’s proposal received strong support. In June 2006, the House of Representatives
voted on a bipartisan basis to enact a version of the Legislative Line Item Veto. In the Senate,
members voted to report an amended version of the President’s proposal out of the Senate
Budget Committee for consideration on the Floor.
Forty-three Governors have a line item veto to reduce spending, and the President needs similar
authority to help control unjustified and wasteful spending in the Federal budget. The
Administration urges continued support for this common-sense provision and will seek its
enactment in the 110th Congress.
Other Budget Reform Proposals
Joint Budget Resolution—
A joint budget resolution would set the overall levels for discretionary spending, mandatory
spending, receipts, and debt in a simple document that would have the force of law. Under the
current process, the Congress annually adopts a concurrent resolution, which does not require the
President's signature and does not have the force of law.
A joint budget resolution could be enforced by sequesters requiring automatic across-the-board

cuts to offset any excess spending, similar to the BEA. It would bring the President into the
205
process at an early stage, encourage the President and the Congress to reach agreement on
overall fiscal policy before individual tax and spending bills are considered, and give the budget
resolution the force of law.
Biennial Budgeting and Appropriations—
Only three times in the last 25 years have all appropriation bills been enacted by the beginning of
the fiscal year. Because Congress must enact these bills each year, it cannot devote the time
necessary to provide oversight and fully address problems in Federal programs. The
preoccupation with these annual appropriations bills frequently precludes review and action on
authorization legislation and on the growing portion of the budget that is permanently funded
under entitlement laws. According to the Congressional Budget Office, in recent years the
Congress appropriated between $160 billion and $170 billion for programs and activities whose
authorizations of appropriations have expired.
In contrast, a biennial budget would allow lawmakers to devote more time every other year to
ensuring that taxpayers' money is spent wisely and efficiently. In addition, Government agencies
would receive more stable funding, which would facilitate longer range planning and improved
fiscal management. Under the President's proposal for a biennial budget, funding decisions
would be made in odd-numbered years, with even-numbered years devoted to authorizing
legislation.
Government Shutdown Prevention—
In the 22 out of the past 25 years in which the Congress has not finished appropriation bills by
the October 1st deadline, it has funded the Government through continuing resolutions (CRs),
which provide temporary funding authority for Government activities, usually at current levels,
until the final appropriations bills are signed into law.
If the Congress does not pass a CR or the President does not sign it, the Federal Government
must shut down. Important Government functions should not be held hostage simply because of
an impasse over temporary funding bills. There should be a back-up plan to avoid the threat of a
Government shutdown, although the expectation is that appropriations bills still would pass on
time as the law requires. Under the Administration's proposal, if an appropriations bill is not
signed by October 1 of the new fiscal year, funding would be automatically provided at the lower
of the President's Budget or the prior year's level.
Results and Sunset Commissions—
The Federal Government's ability to serve the American people is often hampered by poorly
designed programs or uncoordinated, overlapping programs trying to achieve the same objective.
Today, almost 30 percent of assessed programs have been determined to be either ineffective or
unable to demonstrate results. And the problem of overlapping programs exists in many areas
where the Government is trying to serve.
206
From the 1930s through 1984, Presidents submitted to the Congress Federal agency
reorganization plans that became effective automatically unless disapproved by either House of
Congress. After the Supreme Court decision in INS v. Chadha, 462 U.S. 919 (1983), however,
such reorganization plans could become effective pursuant to the Reorganization Act, 5 U.S.C.
903, only through passage of a joint Congressional approval resolution. Today, proposals to
restructure or consolidate programs or agencies so they can perform better require a change in
law and often face long odds of being enacted due to a cumbersome process that requires
approval from multiple congressional committees.
To address this problem, in June 2005 the Administration transmitted the Government
Reorganization and Program Performance Improvement Act, which would establish bipartisan
Results Commissions and a Sunset Commission. Results Commissions would consider and
revise Administration proposals to restructure or consolidate programs or agencies to improve
their performance. The Sunset Commission would consider Presidential proposals to retain,
restructure, or terminate agencies and programs according to a schedule set by the Congress.
Agencies and programs would automatically terminate according to the schedule unless
reauthorized by the Congress. The legislation was introduced in the House and Senate, but was
not enacted.
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Major Savings and Reforms in The President's 2008 Budget: Ebruary

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Major Savings and Reforms

Savings from Discretionary Program Terminations and Reductions:

Program Terminations .................................................................................... 11

Program Reductions ........................................................................................ 77

Department of Defense Restructuring ...................................................................... 127

Mandatory Program Reforms ................................................................................... 137

Budget Enforcement and Other Reforms ................................................................. 195

1. All years referred to are fiscal years, unless otherwise noted.

Spending restraint in combination with sustained economic expansion is critical to deficit

Savings from Discretionary Program Terminations and Reductions

Savings from Mandatory Spending Reductions and Reforms

Comprising nearly two-thirds of the Federal spending, mandatory spending is generally

The 2008 Budget includes several budget reforms, including:

The PART: Assessing Government Efficiency and Effectiveness

Terminations of Discretionary Programs

Major Program Reductions

Discretionary TOTAL for Program Terminations and Major Reductions

2007 2008 Change

Administration Proposal and Impact

2007 2008 Change

Administration Proposal and Impact

2007 2008 Change

Administration Proposal and Impact

2007 2008 Change

Administration Proposal and Impact

2007 2008 Change

Administration Proposal and Impact

2007 2008 Change

Administration Proposal and Impact

2007 2008 Change

Administration Proposal and Impact

2007 2008 Change

Administration Proposal and Impact

The Administration proposes no funding for Rural Enterprise Zones/Empowerment Communities

2007 2008 Change

Administration Proposal and Impact

2007 2008 Change

Administration Proposal and Impact

2007 2008 Change

Administration Proposal and Impact

2007 2008 Change

Administration Proposal and Impact

The Administration proposes to terminate Public Telecommunications, Facilities, Planning and

2007 2008 Change

Administration Proposal and Impact

2007 2008 Change

Administration Proposal and Impact

2007 2008 Change

Administration Proposal and Impact

2007 2008 Change

Administration Proposal and Impact

2007 2008 Change

Administration Proposal and Impact

2007 2008 Change

Administration Proposal and Impact

2007 2008 Change

Administration Proposal and Impact

2007 2008 Change

Administration Proposal and Impact