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SPECIAL EDITION: AGENCY BRIEFINGS (This is the second of two editions CongressDaily is publishing today on President Bush's FY08 budget. The following are highlights of departmental briefings this afternoon.) 
AGRICULTURE Under President Bush's FY08 budget, Agriculture Department spending would be $89 billion, the same level as 2007. Because of high prices for most commodities, farm subsidies through the Commodity Credit Corp. are projected at $11.7 billion in FY08, down from 13.4 billion in FY07 and the record high of $32.3 billion in FY2000. The budget includes an increase of $148 million for food safety. It proposes raising $92 million from a new licensing fee for slaughterhouses based on their size and type of operation and $4 million by charging facilities when inspectors find violations and must reinspect them. The administration proposed reducing the agricultural research, education and economics budget from $2.62 billion in FY07 to $2.35 billion in FY08. Agriculture Secretary Johanns noted that the proposal does not include $438 million in congressional earmarks for research and construction of specific facilities. Although the administration proposed increasing the conservation budget in its farm bill proposal last week, the FY08 budget would cut spending for the Environmental Quality Incentives Program and stop new enrollments in the Conservation Security Program on the grounds that the programs might be rewritten in the farm bill. The administration repeated an FY07 proposal to remove people who receive non-cash welfare assistance from automatic eligibility for food stamps and the budget foresees a reduction in the number of people receiving food stamps from 26.3 million to 26.2 million. -- by Jerry Hagstrom COMMERCE The FY08 budget request for the Commerce Department proposes slightly lower overall funding while boosting spending for ocean research, nanotechnology and preparedness for the 2010 Census. The White House requested that the department receive $6.55 billion in discretionary funding for FY08. Lawmakers are still grappling with FY07 funding in the continuing resolution that the Senate will take up shortly; the department received $6.62 billion in FY06. The budget requests $3.82 billion for the National Oceanic and Atmospheric Administration, an 11 percent increase, which includes $123 million in new funding for projects that would advance ocean science and research. Those projects include $20 million to implement legislation designed to curb overfishing, as called for under the reauthorization of the Magnuson-Stevens Fisheries Management and Conservation Act, and another $16 million for an integrated system to conduct ocean research. Funding for agencies under the American Competitiveness Initiative would total $11.4 billion, a proposed 7 percent increase over the FY07 budget proposal. Bush has called for a doubling in funding over the next 10 years for programs under the initiative, which include physical sciences and engineering. The budget would provide a 4 percent increase, to an overall total of $1.45 billion, to support nanotechnology efforts. In other areas, the White House has proposed $1.23 billion for the Census Bureau, including a $325 million increase for programs to prepare for the 2010 Census, improve data collection and provide for a dress rehearsal for the census. The department also proposes a $60 million cut in economic assistance development programs from the assumed funding for FY07 and a $46 million decrease in industrial technology services as well. -- by Bill Swindell DEFENSE The White House today proposed $716.5 billion in new defense spending, including $481.4 billion in the Defense Department's base budget for FY08 and $235.1 billion essentially to cover war costs for the remainder of this fiscal year and all of next year. Not included in this amount is a proposed $50 billion "allowance" to cover war-related costs in FY09, the White House said. The amount sought for FY08 alone, including $141.7 billion in emergency wartime appropriations, would surpass defense spending at the peak of the Vietnam War by $130 billion, adjusted for inflation, according to the independent Center for Strategic and Budgetary Assessments. Meanwhile, the $481.4 billion base budget, which is $17.2 billion higher than what the administration projected for FY08 when it released its FY07 budget a year ago, is slightly above average annual spending during the Reagan administration buildup of the 1980s. The Pentagon request "will make the necessary and strategic investments" to modernize, recapitalize, sustain and reset the force, Defense Secretary Gates said during a Pentagon briefing today. Defense spending "should be at a level to adequately meet the challenges" now confronting the United States, he added. The FY08 budget includes a $7.6 billion request to reorganize Army combat brigades into more modular and easily deployable units. Defense officials also want $8.9 billion to develop, test and field ground-based and sea-based missile defense systems in the Pacific, as well as $310 million to deploy a missile defense site at an unidentified location in Europe. The Pentagon wants $14.2 billion for Navy shipbuilding, including money for the first CVN-21 aircraft carrier and three Littoral Combat Ships. The budget also provides $315 million for a new Air Force tanker and $175 million for conventional Trident missiles. Additionally, the Pentagon wants $1.6 billion to develop and procure medical countermeasures and warning systems that protect against bio-engineered threats and non-traditional agents. Meanwhile, the wartime spending bills include $13.9 billion for the remainder of FY07 and $37.6 billion in FY08 to repair and replace equipment lost or damaged in Iraq and Afghanistan. Last year, Congress approved $23.6 billion for what the military calls equipment "reset" efforts. -- by Megan Scully EDUCATION The Education Department's $62.6 billion FY08 budget proposal, which is slightly less than last year's $63.4 billion request, includes a hike for the primary funding source for No Child Left Behind. Under President Bush's plan, Title I spending would be set at $13.9 billion, up from $12.7 billion in FY07. Most of the additional $1.2 billion, however, would be spent on improving high school education. The increased funding would pay for new reading and math tests, as well as an 11th grade college readiness exam that, under the Bush plan, would be incorporated in this year's reauthorization of the NCLB law. Bush's proposal would also boost the maximum Pell Grant award, which has been frozen at $4,050 since 2002, to $4,600. The long-term continuing resolution for FY07, passed by the House last week, increases the maximum Pell Grant to $4,310. The American Competitiveness Initiative, a Bush education plan proposed in 2006 to strengthen math, science and foreign language studies, would receive $365 million more funding under the FY08 budget, according to department documents. The education initiative is estimated to receive $850 million in the pending FY07 continuing resolution, and was appropriated $790 million in FY06. Meanwhile, the FY08 budget proposal would cut money for private student loan lenders by $12.4 billion over five years by decreasing lender subsidies 0.5 percent and reducing guaranteed insurance from covering 97 percent to 95 percent on defaulted loans. The Education Department would also cut the amount of money private agencies may retain from collections on defaulted loans, reduce the administrative fees paid out to private agencies and increase the fee lenders pay to the department for consolidating loans by 1 percent. -- by Jessica Brady ENERGY President Bush's $24.3 billion proposal for the Energy Department includes a boost for nuclear energy but less money to enact a national waste dump. Bush is asking for $494.5 million for the Yucca Mountain nuclear repository in Nevada, less than the $544 million he asked for in FY07. "It's not a matter of retrenching; it's a matter of where our priorities are," Energy Secretary Bodman said today. Administration officials are seeking to submit a license application next year to the Nuclear Regulatory Commission, with an eye toward opening the repository as early as 2017. Congress is looking to approve roughly $405 million for the project in FY07. The Yucca project has its share of enemies, none more determined than Nevada lawmakers such as Senate Majority Leader Reid. The department's nuclear energy office would get $875 million, a $242 million or 38 percent boost over Bush's FY07 request. Bush wants Congress to provide $405 million for the administration's program to reprocess spent nuclear fuel -- the Global Nuclear Energy Partnership. Congress provided $120 million in FY07 for GNEP. Senate Energy and Natural Resources Chairman Bingaman questioned the "rationale for diverting so much money towards a program whose details are poorly understood." Bush is proposing $700 million more overall for the department compared to his FY07 request. Bush again this year proposed zeroing out oil and gas research funding, while including $168 million toward a goal of doubling the capacity of the Strategic Petroleum Reserve to 1.5 billion barrels by 2027. Bush also is requesting as much as $9 billion for loan guarantees intended to help a variety of alternative energy projects. Congress is likely to grant roughly $4 billion for FY07. Senate Energy and Natural Resources ranking member Pete Domenici, R-N.M., said: "Add a zero to that $9 billion and we could really do something for clean energy and the environment." -- by Darren Goode EPA The Bush administration today proposed a $7.2 billion budget for the EPA in FY08 -- an overall reduction of $116 million from its FY07 proposal. The bulk of the cuts are coming from science and technology spending and grants funding. EPA Administrator Johnson said the budget emphasizes programs with a history of success, but noted the proposal also relies on leveraging money from state, local and private sources. "As our nation shifts to a green culture, Americans are realizing that environmental responsibility is everyone's responsibility. Today, EPA has 300 million citizen-partners in our efforts to accelerate the pace of environmental protection," Johnson said. He touted a $9.1 million increase over EPA's FY07 request for environmental enforcement. That would bring the total to $549.5 million, which he called "the highest enforcement budget ever." The proposed FY08 budget would spend $754.5 million for science and technology, which is about $33.7 million less than requested in FY07. It also proposes more than $2.7 billion for state and tribal assistance grants, a cut of nearly $53 million. The reductions include $14.5 million in the Diesel Emissions Reduction Program and $14.8 million for Mexico border projects. The budget includes $687.5 million for clean water grants and $842.2 million for drinking water grants, which are nearly identical to the administration's FY07 request. Also proposed is $1.24 billion overall for the hazardous waste Superfund, including a $3.2 million increase for the remedial program and $162.2 million for EPA's "brownfields" program. -- by Mark Wegner FCC The White House recommended that the FCC receive $313 million in FY08, $23 million more than the $290 million it is expected to get from the long-term FY07 continuing resolution awaiting Senate approval to finish out the current fiscal year. The FY08 proposal is $10.5 million more than the $302.5 million the Bush administration requested for proposed for this current fiscal year. In its latest request, the administration endorses revamping the multibillion-dollar universal service fund, which subsidizes telecommunications connections in rural and underprivileged areas, and pledges to minimize abuse and waste associated with the program. The White House also calls for legislation arming the FCC with new authority to charge fees to improve spectrum management. "The commission would be authorized to set user fees on unauctioned spectrum licenses based on public-interest and spectrum-management principles," the budget says. Also proposed is legislation to permanently extend the FCC's authority to auction spectrum licenses, which expires Sept. 30, 2011. -- by David Hatch HHS President Bush's FY08 budget proposal would cut more than $4 billion from Medicare spending and nearly $2 billion from Medicaid this year. The administration contended that the Medicare proposals could reduce the program's long-term income-to-revenue budget shortfall by as much as $8 trillion over 75 years. First on the list is a proposed 0.65 percent cut in hospital payment updates for 2008. Similar cuts are proposed in following years for other healthcare providers. The administration also wants to expand Medicare Advantage -- Medicare's private managed care option -- by giving beneficiaries in 39 states access to medical savings accounts. The administration also is proposing to decrease subsidies for certain high-income beneficiaries. Under Medicaid, the administration is proposing the elimination of reimbursements for graduate medical education, saying that use of Medicaid fund for that purpose is "outside of Medicaid's primary purpose." Recycling an idea proposed in previous years, the administration also wants to remove the lowest transaction price or "best price" from the Medicaid rebate calculation for prescription drugs. The administration claims the best price acts as a price "floor" and impedes competitive pricing. For the State Children's Health Insurance Program, the administration is proposing to reauthorize funding at an additional $5 billion over five years. Lawmakers say the program needs $15 billion over that same time period just to cover those who are already receiving SCHIP benefits. The administration said the program has $4 billion in unexpended allotments and baseline funding of $5 billion over five years. The SCHIP budget request is in addition to those funds. -- by Fawn Johnson HOMELAND SECURITY The Homeland Security Department is requesting about $37.7 billion in total discretionary spending for the next fiscal year, which is about $2.7 billion more than Congress approved for the department's current budget. But Congress also gave Homeland Security an additional $1.8 billion in emergency supplemental spending for border security during this fiscal year, which means the proposed FY08 increase is not much more than the total amount the department is spending in FY07. Nonetheless, all the department's major agencies would see an increase in discretionary spending. "This budget will ensure that the department has the tools and resources we need to protect the country," Homeland Security Secretary Chertoff said during a news conference today. Customs and Border Protection, which secures the nation's borders, would get the largest single increase in discretionary money. Funding would increase by about $2.3 billion over current enacted levels to about $8.8 billion. The budget request would allow the department to hire 3,000 new Border Patrol agents -- bringing the total number of agents to almost 18,000 -- and provide $1 billion to install technology and tactical infrastructure along the nation's borders. The discretionary funding sought for other major Homeland Security components includes: $7.2 billion for the Coast Guard; $6.4 billion for the Transportation Security Administration; $4.8 billion for Immigration and Customs Enforcement; and $3 billion for the Federal Emergency Management Agency. The budget also provides $3.2 billion in grants to state and local governments, with $2.2 billion provided through existing grant programs and $1 billion to help state and local governments buy interoperable communications equipment. The department expects that funding to come from a sale of radio spectrum this fall. The program to administer the funding will be run jointly by the Homeland Security and Commerce departments. -- by Chris Strohm HUD President Bush teed up HUD budget requests and overhaul proposals for FY08 that were met with either hostility or indifference in the last Congress, setting the stage for another round of debate -- this time with a Democratic-controlled body. If any item in the proposed $35.2 billion HUD budget betokens a clash, it is the president's aim not only to reduce funding for the Community Development Block Grant program but to roll the Brownfields redevelopment program and Rural Housing Service into the CDBG mix as well as "distribute resources more equitably and promote efficiency" in the program, according the administration's budget document. "The current CDBG formula allocates a disproportionate amount of resources to areas with relatively few critical development needs while other, needier areas go underserved," the document reads. The White House tried last year to achieve the same result, but when the new Congress got around this year to passing a continuing resolution to fund federal programs for the remainder of FY07, it provided about $3.7 billion for CDBG (without the add-ins) -- or $700 million more than Bush wanted. The same outcome is expected this year when Congress takes up the FY08 proposal. In unveiling the new budget, HUD Secretary Jackson said it "reflects the president's goals for supporting what works and cutting the federal budget deficit" while targeting the problems that demand the most attention. Among other things, its boosts spending by $259 million to a total of nearly $1.6 billion for programs to help the homeless and provides $16 billion in rental assistance vouchers for needy families, a $900 million increase over FY07 (although some of that money is carried over from "excess balances" at local public housing authorities). The Federal Housing Administration also is directed to provide more help to first-time buyers and low-income working families for home loans. -- by David Hess LABOR The president's FY08 budget would provide $10.6 billion in discretionary funding for the Labor Department, down from the administration's request of $11.7 billion in FY07. Most significantly, the administration proposes $1 billion in cuts in federal job training programs and repeated its 2006 call for a restructuring that would merge several job training programs into a single funding stream. These Career Advancement Accounts would allow workers to spend $6,000 in job training funds over two years. Labor Secretary Chao said the proposal would eliminate duplicative services and give workers greater flexibility to choose their own training programs. She said that restructuring would allow for the number of workers trained to triple from the current 200,000 to 600,000. "I'm challenging the system to do better because people who are out of work are depending on us," she said. The proposal has changed from last year's request to reflect a House-passed Workforce Investment Act reauthorization as well as consultations with stakeholders. The budget included an $18 million increase for OSHA, a $36 million increase for the Mine Safety and Health Administration -- reflecting the MINER Act mine safety legislation signed into law in 2006 -- and a $14 million increase to the Employee Benefits Security Administration. The budget would also increase staff to the Office of Labor Management Standards to oversee labor unions. -- by Kristen A. Lee NASA President Bush's FY08 federal budget requests $17.3 billion for NASA, a 3.1 percent increase over last year's proposal, which Administrator Michael Griffin said "demonstrates the president's commitment to our nation's leadership in space and aeronautics research." But Griffin expressed concern that the continuing resolution for FY07 approved by the House last week, which would cut NASA's funding $545 million below last year's request and require even deeper cuts in human spaceflight programs, would threaten the agency's ability to transition "safely and efficiently" from the space shuttle to a new generation of manned space vehicles. As passed by the House, the long-term CR could delay the planned 2014 availability of the new Orion crew exploration vehicle and the new rockets that would power it into space, forcing a longer gap in manned space missions after the shuttle is retired in 2010, he said. "It will have serious effects on many people, projects and programs, this year and for the longer term," Griffin told reporters at NASA headquarters. He said safely flying the tragedy-marred shuttles long enough to complete construction of the international space station, while developing the new manned space systems, was "the greatest challenge we face." Four or five shuttle missions are planned for this year and in 2008, up from three last year, NASA's budget documents said. The bulk of NASA's proposed funding, $10.5 billion, would go to its science, aeronautics and exploration programs. That would be a slight decrease from last year's request, with most of the cuts coming from exploration, which would receive $3.9 billion, down $228 million. Small increases were requested for science and aeronautics research, which would get $5.5 billion and $554 million respectively. -- by Otto Kreisher PATENT AND TRADEMARK OFFICE The Patent and Trademark Office would receive $1.9 billion under President Bush's FY08 budget proposal -- about 8 percent more thant Congress is expected to appropriate for FY07. For the fourth year in a row, Bush also recommended that Congress allow the agency to keep fees collected from patent and trademark applications instead of diverting funding to other government programs. The request would allow the PTO to "build on its recent successes in improving quality and increasing the number of patent and trademark examinations," PTO Deputy Director Stephen Pinkos said. The agency also could continue hiring patent examiners and expand its worldwide intellectual property protection efforts, he added. The patent office anticipates hiring an additional 1,200 patent examiners. The net gain in examiners would be about 800 employees because the agency's annual attrition rate is about 10 percent, Pinkos said. The request also would allow the agency to move toward its goal of processing all patent and trademark applications electronically. Nearly half of patent applications are now filed electronically, he said. Under Bush's proposal, PTO could expand its global intellectual property academy, which has provided training programs for foreign government officials since its launch in September 2005. The request also would allow the agency to post additional IP experts abroad, Pinkos said. -- by Andrew Noyes SEC The SEC would receive $905 million under President Bush's FY08 budget proposal, a 1.5 percent increase for the agency that is the top watchdog for corporate wrongdoing. The agency is slated under the FY07 continuing resolution to receive $892 million, including an estimated $4.5 million in cost-of-living adjustments for staff members, according to agency officials. The Bush request would allow the agency to hold staffing levels at 3,788 and to devote resources to its investigations into allegation of backdating stock options, investing in new case-tracking systems and modernizing its public database, EDGAR, to incorporate interactive data, said SEC Executive Director Diego Ruiz. The agency proposes that $321 million would go to enforcement actions, a 3 percent increase from FY06 appropriations. The SEC compliance and inspections office, which helps carry out obligations under the 2002 Sarbanes-Oxley corporate governance law, would receive $213 million under the request, a 5 percent increase from FY06. "The SEC's budget request reflects the importance and vitality of the SEC's mission to protect investors, maintain fair and orderly markets and facilitate capital formation," said SEC Chairman Christopher Cox. "American taxpayers can be confident that they will receive an excellent return this year on their investment in the agency as we pursue vast improvements to corporate disclosure and vigorous enforcement of our securities laws." The request also includes $3 million for construction of a childcare center at the agency's headquarters. -- by Bill Swindell SMALL BUSINESS ADMINISTRATION President Bush called today for $28 billion in FY08 for key guaranteed lending programs for the Small Business Administration, which expects to increase the number of loans it makes over this year's total. The funding level is the same as FY07 but the agency does not intend to use the entire amount set aside for this current fiscal year. SBA Administrator Steven Preston said his agency expects to use about approximately $20 billion in this fiscal year. "We hope to loan more money" in FY08, he said, but did not say how much more. In a statement, SBA said its overall budget is expected to increase financing capacity by 40 percent over its business lending in FY06. The SBA is proposing to drop some upfront fees that it charges businesses and lower others, which could be an incentive for borrowers. It also proposes $814 million in direct spending for FY08, including $464 million in new budget authority, $329 million in funds for disaster relief, and $21 million in reimbursable revenues. SBA is asking Congress for $17.5 billion in authority -- the same level as in FY07 -- for so-called 7(a) loans made by banks and guaranteed by the government for capital and expenses. For Section 504 guaranteed loans for economic development, plant and equipment, SBA's budget includes $7.5 billion -- also the same as this fiscal year. SBA also said it will supplement the venture capital for small business development companies with $3 billion in guaranteed long-term loans. Micro loans -- tiny start-up loans up to $35,000 -- were included in the budget although SBA has historically tried to eliminate these loans. But Preston said the government subsidy of below-market interest rate lending will be discontinued. -- by Michael Posner TRANSPORTATION The White House's FY08 transportation budget calls for scrapping the 7.5-percent airline ticket tax and setting up an aviation financing system featuring user fees. The spending plan also calls for a hefty cut in Amtrak funding as a part of yet another attempt to force the railroad to jettison money-hemorrhaging long-distance lines. Under the aviation financing system, commercial airlines would pay user fees plus the fuel tax, while business aircraft owners would continue to be subject to the fuel tax. Both taxes would be calibrated to cover the FAA costs. FAA Administrator Marion Blakey said business plane operators were exempted from the user fees because "we took very seriously" their argument that paying at the fuel pump was the most efficient for them. But she acknowledged that the proposal -- which is due to be spelled out in detail next week -- will likely call for a fuel tax increase. The goal of the new tax system is to reverse the decline of the aviation trust fund, which recently dropped to $1.8 billion, a 10-year low. The airlines have long sought the switch to user fees, arguing that the ticket tax forced them to ante up 90 percent of the contributions to the trust fund. But the companies wanted the fees to be applied to all segments of the industry. Overall, the White House spending plan would provide Amtrak with $800 million, $500 million less than in FY06. Operating subsidies would be $300 million, down from $490 million in FY06. About $100 million would be allocated in FY08 to subsidize state efforts to provide inter-city passenger rail service. The spending blueprint would increase highway spending by $500 million over estimated FY07 levels to about $39.6 billion. The funding would include $175 million for a new program to help states develop pilot projects for reducing traffic congestion. -- by Terry Kivlan THE FINAL WORD -- Senate Budget Chairman Conrad, as quoted by the Associated Press.
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