Budget assumes agencies will collect unlikely amount in fees

President Bush's fiscal 2007 budget request assumes nearly $7 billion in user fees and offsets lawmakers are unlikely to approve. But such accounting moves can tweak the numbers to serve White House political goals, such as funding the war on terrorism and holding down other spending.

The budget assumes roughly $3.8 billion in new fees and related revenue, and $3 billion in other offsets that might prove difficult to enact, including a $1.6 billion rescission of unspent FAA funds.

"It makes a difficult job even harder, because there are holes we have to fill," said John Scofield, a spokesman for the House Appropriations Committee. "Some of these proposals aren't new, but in an even tighter budget year, the problems are exacerbated."

The Bush budget assumes, for example, that Congress will enact increased enrollment fees and deductibles for retired military personnel under the age of 65 and their families, saving $249 million in fiscal 2007.

But the budget also assumes that, as a result, retirees will leave the system rather than pay the new fees, thus saving an additional $496 million.

That is a $745 million gap in the Pentagon's healthcare budget that appropriators will have to make up elsewhere if the Armed Services committees, as expected, reject the fee proposal.

In an overall Pentagon budget slated for a $28.5 billion increase to $439.3 billion, lawmakers probably will be able to find room for additional retiree healthcare funds. But the budget is not as generous in other areas where appropriators will be harder pressed to make up the extra cash.

Bush's $870.7 billion fiscal 2007 discretionary spending request is a 3.2 percent increase over fiscal 2006.

Most of that spending is weighted toward defense and homeland security. Funding for homeland security efforts across all agency budgets, ranging from the Agriculture Department to the Smithsonian, would see a 3.3 percent increase.

But add State Department and foreign aid increases to the mix, which Bush has made a priority in the war on terrorism, and total fiscal 2007 domestic, non-security spending would be cut by 1.6 percent.

While praising Bush for fiscal restraint, Senate Appropriations Chairman Thad Cochran, R-Miss., said Wednesday some cuts would be tough to swallow.

"I am concerned about some of the suggested reductions the president has offered Congress, specifically in the areas of education, health care and agriculture, and I hope we are able to agree upon funding levels that reflect the needs of our nation," Cochran said.

Even homeland security increases might not be what they appear to be.

Total funding for the Homeland Security Department is slated to grow to $35.6 billion under the Bush budget, a 7 percent increase over last year.

But that assumes Congress will agree to increase airline ticket security fees from $2.50 to $5 per one-way trip, while collecting security fees owed by the airlines, for a total of $1.6 billion.

The airline industry, which has powerful friends in Congress, is fighting the plan.

A similar plan died last year. Removing the fee increase from the equation brings total Homeland Security Department funds instead to $33.9 billion, only a 2.3 percent increase from last year, barely enough to keep up with inflation.

Funding subject to appropriations, not counting any user fees, would only see a 1 percent increase.

OMB defends its fee proposals as legitimate expenses. Like highway tolls drivers pay that are put back into road repairs, aviation system users should share more of its security burden, the logic goes.

"Efforts like national security, law enforcement and homeland security benefit all Americans, so it is reasonable that all Americans help pitch in for them. It's not reasonable for all Americans to bear the entire cost of government activities from which they only receive a partial benefit," said OMB spokesman Scott Milburn. "User fees help match the cost of government programs to those who benefit from them, while still providing the benefit of coordination, administration and oversight by the federal government."

The Bush budget recycles some other old proposals that have gone nowhere, like Bureau of Alcohol, Tobacco, Firearms and Explosives fees for explosives registration.

There are some new ones as well, such as new fees on the commodities industry to cover the cost of Commodity Futures Trading Commission regulatory activities are likely to face steep opposition.

"If we believe a policy is sound, we're going to continue to work to put it in place," said OMB's Milburn. "Persistence pays off if you believe you're doing the right thing."