[DOCID: f:hr017.109]
From the House Reports Online via GPO Access
[wais.access.gpo.gov]

109th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES                 
 1st Session                                                     109-17
_______________________________________________________________________

                                     


                         CONCURRENT RESOLUTION
                         ON THE BUDGET--FISCAL
                               YEAR 2006

                               ----------                              

                              R E P O R T

                                 of the

                        COMMITTEE ON THE BUDGET
                        HOUSE OF REPRESENTATIVES

                              to accompany

                            H. Con. Res. 95

ESTABLISHING THE CONGRESSIONAL BUDGET FOR THE UNITED STATES GOVERNMENT 
FOR FISCAL YEAR 2006, REVISING APPROPRIATE BUDGETARY LEVELS FOR FISCAL 
 YEAR 2005, AND SETTING FORTH APPROPRIATE BUDGETARY LEVELS FOR FISCAL 
                        YEARS 2007 THROUGH 2010

                             together with

                             MINORITY VIEWS

<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>


 March 11, 2005.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed
         CONCURRENT RESOLUTION ON THE BUDGET--FISCAL YEAR 2006


109th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES                 
 1st Session                                                     109-17
_______________________________________________________________________

                                     


                         CONCURRENT RESOLUTION

                         ON THE BUDGET--FISCAL

                               YEAR 2006

                               __________

                              R E P O R T

                                 of the

                        COMMITTEE ON THE BUDGET

                        HOUSE OF REPRESENTATIVES

                              to accompany

                            H. Con. Res. 95

ESTABLISHING THE CONGRESSIONAL BUDGET FOR THE UNITED STATES GOVERNMENT 
FOR FISCAL YEAR 2006, REVISING APPROPRIATE BUDGETARY LEVELS FOR FISCAL 
 YEAR 2005, AND SETTING FORTH APPROPRIATE BUDGETARY LEVELS FOR FISCAL 
                        YEARS 2007 THROUGH 2010

                             together with

                             MINORITY VIEWS

<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>


 March 11, 2005.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed
                        COMMITTEE ON THE BUDGET

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

                           Professional Staff

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


                            C O N T E N T S

                                                                   PAGE
Introduction.....................................................     3
The Economy and Economic Assumptions.............................    11
    Economic Projections: Administration, CBO, and Private 
      Forecasters (Table 1)......................................    15
    Economic Assumptions of the Budget Resolution (Table 2)......    16
Revenue..........................................................    17
Function-by-Function Presentation:                                   19
    050 National Defense.........................................    21
    150 International Affairs....................................    22
    250 General Science, Space and Technology....................    23
    270 Energy...................................................    24
    300 Natural Resources and Environment........................    25
    350 Agriculture..............................................    26
    370 Commerce and Housing Credit..............................    27
    400 Transportation...........................................    29
    450 Community and Regional Development.......................    31
    500 Education, Training, Employment and Social Services......    32
    550 Health...................................................    33
    570 Medicare.................................................    34
    600 Income Security..........................................    35
    650 Social Security..........................................    37
    700 Veterans Benefits and Services...........................    38
    750 Administration of Justice................................    39
    800 General Government.......................................    40
    900 Net Interest.............................................    41
    920 Allowances...............................................    42
    950 Undistributed Offsetting Receipts........................    44
Summary Tables: Revenue and Spending.............................    45
    Comparison of Total Revenues for President's Request and 
      Committee Recommendation (Table 3).........................    45
    Comparison of On-Budget Revenues for President's Request and 
      Committee Recommendation (Table 4).........................    46
    CBO Baseline Revenues by Source, in Billions of Dollars 
      (Table 5)..................................................    47
    CBO Baseline Revenues by Source, as Percent of GDP (Table 6).    47
    Comparison of Total Revenues for CBO Baseline and Committee 
      Recommendation (Table 7)...................................    48
    Comparison of Total Revenues, as Percent of GDP, for CBO 
      Baseline and Committee Recommendation (Table 8)............    49
    Tax Expenditure Estimates by Budget Function, Fiscal Years 
      2005-2009 (Table 9)........................................    50
    Fiscal Year 2006 Budget Resolution Total Spending and 
      Revenues (Table 10)........................................    56
    Fiscal Year 2006 Budget Resolution Discretionary Spending 
      (Table 11).................................................    58
    Fiscal Year 2006 Budget Resolution Mandatory Spending (Table 
      12)........................................................    60
    Fiscal Year 2006 Budget Resolution Minus the President's 
      Budget (Table 13)..........................................    62
    Fiscal Year 2006 Budget Resolution Compared to 2005: Total 
      Spending and Revenues (Table 14)...........................    64
    Fiscal Year 2006 Budget Resolution Compared to 2005: Total 
      Spending and Revenues (Percentage Change) (Table 15).......    66
Reconciliation...................................................    69
    Reconciliation Instructions to House Authorizing Committees 
      (Table 16).................................................    71
Section-by-Section Summary of the Budget Resolution..............    73
The Congressional Budget Process.................................    81
    Appropriations Committee.....................................    81
    Authorizing Committees.......................................    82
    Adjustments..................................................    82
    Enforcement..................................................    83
    Allocation of Spending Authority to House Appropriations 
      Committee (Table 17).......................................    85
    Allocations of Spending Authority to House Committees Other 
      Than Appropriations (Table 18).............................    86
Enforcing the Budget Resolution..................................    89
Votes of the Committee...........................................    91
Additional Report Language.......................................   113
Other Matters To Be Discussed Under the Rules of the House.......   119
    Committee on the Budget Oversight Findings and 
      Recommendations............................................   119
    New Budget Authority, Entitlement Authority, and Tax 
      Expenditures...............................................   119
    General Performance Goals and Objectives.....................   119
    Additional, Supplemental, Dissenting and Minority Views......   119
Appendix--The Concurrent Resolution on the Budget................   127

                            List of Acronyms

Office of Management and Budget..................................   OMB
Congressional Budget Office......................................   CBO
Gross Domestic Product...........................................   GDP
Budget Authority.................................................    BA
                              T A B L E S

                                                                   Page
Table 1: Economic Projections: Administration, CBO, and Private 
  Forecasters....................................................    15
Table 2: Economic Assumptions of the Budget Resolution...........    16
Table 3: Comparison of Total Revenues for President's Request and 
  Committee Recommendation.......................................    45
Table 4: Comparison of On-Budget Revenues for President's Request 
  and Committee Recommendation...................................    46
Table 5: CBO Baseline Revenues by Source, in Billions of Dollars.    47
Table 6: CBO Baseline Revenues by Source, as Percent of GDP......    47
Table 7: Comparison of Total Revenues for CBO Baseline and 
  Committee Recommendation.......................................    48
Table 8: Comparison of Total Revenues, as Percent of GDP, for CBO 
  Baseline and Committee Recommendation..........................    49
Table 9: Tax Expenditure Estimates by Budget Function, Fiscal 
  Years 2005-2009................................................    50
Table 10: Fiscal Year 2006 Budget Resolution Total Spending and 
  Revenues.......................................................    56
Table 11: Fiscal Year 2006 Budget Resolution Discretionary 
  Spending.......................................................    58
Table 12: Fiscal Year 2006 Budget Resolution Mandatory Spending..    60
Table 13: Fiscal Year 2006 Budget Resolution Minus the 
  President's Budget.............................................    62
Table 14: Fiscal Year 2006 Budget Resolution Compared to 2005: 
  Total Spending and Revenues....................................    64
Table 15: Fiscal Year 2006 Budget Resolution Compared to 2005: 
  Total Spending and Revenues (Percentage Change)................    66
Table 16: Reconciliation Instructions to House Authorizing 
  Committees.....................................................    71
Table 17: Allocation of Spending Authority to House 
  Appropriations Committee.......................................    85
Table 18: Allocations of Spending Authority to House Committees 
  Other Than Appropriations......................................    86


109th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     109-17

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



 
         CONCURRENT RESOLUTION ON THE BUDGET--FISCAL YEAR 2006

                                _______
                                

 March 11, 2005.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

   Mr. Nussle, from the Committee on Budget, submitted the following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                     [To accompany H. Con. Res. 95]
                              Introduction

                            SETTING THE PATH

    Long before today--even long before Congress received the 
President's budget proposal--the priorities of this fiscal year 
2006 budget were clear. The driving force of this budget had to 
be, before all else, providing for America's most urgent needs. 
They are:

- Continued Strength. America is free, and will remain free, as 
    long as the Nation is strong enough to defend that freedom 
    at home, and around the world.
- Continued Growth. To remain the world's most prosperous 
    nation, Congress must ensure that America's economy 
    continues to grow and to create jobs.
- Restrained Spending. America's continued greatness comes from 
    the unlimited opportunities that freedom provides. Congress 
    must continue encouraging opportunities for a better life 
    for every American, and must also ensure those 
    opportunities and benefits for the next generation. All 
    government spending must be paid for, either through taxes 
    or through borrowing--and both burden the economy. 
    Controlling spending eases that burden--and therefore is 
    itself a policy favoring economic growth.

    Congress has addressed extraordinary spending demands in 
the past several years, and faces an unsustainable rate of 
spending growth that both Republicans and Democrats have 
created. Congress must meet this challenge as it faces what 
Federal Reserve Chairman Greenspan calls ``an unprecedented 
demographic shift''--a shift that will put exceptional strains 
on the government's entitlement programs, and the Nation's 
economy. As discussed below, under ``Mandatory Spending,'' a 
principal aim of this budget resolution is to begin addressing 
the unsustainable growth of these programs.

                              FIRST STEPS

    Last year, this committee began the process of recovering 
from a crisis mode--generated by the necessary response to 9-
11--and entering a long-term planning mode that is critical at 
this time in the Nation's history.
    Last year's budget called for no tax increases. This was 
based on an economic policy that had bolstered the recovery and 
expansion already under way, but not yet fully developed. Due 
in large part to the fiscal policies of the past several years, 
the Nation is now enjoying strong, sustained economic growth 
and job creation, including:
- The strongest real growth in gross domestic product [GDP] in 
    5 years, and one of the strongest sustained performances of 
    the past 2 decades.
- More than 3.0 million new jobs created over the past 21 
    months, record high employment, low unemployment. In 
    February this year, payroll employment increased by 262,000 
    jobs.
- Business equipment investment stands at a 7-year high.
- Home ownership rates have reached record highs.
- A consensus among private Blue Chip forecasters--as well as 
    the Federal Reserve--believe the economy is in for a 
    sustained expansion.
    Congress also slowed the rate of non-homeland security, 
non-defense spending discretionary growth to about 2.1 
percent--roughly the rate of inflation--compared with the 
previous 5-year average of 6.0 percent.
    Because of these efforts, last year's budget deficit fell 
$109 billion from its original estimate--a reduction of 20 
percent that put Congress on track to cutting the deficit in 
half by 2009.

                        NEXT STEPS, STARTING NOW

    This year the President's budget took some tough, but 
necessary, next steps to slow spending while ensuring the 
Nation's priorities were met. The proposal included holding all 
non-homeland, non-defense spending below inflation. This budget 
resolution follows that path.
    The budget also follows the President's effort to find 
savings in the largest part of the Federal budget--the 55 
percent of spending that operates on automatic-pilot each year, 
that keeps growing every year, largely without any review or 
oversight: the mandatory side of the ledger.
- Although the committees of jurisdiction will determine the 
    specific policies--which may or may not include the 
    President's recommendations--the budget does track with the 
    total savings amounts the administration proposed. This too 
    is a necessary step.
- As Chairman Greenspan told the Budget Committee: ``You either 
    choose to do something in advance, which will ameliorate 
    the problem * * * or wait until the problem is right on 
    you, in which the solutions are going to be very painful.'' 
    This budget chooses--as tough as it may be--to begin 
    dealing with the problem now.
    Like last year's budget, this plan takes into account 
funding for the ongoing military operations in Iraq and 
Afghanistan. Obviously, it cannot be known at this time what 
the actual costs will be. But without question, there will be 
costs--and the budget provides for them. The budget includes 
$50 billion for fiscal year 2006 in anticipation of 
supplemental appropriations for these activities. It is the 
same figure as was included for fiscal year 2005 in last year's 
resolution.
    Finally, with this combination, the budget cuts the deficit 
in half, both in dollars and as a percent of gross domestic 
product.

                     DEFENSE AND HOMELAND SECURITY

    As became painfully clear on September 11, 2001, this 
Nation had severe defense and homeland security deficits that 
had to be addressed. Since that day, Congress has provided 
whatever was needed to protect and defend the Nation, and 
support the needs of its troops.
- Since September 11, Congress has spent about $1.9 trillion to 
    provide for defense and homeland security. That does not 
    include the supplementals already enacted, which add on 
    about another $248 billion.
- These figures reflect a great deal of necessary, and costly, 
    building, rebuilding, and across-the-board updating to 
    correct those deficits. Congress acted quickly, 
    deliberately, and in a bipartisan way, to provide for those 
    critical needs.
    This year's budget builds on the substantial progress 
already made.

                                Defense

    The national defense budget continues the multiyear plan to 
enable the military both to fight the war against terrorism 
now, and to transform itself to counter unconventional threats 
in the future.
    This budget fully accommodates the President's request for 
the Department of Defense, and increases funding to $419.5 
billion in discretionary spending--an increase of about 4.8 
percent. It also proposes a sustained average increase of 3.0 
percent over the next 5 years--not counting supplementals--
following on the heels of a more than 35-percent increase 
between 2001 and 2005.
    Key funding areas include:
- Military Pay and Benefits. To support military personnel--and 
    to allow DOD to continue recruiting and training first-rate 
    forces--this budget builds on the critically needed funding 
    increases of the past few years for military pay and 
    benefits. Since President Bush took office, spending in 
    military personnel accounts has increased by approximately 
    40 percent--providing for such quality-of-life advancements 
    as: an increase of more than 21 percent in basic pay; a 
    reduction of average out-of-pocket housing expenses for 
    military personnel--from an average of 18 percent before 
    2001, to an average of zero now; the full funding of health 
    benefits for active duty members, retirees, and their 
    dependents.
- Operations and Maintenance. The budget provides for increases 
    in training and education, operations, and support of the 
    military forces; maintenance of field weapon systems and 
    equipment; and operation and maintenance of facilities. In 
    total, Operations and Maintenance--the core of the 
    military's readiness to fight the Global War Against 
    Terrorism--has increased by 20 percent since 2001.
- Procurement. To continue accelerated efforts to replace worn 
    out or obsolete equipment, the budget provides the 
    necessary funds for procurement of new ships, aircraft, and 
    vehicles, as well as the purchase and initial fielding of 
    weapon systems, ammunition, and other combat-related 
    systems. Over the past 4 years, funding for procurement has 
    increased by 25 percent. The budget also provides for the 
    continued deployment of defenses against long-range 
    ballistic missile threats.
- Research and Development. The budget provides the resources 
    for research, development, testing, and evaluation--the 
    seed money for the next generation of weapons. Funding for 
    research and development has increased 65 percent in the 
    past 4 years.
- Iraq and Afghanistan. As noted, the budget also includes $50 
    billion to provide for the ongoing war against terrorism.

                           Homeland Security

    This budget provides for total spending of $49.9 billion, 
excluding offsets for fee-funded activities. The funds are 
distributed over multiple budget functionswith homeland-
security-related activities. The total includes a net increase of 2.3 
percent in non-military appropriated accounts, including $32.5 billion 
for the Department of Homeland Security. Other homeland security-
related funding goes to: the Department of Defense, 19 percent; the 
Department of Health and Human Services, 9 percent; the Department of 
Justice, 6 percent; and the remainder spread throughout the government.
    These funds will work to meet the needs in the three key 
strategic areas of homeland security, including:
- Preventing Attacks. The budget can accommodate increases in 
    funding homeland security programs and agencies 
    specifically designed to help prevent attacks from 
    occurring, including border security, counter-terrorism, 
    and counter-intelligence.
- Reducing Vulnerabilities. The budget works to reduce and 
    eliminate the risks of attacks on U.S. ports, rails, skies, 
    food supplies, and roads by allowing for increases in 
    programs and agencies that help protect all these important 
    areas of commerce and travel.
- Ensuring Preparedness. This budget also helps to ensure the 
    Nation's first responders have the necessary material and 
    equipment to handle emergencies.
    Key initiatives of the President's proposals supported by 
this budget include:
- A sum of $40.4 billion for total homeland security spending 
    outside the Department of Defense.
- For the Department of Homeland Security, $38.3 billion--a 
    177.5-percent increase from fiscal year 2001 for agencies 
    moving into the Department. Included in this total is $2.5 
    billion for Project BioShield, to secure new vaccines 
    against smallpox, anthrax, and botulinum toxin.
    The increase in this year's budget follows on the heels of 
massive increases of the past few years.
- In 2000, spending in this category was about $9 billion. Over 
    the past 5 years, Congress has increased spending in this 
    category at an average rate of about 28 percent per year.
- Congress invested more than $50 billion to create the 
    Department of Homeland Security, reorganized 22 agencies 
    consisting of 180,000 employees and their missions, and 
    invested heavily to protect the homeland against threats 
    such as bio-terrorism.

                            CONTINUED GROWTH

    The past 4 years, the Nation's economic picture has 
brightened remarkably. The country and the economy have endured 
the bursting of the stock market bubble; corporate scandals; a 
recession; the terrorist attacks and their aftermath; and the 
uncertainties of an international war against terrorism, 
including conflicts in Afghanistan and in Iraq.
    Today, the general consensus of both private and public 
forecasters is that the U.S. economy is in a sustained 
expansion with solid growth of real GDP and payroll jobs, and 
with low unemployment and low inflation.
    The speed and strength of the economic recovery of the past 
several years has been due in large part to the tax relief 
packages passed in 2001, 2002, and 2003--and the extensions of 
tax relief passed last year. These policies will continue to 
work to promote sustained economic growth and job creation.
    Beyond the obvious benefits, sustained growth is needed to 
reduce the budget deficit. It will not erase the deficit on its 
own; but without economic growth, the budget never will return 
to balance. So continued economic growth is one of the 
overriding priorities of this budget.
    That means that there will be no tax increase. The lowered 
tax burdens of the past several years will remain in place. 
Although the budget resolution does not explicitly define 
specific changes in tax policy--those will be determined by the 
Committee on Ways and Means--the resolution provides for 
permanent extension of tax laws enacted in the 2001 and 2003. 
It also could accommodate packages of energy tax incentives and 
charitable contribution incentives.

                          RESTRAINED SPENDING

    All spending must get paid for, either through taxes or 
borrowing--and both are burdens on the economy. For that reason 
alone, controlling spending is itself a policy for sustaining 
stronger economic growth.

                         Discretionary Spending

    This budget calls for a 0.8-percent reduction for fiscal 
year 2006 in total non-defense, non-homeland-security spending. 
The specific program actions for achieving this restraint will 
be determined, as always, by the Committee on Appropriations. 
The budget sets the fences; the Appropriations Committee 
determines the policies.
    Last year Congress began the process of reining in 
discretionary spending. The savings--combined with strong 
economic growth and job creation--helped reduce the budget 
deficit by $109 billion from its earlier projections. This 
budget continues the process by holding the line on non-
security appropriated spending.
    It is important to grasp the background of this spending 
restraint. On the discretionary side of the budget--in programs 
subject to annual appropriations--spending has grown by an 
average of 6.1 percent per year in the past 10 years. Even last 
year, these programs grew by about 4.3 percent, excluding the 
cost of the Iraq conflict.
    Some examples:
- Education. Although this is quintessentially a State and 
    local function, the Federal Government's funding for 
    education has increased by an average of 9.7 percent per 
    year since 2000. In fact, aside from the newly-created 
    Department of Homeland Security, the Department of 
    Education has grown faster than any other agency during 
    this period. This has included a 55-percent increase in 
    Title 1, a 57-percent increase for Pell Grants, and an 87-
    percent increase in funding for the Individuals with 
    Disabilities Education Act. Congress also passed the No 
    Child Left Behind Act of 2001, which demands results from 
    schools in exchange for Federal dollars.
- Agriculture. Since 1996, funding for all programs 
    administered through the U.S. Department of Agriculture has 
    grown by more than 5 percent per year. In 2002, Congress 
    passed the Farm Security and Rural Investment Act, a farm 
    bill that sets the course of agricultural policy through 
    2007. The new law continues orientation toward free 
    agricultural markets, allowing producers to exercise their 
    own discretion on cropping and other production choices, 
    and strengthens the farmer safety net through the new 
    direct and counter-cyclical support programs.
- Veterans. Since 1995, great strides have been made in 
    improving benefits for the Nation's veterans through hefty 
    increases in funding and substantial increases in benefits 
    and services. In 1996 and 1999, Congress expanded 
    eligibility for medical care. As a result, the number of 
    veterans using VA medical care has increased from 2.5 
    million in 1995, to 4.8 million today. Since 1995, total 
    spending on veterans has increased from $38 billion to 
    $67.6 billion, a 77-percent increase. Funding for veterans' 
    medical care has increased from $16.2 billion in 1995 to 
    $29.9 billion today. Congress also has increase monthly 
    education benefit payment levels under the Montgomery GI 
    Bill from $405 to $1,004--an increase of 147 percent. 
    Finally, military retirees injured in combat, while 
    training for combat, or who are 50-percent or more service-
    disabled, may now--for the first time in over a century--
    receive retirement benefits concurrently with veterans 
    disability compensation.

                           Mandatory Spending

    Although last year's budget began to control spending by 
limiting domestic appropriated accounts, mandatory programs 
continued to grow without restraint. This year, net mandatory 
spending (excluding interest) consumes 55 percent of the 
budget. If it continues at its current rate, by 2015 it will 
reach 61 percent of the budget--and it will crowd out more and 
more of other priorities, such as education, veterans, science, 
and the environment, as well as any kind of overall budget 
control.
    The problem in mandatory spending--the automatic-pilot 
spending that grows every year, mostly without any reform or 
review--is nearly as old as the Budget Act itself.
- In 1969, total mandatory spending, excluding interest, was 
    5.7 percent of GDP and 29.2 percent of total Federal 
    spending (including the effect of offsetting receipts). 
    Annual appropriations controlled 63.9 percent of outlays.
- By 1975, the year after enactment of the Budget Act, net non-
    interest mandatory spending had leapt to 45.5 percent of 
    total spending, and 9.7 percent of GDP.
- In 1982, this net mandatory spending reached double-digit 
    percentages of GDP, at 10.4 percent.
- In 1996, non-interest mandatory spending reached 50.4 percent 
    of the budget, and would never again consume less than half 
    of the government's outlays. The spending controlled by 
    annual appropriations had fallen to 34.1 percent of GDP.
    Some examples:
- Student Loans. Since 2000, student loan volume has increased 
    by 72percent, with loans increasing by an average $32 
billion each year.
- Medicare. In just the past decade, since 1995, Medicare 
    spending has grown 88 percent. This year alone, it will 
    spend $293 billion. Over the next 5 years, the 
    Congressional Budget Office estimates that Federal Medicare 
    outlays will grow to $2 trillion.
- Medicaid. Since 1995, Medicaid spending has grown 211 
    percent. This year the Federal Government will spend $183.2 
    billion on Medicaid, and over the next 5 years, that 
    spending will total more than $1.1 trillion.
    Federal spending cannot be controlled without control of 
mandatory spending. Hence this budget includes reconciliation 
instructions to a select group of authorizing committees. It 
calls for slowing the growth of total mandatory spending 
(including interest) to an average of 6.3 percent per year 
(over the next 5 years), compared with its current-law rate of 
6.4 percent per year. This translates to approximately $68.6 
billion in savings over the next 5 years, spread among nine 
authorizing committees.
    The budget directs each of the selected committees to find 
a specified amount of savings. It does not tell them how or 
where to find those savings. The budget has a number for each 
committee, and it directs them to find that amount of savings. 
This is the step--the critical step--this budget takes to begin 
the process of getting our mandatory spending back to a 
sustainable level. The budget sets the fences within which the 
authorizing committees are to work.
    Reconciliation directives have appeared from time to time 
in past, in various magnitudes. All were worthwhile, but none 
``solved'' the fundamental problem--as demonstrated by the 
continued growth of mandatories. The directives in this budget 
should not be seen as the last that will ever be written. It is 
far more likely that mandatory spending is a challenge Congress 
will need to address frequently in future years--a challenge to 
be answered incrementally, through regular, disciplined 
oversight and review.

                            Social Security

    Although Social Security has major fiscal and economic 
effects, it is classified as ``off budget.'' Hence the reported 
resolution does not attempt to address the many unknowns in the 
pending issue of Social Security reform.
    At present, there is no Social Security plan to reflect in 
the budget. Many proposals have been offered; many options are 
on the table. But it is unknown what kind of plan Congress 
might develop, or when. To try to anticipate that here is to 
encumber the budget with something that does not even exist as 
yet.

                               CONCLUSION

    As noted at the outset, this budget is driven by three 
principles:
- Keeping America free by maintaining its strength around the 
    world, and its security at home.
- Supporting the economic prosperity that assures work and 
    opportunity for all Americans.
- Securing opportunity for future generation by restraining 
    government's burden on the economy. The budget achieves 
    this by maintaining the lower tax burdens enacted in the 
    past 4 years, and then also taking the next necessary step: 
    reining in the growth of government spending.
    These three principles constitute the budget's purpose--and 
that purpose is what makes the exercise of budgeting 
meaningful.
                  The Economy and Economic Assumptions

                              ----------                              


      SUSTAINED EXPANSION FOLLOWING THE CHALLENGES OF RECENT YEARS

    Recent data confirm that 2004 displayed one of the best 
performances for the U.S. economy in the past 2 decades--
including strong growth in real gross domestic product [GDP] 
and business investment, rebounding payroll employment, falling 
unemployment, and robust housing markets.
    Looking forward, public and private forecasters expect the 
economy to continue in a sustained expansion, with solid real 
growth, ongoing payroll jobs gains, and low unemployment and 
inflation.
    The Nation's economic picture has undergone remarkable 
changes in the past 4 years, and no one should underestimate 
the challenges overcome. The Nation and the economy endured the 
bursting of the stock market bubble; corporate scandals; a 
recession; the terrorist attacks and their aftermath; and the 
uncertainties of an international war against terrorism, 
including conflicts in Afghanistan and in Iraq.
    The steady improvements are a testament to the fundamental 
strength, resilience and flexibility of the U.S. economy. In 
addition, fiscal and monetary policies combined to play major 
roles in keeping the adverse effects of the 2000-01 slowdown 
and recession milder than otherwise would have been the case 
and to help boost the economy in its recovery from the 
recession and as it enters a sustained expansion.
    In response to the challenges cited above, Congress and the 
President acted together and took quick, deliberate action. The 
responses included tax relief for the economy and necessary 
spending increases for national defense and homeland security--
and because of those efforts, the Nation today stands in a much 
better position.
    Fiscal policy actions have been particularly aggressive in 
working to boost the economy. Three major tax relief bills 
became law over 2001-03:
- The Economic Growth and Tax Relief Reconciliation Act of 2001 
    (June 2001) provided for immediate and phased-in reductions 
    in income taxes and tax rates, as well as other tax relief 
    and incentives. Joint Committee on Taxation [JCT] estimates 
    showed the tax relief totaling nearly $300 billion over 
    fiscal years 2001-04, and more than $100 billion per year 
    in subsequent years.
- The Job Creation and Worker Assistance Act of 2002 (March 
    2002)--in addition to providing extended unemployment 
    benefits and special tax relief following September 11--
    provided tax relief intended for economic stimulus, 
    including business investment tax incentives from ``bonus 
    depreciation'' of equipment and software. JCT estimates 
    show the business investment tax incentives totaling more 
    than $100 billion over 2002-04.
- The Jobs and Growth Tax Relief Reconciliation Act of 2003 
    [JGTRRA] (May 2003) accelerated the scheduled income tax 
    relief and tax rate reductions of the 2001 legislation, 
    increased the ``bonus depreciation'' business investment 
    tax incentives, and reduced dividend and capital gains tax 
    rates. JCT estimates showed the tax relief totaling $185 
    billion over fiscal years 2003-04.
    Altogether, the JCT estimates show that the combined tax 
relief over the 2001-04 period amounted to nearly $600 
billion--or about 6 percent of gross domestic product spread 
over the 4 fiscal years, with a concentration in fiscal years 
2003 and 2004.
    Monetary policy also played an important role in bolstering 
the economy. From January 2001 through June 2003, the Federal 
Reserve reduced the Federal funds rate--the key monetary policy 
interest rate--from 6\1/2\ percent to 1 percent in 13 separate 
cuts. Lower interest rates helped to boost interest-sensitive 
spending, including consumer durable goods, business equipment 
investment, and residential housing construction.

                     THE CURRENT ECONOMIC SITUATION

    The vast array of data and evidence point to the U.S. 
economy being in a sustained expansion, with solid real growth, 
ongoing payroll jobs gains, and low unemployment and inflation
    The list of ``Good News'' confirming the economy's solid 
performance is impressive, including:
- Real GDP grew 4.4 percent in 2004--the strongest annual 
    performance in 5 years and one of the strongest growth 
    performances of the past 20 years. Private Blue Chip 
    forecasters expect solid real GDP growth to continue--at 
    about a 3.6 percent rate in 2005 and in the range of 3 
    percent to 3\1/2\ percent over the next 5 years.
- Payroll employment rose by 2.2 million jobs during 2004 and 
    has increased for 21 straight months, increasing by over 
    3.0 million jobs since May 2003. Private forecasters expect 
    jobs gains averaging nearly 200,000 per month during 2005, 
    or about an additional 2 million through the end of the 
    year. Payroll employment has now more than regained the 
    jobs lost during the slowdown and recession of 2000-01.
- Total employment as measured by the household survey--which 
    includes self-employed individuals and others not captured 
    by the establishment payroll jobs numbers--continues at 
    record high levels in excess of 140 million in recent 
    months.
- The unemployment rate is down to 5.4 percent in February from 
    6.3 percent in June of 2003. At 5.4 percent, the 
    unemployment rate is lower than the decade averages for the 
    1970s (6.2 percent), the 1980s (7.3 percent), and the 1990s 
    (5.8 percent).
- New claims for unemployment insurance have been running at 
    just over 300,000--the lowest levels in more than 4 years, 
    and a sign of likely ongoing solid growth in employment. 
    Claims have been below the 400,000 level for nearly a year 
    and a half. (Claims below 400,000 indicate continued 
    improvement in labor markets.)
- Manufacturing activity soared from mid-2003 through 2004--the 
    strongest continued pace of manufacturing activity in 20 
    years (Institute for Supply Management PMI index).
- Industrial production--the output of the Nation's factories, 
    mines and utilities--is up 6\1/2\ percent over the past 
    year and a half. Manufacturing industrial production is up 
    7\1/2\ percent over that period--the best sustained 
    performance in more than 4 years.
- Real business equipment investment has increased at a 15-
    percent annual rate over the past year and a half--the best 
    performance in 7 years.
- Housing starts and building permits have been running at 
    their highest levels in 20 years--at a pace of about 2 
    million new housing units per year.
- The homeownership rate is at a record high level--reaching 
    69.2 percent at the end of 2004.

                 THE ROLE OF BUDGET RESOLUTION POLICIES

    One of the guiding principles of the budget policies is 
that The Nation's economy must continue to grow and to create 
jobs to serve as a solid foundation for reducing the budget 
deficit. Economic growth alone may not be able to eliminate the 
deficit--but without solid economic growth, efforts to reduce 
budget deficits will be futile.
    One of the fundamental ways that this budget encourages 
that growth is by supporting the policies that have been 
working to boost the economy. The resolution provides for 
continuing the provisions of tax law enacted in 2001 and 2003, 
and keeps the tax burden from rising.
    In addition, it is of critical importance to control 
Federal spending. All spending must get paid for, either 
through taxes or borrowing--and both are burdens on the 
economy. For that simple reason alone, controlling spending is 
itself a policy for sustaining stronger economic growth.
    Reinforcing this view, Federal Reserve Chairman Greenspan 
recently stated that: ``Addressing the government's own 
imbalances will require scrutiny of both spending and taxes. 
However, tax increases of sufficient dimension to deal with the 
looming fiscal problems arguably pose significant risks to 
economic growth and the revenue base. The exact magnitude of 
such risks is very difficult to estimate, but, in my judgment, 
they are sufficiently worrisome to warrant aiming, if at all 
possible, to close the fiscal gap primarily, if not wholly, 
from the outlay side.''
    The underlying policies of the budget resolution--including 
sustained tax relief, restrained spending growth, declining 
deficits, and a stable or falling debt-to-GDP ratio--represent 
a favorable set of policies for the performance of the economy.
    Of particular note, the projected decline in the unified 
deficit under budget resolution policies to less than 2 percent 
of GDP--and the projection for a declining public debt as a 
share of GDP--are typical benchmarks for fiscal policies being 
viewed as sustainable over time, and without significant 
adverse effects on the economy.
    As examples of these views, consider recent statements by 
Chairman Greenspan:
- ``My general view is that, over the long run, it is essential 
    to run a fiscal policy which is stable, meaning effectively 
    that the level of debt to the public as a ratio to GDP 
    tends to be relatively flat.''
- [O]ne standard is, if the unified budget deficit is 2 percent 
    of GDP or less, it stabilizes the ratio of debt to GDP. So, 
    if you are looking at a straightforward numerical type, 
    that's not a bad one.''

                          THE ECONOMIC OUTLOOK

    The economic projections from the administration, the 
Congressional Budget Office [CBO], and private forecasters 
reveal the consensus outlook for continued solid growth in the 
economy over the 2005-2010 projection period for the budget 
resolution (see Table 1.).
- The various forecasts show projections for solid real GDP 
    growth in 2005 in the range of 3.6 percent to 3.8 percent: 
    3.8 percent for the CBO, and 3.6 percent for the private 
    Blue Chip consensus and for the Administration.
- Relatively strong growth is expected to continue beyond 2005 
    for the 2006-2010 period, with CBO projecting real GDP 
    growth to average about 3.4 percent per year, and the 
    administration and Blue Chip at 3.2 percent.
- Reflecting the stronger growth in the economy, the 
    unemployment rate is projected to continue throughout the 
    forecast in the 5.1 to 5.3 percent range--a relatively low 
    level by historical comparison.
- Inflation and interest rates are projected to rise gradually 
    over the next several years, yet still ultimately remain at 
    relatively low historical levels for an expanding economy. 
    By 2010, the 3-month Treasury bill rate is projected to 
    rise to the 4.2 to 4.6 percent range; the 10-year Treasury 
    note yield is projected to rise to the 5.5 to 5.7 percent 
    range.
    CBO's annual economic assumptions were adopted for use in 
the budget resolution and are shown in Table 2.

                  TABLE 1.--ECONOMIC PROJECTIONS: ADMINISTRATION, CBO, AND PRIVATE FORECASTERS
                                                [Calendar years]
----------------------------------------------------------------------------------------------------------------
                                                             2005   2006   2007   2008   2009   2010   2006-2010
----------------------------------------------------------------------------------------------------------------
Real GDP (percent change, year over year):
  Administration..........................................    3.6    3.5    3.3    3.2    3.1    3.1         3.2
  CBO.....................................................    3.8    3.7    3.7    3.4    3.1    2.9         3.4
  Blue Chip, February*....................................    3.6    3.4    3.2    3.2    3.1    3.3         3.2
GDP Price Index (percent change, year over year):
  Administration..........................................    1.9    2.0    2.1    2.1    2.1    2.1         2.1
  CBO.....................................................    1.8    1.5    1.7    1.8    1.8    1.8         1.7
  Blue Chip, February*....................................    2.0    2.0    2.1    2.1    2.1    2.1         2.1
Consumer Price Index (percent change, year over year):
  Administration..........................................    2.4    2.3    2.4    2.4    2.4    2.4         2.4
  CBO.....................................................    2.4    1.9    2.1    2.2    2.2    2.2         2.1
  Blue Chip, February*....................................    2.5    2.3    2.4    2.4    2.4    2.4         2.4
Unemployment Rate (percent, annual average):
  Administration..........................................    5.3    5.1    5.1    5.1    5.1    5.1         5.1
  CBO.....................................................    5.2    5.2    5.2    5.2    5.2    5.2         5.2
  Blue Chip, February*....................................    5.3    5.2    5.1    5.1    5.1    5.1         5.1
3-Month Treasury Bill Rate (percent, annual average):
  Administration..........................................    2.7    3.5    3.8    4.0    4.1    4.2         3.9
  CBO.....................................................    2.8    4.0    4.6    4.6    4.6    4.6         4.5
  Blue Chip, February*....................................    3.0    3.9    4.1    4.3    4.2    4.2         4.1
10-Year Treasury Note Yield (percent, annual average):
  Administration..........................................    4.6    5.2    5.4    5.5    5.6    5.7         5.5
  CBO.....................................................    4.8    5.4    5.5    5.5    5.5    5.5         5.5
  Blue Chip, February*....................................    4.7    5.3    5.6    5.6    5.6    5.6         5.5
----------------------------------------------------------------------------------------------------------------
Sources: OMB, CBO, Blue Chip Economic Indicators (February 2005 and October 2004).

*Blue Chip projection for 2005 and 2006 from February; for 2007-2010, from October.


                             TABLE 2.--ECONOMIC ASSUMPTIONS OF THE BUDGET RESOLUTION
                                           [Calendar years, 2005-2010]
----------------------------------------------------------------------------------------------------------------
                                                              2005     2006     2007     2008     2009     2010
----------------------------------------------------------------------------------------------------------------
Real GDP (percent change, year over year).................      3.8      3.7      3.7      3.4      3.1      2.9
GDP Price Index (percent change, year over year)..........      1.8      1.5      1.7      1.8      1.8      1.8
Consumer Price Index (percent change, year over year).....      2.4      1.9      2.1      2.2      2.2      2.2
Unemployment Rate (percent, annual average)...............      5.2      5.2      5.2      5.2      5.2      5.2
3-Month Treasury Bill Rate (percent, annual average)......      2.8      4.0      4.6      4.6      4.6      4.6
10-Year Treasury Note Yield (percent, annual average).....      4.8      5.4      5.5      5.5      5.5      5.5
Note: Nominal GDP ($ Billions, annual average)............   12,396   13,059   13,766   14,486   15,210   15,940
----------------------------------------------------------------------------------------------------------------

                                Revenue

                              ----------                              


                                Summary

    The component of the budget resolution designated as 
revenue reflects all of the Federal Government's various tax 
receipts that are classified as ``on budget.'' This includes 
individual income taxes; corporate income taxes; excise taxes, 
such as the gasoline tax; and other taxes, such as estate and 
gift taxes. The component of social insurance taxes that is 
collected for the Social Security system--the Old Age and 
Survivors and Disability Insurance [OASDI] payroll tax--is 
``off budget.'' The remaining social insurance taxes (the 
Hospital Insurance [HI] payroll tax portion of Medicare, the 
Federal Unemployment Tax Act [FUTA] payroll tax, railroad 
retirement and other retirement systems) are all on budget. 
Customs duties, tariffs, and other miscellaneous receipts also 
are included in the revenue function. Pursuant to the 
Congressional Budget Act of 1974 and the Budget Enforcement Act 
of 1990, Social Security payroll taxes, which constitute 
slightly more than a quarter of all Federal receipts, are not 
included in the budget resolution.

                           Revenue Over Time

    Total Federal revenue has averaged about 18 percent of 
gross domestic product [GDP] over the past 50 years. Even 
though the intent is that there will be no statutory tax 
increases under this budget, total Federal revenue is projected 
to rise from 16.8 percent of GDP in fiscal year 2005 to 17.7 
percent of GDP in 2010--a return to roughly the historical 
average level. The increase in taxes relative to GDP occurs 
because of the improving economy as well as the natural 
tendency for taxes to increase over time because of provisions 
in the tax code that are not indexed fully for inflation and 
real, inflation-adjusted, income growth. That intrinsic 
tendency for taxes to increase relative to the size of the 
economy under the current tax code highlights the need to 
regularly adjust tax policies to avoid an ever-increasing tax 
burden in our economy.

                Summary of Committee-Reported Resolution

    The budget resolution calls for $1.590 trillion in on-
budget revenue for fiscal year 2006, and $9.080 trillion over 
2006-10. Total revenue in the budget resolution is $2.195 
trillion for fiscal year 2006 and $12.441 trillion over 2006-
10. The resolution assumes policies with a revenue impact of 
$16.623 billion for fiscal year 2006 and $105.715 billion over 
2006-10. These effects are principally the result of preventing 
automatic tax increases that otherwise would occur.
    Although the budget resolution does not define specific 
changes in tax policy, the revenue levels established in the 
resolution can accommodate the continuation of existing tax 
law. In particular, those levels can accommodate the following:
- No tax increase resulting from the individual alternative 
    minimum tax. The resolution could accommodate an extension 
    of the current individual AMT exemption amounts of $58,000 
    for joint filers and $40,250 for single filers. It 
    anticipates that Congress could act to prevent a reduction 
    in the exemptions, to $45,000 for joint filers and $33,750 
    for single filers, scheduled to occur in 2006. In other 
    words, the budget resolution could accommodate changes to 
    prevent tax increases on families of up to $3,380 that 
    otherwise could occur. The budget resolution also 
    accommodates changes to prevent families from losing their 
    ability to use nonrefundable tax credits against AMT 
    liability.
- No tax increase resulting from the loss of the state sales 
    tax deduction. The resolution could accommodate an 
    extension of the deduction for state sales taxes, enacted 
    as part of the American Jobs Creation Act of 2004 (Public 
    Law 108-357) and scheduled to expire December 31, 2005 
    under current law.
- No increase on the tax burden imposed on research and 
    development. The resolution could accommodate an extension 
    of the research and experimentation tax credit, which 
    enables innovators and entrepreneurs to engage in the 
    research necessary to develop new technologies that lead to 
    economic growth.
    The revenue levels in the resolution also could accommodate 
packages of energy tax incentives and charitable contribution 
incentives.
    The budget resolution sets the on-budget revenue level of 
the Federal Government for the next 6 years but it is the 
responsibility of the Committee on Ways and Means to make the 
specific adjustments in law to implement these levels.

                             RECONCILIATION

    Through the reconciliation instructions of the budget 
resolution, the Committee on Ways and Means is directed to 
report legislation to the House floor by June 24, 2005, making 
adjustments in current law to prevent tax increases of $16.623 
billion in fiscal year 2006 and $45.000 billion for fiscal 
years 2006-10.
                   Function-by-Function Presentation

                              ----------                              

    The following presentation shows the resolution's 
recommended distribution of budget authority and outlays 
according to broad categories called ``budget functions.'' This 
is the conventional framework of the resolution, also employed 
in the legislative text.
    But the distribution of spending amounts in the functions 
is derived, however, from a broader perspective on budgetary 
and fiscal policy. It might be summarized as follows (figures 
are based on the the re-estimate, by the Congressional Budget 
Office [CBO], of the President's budget submission, and CBO's 
March baseline):

                         DISCRETIONARY SPENDING

    The fiscal year 2006 discretionary amount--reflecting 
spending subject to annual appropriations--increases by 2.1 
percent. It is built from the following considerations:
- An increase of approximately 4.8 percent for national 
    defense, supporting the President's request.
- An increase of 2.3 percent in homeland security 
    appropriations, which range over multiple functions.
- A 0.8-percent reduction in the aggregate for other programs 
    in fiscal year 2006.
    The functional distributions also are generally the same as 
the President's recommendations, with a few adjustments to 
accommodate congressional priorities. (These adjustments are 
described in the respective functional discussions.) Based on 
this overall framework, total discretionary spending translates 
into a single allocation (known as ``302a'') to the Committee 
on Appropriations, and that committee will allocate portions of 
that amount to the respective subcommittees (in ``302b'' 
suballocations). The outyear figures do not reflect specific 
policy assumptions. Rather, they show the approximate effect of 
a freeze on non-defense, non-homeland-security spending, as 
recommended in the President's request.)

                           MANDATORY SPENDING

    The budget recognizes the significance and rapid growth of 
mandatory spending--spending not subject to annual 
appropriations--which now consumes about 55 percent of total 
Federal spending (excluding interest). Total mandatory spending 
(including interest) is expected to grow at a rate of about 6.4 
percent per year. At its current rate, net non-interest 
mandatory spending will consume 61 percent of total spending in 
just 10 years--increasingly crowding out other priorities. 
Spending control depends on controlling the rate of mandatory 
spending growth. Therefore, to slow the growth of total 
mandatory spending--to about 6.3 percent per year--the budget 
includes directives to nine authorizing committees translating 
to approximately $68.6 billion in savings over the next 5 
years. These savings are displayed in Function 920. They 
reflect the amounts of net mandatory savings expected to be 
achieved, subject to the specific programmatic decisions to 
come from the authorizing committees. This approach is designed 
to allow wide discretion to the authorizing committees in 
achieving the savings amounts identified. That is, the 
committees are free to legislate savings provisions in any of 
the mandatory programs in their jurisdictions, so long as they 
reach their respective reconciliation targets. Nothing in the 
reconciliation directives or the functional levels constrains 
the policy choices the committees make. The mandatory spending 
amounts in the other functions are the CBO baseline levels, 
except for Function 900, which contains the debt service cost 
of the combined policy of the resolution.
    The budget functions presented here are as follows:
    <bullet> National Defense (Function 050)
    <bullet> International Affairs (Function 150)
    <bullet> General Science, Space, and Technology (Function 
250)
    <bullet> Energy (Function 270)
    <bullet> Natural Resources and Environment (Function 300)
    <bullet> Agriculture (Function 350)
    <bullet> Commerce and Housing Credit (Function 370)
    <bullet> Transportation (Function 400)
    <bullet> Community and Regional Development (Function 450)
    <bullet> Education, Training, Employment, and Social 
Services (Function 500)
    <bullet> Health (Function 550)
    <bullet> Medicare (Function 570)
    <bullet> Income Security (Function 600)
    <bullet> Social Security (Function 650)
    <bullet> Veterans Benefits and Services (Function 700)
    <bullet> Administration of Justice (Function 750)
    <bullet> General Government (Function 800)
    <bullet> Net Interest (Function 900)
    <bullet> Allowances (Function 920)
    <bullet> Undistributed Offsetting Receipts (Function 950)
                     FUNCTION 050: NATIONAL DEFENSE


                            Function Summary

    The National Defense function includes funds to develop, 
maintain, and equip the military forces of the United States. 
More than 95 percent of the funding in this function goes to 
Department of Defense [DOD] military activities; the remaining 
funding in the function applies to atomic energy defense 
activities of the Department of Energy, and other defense-
related activities.
    For the 5-year period 2001-05, budget authority in this 
function increased at an average annual rate of 10.5 percent, 
to $500.6 billion. During the same time period, outlays rose 
from $294.5 billion to $497.2 billion, an 11-percent average 
annual growth rate (these figures include the effects of 
supplemental spending including the expected 2005 
supplemental). The largest component of this was the budget of 
the Department of Defense, whose budget authority grew from 
$290.4 billion in 2000 to $480 billion in 2005. The average 
annual growth rate for the 5-year period 2001-2005 is 10.6 
percent (these figures include the effects of supplemental 
spending including the expected 2005 supplemental).

                Summary of Committee-Reported Resolution

    The resolution calls for $441.6 billion in budget authority 
and $475.6 billion in outlays in fiscal year 2006. 
Discretionary spending is $439 billion in budget authority and 
$473 billion in outlays in fiscal year 2006. Mandatory spending 
in 2006 is $2.6 billion in budget authority and $2.6 billion in 
outlays. The five year totals for budget authority and outlays 
are $13.6 billion and $13.7 billion respectively. The outlay 
figures include the 2005 expected supplemental.

                           MANDATORY SPENDING

    Function 050 contains numerous small mandatory accounts 
such as stock funds, trust funds, and gift funds whose receipts 
vary from year to year. There are no mandatory assumptions with 
respect to the Committee on Armed Services.

                         DISCRETIONARY SPENDING

    The discretionary level in this function for fiscal year 
2006 is the President's recommended level, as re-estimated by 
the Congressional Budget Office. The Committee on 
Appropriations will allocate budget authority among the 
respective subcommittees, which will determine funding levels 
for specific programs.
    Elsewhere (in Function 920) the resolution includes $50 
billion for fiscal year 2006 in anticipation of additional 
needs in Afghanistan, Iraq, and the global war on terrorism. 
(In addition, the resolution adjusts fiscal year 2005 levels, 
which accommodate $81.1 billion in supplemental funding for 
these activities in the current year.) This is a mid-range 
estimate for anticipated annual costs. It is not an attempt to 
predetermine the scope or intensity of operations, troops 
levels, or which weapons and supplies DOD will need, but rather 
an effort to make the budget reflect a likely future outlay.
                  FUNCTION 150: INTERNATIONAL AFFAIRS


                            Function Summary

    This function includes international development and 
humanitarian assistance; international security assistance; the 
conduct of foreign affairs; foreign information and exchange 
activities; and international financial programs. The major 
agencies in this function include the Department of 
Agriculture, the Department of State, the Department of the 
Treasury, the United States Agency for International 
Development, and the Millennium Challenge Corporation.
    International Affairs budget authority rose at an annual 
average rate of 7.2 percent for the 5-year period 2001-05, to 
$32.1 billion. During the same time period, outlays rose from 
$17.2 billion to $32.2 billion, a 13.3-percent average annual 
growth rate. The largest component of this was the budget of 
the Department of State, whose budget authority grew at an 
average of 7.5 percent per year, to $11.9 billion in 2005.

                Summary of Committee-Reported Resolution

    The resolution calls for $31.7 billion in BA and $35.2 
billion in outlays in fiscal year 2006. The function totals are 
$171.9 billion in BA and $164.6 billion in outlays over 5 
years. Mandatory spending is -$0.5 billion in BA and -$2.8 
billion in outlays in fiscal year 2006, and totals $2.9 billion 
in BA and -$13.1 billion in outlays over 5 years. Discretionary 
spending is $32.2 billion in BA and $37.9 billion in outlays in 
fiscal year 2006.
    The negative budget authority and outlay levels in 
mandatory spending reflect receipts of the foreign military 
sales trust fund, the repayment of loans and credits to foreign 
nations, and the liquidation of economic assistance loans, 
foreign military financing loans, Export-Import Bank loans, and 
housing and other credit guaranty programs.

                           MANDATORY SPENDING

    The committees with jurisdiction over programs in this 
function are the Committee on International Relations, the 
Committee on Agriculture, the Committee on Financial Services, 
and the Committee on the Judiciary. The mandatory figures are 
CBO baseline levels.

                         DISCRETIONARY SPENDING

    The discretionary level in this function for fiscal year 
2006 is the President's recommended level, as re-estimated by 
the Congressional Budget Office, with the following 
adjustments: the starting level was reduced by $1.2 billion; 
and a further reduction was made with the adoption of the 
Bradley amendment, which shifted $229 million in fiscal year 
2006 and $1.15 billion over 5 years to function 700 to provide 
for an increase in the Department of Veterans Affairs' medical 
care funding. The Committee on Appropriations will allocate 
budget authority among the respective subcommittees, which will 
determine funding levels for specific programs.
          FUNCTION 250: GENERAL SCIENCE, SPACE AND TECHNOLOGY


                            Function Summary

    The largest component of this function--about two-thirds of 
total spending--is for the space flight, research, and 
supporting activities of the National Aeronautics and Space 
Administration [NASA]. The function also contains general 
science funding, including the budgets for the National Science 
Foundation [NSF], and the fundamental science programs of the 
Department of Energy [DOE].
    For the 5-year period 2001-05, budget authority in this 
function rose an average of 4.8 percent per year, to $24.4 
billion. During the same period, outlays rose from $18.6 
billion to $23.6 billion, a 4.9-percent average annual growth 
rate.

                Summary of Committee-Reported Resolution

    The resolution calls for $24.7 billion in budget authority 
and $23.9 billion in outlays in fiscal year 2006. The function 
totals are $127.5 billion in budget authority and $124.2 
billion in outlays over 5 years. Mandatory spending is $130 
million in budget authority and $79 million in outlays in 
fiscal year 2005, and totals $601 million in budget authority 
and $462 million in outlays over 5 years. Discretionary 
spending is $24.6 billion in BA and $23.8 billion in outlays in 
fiscal year 2006.

                           MANDATORY SPENDING

    There are no mandatory assumptions in this function.

                         DISCRETIONARY SPENDING

    The discretionary level in this function for fiscal year 
2006 is the President's recommended level, as re-estimated by 
the Congressional Budget Office. The Committee on 
Appropriations will allocate budget authority among the 
respective subcommittees, which will determine funding levels 
for specific programs.
    Within Function 250, the Budget Committee assumes full 
funding of the President's request for NASA.
                          FUNCTION 270: ENERGY


                            Function Summary

    This function includes civilian energy and environmental 
programs of the Department of Energy [DOE] (it does not include 
DOE's national security activities--the National Nuclear 
Security Administration--which are in Function 050, or its 
basic research and science activities, which are in Function 
250). Function 270 also includes the Rural Utilities Service of 
the Department of Agriculture, the Tennessee Valley Authority 
[TVA], the Federal Energy Regulatory Commission, and the 
Nuclear Regulatory Commission.
    Budget authority in this function reached $2.6 billion in 
2005 with outlays of $794 million. Receipts, repayments, and 
electricity sales (negative spending) result in sharp year-by-
year fluctuations in this function's budget authority and 
outlays.

                Summary of Committee-Reported Resolution

    The resolution calls for $3.1 billion in budget authority 
and $2.0 billion in outlays in fiscal year 2006. The function 
totals are $11.8 billion in budget authority and $5 billion in 
outlays over 5 years. Mandatory spending is -$1.4 billion in 
budget authority and -$2.7 billion in outlays in fiscal year 
2006. Over the 2006-10 period, mandatory spending is -$7.9 
billion in budget authority and -$15.4 billion in outlays. The 
negative figures result from increasing offsetting receipts 
from various loan repayments and liquidations, electricity 
sales, and fees--which appears as negative spending. 
Discretionary spending is $4.5 billion in budget authority and 
$4.7 billion in outlays in fiscal year 2006.

                           MANDATORY SPENDING

    The committees with jurisdiction over programs in this 
function are the Committee on Energy and Commerce, and the 
Committee on Resources. The mandatory figures are CBO baseline 
levels. Any changes in these levels that may result from 
reconciliation directives (described in the Reconciliation 
discussion in this report) and the savings indicated under 
Function 920 will be determined by polices developed by the 
committees of jurisdiction.
    The resolution could accommodate a comprehensive energy 
bill. This is reflected in the allocation to the Committee on 
Energy and Commerce. The authorizing committee is free to 
determine its own policies within the allocation limits.

                         DISCRETIONARY SPENDING

    The discretionary level in this function for fiscal year 
2006 is the President's recommended level, as re-estimated by 
the Congressional Budget Office. The Committee on 
Appropriations will allocate budget authority among the 
respective subcommittees, which will determine funding levels 
for specific programs.
            FUNCTION 300: NATURAL RESOURCES AND ENVIRONMENT


                            Function Summary

    The Natural Resources and Environment function consists of 
water resources, conservation, land management, pollution 
control and abatement, and recreational resources. Major 
departments and agencies in this function are the Department of 
Interior, including the National Park Service [NPS], the Bureau 
of Land Management [BLM], the Bureau of Reclamation, and the 
Fish and Wildlife Service [FWS]; conservation-oriented and land 
management agencies within the Department of Agriculture [USDA] 
including the Forest Service; the National Oceanic and 
Atmospheric Administration [NOAA] in the Department of 
Commerce; the Army Corps of Engineers; and the Environmental 
Protection Agency [EPA].
    Budget authority in this function for the 5-year period 
2001-05 rose an average of 5.4 percent per year, to $32.5 
billion. During the same period, outlays increased at a 4.5-
percent rate, to $31.2 billion.

                Summary of Committee-Reported Resolution

    The resolution calls for $30.5 billion in budget authority 
and $32.3 billion in outlays in fiscal year 2006. The function 
totals are $155.3 billion in budget authority and $161.6 
billion in outlays over 5 years. Mandatory spending is $2.0 
billion in budget authority and $1.7 billion in outlays in 
fiscal year 2006. Over the 2006-10 period, mandatory spending 
totals $13.5 billion in budget authority and $14.3 billion in 
outlays. Discretionary spending is $28.5 billion in budget 
authority and $30.6 billion in outlays in fiscal year 2006.

                           MANDATORY SPENDING

    The Committee on Resources has jurisdiction over the 
majority of mandatory programs in this function. The Committees 
on Agriculture, Transportation and Infrastructure, and Energy 
and Commerce also have jurisdiction. The mandatory figures are 
CBO baseline levels. Any changes in these levels that may 
result from reconciliation directives (described in the 
Reconciliation discussion in this report) and the savings 
indicated under Function 920 will be determined by polices 
developed by the committees of jurisdiction.

                         DISCRETIONARY SPENDING

    The discretionary level in this function for fiscal year 
2006 is the President's recommended level, as re-estimated by 
the Congressional Budget Office, with the following adjustment: 
the starting level was increased to accommodate $500 million in 
additional budget authority. The Committee on Appropriations 
will allocate budget authority among the respective 
subcommittees, which will determine funding levels for specific 
programs.
                       FUNCTION 350: AGRICULTURE


                            Function Summary

    The Agriculture function includes funds for direct 
assistance and loans to food and fiber producers, export 
assistance, market information, inspection services, and 
agricultural research. Farm policy is driven by the Farm 
Security and Rural Investment Act of 2002, which provides 
producers with continued planting flexibility while protecting 
them against unique uncertainties such as poor weather 
conditions and unfavorable market conditions.
    Homeland security spending in this function includes 
funding for the Department of Agriculture and the Department of 
Homeland Security (including the Agriculture and Plant Health 
Inspection Service).
    Budget authority and outlays in this function have declined 
in past 5 years, principally due to more favorable overall 
commodity prices in 2005 than in 2000. Commodity prices often 
fluctuate from year to year. This has a significant impact on 
mandatory programs, which account for the vast majority of 
spending within Function 350.

                Summary of Committee-Reported Resolution

    The resolution calls for $29.5 billion in budget authority 
and $28.5 billion in outlays in fiscal year 2006. The function 
totals are $133.1 billion in budget authority and $128.3 
billion in outlays over 5 years. Mandatory spending is $24.1 
billion in budget authority and $22.7 billion in outlays in 
fiscal year 2006. Over the 2006-10 period, mandatory spending 
totals $104.7 billion in budget authority and $99.7 billion in 
outlays. Discretionary spending is $5.4 billion in budget 
authority and $5.8 billion in outlays in fiscal year 2006.

                           MANDATORY SPENDING

    The Agriculture Committee has sole jurisdiction over 
programs in this function. The mandatory figures are CBO 
baseline levels. Any changes in these levels that may result 
from reconciliation directives (described in the Reconciliation 
discussion in this report) and the savings indicated under 
Function 920 will be determined by polices developed by the 
Agriculture Committee.

                         DISCRETIONARY SPENDING

    The discretionary level in this function for fiscal year 
2006 is the President's recommended level, as re-estimated by 
the Congressional Budget Office. The Committee on 
Appropriations will allocate budget authority among the 
respective subcommittees, which will determine funding levels 
for specific programs.
               FUNCTION 370: COMMERCE AND HOUSING CREDIT


                            Function Summary

    The Commerce and Housing Credit function includes four 
components: mortgage credit (usually negative budget authority 
because receipts tend to exceed the losses from defaulted 
mortgages); the Postal Service (mostly off budget); deposit 
insurance (negligible spending due to reserve supporting fees, 
etc.); and other advancement of commerce (the majority of the 
discretionary and mandatory spending in this function).
    The mortgage credit component of this function includes 
housing assistance through the Federal Housing Administration 
[FHA], the Federal National Mortgage Association [Fannie Mae], 
the Federal Home Loan Mortgage Corporation [Freddie Mac], the 
Government National Mortgage Association [Ginnie Mae], and 
rural housing programs of the Department of Agriculture. The 
function also includes net postal service spending and spending 
for deposit insurance activities of banks, thrifts, and credit 
unions. Finally, most, but not all, of the Commerce Department 
is provided for in this function, including the International 
Trade Administration, Bureau of Economic Analysis, Patent and 
Trademark Office [PTO], National Institute of Standards and 
Technology, National Telecommunications and Information 
Administration, and the Bureau of the Census; as well as 
independent agencies such as the Securities and Exchange 
Commission [SEC], the Commodity Futures Trading Commission, the 
Federal Trade Commission, the Federal Communications Commission 
[FCC], and the majority of the Small Business Administration 
[SBA].
    More than two-thirds of the spending in function 370 is out 
of the FCC's Universal Service Fund. This fund collects 
receipts raised by certain telecommunications operators from 
charges on their consumers and customers to promote service to 
low-income users and high-cost areas, as well as new services.
    For the 5-year period 2001-05, on-budget budget authority 
in this function rose an average of 7.5 percent per year, 
reaching $16.8 billion in 2005. In the same period, outlays 
rose 57.2 percent per year, to $11.3 billion.

                Summary of Committee-Reported Resolution

    For on-budget amounts, the resolution calls for $10.8 
billion in budget authority and $5.6 billion in outlays in 
fiscal year 2006. The function totals are $56.1 billion in 
budget authority and $24.9 billion in outlays over 5 years. 
Mandatory spending is $9.9 billion in budget authority and $4.5 
billion in outlays in fiscal year 2006, and totals $46.5 
billion in budget authority and $16.0 billion in outlays over 5 
years. Discretionary spending is $0.9 billion in budget 
authority and $1.1 billion in outlays in fiscal year 2006.

                           MANDATORY SPENDING

    The Committees on Financial Services, Energy and Commerce, 
and Small Business have principal jurisdiction over on-budget 
programs in this area. The mandatory figures are CBO baseline 
levels. Any changes in these levels that may result from 
reconciliation directives (described in the Reconciliation 
discussion in this report) and the savings indicated under 
Function 920 will be determined by polices developed by the 
authorizing committees.

                         DISCRETIONARY SPENDING

    The discretionary level in this function for fiscal year 
2006 is the President's recommended level, as re-estimated by 
the Congressional Budget Office. The Committee on 
Appropriations will allocate budget authority among the 
respective subcommittees, which will determine funding levels 
for specific programs.
                      FUNCTION 400: TRANSPORTATION


                            Function Summary

    The Transportation function includes ground, air, water and 
other transportation funding. The major agencies and programs 
in this function include the Department of Transportation 
(including the Federal Aviation Administration; the Federal 
Highway Administration; the Federal Transit Administration; 
highway, motor carrier, rail and pipeline safety programs; and 
the Maritime Administration), the aeronautical activities of 
the National Aeronautics and Space Administration [NASA], and 
the National Railroad Passenger Corporation [Amtrak].
    Homeland security spending in this function includes 
funding for the Department of Homeland Security (including the 
Federal Air Marshals, the Transportation Security 
Administration and the U.S. Coast Guard) and the Department of 
Transportation.
    Budget authority rose an average of 5.5 percent per year 
for the 5-year period 2001-05, to $72.5 billion. During the 
same time period, outlays rose to $67.7 billion, at a 7.6-
percent average annual growth rate. The largest component of 
this was the Department of Transportation; the committee's 
budget authority grew an average of 4.1 percent per year, to 
$61.1 billion in 2005.

                Summary of Committee-Reported Resolution

    The resolution calls for $70.0 billion in budget authority 
and $70.4 billion in outlays in fiscal year 2006. The function 
totals are $353.8 billion in budget authority and $369.8 
billion in outlays over 5 years. Mandatory spending is $48.4 
billion in budget authority and $2.2 billion in outlays in 
fiscal year 2006, and totals $242.2 billion in budget authority 
and $10.9 billion in outlays over 5 years. Discretionary 
spending is $21.6 billion in budget authority and $68.2 billion 
in outlays in fiscal year 2006.

                           MANDATORY SPENDING

    The committees with jurisdiction over programs in this 
function are the Committee on Transportation and 
Infrastructure, the Committee on Homeland Security, and the 
Committee on Resources. The mandatory figures are CBO baseline 
levels adjusted to accommodate the anticipated reauthorization 
of TEA-21. Any changes in these levels that may result from 
reconciliation directives (described in the Reconciliation 
discussion in this report) and the savings indicated under 
Function 920 will be determined by polices developed by the 
committees of jurisdiction.
    The resolution establishes a reserve fund that allows the 
Chairman of the Committee on the Budget to adjust the 
allocation of budget authority to the Committee on 
Transportation and Infrastructure for any measure that 
reauthorizes surface transportation programs and provides new 
budget authority for highway and transit spending. The 
adjustment may only be made if it is offset by changes in law, 
either included in same measure or by previously enacted 
legislation. The language in the resolution regarding this 
contingency measure is identical to that included in the budget 
resolution for fiscal years 2004 and 2005.
    The Committee on Transportation and Infrastructure has 
programs that spend out of the Highway Trust Fund, in which 
budget authority is defined as mandatory. The resulting 
outlays, however, are characterized as discretionary, and are 
scored against the Appropriations Committee. That committee 
constrains the outlays through appropriations act language 
known as ``obligation limitations.''

                         DISCRETIONARY SPENDING

    The discretionary level in this function for fiscal year 
2006 is the President's recommended level, as re-estimated by 
the Congressional Budget Office, with the following adjustment: 
the starting level was increased to accommodate for continued 
funding of passenger rail services. The Committee on 
Appropriations will allocate budget authority among the 
respective subcommittees, which will determine funding levels 
for specific programs.
            FUNCTION 450: COMMUNITY AND REGIONAL DEVELOPMENT


                            Function Summary

    The Community and Regional Development function includes 
programs that provide Federal funding for economic and 
community development in both urban and rural areas, including: 
Community Development Block Grants [CDBGs]; the non-power 
activities of the Tennessee Valley Authority; the non-roads 
activities of the Appalachian Regional Commission; the Economic 
Development Administration [EDA]; and partial funding for the 
Bureau of Indian Affairs.
    Homeland Security spending in this function includes the 
State and Local Government grant programs of the Department of 
Homeland Security.
    During the 5-year period 2001-05, budget authority in this 
function rose an average of 15.3 percent per year, to $23.0 
billion. Outlays rose at a rate of 14.4 percent per year, to 
$20.8 billion. A factor in this growth was Federal Emergency 
Management Agency [FEMA] funding for first responders, and one-
time New York City recovery funds in the wake of the events of 
9-11.

                Summary of Committee-Reported Resolution

    The resolution calls for $14.2 billion in budget authority 
and $18.5 billion in outlays in fiscal year 2006. The function 
totals are $71.5 billion in budget authority and $80.2 billion 
in outlays over 5 years. Mandatory spending is $0.5 billion in 
budget authority and -$0.2 billion in outlays in fiscal year 
2006, and totals $0.8 billion in budget authority and -$0.8 
billion in outlays over 5 years. The negative figures reflect 
receipts to revolving loan funds. Discretionary spending is 
$13.7 billion in budget authority and $18.7 billion in outlays 
in fiscal year 2006.

                           MANDATORY SPENDING

    The resolution assumes no changes to mandatory spending 
programs in the function.

                         DISCRETIONARY SPENDING

    The discretionary level in this function for fiscal year 
2006 is the President's recommended level, as re-estimated by 
the Congressional Budget Office, with the following adjustment: 
the starting level was increased $1.1 billion to accommodate 
higher appropriations for programs such as the Community 
Development Block Grant. The resolution makes no assumption 
regarding implementation of the President's proposed 
Strengthening America's Communities Block Grant or transferring 
the Community Development Block Grant program from the 
Department of Housing and Urban Development to the Department 
of Commerce. The Committee on Appropriations will allocate 
budget authority among the respective subcommittees, which will 
determine funding levels for specific programs.
   FUNCTION 500: EDUCATION, TRAINING, EMPLOYMENT, AND SOCIAL SERVICES


                            Function Summary

    The function titled Education, Training, Employment, and 
Social Services primarily covers Federal spending within the 
Departments of Education, Labor, and Health and Human Services 
for programs that directly provide--or assist States and 
localities in providing--services to young people and adults. 
Its activities provide developmental services to low-income 
children; support programs for disadvantaged and other 
elementary and secondary school students; make grants and loans 
to post secondary students; and maintain job-training and 
employment services.
    For the 5-year period 2001-05, budget authority in this 
function rose an average of 13.7 percent per year, reaching 
$94.0 billion in 2005. During the same period, outlays rose 
11.5 percent per year, to $92.8 billion.

                Summary of Committee-Reported Resolution

    The resolution calls for $92.0 billion in budget authority 
and $91.0 billion in outlays in fiscal year 2006. The function 
totals are $451.7 billion in budget authority and $446.7 
billion in outlays over 5 years. Mandatory spending is $13.9 
billion in budget authority and $11.5 billion in outlays in 
fiscal year 2006, and totals $71.7 billion in budget authority 
and $62.4 billion in outlays over 5 years. Discretionary 
spending is $78.1 billion in budget authority and $79.5 billion 
in outlays in fiscal year 2006.

                           MANDATORY SPENDING

    The committee with jurisdiction over programs in this 
function is the Committee on Education and the Workforce. The 
mandatory figures are CBO baseline levels. Any changes in these 
levels that may result from reconciliation directives 
(described in the Reconciliation discussion in this report) and 
the savings indicated under Function 920 will be determined by 
policies developed by the committees of jurisdiction.

                         DISCRETIONARY SPENDING

    The discretionary level in this function for fiscal year 
2006 is the President's recommended level, as re-estimated by 
the Congressional Budget Office. The Committee on 
Appropriations will allocate budget authority among the 
respective subcommittees, which will determine funding levels 
for specific programs.
                          FUNCTION 550: HEALTH


                            Function Summary

    This function consists of health care services, including 
Medicaid, the Nation's major program covering medical and long-
term care costs for low-income persons; the State Children's 
Health Insurance Program [SCHIP], health research and training, 
including the National Institutes of Health [NIH] and substance 
abuse prevention and treatment; and consumer and occupational 
health and safety, including the Occupational Safety and Health 
Administration. Medicaid represents 71 percent of the spending 
in this function.
    Homeland security activities and agencies in this category 
include Project Bioshield, the National Institutes of Health, 
the National Institute of Allergy and Infectious Diseases, the 
Food Safety and Inspection Service, and the Food and Drug 
Administration.
    For the 5-year period 2001-05, budget authority in this 
function rose an average of 9.8 percent per year, to $257.5 
billion in 2005. Outlays in the same period increased at an 
average 10.3-percent rate, to $252.8 billion. The largest 
component of this growth was Medicaid, whose Federal payments 
grew an average of 9.8 percent per year, to $183.2 billion.

                Summary of Committee-Reported Resolution

    The resolution calls for $262.2 billion in BA and $262.5 
billion in outlays in fiscal year 2006. The function totals are 
$1,486.0 billion in BA and $1,480.3 billion in outlays over 5 
years. Mandatory spending is $211.2 billion in BA and $210.8 
billion in outlays in fiscal year 2006, and totals $1,231.2 
billion in BA and $1,225.7 billion in outlays over 5 years. 
Discretionary spending is $50.9 billion in BA and $51.7 billion 
in outlays in fiscal year 2006.

                           MANDATORY SPENDING

    The Committee on Energy and Commerce has jurisdiction over 
programs in this function. The mandatory figures are CBO 
baseline levels. Any changes in these levels that may result 
from reconciliation directives (described in the Reconciliation 
discussion in this report) and the savings indicated under 
Function 920 will be determined by policies developed by the 
committees of jurisdiction.

                         DISCRETIONARY SPENDING

    The discretionary level in this function for fiscal year 
2006 is the President's recommended level, as re-estimated by 
the Congressional Budget Office. The Committee on 
Appropriations will allocate budget authority among the 
respective subcommittees, which will determine funding levels 
for specific programs.
                         FUNCTION 570: MEDICARE


                            Function Summary

    This budget function reflects the Medicare Part A Hospital 
Insurance [HI] Program, Part B Supplementary Medical Insurance 
[SMI] Program, Part C Medicare Advantage Program, and Part D 
Prescription Drug Benefit, as well as premiums paid by 
qualified aged and disabled beneficiaries. On 8 December 2003, 
Congress and the President enacted the Medicare Prescription 
Drug, Improvement, and Modernization Act [MMA]. MMA changed 
Medicare Part C from the Medicare+Choice Program to the 
Medicare Advantage Program and added the Part D Prescription 
Drug Benefit to the Medicare Program.
    Function 570 budget authority rose from $217.1 billion in 
2001 to $292.6 billion in 2005; the average annual growth for 
the 5-year period 2001-05 is 7.8 percent. During the same time 
period, outlays rose from $217.4 billion to $293.6 billion, a 
8.3-percent average annual growth rate. This function consists 
entirely of the Medicare program.

                Summary of Committee-Reported Resolution

    The resolution calls for $331.2 billion in budget authority 
and $330.9 billion in outlays in fiscal year 2006. The function 
totals are $1,966.7 billion in budget authority and $1,966.7 
billion in outlays over 5 years. Mandatory spending is $326.1 
billion in budget authority and $326.1 billion in outlays in 
fiscal year 2006, and totals $1,941.8 billion in budget 
authority and $1,942.0 billion in outlays over 5 years. 
Discretionary spending is $5.1 billion in budget authority and 
$4.9 billion in outlays in fiscal year 2006.

                           MANDATORY SPENDING

    The committees with jurisdiction over programs in this 
function are the committees on Energy and Commerce and Ways and 
Means. The mandatory figures are the CBO baseline levels.

                         DISCRETIONARY SPENDING

    The discretionary level in this function for fiscal year 
2006 is the President's recommended level, as re-estimated by 
the Congressional Budget Office.
                     FUNCTION 600: INCOME SECURITY


                            Function Summary

    The Income Security function includes most of the Federal 
Government's income support programs. These include: general 
retirement and disability insurance (excluding Social 
Security)--mainly through the Pension Benefit Guaranty 
Corporation [PBGC]--and benefits to railroad retirees. Other 
components are Federal employee retirement and disability 
benefits (including military retirees); unemployment 
compensation; low-income housing assistance, including section 
8 housing; food and nutrition assistance, including food stamps 
and school lunch subsidies; and other income security programs.
    This last category includes: Temporary Assistance to Needy 
Families [TANF], the Government's principal welfare program; 
Supplemental Security Income [SSI]; spending for the refundable 
portion of the Earned Income Credit [EIC]; and the Low Income 
Home Energy Assistance Program [LIHEAP]. Agencies involved in 
these programs include the Departments of Agriculture, Health 
and Human Services, Housing and Urban Development, the Social 
Security Administration (for SSI), and the Office of Personnel 
Management (for Federal retirement benefits).
    This function's budget authority rose an average of 6.3 
percent per year for the 5-year period 2001-05, to $339.1 
billion. Outlays rose an average of 6.5 percent per year in the 
same period, to $347.8 billion in 2005.

                Summary of Committee-Reported Resolution

    The resolution calls for $347.2 billion in budget authority 
and $354.1 billion in outlays in fiscal year 2006. The function 
totals are $1,823.1 billion in budget authority and $1,850.0 
billion in outlays over 5 years. Mandatory spending is $300.1 
billion in budget authority and $299.9 billion in outlays in 
fiscal year 2006, and totals $1,591.7 billion in budget 
authority and $1,590.4 billion in outlays over 5 years. 
Discretionary spending is $47.1 billion in budget authority and 
$54.2 billion in outlays in fiscal year 2006.

                           MANDATORY SPENDING

    Although several committees have jurisdiction over programs 
in this function, those with major programs are: Ways and 
Means, Agriculture, Education and the Workforce, Government 
Reform, and Armed Services. The mandatory figures are CBO 
baseline levels. Any changes in these levels that may result 
from reconciliation directives (described in the Reconciliation 
discussion in this report) and the savings indicated under 
Function 920 will be determined by policies developed by the 
committees of jurisdiction.

                         DISCRETIONARY SPENDING

    The discretionary level in this function for fiscal year 
2006 is the President's recommended level, as re-estimated by 
the Congressional Budget Office, with the following adjustment: 
the starting level was reduced by $0.1 billion to accommodate 
increased funding for community and regional development 
programs in Function 450. The Committee on Appropriations will 
allocate budget authority among the respective subcommittees, 
which will determine funding levels for specific programs.
                     FUNCTION 650: SOCIAL SECURITY


                            Function Summary

    This function consists of the Social Security Program, or 
Old Age, Survivors, and Disability Insurance [OASDI]. It is the 
largest budget function in terms of outlays, and provides funds 
for the Government's largest entitlement program. Under 
provisions of the Congressional Budget Act and the Budget 
Enforcement Act, Social Security trust funds are considered to 
be off budget. But a small portion of spending within Function 
650--including general fund transfers of taxes paid on Social 
Security benefits--is on budget. The presentations below, 
therefore, refer to only the on-budget portion of Function 650.
    Function 650 on-budget budget authority rose from $11.7 
billion in 2001 to $15.8 billion in 2005; the average annual 
growth for the 5-year period 2001-05 is 3.6 percent. During the 
same time period, outlays rose from $11.7 billion to $15.8 
billion, a 3.6-percent average annual growth rate. This 
function consists entirely of the Social Security program.

                Summary of Committee-Reported Resolution

    The resolution calls for $15.9 billion in on-budget budget 
authority and $15.9 billion in outlays in fiscal year 2006. The 
function totals are $99.1 billion in budget authority and $99.1 
billion in outlays over 5 years. Mandatory spending is $15.9 
billion in budget authority and $15.9 billion in outlays in 
fiscal year 2006, and totals $99.1 billion in on-budget budget 
authority outlays over 5 years. There is no on-budget 
discretionary spending in this function.

                           MANDATORY SPENDING

    There are no mandatory assumptions within this function.

                         DISCRETIONARY SPENDING

    The discretionary level in this function for fiscal year 
2006 is the President's recommended level, as re-estimated by 
the Congressional Budget Office. The Committee on 
Appropriations will allocate budget authority among the 
respective subcommittees, which will determine funding levels 
for specific programs.
              FUNCTION 700: VETERANS BENEFITS AND SERVICES


                            Function Summary

    This function includes funding for the Department of 
Veterans Affairs [VA], which provides benefits to veterans who 
meet various eligibility rules. Benefits range from income 
security for veterans, principally disability compensation and 
pensions; veterans education, training, and rehabilitation 
services; hospital and medical care for veterans; and other 
veterans' benefits and services, such as home loan guarantees. 
There are about 24.8 million veterans.
    Budget authority in this function grew at an average of 8.8 
percent per year for the 5-year period 2001-05, reaching $69.4 
billion. Outlays in the same period rose 7.9 percent per year, 
to $68.9 billion in 2005. The largest component of this was 
veterans medical care, whose budget authority grew an average 
of 9.7 percent per year, to $30.0 billion in 2005.

                Summary of Committee-Reported Resolution

    The resolution calls for $68.9 billion in budget authority 
and $68.1 billion in outlays in fiscal year 2006. The function 
totals are $344.7 billion in budget authority and $342.9 
billion in outlays over 5 years. Mandatory spending is $37.1 
billion in budget authority and $37.1 billion in outlays in 
fiscal year 2006, and totals $190.8 billion in budget authority 
and $190.3 billion in outlays over 5 years. Discretionary 
spending is $31.7 billion in budget authority and $31.0 billion 
in outlays in fiscal year 2006.

                           MANDATORY SPENDING

    The committee with jurisdiction over programs in this 
function is the Committee on Veterans Affairs. The mandatory 
figures are CBO baseline levels. Any changes in these levels 
that may result from reconciliation directives (described in 
the Reconciliation discussion in this report) and the savings 
indicated under Function 920 will be determined by polices 
developed by the committees of jurisdiction.

                         DISCRETIONARY SPENDING

    The discretionary level in this function for fiscal year 
2006 is the President's recommended level, as re-estimated by 
the Congressional Budget Office, with the following 
adjustment(s): The Chairman's Mark increased budget authority 
over the President's recommended levels by $68 million in 
fiscal year 2006 and $609 million over the period 2006-10. 
During markup, the Budget Committee adopted an amendment by Mr. 
Bradley further increasing budget authority by $229 million for 
fiscal year 2006 and $1.145 billion over the period 2006-10. As 
a result, the reported resolution includes an increase in total 
veterans budget authority of $297 million in fiscal year 2006 
over the President's request. The Committee on Appropriations 
will allocate budget authority among the respective 
subcommittees, which will determine funding levels for specific 
programs.
                FUNCTION 750: ADMINISTRATION OF JUSTICE


                            Function Summary

    This function supports the majority of Federal justice and 
law enforcement programs and activities. This includes funding 
for the Department of Justice, as well as the financial law 
enforcement activities of the Department of the Treasury, 
Federal courts and prisons, and criminal justice assistance to 
State and local governments.
    Homeland security spending in this function includes 
funding for the law enforcement and border protection 
activities of the Department of Homeland Security and the 
counterterrorism activities of the Department of Justice and 
the Department of the Treasury.
    For the 5-year period 2001-05, budget authority in this 
function rose an average of 7.7 percent per year, to $39.8 
billion. Outlays rose to $39.5 billion in the same period, an 
average of 6.7 percent per year.

                Summary of Committee-Reported Resolution

    The resolution calls for $40.8 billion in budget authority 
and $42.3 billion in outlays in fiscal year 2006. The function 
totals are $209.7 billion in budget authority and $213 billion 
in outlays over 5 years. Mandatory spending is $2.1 billion in 
budget authority and $1.3 billion in outlays in fiscal year 
2006, and totals $4.6 billion in budget authority and $4.5 
billion in outlays over 5 years. Discretionary spending is 
$38.7 billion in budget authority and $41 billion in outlays in 
fiscal year 2006.

                           MANDATORY SPENDING

    The committees with jurisdiction over programs in this 
function are the Committee on the Judiciary and the Committee 
on Ways and Means. The mandatory figures are CBO baseline 
levels. Any changes in these levels that may result from 
reconciliation directives (described in the Reconciliation 
discussion in this report) and the savings indicated under 
Function 920 will be determined by polices developed by the 
committees of jurisdiction.

                         DISCRETIONARY SPENDING

    The discretionary level in this function for fiscal year 
2006 is the President's recommended level, as re-estimated by 
the Congressional Budget Office, with an adjustment for the 
Federal Judiciary to grow at the rate of inflation. The 
Committee on Appropriations will allocate budget authority 
among the respective subcommittees, which will determine 
funding levels for specific programs.
                    FUNCTION 800: GENERAL GOVERNMENT


                            Function Summary

    General Government consists of the activities of the 
Legislative Branch; the Executive Office of the President; 
general tax collection and fiscal operations of the Department 
of Treasury (including the Internal Revenue Service); the 
Office of Personnel Management, and the property and personnel 
costs of the General Services Administration; general purpose 
fiscal assistance to States, localities, the District of 
Columbia, and U.S. territories; and other general Government 
activities.
    Function 800 budget authority rose an average of 5.2 
percent per year for the 5-year period 2001-05, to $16.7 
billion. During the same time period, outlays rose to $17.7 
billion, at an average rate of 6.4 percent per year.

                Summary of Committee-Reported Resolution

    The resolution calls for $18 billion in budget authority 
and $18.3 billion in outlays in fiscal year 2006. The function 
totals are $88.5 billion in budget authority and $88.5 billion 
in outlays over 5 years. Mandatory spending is $1.7 billion in 
budget authority and $1.7 billion in outlays in fiscal year 
2006, and totals $7.3 billion in budget authority and $7.3 
billion in outlays over 5 years. Discretionary spending is 
$16.3 billion in budget authority and $16.6 billion in outlays 
in fiscal year 2006.

                           MANDATORY SPENDING

    The function includes a collection of legislative and 
executive branch programs that support the general 
responsibilities--the ``nuts and bolts''--of running the 
federal government, as such almost every authorizing committee 
in Congress has some jurisdiction over programs in this 
function. The largest mandatory programs within this function 
fall under the jurisdiction of the Committee on Government 
Reform, the Committee on Ways and Means and the Committee on 
House Administration. The mandatory figures are CBO baseline 
levels. Any changes in these levels that may result from 
reconciliation directives (described in the Reconciliation 
discussion in this report) and the savings indicated under 
Function 920 will be determined by polices developed by the 
committees of jurisdiction.

                         DISCRETIONARY SPENDING

    The discretionary level in this function for fiscal year 
2006 is the President's recommended level, as re-estimated by 
the Congressional Budget Office. The Committee on 
Appropriations will allocate budget authority among the 
respective subcommittees, which will determine funding levels 
for specific programs.
                       FUNCTION 900: NET INTEREST


                            Function Summary

    This function includes net interest, which is the interest 
paid for the Federal Government's borrowing less the interest 
received by the Federal Government from trust fund investments 
and loans to the public. It is a mandatory payment, with no 
discretionary components.
    For the 5-year period 2001-05, unified budget authority and 
outlays declined 4.5 percent per year, to 176.9 billion in 
fiscal year 2005. The largest component of this decline was the 
interest received by off-budget trust funds.

                Summary of Committee-Reported Resolution

    The resolution calls for $214.0 billion in unified budget 
authority and outlays in fiscal year 2006. The function totals 
are $1,357.9 billion in budget authority and outlays over 5 
years. On-budget spending is $310.5 billion in budget authority 
and outlays in fiscal year 2006, and totals $1,946.8 billion in 
budget authority and outlays over 5 years. Off-budget spending 
is -$96.5 billion in budget authority and outlays in fiscal 
year 2006; and over 5 years, it is -$588.9 billion in budget 
authority and outlays.

                           MANDATORY SPENDING

    There are no specific mandatory assumptions in this 
function.
                        FUNCTION 920: ALLOWANCES


                            Function Summary

    Function 920, Allowances, is used for planning purposes to 
address the budgetary effects of proposals or assumptions that 
cross various other budget functions. Once such changes are 
enacted, the budgetary effects are distributed to the 
appropriate budget functions.

                Summary of Committee-Reported Resolution

    The function totals are $47.903 billion in budget authority 
and $24.359 billion in outlays in fiscal year 2006; and $9.963 
billion in budget authority and -$16.969 billion in outlays for 
2006-10. The figures are derived as follows:

                         DISCRETIONARY SPENDING

    The resolution calls for $50.0 billion in discretionary 
budget authority and $32.0 billion in outlays in fiscal year 
2006. This is to anticipate the likelihood of supplemental 
appropriations for continuing military operations in 
Afghanistan and Iraq. This is a mid-range estimate for 
anticipated annual costs. It is not an attempt to predetermine 
the scope or intensity of operations, troops levels, or which 
weapons and supplies the Department of Defense will need, but 
rather an effort to make the budget reflect a likely future 
expenditure. Over 5 years, outlays from the 2006 budget 
authority total $50 billion.

                           MANDATORY SPENDING

    The Allowances function also reflects a net reduction in 
mandatory spending called for in the budget resolution.
    As noted previously, the budget recognizes the significance 
and rapid growth of mandatory spending--spending not subject to 
annual appropriations--which now consumes about 55 percent of 
total Federal spending (excluding interest). Total mandatory 
spending (including interest) is growing at a rate of about 6.4 
percent per year. At its current rate, net non-interest 
mandatory spending will consume 61 percent of total spending in 
just 10 years--increasingly crowding out other priorities. 
Spending control depends on controlling the rate of mandatory 
spending growth. Therefore, to slow the growth of total 
mandatory spending--to about 6.3 percent per year--the budget 
includes reconciliation directives to nine authorizing 
committees (see the Reconciliation discussion in this report). 
The net savings called for are expressed in this function in 
the negative figures for mandatory spending: -$2.097 in budget 
authority and -$7.641 in outlays in fiscal year 2006; and 
-$40.037 billion in budget authority and -$66.969 billion in 
outlays for 2006-10.
    By placing these savings amounts in this function, the 
budget resolution assures the flexibility of the authorizing 
committees in determining the programmatic decisions as to how 
these savings are achieved. The committees are free to 
legislate savings provisions in any of the mandatory programs 
in their jurisdictions, so long as they reach the outlays 
savings called for in their respective reconciliation targets. 
Nothing in the functional levels should be construed as 
constraining the policy choices the committees make.
            FUNCTION 950: UNDISTRIBUTED OFFSETTING RECEIPTS


                            Function Summary

    This function consists of receipts to the Treasury. 
Receipts recorded in this function are either intrabudgetary (a 
payment from one Federal agency to another, such as agency 
payments to the retirement trust funds) or proprietary (a 
payment from the public for some kind of business transaction 
with the Government). The main types of receipts recorded in 
this function are: the payments Federal employees and agencies 
make to employee retirement trust funds; payments made by 
companies for the right to explore and produce oil and gas on 
the Outer Continental Shelf, and payments by those who bid for 
the right to buy or use public property or resources, such as 
the electromagnetic spectrum. These receipts are treated as 
negative spending.
    Because increases in on-budget receipts appear as negative 
spending, budget authority shows a decline for the 5-year 
period 2001-05 of 9.2 percent per year, on average, to $54.1 
billion in 2005, indicating an increase in receipts. Similarly, 
the increasing receipts are reflected as a decline in outlays 
in the same period by an average of 9.2 percent per year, to 
$54.1 billion in 2005. Off-budget receipts have increased an 
average of 7.9 percent per year, reaching $11.2 billion in 2005 
(as reflected in negative spending).

                Summary of Committee-Reported Resolution

    The resolution calls for -$67.1 billion in unified budget 
authority and -$67.1 billion in outlays in fiscal year 2006 
(with the minus signs again indicating receipts into the 
Treasury.) The function totals are -$375.7 billion in budget 
authority and -$376.4 billion in outlays over 5 years.

                           MANDATORY SPENDING

    The committees with jurisdiction over programs in this 
function are the Committees on Energy and Commerce, Armed 
Services, Resources, and Government Reform. The mandatory 
figures are CBO baseline levels. Any changes in these levels 
that may result from reconciliation directives (described in 
the Reconciliation discussion in this report) and the savings 
indicated under Function 920 will be determined by polices 
developed by the committees of jurisdiction.
                          Revenue Comparisons

                              ----------                              



   TABLE 3.--COMPARISON OF TOTAL REVENUES FOR PRESIDENT'S REQUEST AND
                        COMMITTEE RECOMMENDATION
                        [In billions of dollars]
------------------------------------------------------------------------
                                                                 Amount
------------------------------------------------------------------------
Fiscal year:
    1993 Actual..............................................    1,154.4
    1994 Actual..............................................    1,258.6
    1995 Actual..............................................    1,351.8
    1996 Actual..............................................    1,453.1
    1997 Actual..............................................    1,579.3
    1998 Actual..............................................    1,721.8
    1999 Actual..............................................    1,827.5
    2000 Actual..............................................    2,025.2
    2001 Actual..............................................    1,991.2
    2002 Actual..............................................    1,853.2
    2003 Actual..............................................    1,782.3
    2004 Actual..............................................    1,880.1
Fiscal Year 2005:
    President's Request (February 2005)......................    2,057.3
    Committee Level..........................................    2,057.4
Fiscal Year 2006:
    President's Request (February 2005)......................    2,209.8
    Committee Level..........................................    2,194.8
Fiscal Year 2007:
    President's Request (February 2005)......................    2,350.5
    Committee Level..........................................    2,331.2
Fiscal Year 2008:
    President's Request (February 2005)......................    2,491.5
    Committee Level..........................................    2,496.0
Fiscal Year 2009:
    President's Request (February 2005)......................    2,625.1
    Committee Level..........................................    2,634.6
Fiscal Year 2010:
    President's Request (February 2005)......................    2,769.8
    Committee Level..........................................    2,784.3
------------------------------------------------------------------------
Note: President's Request is CBO estimate.


 TABLE 4.--COMPARISON OF ON-BUDGET REVENUES FOR PRESIDENT'S REQUEST AND
                        COMMITTEE RECOMMENDATION
                        [In billions of dollars]
------------------------------------------------------------------------
                                                                 Amount
------------------------------------------------------------------------
Fiscal year:
    1993 Actual..............................................      842.5
    1994 Actual..............................................      923.6
    1995 Actual..............................................    1,000.8
    1996 Actual..............................................    1,085.6
    1997 Actual..............................................    1,187.3
    1998 Actual..............................................    1,306.0
    1999 Actual..............................................    1,383.0
    2000 Actual..............................................    1,544.6
    2001 Actual..............................................    1,483.7
    2002 Actual..............................................    1,337.9
    2003 Actual..............................................    1,258.5
    2004 Actual..............................................    1,345.3
Fiscal Year 2005:
    President's Request (February 2005)......................    1,483.8
    Committee Level..........................................    1,484.0
Fiscal Year 2006:
    President's Request (February 2005)......................    1,605.0
    Committee Level..........................................    1,589.9
Fiscal Year 2007:
    President's Request (February 2005)......................    1,712.6
    Committee Level..........................................    1,693.3
Fiscal Year 2008:
    President's Request (February 2005)......................    1,819.7
    Committee Level..........................................    1,824.3
Fiscal Year 2009:
    President's Request (February 2005)......................    1,919.2
    Committee Level..........................................    1,928.7
Fiscal Year 2010:
    President's Request (February 2005)......................    2,029.3
    Committee Level..........................................    2,043.9
------------------------------------------------------------------------
Note: President's Request is CBO estimate.


                        TABLE 5.--CBO BASELINE REVENUES BY SOURCE, IN BILLIONS OF DOLLARS
                              [Includes on- and off-budget revenues, fiscal years]
----------------------------------------------------------------------------------------------------------------
                                                                                                   Projected
                                           1950    1960    1970    1980     1990      2000   -------------------
                                                                                                2005      2006
----------------------------------------------------------------------------------------------------------------
Individual Income Taxes.................    15.8    40.7    90.4   244.1     466.9    1004.5     898.6     986.2
Corporate Income Tax....................    10.4    21.5    32.8    64.6      93.5     207.3     215.9     226.4
Social Insurance Tax and Contributions..     4.3    14.7    44.4   157.8     380.0     652.9     789.8     833.1
Excise Taxes............................     7.6    11.7    15.7    24.3      35.3      68.9      73.7      76.6
Estate and Gift Taxes...................     0.7     1.6     3.6     6.4      11.5      29.0      23.7      27.2
Customs Duties..........................     0.4     1.1     2.4     7.2      16.7      19.9      21.2      23.3
Miscellaneous Receipts..................     0.2     1.2     3.4    12.7      28.0      42.8      34.5      39.7
                                         -----------------------------------------------------------------------
    Total...............................    39.4    92.5   192.8   517.1    1032.0    2025.2    2057.5    2212.5
On-budget Revenues......................    37.3    81.9   159.3   403.9     750.3    1544.6    1484.0    1607.7
Off-budget Revenues.....................     2.1    10.6    33.5   113.2     281.7     480.6     573.5     604.9
----------------------------------------------------------------------------------------------------------------


                          TABLE 6.--CBO BASELINE REVENUES BY SOURCE, AS PERCENT OF GDP
                              [Includes on- and off-budget revenues, fiscal years]
----------------------------------------------------------------------------------------------------------------
                                                                                                    Projected
                                                  1950   1960   1970    1980    1990     2000  -----------------
                                                                                                  2005     2006
----------------------------------------------------------------------------------------------------------------
Individual Income Taxes........................    5.8    7.9     8.9     9.0     8.1     10.3      7.3      7.7
Corporate Income Tax...........................    3.8    4.2     3.2     2.4     1.6      2.1      1.8      1.8
Social Insurance Tax and Contributions.........    1.6    2.8     4.4     5.8     6.6      6.7      6.5      6.5
Excise Taxes...................................    2.8    2.3     1.6     0.9     0.6      0.7      0.6      0.6
Estate and Gift Taxes..........................    0.3    0.3     0.4     0.2     0.2      0.3      0.2      0.2
Customs Duties.................................    0.1    0.2     0.2     0.3     0.3      0.2      0.2      0.2
Miscellaneous Receipts.........................    0.1    0.2     0.3     0.5     0.5      0.4      0.3      0.3
                                                ----------------------------------------------------------------
    Total......................................   14.4   17.9    19.0    19.0    18.0     20.9     16.8     17.2
On-budget Revenues.............................   13.7   15.8    15.7    14.8    13.1     15.9     12.1     12.5
Off-budget Revenues............................    0.8    2.1     3.3     4.2     4.9      4.9      4.7      4.7
----------------------------------------------------------------------------------------------------------------


  TABLE 7.--COMPARISON OF TOTAL REVENUES FOR CBO BASELINE AND COMMITTEE
                             RECOMMENDATION
                        [In billions of dollars]
------------------------------------------------------------------------
                                                                 Amount
------------------------------------------------------------------------
Fiscal year:
    1993 Actual..............................................    1,154.4
    1994 Actual..............................................    1,258.6
    1995 Actual..............................................    1,351.8
    1996 Actual..............................................    1,453.1
    1997 Actual..............................................    1,579.3
    1998 Actual..............................................    1,721.8
    1999 Actual..............................................    1,827.5
    2000 Actual..............................................    2,025.2
    2001 Actual..............................................    1,991.2
    2002 Actual..............................................    1,853.2
    2003 Actual..............................................    1,782.3
    2004 Actual..............................................    1,880.1
Fiscal Year 2005:
    CBO Baseline.............................................    2,057.5
    Committee Level..........................................    2,057.4
Fiscal Year 2006:
    CBO Baseline.............................................    2,212.5
    Committee Level..........................................    2,194.8
Fiscal Year 2007:
    CBO Baseline.............................................    2,357.2
    Committee Level..........................................    2,331.2
Fiscal Year 2008:
    CBO Baseline.............................................    2,508.0
    Committee Level..........................................    2,496.0
Fiscal Year 2009:
    CBO Baseline.............................................    2,662.2
    Committee Level..........................................    2,634.6
Fiscal Year 2010:
    CBO Baseline.............................................    2,806.8
    Committee Level..........................................    2,784.3
------------------------------------------------------------------------


   TABLE 8.--COMPARISON OF TOTAL REVENUES, AS PERCENT OF GDP, FOR CBO
                  BASELINE AND COMMITTEE RECOMMENDATION
                   [Percent of gross domestic product]
------------------------------------------------------------------------
                                                                 Amount
------------------------------------------------------------------------
Fiscal year:
    1993 Actual..............................................       17.6
    1994 Actual..............................................       18.1
    1995 Actual..............................................       18.5
    1996 Actual..............................................       18.9
    1997 Actual..............................................       19.3
    1998 Actual..............................................       20.0
    1999 Actual..............................................       20.0
    2000 Actual..............................................       20.9
    2001 Actual..............................................       19.8
    2002 Actual..............................................       17.8
    2003 Actual..............................................       16.4
    2004 Actual..............................................       16.3
Fiscal Year 2005:
    CBO Baseline.............................................       16.8
    Committee Level..........................................       16.8
Fiscal Year 2006:
    CBO Baseline.............................................       17.2
    Committee Level..........................................       17.0
Fiscal Year 2007:
    CBO Baseline.............................................       17.3
    Committee Level..........................................       17.2
Fiscal Year 2008:
    CBO Baseline.............................................       17.5
    Committee Level..........................................       17.4
Fiscal Year 2009:
    CBO Baseline.............................................       17.7
    Committee Level..........................................       17.5
Fiscal Year 2010:
    CBO Baseline.............................................       17.8
    Committee Level..........................................       17.7
------------------------------------------------------------------------


                                     TABLE 9.--TAX EXPENDITURE ESTIMATES BY BUDGET FUNCTION, FISCAL YEARS 2005-2009
                                                                  [Billions of dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                     Corporations                                 Individuals
                      Function                      ------------------------------------------------------------------------------------------   Total
                                                       2005     2006     2007     2008     2009     2005     2006     2007     2008     2009    2005-09
--------------------------------------------------------------------------------------------------------------------------------------------------------
National Defense
  Exclusion of benefits and allowances to Armed      .......  .......  .......  .......  .......      2.9      2.9      3.0      3.1      3.1       15.0
   Forces personnel................................
  Exclusion of military disablity benefits.........  .......  .......  .......  .......  .......      0.1      0.1      0.1      0.1      0.1        0.5
  Deduction for overnight-travel expenses of         .......  .......  .......  .......  .......      0.1      0.1      0.1      0.1      0.1        0.4
   National Guard and Reserve Members..............
International Affairs
  Exclusion of income earned abroad by U.S.          .......  .......  .......  .......  .......      3.6      3.8      4.0      4.2      4.4       20.1
   citizens........................................
  Exclusion of certain allowances for Federal        .......  .......  .......  .......  .......      0.5      0.6      0.6      0.7      0.7        3.0
   employees abroad................................
  Exclusion of extraterritorial income.............      3.1      3.9      1.9      0.1      0.1      0.1      0.1    (\1\)    (\1\)    (\1\)        9.4
  Deferral of active income of controlled foreign        3.2      3.4      5.8      6.4      7.0  .......  .......  .......  .......  .......       25.8
   corporations....................................
  Inventory property sales source rule exception...      5.9      6.2      6.4      6.3      6.1  .......  .......  .......  .......  .......       30.9
  Deferral of certain active financing income......      1.0      1.1      1.7  .......  .......  .......  .......  .......  .......  .......        3.8
General Science, Space, and Technology
  Tax credit for qualified research expenditures...      4.8      3.0      1.5      1.0      0.4      0.1      0.1    (\1\)    (\1\)    (\1\)       11.0
  Expensing of research and experimental                 4.0      5.5      6.3      6.4      6.3      0.1      0.1      0.1      0.1      0.1       31.7
   expenditures....................................
Energy
  Expensing of exploration and development costs:
    Oil and gas....................................      0.5      0.