Howard J. Silver p resident Bush's proposed fiscal year [FY] 2007 budget translates his initiative in economic development by prioritizing among a large number of programs that make up the $2.77 trillion federal budget. Although the larger priorities remain fighting the war on terror, protecting the homeland, and promoting the U.S. economy, the president has heeded the calls from outside efforts, such as the Rising Above the Gathering Storm report, to promote science and innovation. Among the beneficiaries of this new effort will be the National Science Foundation (NSF). The administration proposes to enhance spending for science and innovation within the context of reducing discretionary spending by 0.5 percent for all programs not associated with defense and homeland security. As it has done in previous years, the White House has produced a long list of over 90 programs, 42 in the Department of Education, it would like eliminated. The administration has renewed its crusade against congressional earmarks-member requested projects inserted into spending bills. The FY 2006, Labor, Health and Human Services, Education appropriations bill surprised many when it included none of these projects. Forced by a low allocation to choose between adequately funding regularly authorized programs and spending on specific new projects, Congress agreed to forego its usual earmarking frenzy. This has not spread to the other spending bills, as of yet. However, the latest Abramoff lobbying scandal has focused intense scrutiny on the earmarking process and there are many calls for limiting their inclusion in funding measures. The federal budget still remains in the red and will continue that way for the foreseeable future. The deficit for FY 2005 was $318.5 billion or 2.6 percent of Gross Domestic Product (GDP). The administration's projections for FY 2006 are $423 billion or 3.2 percent of GDP and for FY 2007 $354 billion back down to 2.6 percent of GDE The president still believes that making his tax cuts permanent and holding down spending will bring the deficit down to $208 billion or 1.9 percent of GDP by FY 2009, the year he would leave office. Since most of the federal budget difficulties are created by mandatory spending--Medicare, Social Security, and other entit lement programs--both the administration and Congress continue their interest in reforming these programs and reducing their costs. Congress took a small step by enacting a $39.5 billion package to rein in entitlement spending that would, among other things, make student loans more expensive. For FY 2007, the president proposes reforms that will save an additional $65 billion over the next five years. As President Bush found out with his attempt to sell his plan for social security reform, reforming entitlement programs remains a large political problem exacerbated by the demographics of the coming retirement needs of the baby boom generation.